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Disney's promotion agreement with McDonald's ends

For 10 years, Walt Disney Co. and McDonald's appeared to have the perfect marriage. Happy Meals bore little figurines of Nemo, Mr. Incredible, and 101 Dalmatians.

But no more. This is one relationship that's ending because of the children.

Disney is not renewing its cross-promotional pact with the fast-food giant, which comes to a close with this summer's release of ''Cars" and ''Pirates of the Caribbean: Dead Man's Chest." The reason in part, say multiple high-ranking sources within Disney, is that the company that prides itself on being family friendly wants to distance itself from fast food -- and its links to the epidemic of childhood obesity.

Disney's not the only studio that thinks french fries loaded with trans fats may be too hot to handle.

DreamWorks is working with McDonald's to promote ''Shrek 3," due out in 2007. But according to one top-level source inside the studio, there is internal debate about whether the lovable green ogre should steer clear of Chicken McNuggets and Big Macs in favor of the healthier fare on McDonald's menu, such as salads. (Shrek is, after all, overweight.)

The end of the Happy Meal partnership comes at a time when the processed- and fast-food industries are under fire on a number of fronts because of growing concerns about expanding waistlines, particularly among youngsters. Just last week, former President Clinton succeeded in yanking sugary sodas from elementary school campuses.

But some say the more discreet actions of the entertainment industry ultimately could have a greater influence, especially if other corporate giants follow suit.

''I think it would have impact in contributing to the cultural change that is necessary," said Dr. J. Michael McGinnis, chairman of a National Academy of Science panel that just released a study showing how food marketing adversely affects children's diets. ''The committee thought it was important for the use of cartoon characters that appeal to children only to be used in the marketing of healthy products."

One of the industry's most prominent critics, ''Fast Food Nation" author Eric Schlosser, said it will be ''hugely significant" if Hollywood walks away from Happy Meals. ''It will put more pressure on McDonald's to change what they sell in Happy Meals. The obesity issue would be irrelevant if the food in the Happy Meals was healthy."

Sources on both sides of the agreement say the parting of the ways was mutual. And it's not a complete divorce, either. McDonald's fare will continue to be a staple in Disney's theme parks. Disney also is leaving open the possibility of McDonald's promotions geared toward adults.

Disney released a statement praising its decadeslong relationship with McDonald's, adding: ''While our contract with them will expire at the end of the year, we look forward to a more flexible, nonexclusive relationship where we will be working with them on a case by case basis."

Dean Barrett, senior vice president of global marketing for McDonald's, agreed. ''Our relationship was ongoing before the agreement and will continue after. We've had great success. There's great entertainment value with us and Disney, and I would think that would continue for years to come."

Barrett said that the only factor that really has changed is the exclusivity of the relationship -- McDonald's is now free to partner with other studios. Hence McDonald's new, two-year agreement with DreamWorks, beginning with ''Shrek 3." DreamWorks declined to comment.

Disney has not signed any new deals with fast-food providers.

Industry analysts say the breakup will force both Disney and McDonald's to find new promotional outlets.

Restaurant analysts don't believe McDonald's bottom line will suffer if other studios and toy companies pick up where Disney left off. Kids might not even notice.

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