Disney Humiliates Mattel

By Douglas A. McIntyre Published Sep 10, 4:38AM EDT

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Disney (DIS) will begin to inspect toys based on characters that it licenses to large companies like Mattel (MAT). Disney does not make the toys. It does not sell them. But, to protect its brand, it does not want other manufacturers to sell unsafe products that carry its name via licensing deals.

“It sends the message that we are looking over their shoulders,” said Andy Mooney, the chairman of Disney’s consumer products division writes The New York Times.

Given the large numbers of factories that make these toys and the tens of thousands of outlets that carry the products, the Disney move may simply be symbolic and a good PR ploy. But, it send a message to toy companies, especially Mattel, that it no longer trusts them and that they present a danger to Disney’s image.

It adds to the humiliation of Mattel which has clearly done a very poor job of policing its consumers. The company has also been accused of reporting safety products to the federal government. Mattel’s CEO is being hauled before Congress and will likely be pilloried by representatives who will see the hearings as a stage to demonstrate how concerned they are about child safety.

Mattel’s shares are now at $21, down from $29 earlier this year. Watch them fall farther as its critics pile on. The company’s holiday sales will be a train wreck.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.