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Making New Mileys: Disney's Teen-Star Factory by Belinda Luscombe for Time Magazine

Bridgit Mendler is a willowy, blond teen with a sweet singing voice and decent comic timing. She's also the show-biz equivalent of the next iPhone — a young Disney star-in-waiting. Mendler, 16, is getting the full Disney Channel rollout. Introduced with recurring guest spots on two of its hit shows, Jonas and Wizards of Waverly Place, she will star in her own series, Good Luck Charlie, in 2010. "I've been told to brace myself," says Mendler. "If we have the success I hope we have with the show, everything will change."

Mendler is following a path to fame the channel has mapped over the past three years as it has launched serial stars into orbit: the supernova Miley Cyrus in 2006, Selena Gomez in 2007, the Jonas Brothers in 2008 and Demi Lovato this year.

Each of these youngsters was given a TV show — the so-called zitcom — followed usually by a recording contract with Disney-owned Hollywood Records, songs in heavy rotation on Radio Disney and on Disney-movie sound tracks, a concert tour with Disney-owned Buena Vista Concerts and tie-in merchandise throughout the Disney stores. Miley & Co. are like modern Mouseketeers, but instead of M-I-C-K-E-Y, they spell C-A-S-H.

The Disney Teen Machine has become a finely tuned profit pump in an industry rife with unpredictability. The result is that Disney's cable networks represent the one slightly solid piece of earth among the entertainment giant's sinking properties. ABC is struggling, sales are way down at Disney's theme parks and stores, most of its non-Pixar movies have been wan performers, and revenue from DVDs is shriveling. The cable networks, which in addition to the Disney Channel include ESPN, ABC Family, Soapnet and Disney XD, brought in 26% of the company's $26.3 billion in revenue and 58% of its $4.8 billion in operating income during the nine months ending June 27. In the past three years, they have represented 80% of Disney's revenue growth.

ESPN does rule sports with ever higher-priced program rights, but as an incubator, Disney Channel is more important, a fact amply displayed by its High School Musical franchise. The channel made the original TV movie for about $5 million. It took off, leading to a sequel, a sound-track album, a motion picture, books and video games. "So far, the franchise has generated $150 million to $200 million in operating income," estimates Barclays Capital analyst Anthony DiClemente. If the company leverages all aspects of the brand, he says, the teen franchises are a formidable force.

Disney's much admired ability to maximize profit from every pop-culture nugget it creates — this is a company that made billions of dollars from movies based on Pirates of the Caribbean, a cheesy 10-minute boat ride — works only if it continues to create appealing characters and stories that it can cross-promote. When Gomez released her new album, Kiss & Tell, on Sept. 29, she celebrated with an appearance on ABC's Dancing with the Stars. She has a song that plays during the end credits of the first Tinkerbell DVD. While on hiatus from her show, Wizards of Waverly Place, she made a TV movie with Lovato, Princess Protection Program, that got decent ratings. Mike Tirico just can't pull off that stuff.

That's why the Disney Channel's ability to mint teen stars is so central to the company's future and why Rich Ross, former head of the Disney Channel, was recently tapped to replace longtime studio chief Dick Cook. In many ways, Ross ran his outfit like an old-school movie studio. The channel has always found young stars. Shia LaBeouf got his first break there, as did Hilary Duff and — way back in 1993 — Britney Spears. But only in the past few years has Disney mastered how to hang on to them, to keep them from getting away like LaBeouf, tiring of Disney like Duff or being churned into tabloid chum like Spears. And only since High School Musical and Hannah Montana has it learned how to supersize them.

"As we've gotten smarter about how to build talent, we've created more opportunities for them within the company," says Gary Marsh, president of entertainment for Disney Channels Worldwide, who remembers walking Duff over to the music division and introducing her to Bob Cavallo, head of Hollywood Records. "For many people, TV is an endgame. For us, TV has simply become a launchpad to opportunities elsewhere in the company. By creating these opportunities, [we make sure] the talent is more interested in engaging longer with the company."

As launchpads go, a half-hour comedy is pretty economical. By the end of the first season of Hannah Montana, Cyrus was a star. Assuming the company spent about $600,000 for each of the 26 episodes, it cost Disney about $15.6 million to set her up. Three seasons, more than 8 million CDs, $225 million worth of movie tickets, two concert tours, a best-selling memoir and 15 million Hannah Montanabooks later, says Disney, she's worth billions of dollars to the company. Of course, the channel reduced its risk considerably by casting the girl it wanted to develop into a famous pop singer in — um — a show about a girl who's a famous pop singer. Jonas, starring three real-life musical brothers, is about brothers who are rock stars. On Lovato's show, Sonny with a Chance, she's a Midwestern girl who gets to be on a TV show.

If that seems like a no-lose formula, it's worth remembering that one of the biggest entertainment corporations in the U.S. (2008 revenues: $37.8 billion) is relying on teenagers for a major source of revenue. Even worse, on celebrity teenagers. They grow up, change their minds, get less cute, rebel, make choices their fans' parents don't approve of. (Seminaked Vanity Fair shoot, anyone?) They're on Twitter and Facebook. The opportunities for doing something irresponsible are legion.

Disney Channel is taking extraordinary steps to make its modern Mouseketeers' stay at the Mouse House as long — and mutually enriching — as possible. Most recently, this includes instituting a Talent 101 seminar. Young actors whose shows have been filmed but not yet aired are required to attend Talent 101 with a parent. It includes instruction from security experts, media-relations consultants and psychologists. Mendler is one of its first graduates. "We learned how to answer questions from the media and how your family has to be your support," she says. "I was surprised at the amount of security some people recommend — to the degree where you don't even have a mailbox at your home."

Marsh says it's not deliberate, but the company also seems to minimize its exposure by casting the most gosh-darn wholesome teens it can find. The Jonases, Cyrus, Gomez and Lovato wear purity rings and talk about their Christian faith. "I don't know if they find them wearing the rings or if that becomes part of the image," says Frederick Levy, a manager of child actors and the author of the new book Acting in Young Hollywood. He notes that generally, children who are less jaded make better TV stars.

Not every young actor wants to be a cog in the Disney machine. It pays considerably less than the networks do and typically expects to monopolize an actor's time and talent for at least four TV seasons — 14 to 18 years old seems to be the sweet spot. Still, the line of hopefuls shows no sign of dwindling. "Disney's an amazing cross-promoter. You will become a teen star," says Levy. "Then you'll have to work twice as hard to prove you are more."

In fact, Disney's successful moves, along with similar ones by Nickelodeon, which is in the teen-star business too, have created something of a boomlet in the child-talent business. Big agencies such as CAA and William Morris Endeavor now have dedicated youth departments. "What used to happen is that we would find the talent, and there would be a feeding frenzy," says Marsh. "Now that we've shown these are potentially viable clients for them in the long term, talent agencies have become more aggressive in finding their talent before we do." And locating them, he says, is by far the hardest part. When Disney was looking for a young Latina star, Marsh says, he looked at thousands of kids and found one he wanted to pursue: Gomez.

Executives at Disney must know that its streak of luck with fresh faces can't last. For a start, there are not many genuine teen stars out there. Second, even tween girls — Disney Channel's main consumers — can generate ardor for only so many other humans. The company has recently made moves to find story lines and characters elsewhere, paying $4 billion to buy Marvel Entertainment merely to get access to some of its lesser superheroes. (The big ones, like Spider-Man, are already spoken for.) Comic-book characters can't give concerts or go to a meet-and-greet or record songs for Disney end credits. But at least Thor and Captain America won't be caught in compromising situations by a camera phone.

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