You have to start one step before this: Are there convincing arguments that this is a failure at all? Children's entertainment isn't an exclusionary arena, nothing about the number of options Disney provides prevents someone else from putting out option N+1. It was true on cable TV, and it's infinitely more true in the streaming world of today. In such a market, Disney's dominance need not mean anything more than being really good at servicing this market.

Copyright is really an orthogonal concern here. Yes, it certainly endows Disney with some rents that they shouldn't have, but their dominance is based on a continuous supply of new content, not derivatives of Mickey Mouse.