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McDonald’s and Disney to end relationship?

With the marketing pact between the two companies set to expire next year, the Wall Street Journal, citing people familiar with the matter, reported that the world’s largest fast-food chain has been courting a few of Disney’s animation rivals, including DreamWorks Animation SKG (Research) and Pixar Animation Studios (Research), in a bid to revamp its movie-related promotions.

DreamWorks Animation CEO Jeffrey Katzenberg earlier this year addressed McDonald’s marketing managers at a meeting in Chicago where he gave an overview of the company and its strategy for tapping promotional and licensing partners to help sell its movies, the report said.

DreamWorks was the studio behind “Shrek” and other animated hits.

According to the paper, the McDonald’s-Disney agreement, set in 1996, made sense a decade ago when Disney was the king of the animation business with blockbusters like “The Lion King.” Since then, McDonald’s (Research) has promoted only Disney (Research) movies, television shows and theme parks.

But eventually, McDonald’s was also forced to promote Disney flops like “Treasure Planet.” The Journal said franchisees have complained the unsuccessful tie-ins are partially to blame for declining Happy Meals sales.

At the same time, the Journal said Disney is looking for a change, pointing out that the 10-year deal has limited the studio’s flexibility in picking release dates for movies in an increasingly crowded marketplace.

Citing sources close to the situation, the report said the agreement has locked Disney-owned TV networks into selling some advertising time to McDonald’s at below-market rates.

Still, the Journal said, the burger chain represents a powerful launching pad for studios seeking the family audience, while movies are an equally valuable tool for drawing customers into a fast-food restaurant.