A drag show? Gay rights? Body image issues? Hardly the stuff of Disney animation, but 30 years ago, Disney’s The Little Mermaid tackled these topics and made a courageous statement about identity in Reagan-era America. Moreover, the movie not only saved the company from almost certain death, but allowed Disney to become the international corporate juggernaut we know today.

Without the brave storytellers and desperate animators of The Little Mermaid , moviegoers would have missed out on the new classics of Beauty and the Beast (1991), Aladdin (1992), and The Lion King (1994). And without the profits from those films, Disney would not have had the capital to build new parks and resorts , invest in new media ventures , or expand its urban planning program , let alone gobble up Pixar, Marvel, Fox, the Star Wars universe, National Geographic , ESPN, A&E and Hulu—moves entirely unthinkable back in the 1980s, when the corporation was in its darkest hour.

When Walt Disney died suddenly in 1966, his company was left aimless. “The creative atmosphere for which the Company has so long been famous and on which it prides itself has, in my opinion, become stagnant,” wrote Walt’s nephew Roy E. Disney in his 1977 resignation letter from Walt Disney Productions (though he retained his seat on the board). “Uncle Walt” had personally overseen almost every project, and without his direction, production slowed and revenue declined. The animation studio kept cranking out films, but they were expensive to make, spent years in production, and lacked the inspiration of earlier “classics.” Features like The Aristocats (1970), Robin Hood (1973) and Pete’s Dragon (1977) failed at the box office and seemed out of place in a new era of gritty Hollywood film noir. Movies were the lifeblood of Disney, and the company was suffering. To make matters worse, Walt Disney World opened in central Florida in 1971 (followed by EPCOT in 1982), costing a fortune but yielding little profit.

By 1984, stock prices sagged, wages were cut, layoffs ensued, and corporate raiders circled. To prevent a hostile takeover, Disney’s Board of Directors, led by Roy E. Disney, brought in a brash young executive from ABC and Paramount: Michael Eisner. Though he had no experience with animation and no personal connection to Disney (according to journalist James Stewart’s searing exposé Disney War, Eisner had not seen a Disney film until adulthood and had never even visited Disneyland), the new CEO was confident he could save the company by cutting costs, eliminating Walt-era traditions, and focusing on television and live-action films. “Eisner was fanatical at keeping costs low to earn a profit,” wrote Stewart.

Disney traditionalists were aghast, but the plan seemed to work. With Eisner at the helm, the studio produced inexpensive hits like Three Men and a Baby (1987), as well as several popular tv shows, including “The Golden Girls” (1985). Eisner also realized the untapped profit potential of the Disney parks, so he authorized new top-tier attractions (like Splash Mountain), created new luxury hotels, and opened Disney-MGM Studios (now Disney’s Hollywood Studios) and Typhoon Lagoon in 1989.

The cash flow returned, and the company became financially viable again. Eisner’s achievement seemed to prove that Disney no longer needed animation. (1989’s Who Framed Roger Rabbit?, though featuring classic animated characters, was truly more of a live-action film.) Sure, Disney animators produced a couple of modest successes, such as The Great Mouse Detective (1986) and Oliver & Co (1988), but they were far too expensive for the cost-conscious Eisner. Animation, according to the CEO, simply wasn’t worth the money, time, and risk. Thus, he put animation on notice: Find a way to be quick and profitable, or you’re dead. To emphasize the point, Stewart reported, Eisner “banished” animators from their beloved historic Burbank studio (where Walt had once roamed the halls) to a warehouse in Glendale on the other side of Los Angeles. “This might be the beginning of the end,” lamented animator Andreas Deja in a bonus “making of” feature on The Little Mermaid DVD . “The writing is on the wall, we’ve got to prove ourselves,” added animator Glen Keane.

