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A sticky, icky mess

This isn't Hundred Acre Wood. And this is no simple story. Winnie the Pooh, Disney's most lucrative character, and his multibillion-dollar money pot are at the center of a legal battle that pits the Tampa heirs of a literary agent against marketing machine Walt Disney Co.

By ROBERT TRIGAUX

© St. Petersburg Times, published October 21, 2001


This isn't Hundred Acre Wood. And this is no simple story. Winnie the Pooh, Disney's most lucrative character, and his multibillion-dollar money pot are at the center of a legal battle that pits the Tampa heirs of a literary agent against marketing machine Walt Disney Co.

Most of us think of Winnie the Pooh as a lovable bear with very little brain and an insatiable yen for honey.

Well, forget the honey pot. This is a tale of a fight over Winnie the Pooh's great big money pot.

In one corner sit the Tampa heirs of literary agent Stephen Slesinger, who 72 years ago cut a licensing deal with Pooh author A.A. Milne. In the other corner resides Walt Disney Co., the modern marketing and merchandising machine of Winnie the Pooh movies, videos, toys, clothing, software, games, toothbrushes, breakfast foods and maybe a bazillion other items.

The legal tiff? Slesinger's widow and daughter control Stephen Slesinger Inc., which still receives royalties from the sale of Pooh merchandise. They say they've been cheated out of $35-million since 1983 when Disney failed to report at least $3-billion in Pooh-related revenue, mostly from videos, DVDs and software.

Disney counters that the products in question are not covered by its agreement with Slesinger. Besides, the family has already been compensated beyond expectations because of, in the words of Disney's lawyer, "Disney's ability to fully exploit this property of Winnie the Pooh."

Before we get into all the legal battles (complete with celebrity lawyers) over Pooh royalties, just how big is that stuffed bear's pot o' bucks?

A lot bigger than a Heffalump. Even larger, it seems, than the Hundred Acre Wood, where Pooh and his pals live.

Lawyers acting for the Slesinger family say Disney sold $4.5-billion of Pooh merchandise last year alone. A Merrill Lynch analyst estimates Pooh products generate $6-billion in retail sales a year, double what they did five years ago.

Choose either number and the result is the same:

Pooh is now Disney's most popular character, eclipsing Pluto, Goofy, Donald Duck, Minnie Mouse and -- yes -- even Mickey Mouse in licensing income.

Pooh-related sales amounted to roughly one-fifth of Disney's $25-billion in revenues last year.

Author Milne would be astonished how some simple stories about the adventures of his son, Christopher Robin, with Pooh, Piglet, Rabbit, Tigger, Eeyore and other memorable characters would end up forming the core of one of the world's most massive entertainment properties.

Not bad for a Silly Old Bear who celebrated his 75th birthday this month, and whose simple musings of "Think, think, think!" and "Bother!" draw fans one generation after another.

Alan Alexander Milne published Winnie the Pooh in 1926 about his son and his toy bear. Under the terms of a publishing deal with Dutton, Milne was to receive royalties of 20 to 25 percent from the sales of the book. The book's illustrator, E.H. Shepard, would get 20 percent of that.

By the time Milne died in 1956, his children's books had sold a hefty 7-million copies. Back then, royalties were important. But merchandising rights received little attention.

Slesinger, a New York entrepreneur and literary agent, bought the rights to merchandise Winnie the Pooh from Milne in 1929.

Slesinger died in 1953. Eight years later, Disney bought the rights to merchandise Pooh and his friends from Slesinger's widow. The contract was negotiated by Walt Disney himself. (The Pooh books were favorites of Walt's daughters.)

Thirty years later, in 1991, the Slesinger family sued Disney saying the company was not disclosing all of its revenues from Pooh sales, especially in newer product lines of videos, DVDs and computer software.

For the Slesingers, keeping up with Disney's total Pooh sales is critical. Under its agreement with Disney, Slesinger Inc. receives an average of 1.2 cents of every dollar of Pooh merchandise Disney sells.

If Disney sold $4.5-billion in Pooh stuff last year, for example, the Slesingers argue they would be due about $4-million in royalties.

While this legal battle is now 10 years old, recent court actions have shed new light on the dispute and may force the disagreement to trial early next year.

Disney has taken its share of hits along the way.

Last year, Los Angeles Superior Court Judge Ernest M. Hiroshige sanctioned Disney for deliberately destroying 40 boxes of documents that could have been relevant to the case. One file was marked "Winnie the Pooh-legal problems."

(Hiroshige found that Disney destroyed correspondence that the Slesingers say supported their position that under a 1983 agreement they were entitled to royalties on videocassettes.)

In August, a court hearing was held to determine whether court-appointed forensic accountants had fairly calculated disputed revenue during two six-month periods in 1988 and 1994. One accountant characterized the Slesingers' monetary claims as inflated.

The Slesingers say the future value of royalties must also be considered.

Not surprisingly, the high-profile case of Disney and Pooh comes with its own glitterati attorneys.

Disney's interests are defended by Dan Petrocelli, who gained prominence when he represented the family of murder victim Ronald Goldman in their civil suit against O.J. Simpson.

But Bertram Fields, the Slesingers' lawyer, is no Los Angeles wall flower. And he already is accustomed to battling Disney for money.

In the mid-1990s, Fields represented Jeffrey Katzenberg, Disney's former studio chief, against his old employer in a widely followed lawsuit over unpaid bonuses. (They settled.) Fields defended movie mogul Steven Spielberg on the eve of releasing his movie Amistad against claims of plagiarism by author Barbara Chase-Riboud. And Fields represented rock star George Harrison, who sued his longtime business manager for $25-million and living the high life at the ex-Beatle's expense.

