McDonald’s Teams With DreamWorks

McDonald’s Corp. is turning to “Shrek” to lead it to greener pastures in Hollywood.

The fast-food giant disclosed Wednesday that it would end its exclusive, decade-long promotional partnership with Walt Disney Co. when it teams with rival DreamWorks Animation SKG Inc. starting in May 2007.

First up will be “Shrek 3,” with McDonald’s promoting DreamWorks’ next computer-animated installment about the giant green ogre via Happy Meals and other promotions in its 30,000-plus restaurants worldwide.

The announcement comes as a 10-year deal between McDonald’s and Disney winds down next year.

Signed in 1996, the arrangement, estimated to be worth hundreds of millions of dollars, helped sell Disney’s stable of cartoon characters along with hit films such as “Finding Nemo,” “The Incredibles” and “Tarzan.”

But tensions between the two sides increased in recent years. McDonald’s franchisees complained as they watched their marketing dollars spent on flops such as “Treasure Planet” and “Atlantis: The Lost Empire.”

“There is a considerable amount of frustration among franchisees about what happened with the Disney deal,” said Richard Adams, a former McDonald’s executive and consultant to franchisees. “For 10 years, they lost control of their marketing.”

That deal was struck during turbulent times for McDonald’s, which was eager to pair up with Disney after competitor Burger King successfully promoted “The Lion King.” But McDonald’s now wants to keep its options open, agreeing to a limited two-year deal with DreamWorks.

“I think exclusivity is an idea we will not see again,” said Larry Light, a global marketing executive for McDonald’s.

Light characterized the DreamWorks deal as another step in revamping the company’s image through its “I’m lovin’ it” campaign aimed at making the company seem hipper.

“Our focus has moved from the child in every one of us to the young adult in all of us,” Light said.

The arrangement doesn’t rule out McDonald’s and Disney teaming up on future projects. For their part, Disney executives have maintained that they also want the ability to deal with other fast-food chains. In a statement, Disney said both companies “will have the flexibility to develop projects on a nonexclusive basis.”

After the campaign for “Shrek 3,” DreamWorks and McDonald’s will promote such films as comedian Jerry Seinfeld’s “Bee Movie” in 2007 and “Kung Fu Panda” in 2008.

In addition, DreamWorks will craft original animation for the fast-food chain’s television commercials and other marketing initiatives. McDonald’s executives said they were considering teaming “Shrek” and Ronald McDonald in ads.

Under the deal, McDonald’s is the only fast-food chain DreamWorks will work with. Previously, DreamWorks juggled contracts with chains such as Burger King and Denny’s.

In a conference call, DreamWorks Animation Chief Executive Jeffrey Katzenberg, who formerly headed Disney’s studio, said the partnership would expand the animation studio’s global reach.

“There is no company in the world that is more prestigious than McDonald’s,” he said.