Why was Disney-MGM Studios Renamed?

“It’ll always be MGM Studios to me!” It’s a common phrase we often hear from longtime Disney World fans who remember the days when Disney World’s third park, Disney’s Hollywood Studios, was called Disney-MGM Studios. But why was that it’s name to begin with, and why did it change?

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Disney MGM Studios was born from EPCOT in more ways than one. As the origin story goes, Disney was initially planning to create two new pavilions in Future World. One was going to be about the human body, and would eventually become The Wonders of Live pavilion. The other was going to be a Great Movie Ride pavilion, which would look like a film soundstage, have a movie-theater facade, and focus on, as expected, the film industry.

When he saw the idea CEO Michael Eisner felt that there was enough potential in the film pavilion concept that he thought it could act as a centerpiece for a whole third park, which would be themed around the movies.

On top of that Eisner was just eager to build and open a third theme park. Disney had seen with the opening of EPCOT in 1982 that average stay length for guests doubled. That meant guests spent more money not just on park entry, but on food and hotels as well. Lastly, Disney wanted to be prepared to take on MCA, who were looking to build a Universal Studios in Orlando to compete with Disney. To that end, a theme park centered around Hollywood would be the perfect foil to MCA’s plans.

There was just one problem: Disney’s film library wasn’t as nearly a well rounded as Universal’s was. Sure, Disney was synonymous with classic animation and wholesome family entertainment, but Universal was a Hollywood staple that had films that ranged from classics like Frankenstein, to masterpieces like Hitchcock’s Psycho, to modern action blockbusters like Jaws. Believe it or not, Disney was outmatched.

So they decided to turn to another studio to partner with. It would have to be a studio with as much of a celebrated history in Hollywood as Universal. Enter MGM.

Disney worked out a contract with MGM in 1985 and it was pretty amazing for Disney. According to “The Disney Touch” by Ron Grover, Disney essentially had free reign of MGM’s film and name rights for the park, and all for almost nothing. The deal had Disney paying MGM $100k a year for first three years and $250k for the fourth year. For every year after that the fee would go up an additional $50k, capping out at a million dollars. So what’s that mean? It means over the full 20 years of the deal, Disney would pay a total of 11.3 million dollars to MGM. Now, to us that’s a lot of money, but to put it in perspective, in 1989 Disney Parks and Resorts made that much money in less than two days.

Apparently MGM owner and billionaire Kirk Kerkorian was unaware of the deal with Disney until after it was finalized, and he was not too happy to hear how much Disney was getting for such a low price. So while the deal went through, it started on rocky ground.

In fact, before the park even opened, MGM sued Disney, claiming that Disney violated their contract by operating a functional studio at the park donning their name. In turn Disney filed a counter-suit, stating that MGM was violating the contract by planning to open an MGM park in Las Vegas. In 1992 a judge ruled that Disney could continue to produce content at the theme park and use the Disney-MGM name in it. He also ruled that MGM had the right to build a theme park in Las Vegas and use the MGM name and logo, as long as it wasn’t themed after a movie studio like Disney’s park.

So, with bad blood between them, a couple of lawsuits, and a licensing deal that Disney was surely not going to get lucky with again, it came as no surprise when Disney decided not to try and renew their agreement towards the end of the 20-year deal. In August of 2007 it was announced that the park would be renamed to Disney’s Hollywood Studios the following year in 2008, 19 years after the park opened.

Beyond that, there’s an argument to be made that Disney didn’t really need MGM anymore. In the time since Michael Eisner had stepped in as CEO, Disney’s approach to the film industry had been renewed and rounded out. Disney experienced a renaissance in animation, and new subsidiary studios were producing films that Disney wouldn’t have even considered making in the past. Sure they weren’t Hollywood classics yet, but with the park generally leaning away from the backlot approach anyway, it didn’t seem to matter.

Today the park is undergoing even more change, and is expected to see its name replaced once again. Luckily though, as Disney fans, we don’t need eleven million dollars to keep calling it MGM Studios.