It was time for a Hail Mary pass. Animators knew they had to do something dramatically different to save Walt’s studio from the suits, so they turned to Broadway’s most innovative team: writer-producer Howard Ashman and lyricist Alan Menken. Fresh off the success of their smash hit Little Shop of Horrors (with its satirical songs and gruesome humor), Ashman and Menken were skeptical about working for Disney, which to many young artists was a conservative old company stuck in the 1950s, symbolic of an intolerant past rather than an expansive future. Nevertheless, the duo agreed to sign on as long as they had complete artistic control and the freedom to explore taboo topics.

At the suggestion of director Ron Clements, studio chiefs decided to pursue the Hans Christian Andersen tale “The Little Mermaid,” except with a happy ending and a central villain. (In the original story, the mermaid does not get the prince. Instead, she faces a variety of antagonists and ends up committing suicide.) Ashman got right to work, transforming the depressing 19th-century yarn into a dynamic Broadway spectacle.

In classic Disney animated features of old, plot was advanced through dialogue, and songs were incidental. For instance, in Snow White and the Seven Dwarves, the song “Whistle While you Work” does nothing to move the plot forward. Ashman and Menken approached the film’s book as they would a Broadway musical, using songs to impart critical plot points and character development. Music tells the audience everything they need to know about Ariel: The song “Part of Your World,” for instance, is a classic example of the “I Want” trope of American musical theater. “They approached it like a Broadway musical,” recalled Jodi Benson, the voice of Ariel, in the DVD documentary. “It is something totally different. The characters actually run out of words, can’t express themselves anymore, and it has to come out in song.”

Jeffrey Katzenberg, former chairman of the studio, added, “I don’t know where the knowledge came from, [and] I don’t know how it came to be, but man, [Ashman] just understood it.”

Ashman, like young Walt Disney, oversaw every aspect of the creative process. He invented the characters, defined their personalities, and coached the voice actors on their performances. “He was brilliant,” remembered Pat Carroll (the voice of Ursula), in the documentary, of the time when Ashman enacted “Poor Unfortunate Souls.” “I watched every body move of his, I watched everything, I watched his face, I watched his hands, I ate him up!”

A gay man in 1980s America, Ashman had personal experience with the culture wars over “family values” and gay rights. The “Reagan Revolution” marked the arrival of the long-brewing marriage of the Republican Party with conservative Christians and included a platform that was unfriendly to gay rights, to say the least. President Reagan ignored the AIDS epidemic that swept the nation (refusing to appropriate any federal funds for research or treatment), and Republicans in general claimed the “gay plague” was God’s punishment for homosexuality. Ashman saw the film as an opportunity to advance a social message through the medium of “family entertainment.” The last thing Americans would expect from Disney was a critique of patriarchy, but sure enough, Ashman’s The Little Mermaid is a gutsy film about gender and identity—a far cry from the staid Disney catalog.

The central story of The Little Mermaid is, of course, 16-year-old Ariel’s identity crisis. She feels constrained by her patriarchal mer-society and senses she doesn’t belong. She yearns for another world, apart from her own, where she can be free from the limits of her rigid culture and conservative family. Her body is under the water, but her heart and mind are on land with people. She leads a double life. She is, essentially, “in the closet” (as symbolized by her “cavern”—or closet—of human artifacts, where the character-building song “Part of Your World” takes place).

When Ariel ventures to tell her friends and family about her secret identity, they chastise her and tell her she must conform. She must meet her father’s expectations, sing on demand, perform for the public and give up all hopes of a different life. Her father, King Triton, even has her followed by a court official. In her misery, Ariel flees to the sea witch Ursula, the only strong female in the entire film and thus Ariel’s only female role model. At this point, the movie becomes truly subversive cinema.

Conceived by Ashman, Ursula is based on the famous cross-dressing performer Divine, who was associated with the openly gay filmmaker John Waters. As scholar Laura Sells explained in a 1995 anthology of essays , Ursula’s “Poor Unfortunate Souls” song is essentially a drag show instructing the naive mermaid on how to attract Prince Eric (who is conspicuously uninterested in Ariel and most content at sea with his all-male crew and manservant Grimsby). “In Ursula’s drag scene,” Sells wrote, “Ariel learns that gender is performance; Ursula doesn’t simply symbolize woman, she performs woman.”