Fields also was the force behind a 1997 "open letter" -- signed by more than 30 American entertainment industry figures -- to Helmut Kohl, then chancellor of Germany. The letter, published as a full-page ad in the Paris-based International Herald-Tribune, accused Germany of persecuting Scientologists as the country once persecuted Jews.

Stephen Slesinger's 1929 deal for the merchandising rights to Winnie the Pooh was no fluke. Slesinger obtained a range of licensing rights to popular stories and cartoons of the time.

For example, Slesinger owned the rights to the popular Red Ryder newspaper comic strip that ran from 1938 until 1964 and served as the basis for a series of popular movies.

Slesinger also represented famed Western novelist Zane Grey. And he even illustrated a 1935 set of pictures for a Tarzan story by Edgar Rice Burroughs.

Slesinger's heirs are behind the current lawsuit against Disney. Slesinger's elderly widow, Shirley Slesinger Lasswell, attended at least one recent court hearing.

(Eleven years after Stephen Slesinger died, his wife married Tampa cartoonist Fred Lasswell in 1964. Lasswell wrote and drew the Barney Google and Snuffy Smith comic strip without interruption for nearly 60 years. He died in March.)

While the Slesingers hold much of the North American rights to Winnie the Pooh, the Milne estate owns much of the Pooh market elsewhere. When Disney initially bought the rights to Pooh characters in 1961, it divided royalties between Slesinger and the Milne Trust.

To consolidate its control of Pooh, Disney early this year bought the future Pooh royalty stream from the A.A. Milne Trust for $350-million.

All these transactions with Disney did not sit well with Milne's son and inspiration, Christopher Robin Milne. Before his death in 1996, he and his wife, Lesley, sold half their share in the Pooh royalties to a literary fund in Britain and used the remainder as a trust fund for their daughter.

"Christopher was very anti-Disney," Lesley Milne told Britain's Sunday Times. "He hated what they had done with the books and the characters."

After 10 years, the spat between Disney and the Slesinger family shows no sign of a near-term solution.

But one thing is clear. Nasty litigation is an all too frequent part of the entertainment business. And Disney has a clear track record of fighting tooth and nail for its bottom line.

Even now, Disney and its supposed partner Pixar, the duo that created the super-successful Toy Story movies and the new flick Monsters, Inc., are wrestling over the future of their partnership. (Disney wants a Toy Story 3 and insists it not count toward the contracted number of movies Pixar has agreed to make.)

At Tokyo's Disneyland, Pooh's "Honey Hunt," where people jump inside a giant honey pot, is the most popular attraction. In the United States, Billboard magazine lists Walt Disney's film version of The Book of Pooh: Stories from the Heart as the top-selling children's video.

Perhaps the real question is: When will Winnie the Pooh's success hit the global ceiling?

If there's an irony in the litigation over Pooh's money pot, it is this: Courtesy of the Disney marketing machine, Winnie the Pooh continues to grow in popularity. And Pooh's enduring appeal is helping Disney through some less-than-stellar years.

Altogether, Pooh's generating more revenues and royalties for everybody involved.

-- Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

Pooh Wars: Disney vs. Tampa family

In 1926, British author A.A. Milne published a book about his son and his toy bear titled Winnie the Pooh. It has become a children's classic and created a multibillion-dollar business of movies, stuffed animals, toys and the Pooh image on everything from underwear and toothbrushes to cereal boxes and software.

New York agent Stephen Slesinger acquired subsidiary rights to the Winnie the Pooh books from Milne in 1929. The rights were licensed to Disney in 1961 in exchange for royalties.

Slesinger's heirs, now living in Tampa, took Disney to court in 1991, claiming Disney shortchanged them $35-million by failing to report at least $3-billion in Pooh-related sales since 1983.

Disney says it has paid the Slesinger family the full amount it owes. The case is scheduled to go to court next year.

A Pooh timeline

1882 -- A.A. Milne is born.

1920 -- His son, Christopher Robin Milne, is born.

1921 -- Edward Bear, the stuffed bear that inspired the tales of Winnie the Pooh, is given to Christopher Robin on his first birthday.

1926 -- Winnie the Pooh is published.

1929 -- Milne sells subsidiary rights to Winnie the Pooh books to literary agent Stephen Slesinger.

1953 -- Stephen Slesinger dies.

1956 -- A.A. Milne dies. Sales of his children's books reach 7-million.

1961 -- Slesinger's widow, Shirley Slesinger Lasswell, licenses the rights to Winnie the Pooh to Walt Disney himself.

1966 -- Disney releases its first Pooh movie, a short film called Winnie the Pooh and the Honey Tree, beginning a great debate between Classic Pooh and New Pooh among the masses.

1987 -- The original stuffed Pooh and friends are presented to the New York Public Library, where they are put on display.

1991 -- Tampa family-controlled Stephen Slesinger Inc. sues Disney, alleging it is owed millions in royalties from unreported revenues from expanded line of Pooh videos and other products.

1996 -- Christopher Robin Milne dies. He had sold half his royalty share to Britain's Royal Literary Fund, set up in the 1780s to help "authors of merit who have fallen on hard times." The other half became a trust for his daughter, Clare, who was born with cerebral palsy.

2001 -- In March, Disney buys additional rights to Winnie the Pooh for $350-million from the A.A. Milne Trust until 2026, when the copyright is to expire.

2002 -- The Slesinger-Disney dispute is expected to go to trial.

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