The Disneyland ride never happened (it would eventually become part of Disneyland Paris decades later, this time featuring characters from "Return to Oz" – more on that in a minute) but in 1965 Disney started releasing a series of records that combined story and song to tell the story of Oz. A year after the first record debuted, Walt Disney had died, but the company, still maintaining a semblance of creative togetherness, kept releasing new records (one of them, "The Cowardly Lion of Oz," supposedly features a number of songs meant for "The Rainbow Road to Oz"). This was a period when every executive or creative type would simply ask themselves "What would Walt do?" and wish for the best.
After Disney's death, there really wasn't an 'Oz' cheerleader at the company, and in the subsequent decades, the value of the property started to depreciate, even while the original was being vaulted to the status of one of the greatest movies of all time. Time passed, and for a very long while it looked like the story of 'Oz' and Disney was over for good. Until, of course, in 1980, an exciting new project rumbled to life. 'Oz' was ready to return.
"Return to Oz"
In 1980, a new project was greenlit at the studio. Simply dubbed "Oz," it was to be written and directed by Walter Murch, a highly regarded editor who had worked with George Lucas and Francis Ford Coppola (he had just won an Oscar for "Apocalypse Now"). Supposedly the idea came out of a conversation with Walt Disney Pictures production chief Tom Wilhite and Murch, who were just gabbing about potential projects and ideas. When Murch suggested another 'Oz' entry, it was music to Wilhite's ears, since Disney's ownership of the 'Oz' titles expired in five short years and if they didn't put anything into production, they would lose their exclusivity to the rights.
The production was okayed in 1982 (after initial conversations suggested a story could be fashioned without the Dorothy character, Murch's eventual screenplay did include her) and extensive pre-production work was done, largely under the supervision of Norman Reynolds, who had handled similar duties on comparably massive "Raiders of the Lost Ark" and "The Empire Strikes Back" (he was an art director on the first "Star Wars"). New characters were introduced alongside old favorites, like a more robotic (he would probably be described as "steampunk" today) tin man character in the form of Tik-Tok and a very scarecrow-ish Pumpkin Head character, who would be a wholly created using advanced puppet technology. The Scarecrow, redesigned, would also return.
At one point during the shoot -- as executives started realizing the darkly hued nature of the screenplay which, while more faithful to the original source material (in particular two novels: "The Marvelous Land of Oz" and "Ozma of Oz") was less accessible from a commercial standpoint -- they tried to oust Murch. Coppola and Lucas assembled to speak on Murch's behalf and keep him in the director's chair. When the film was finally released in the summer of 1985, it drew a number of supporters but the critical community at large was turned off by its darkness (both Dave Kehr and Janet Maslin used the word "bleak" in their respective reviews) and audiences were similarly unresponsive. It earned less than half of its nearly $30 million budget, was nominated only for a single Oscar, for Best Visual Effects, but lost to "Cocoon." By the time the movie came out, Disney management had changed for a third time and the new bosses (led by some guy named Michael Eisner) wanted nothing more than to sweep "Return to Oz" under the yellow brick rug.