While teaching young Ariel how to “get your man,” Ursula applies makeup, exaggerates her hips and shoulders, and accessorizes (her eel companions, Flotsam and Jetsam, are gender neutral)—all standard tropes of drag. “And don’t underestimate the importance of body language!,” sings Ursula with delicious sarcasm. The overall lesson: Being a woman in a man’s world is all about putting on a show. You are in control; you control the show. Sells added, “Ariel learns gender, not as a natural category, but as a performed construct.” It’s a powerful message for young girls, one deeply threatening to the King Tritons (and Ronald Reagans) of the world.

In short, Ursula represents feminism, the fluidity of gender, and young Ariel’s empowerment. Ariel can be anything she wants, yet she chooses the role of young bride and human conformity. To ensure Ariel’s transition to domesticity, the men of her life murder Ursula with a “conveniently phallic” symbol, according to Patrick D. Murphy: or, as Sells puts it, “the ritual slaughtering of the archetypal evil feminine character.” Either way, the movie implicitly offers a dark and disturbing message about the limits of American society in the late 1980s.

Nevertheless, audiences and critics adored the film, and the Hail Mary paid off, grossing a whopping-for-the-time $222 million worldwide won two Academy Awards. Los Angeles Times reviewer Michael Wilmington called The Little Mermaid “ a big leap ” over previous animated features, and Janet Maslin of the New York Times hailed it as “ the best animated Disney film in at least 30 years ,” destined for “immortality.” Still, most reviewers failed to observe the film’s culturally subversive messages, even as they recognized what made Ariel unique. Roger Ebert, to his credit, described Ariel as a “a fully realized female character who thinks and acts independently.”

One of the film’s few negative reviewers, Hal Hinson of the Washington Post —he described the movie as “only passable” and “unspectactular” — at least lauded Disney for delivering “a heroine who has some sense of what she wants and the resources to go after it, even if she looks like Barbara Eden on ‘I Dream of Jeannie.’” (Wilmington, while catching the Divine allusion, couldn’t help but objectify Ariel’s appearance, describing her as “a sexy little honey-bunch with a double-scallop-shell bra and a mane of red hair tossed in tumble-out-of-bed Southern California salon style.”) A 1989 screening of the film at the University of Southern California likewise yielded questions about feminist interpretations, but nothing about identity, gender, or gay rights.

Nevertheless, Disney animation was saved. Howard Ashman had proven that Disney films could be far more than sleeping princesses and pixies. Eisner grudgingly accepted the victory and green-lit a new project, Beauty and the Beast , which followed the same Broadway formula and was designed by the Mermaid team of Ashman, Menken, and Clements. Tragically, Ashman died of AIDS in March 1991, just months before the film’s November premiere.

Ashman never saw how his bold creative vision ushered in a new era of Disney prosperity. Profits from The Little Mermaid , Beauty and the Beast , and Aladdin permitted energetic expansion of the Disney corporation into almost every facet of American life. “Disney leads the world in the production and distribution of popular culture,” observed media studies professor Lee Artz in a 2005 essay . “None challenge Disney as the primary purveyor of entertainment nor approach its perennial popularity and box-office success in animated feature films. Indeed, animation is central to Disney’s economic vitality and cultural influence.”

“Disney is beyond doubt an exemplary model of the new face of corporate power at the beginning of the twenty-first century,” wrote leading Disney critical Henry A. Giroux in 2010. The money from The Lion King alone paved the way for a fourth park in central Florida: Disney’s Animal Kingdom. And the revenue from all these new ventures allowed Disney to corner global media and merchandising markets, making the company one of the most powerful “megacorporations” in the world.

Not too shabby for a courageous Broadway visionary and a team of desperate animators who were willing to push social boundaries, advocating a message of gender fluidity and female empowerment that wouldn’t become widely acceptable until much later.