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Disney Acknowledges Pooh Risk

23 May, 2002 By: Holly J. Wagner

A dispute over profits from Winnie the Pooh videocassettes and merchandising could cost The Walt Disney Co. millions if the company loses a lawsuit brought by the family that has the Pooh merchandising rights, Disney admitted in a recent financial statement.

The case, filed in 1991, has been reported in the past, but the first quarter 2002 financial statement is the first time Disney has flinched, acknowledging it might not win the case that's scheduled for trial next February.

News that a trial date has been set triggered the disclosure in the SEC filing, a Disney spokeswoman said.

Attorneys for the plaintiffs contend they are owed as much as $200 million in videocassette, DVD and computer software profits, as well as profits from other products unforeseen at the time they made the deal that lets Disney exploit the Pooh character.

New York literary agent Stephen Slesinger bought the rights from author A.A. Milne in 1929. While Slesinger died many years ago, his wife and daughter sued Disney in 1991, alleging the Mouse House has erroneously excluded packaged media from royalties paid under a licensing deal forged in 1961 and revised in 1983.

“The company disputes that the plaintiff is entitled to any damages or other relief of any kind, including termination of the licensing agreement,” the company contends in documents filed with the Securities and Exchange Commission (SEC). “Given the number of outstanding issues and the uncertainty of their ultimate disposition, management is unable to predict the magnitude of any potential determination of the plaintiff's claims.”

Disney attorneys argue their agreement covers only merchandise rights for items like clothing and accessories.

“The Slesingers only obtained, many, many years ago, very small license from Mr. Milne, which was merchandise. That applies to objects and things,” Disney attorney Daniel Petrocelli said earlier this year, contending video and software products are outside the scope of the deal.

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