Disney, ‘Lizzie’ Star Parting Ways After Pay Dispute

Lizzie McGuire and Walt Disney Co. are getting divorced -- Hollywood style.

After weeks of rancorous negotiations over the future career of teen sensation Hilary Duff, the star of the Disney Channel’s hit “Lizzie McGuire” sitcom and movie spinoff, the two sides confirmed Friday that they are splitting up amid accusations of greed and squandered opportunities.

The bitter parting, at the height of Duff’s success, provides a rare glimpse into the high-stakes brinkmanship that plays out behind Hollywood’s curtains.

Struggling to shore up its bottom line, Disney was eager to keep alive its most successful home-grown franchise in years. The company had planned another movie for Duff as well as a possible Lizzie-in-high-school sitcom for Disney’s struggling television network, ABC.

Keeping the phenomenon growing has been a major priority for Disney Chief Executive Michael Eisner, who put his second in command, President Bob Iger, in charge of the crucial negotiations.

The reason is simple: Among the “tween” set -- children ages 9 to 14 -- Lizzie has been a money machine with her line of books, clothes and music products, generating millions of dollars for the parent company. Last year, Duff recorded a pop single, “I Can’t Wait,” through Walt Disney Records that received heavy play on Radio Disney.

But the 15-year-old actress from Houston was at a crossroads, looking to expand beyond her role as an awkward and lovable middle-schooler that brought her fame on the small and big screens. Despite last-ditch attempts by top Disney executives and Duff’s lawyer to keep her in the corporate family, efforts at a reconciliation failed when the actress’ representatives turned down the company’s offer for a movie sequel and a new TV series aimed at a slightly older crowd.

“Disney’s strong-armed tactics and failure to pay our client a fee commensurate with offers received from other studios and networks caused the breakdown of negotiations with the Duffs,” said Michael R. Fuller, Duff’s attorney. “While the Lizzie McGuire franchise may be over for Disney, Hilary Duff’s career is flourishing.”

The actress is shooting 20th Century Fox’s family movie “Cheaper by the Dozen” and next month begins production on the Warner Bros. film “Cinderella Story.”

Disney executives counter that the Duffs simply overplayed their hand, demanding unrealistic amounts.

“We very much wanted to continue the Lizzie franchise,” said Disney Studios production chief Nina Jacobson, who was involved in the negotiations. “But every deal has its tipping point, the point at which it no longer makes sense. Unfortunately, that’s the point we reached in the Lizzie negotiations, and we ultimately had to say goodbye.”

Industry analysts said that, although it is difficult to calculate the potential financial effect of Duff’s departure, it clearly is a blow to Disney.

“It’s going to show up on the radar screen as a lost opportunity,” said Gale Daikoku, a media analyst with GartnerG2 in San Jose.

Although Disney does not plan on replacing Duff, it will continue to reap the financial rewards of the Lizzie bonanza. The company owns the rights to the reruns, the character and its related merchandise. That includes the Lizzie McGuire apparel line, publishing rights to seven “Lizzie McGuire” titles, with five more to be released this year, and a host of other Lizzie products from socks and sleeping bags to puzzles and interactive games.

So, what happened?

Two weeks before the early May debut of “The Lizzie McGuire Movie,” Iger began negotiating with Duff’s mother, Susan, and the actress’ lawyer for the movie sequel and proposed ABC series, which envisioned Lizzie during her high school years. Duff wanted at least $100,000 an episode, considerably more than the $15,000 per show she was paid for the Disney Channel series, according to sources close to the Duffs. Disney, they said, offered the actress $35,000 an episode, which she rejected as insultingly low.

Frustrated, Iger broke off the talks. He told Jacobson and her boss, Disney Studios Chairman Dick Cook, that they still could pursue a movie sequel but that he was bowing out of day-to-day negotiations.

When the “Lizzie” movie opened May 2 with an impressive $17.4 million in ticket sales, the idea of a sequel gathered momentum.

Although Jacobson would not discuss financial details, she said: “We feel we were generous and we reached to make this happen. We’re only sorry the other side didn’t feel the same way.”

According to sources close to the negotiations, Disney refused to pay Duff the $5 million she was seeking -- an amount her representatives said was on par with what teen actor Frankie Muniz was paid by MGM for an upcoming sequel to “Agent Cody Banks.”

On May 9, Disney put a final offer on the table. For her first “Lizzie” film, Duff received $1 million. This time, sources said, Disney agreed to pay her $4 million as an advance against 4% of the studio’s gross receipts on the film. Disney also agreed to pay Duff a $500,000 bonus if the first movie grossed at least $50 million at the box office, the sources said.

The deal, they said, broke down that same day, a Friday, when Duff’s representatives demanded that the $500,000 bonus be paid regardless of the film’s performance. Disney refused and the talks ended.

As it turned out, by Monday it was evident that the “Lizzie McGuire” movie was not the big hit the studio had hoped. The film’s second-weekend ticket sales plunged nearly 60%. After three weeks in release, “Lizzie McGuire” has grossed $32.3 million and is expected to reach about $40 million. The film will make a healthy profit because it cost just $17 million and is certain to sell millions of videos and DVDs during the winter holidays.

“Lizzie McGuire” has been the Disney Channel’s biggest success since its debut in January 2001.

The series, which airs seven days a week at 7:30 p.m., is one of the cable channel’s highest-rated shows, averaging 2 million viewers an episode -- nearly half of them ages 9 to 14. It also airs Saturday mornings on ABC.

In December, Disney halted production of the series after shooting 65 episodes, a customary number for popular children’s shows. Of those, five have yet to air. They will be shown during the summer, fall and spring.

Disney Channel expects to continue airing reruns for years to come and is contemplating producing an animated “Lizzie” series.

Disney executives say the cable channel still has a stable of other popular shows, including “That’s So Raven,” starring emerging teen idol Raven Simone, formerly of “The Cosby Show.”

None, however, have achieved the same kind of broad appeal as “Lizzie.”

Duff’s lawyer said the actress is “sad about the ‘Lizzie’ fans being disappointed. She wants to know what Disney will tell them when they hear the show is not returning.”

The studio’s production chief, Jacobson, offered an answer: “We’re sad too.”