Brain Food: Behind the spin - Walt Disney


The House of Mouse has got its knickers in a twist. The theme park to sports cable TV network group has had an annus horribilis involving public criticism of long-time chief exec Michael Eisner and his ongoing spats with Disney's two cinematic jewels, animation studio Pixar and film producer Miramax. A hostile takeover attempt by cable rival Comcast and heavy losses at Euro Disney killed the sparkle at the Magical Kingdom. Eisner's promise to step down in two years' time has created additional uncertainty, with former board members Roy Disney and Stanley Gold demanding that to protect shareholders' interests he should go pronto.


Asked recently about the chances of his leaving before 2006, Eisner, for years the world's highest-paid chief exec, replied: 'There's no chance of it in my mind today.' To accusations of micromanaging, he counters: 'An executive who demands excellence is a CEO I would invest behind.' And he shrugs off criticism of his handling of Pixar's Steve Jobs and Miramax's Harvey Weinstein: 'Whether or not Pixar and Disney come closer together ... or whether or not Miramax stays with the company ... is simply an issue of value to our shareholders. It has nothing to do at all with personalities. Never has.'


Eisner's intractability after 22 years in the hotseat is at the heart of Disney's problems. His spectacular early achievements have since been tarnished by his autocratic style, which won him a 45% no-confidence vote at this year's annual meeting. Eisner's determination to cling on is making it hard for the board to find a successor. 'His continued presence,' said one disaffected investor, 'would prevent the company from making the clean break that is needed to restore investor confidence.'


It's impossible to decouple the fate of Disney from that of Eisner. The sooner he's out, say critics, the more chance the company has of getting back on track. Disney execs will find encouragement in August's third-quarter results, showing a 20% rise in profits, although Euro Disney is struggling and the company had to close its own animation studio after costly flops. What does the future hold? In September, president Bob Iger said a new deal with Pixar was 'unlikely', but revealed that Disney had been approached to buy ITV and some BBC assets. Disney plans to expand into Asia, he said, including opening a new resort in Hong Kong. Is Iger the mouse that will get the cheese?

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