There must be a logical reason why Disney did such thing, right? Surely, they had no other choice, right? Why else would Disney block the impressive theater building with a cheap-looking hat?
A story began circulating on the Internet. According to this story, Disney had to block the direct view of the Chinese Theatre in 2001 due to legal reasons.
The Sorcerer’s Hat with swirly, starry, vaguely Mouse-ear-like things
There are different versions of the story, but it goes something like this... After the Mann’s Theatres chain, which included the Chinese Theatre, was sold in 2000 to a partnership of Warner Bros. and Paramount Pictures, Disney could no longer use the theater façade as a symbol for Disney-MGM Studios. They had to block the direct view. In one version of the story, Disney lost the rights to use the Chinese Theatre façade, but somehow didn’t have to remove it if they put something in front of it. In another version, Disney had to pay a royalty to the owners of the Chinese Theatre every time it was photographed, so Disney did something to limit the ability of guests to take photos.
It’s an Internet legend—a story that’s repeated over and over, until a lot of people assume it to be true because they’ve seen the explanation so many times.