CNBC
updated 6/30/2006 4:11:42 PM ET 2006-06-30T20:11:42

MICHAEL EISNER:
Well, Bob thank you for joining me here in Los Angeles at Spago (PH). It's kind of odd to me, talking to my successor at the Walt Disney Company but-- and that the company's doing so unbelievably well. I mean, your performance is-- is extraordinary. It's never been as good-- in every division. Is that-- is that not true, or am I-- am I dreaming that?

BOB IGER:
Well, I don't know about-- it's never been as good. But by and large, business is good. The TV network ABC is-- doing extremely well in prime time. We've had-- a really good year at the parks, helped by the 50th anniversary celebration. Consumer products, mostly in licensing, is strengthening nicely. The studio should have a great summer with Cars and Pirates, although their last year has been somewhat challenged. And our-- other media networks, of course ESPN has tremendous momentum. And-- the Disney Channels domestically, around the world, all doing well. So it's a good time for the company.

MICHAEL EISNER:
you have been more than-- than I was at Disney, and more than we were together at Disney, really addressing-- the future. And how Disney and how its products and how all the-- en-- whole enter-- entertainment industry can adapt to the digital world. Are you convinced that you've got it? That-- that your I-Pod deal with-- with Apple and those kinds of things are-- are gonna happen? Or-- or is this just a step-- stopgap measure?

BOB IGER:
Well, I'm convinced that-- we have to make sure that our-- creative output-- reaches as many people as possible, no matter where they are, no matter how they're consuming it. One of the things that you know is-- forms the essence of the company-- or what forms the essence of the company is creativity. And-- I recently read something very interesting. In 1956, Walt Disney was asked to put in a time capsule in the Colgate Palmolive building in natural a projection about what the world of entertainment would look like 50 years hence, in 2006. So here we are in 2006. And what he said was that-- no matter what was going on in the world he was convinced that people would want to be amused, entertained, and have the ability to relax. And in effect, seek solace from the daily grind, the daily tasks, their daily frets. And so I fundamentally believe that by investing in creativity and giving people, in effect, the ability to be amused and relaxed and entertained is the right approach for the company. Then we have to make sure that no matter what the-- mechanism for putting our product in front of people, that we're there. And I'm-- I'm amazed at the music industry (NOISE) from 2000 to 2003 lost 20-some-odd percent of their total revenue. And didn't seem to really react (NOISE) to it. I don't want that to happen to the Walt Disney Company. I believe what-- what in effect happened is they failed to realize that they weren't delivering the value that they had to. And they weren't reaching people the way people wanted to be reached. And so all of these steps that we've taken, whether it's the deal that we made with Apple and I-Pod which has been very successful, or what we increasingly announced in ABC.com to download shows, are steps in the direction of putting our content in front of as many people as possible. Keeping the customer first. Because in fairness, technology has shifted the authority from the creator and the distributor to the consumer. And as a creator, we've gotta keep that in mind all the time.

MICHAEL EISNER:
You've made a deal, which I was never able to get done, with-- with-- Steve Jobs on Pixar. And you made it because you felt that animation was the key to the future. I assume that's why you made it, 'cause it was expensive, right?

BOB IGER:
Yeah. It's probably the being thing that we've done-- since you left the company. And-- I think it, long term, should prove to be the most important. And-- what I want to say about that is that-- I talked earlier about creativity and how important it is for the company to succeed from a creative perspective. And as you know, animation creates incredible value for the company. You experienced it at the highest level in your-- Little Mermaid-- beginning with Little Mermaid, which is the first big feature animated film that was done in your tenure, all the way through-- certainly Lion King and movies beyond that. Lion King was probably the real high in many respects. And you know that the value that can be created from those films is enormous. And lasts not just our lifetime but for lifetimes. We last year reissued the DVD of Cinderella which came out in 1950, so a 55-year-old movie. And it sold I think over ten million DVDs worldwide. And-- so I-- I felt, in looking at the company and its future, that it was incredibly important for animation to be successful. Probably more so than any of our other businesses. Because, again, that value. And I felt -- one of the things that I-- I learned from-- from-- you and Tom Murphy and others is to know the edge of your own competency. And I felt that we had talent in animation. But we also needed great leadership. I didn't think I could provide that leadership-- in animation. And I believed strongly that the people at Pixar could. Plus they also had tremendous talent. And so-- while it was, you know, fully valued-- maybe that's a euphemism-- I thought long term for the shareholders of the Walt Disney Company-- it was the right thing to do.

MICHAEL EISNER:
I-- by the way, I don't disagree with that. Everybody thinks I had a strained relationship with Steve Jobs. I-- quite the opposite. I thought Steve Jobs was-- is and-- one of the creative visionaries. I made the original Pixar deal, I made the second Pixar deal. My issue with Steve Jobs was only about money. And in the end of the day-- if you spend a lot of money and you get quality, it probably will work out. There are occasions when you spend a lot of money and the quality starts to evaporate that it doesn't work out. So it is a big bet. You're not betting the company, for sure. But it is a big bet--

BOB IGER:
Yes.

MICHAEL EISNER:
--and you're betting it in the most important part of the Walt Disney Company. And so one last area, which is the threat to the industry. There are two that are happening now that are quite unique. One is the ubiquitous distribution through digital. Yeoh, YouTube, Google Video-- peer-to-peer instantaneous, some peer-to-peer instantaneous distribution that could threaten the-- the basic networks, while it allows users to create their own video. Or it could enhance the basic networks. And then second issue is the windowing of product. Does a movie that's been made for a motion picture theatre go at the same time into your video store or in your download? And I know you and-- and Disney are-- are leading kind of experimentation in these areas. Not necessarily maybe having a major commitment, but you're at least thinking about it. Is that correct?

BOB IGER:
It is. I happen to believe that, again-- we have to put the consumer first. And that technology is putting in the hands of the consumer a lot more power. And they're gonna demand access to this content-- much quicker than the rules that we have in place allow. I also believe the movie industry is I think the one we should focus on 'cause that's been the most controversial from a windows perspective. Most of the business that's done in terms of box office for a movie is done in the first month of its existence. And yet we have this three and a half month, roughly, window or protective layer of sorts between when the movie comes out in the theatres and when it ultimately is-- marketed-- or is-- exploited in the DVD. The DVD window is incredibly important. As an industry, we should be working very, very hard to protect value there because-- there's so much value to be protected. And I actually believe that we'd be-- doing our customers a favor, and doing ourselves a favor, if we made the DVD available sooner. The reason I say that we'd be doing ourselves a favor is, one, I think it's the right thing to do to help combat piracy. The more product you put into a marketplace legitimately on a well timed, well priced basis, the better off you'll be in combating piracy. I also believe that we'll be able to spend less in marketing because there'll be a halo effect when it's out in the movies. We-- in effect now by waiting, we have a complete (NOISE) new launch of the DVD product from the movie and that costs a significant amount of money. So I just think we'd be better off as an industry, and I don't think we'd be destroying value for the theatre owners. Actually, I-- I believe strongly in-- movies being released in theatres. The big screen experience that you see with many other people, kind of a-- a social-- gathering of sorts, which I think's still important for people to experience. So I'm not looking in any way to eliminate that.

MICHAEL EISNER:
I was the CEO for a long time of Disney and-- we worked together for ten years, and it was obviously clear to me and-- and everybody working inside the company that-- that you were the natural successor. But because of governance and the time we were living in and-- and-- all the Enrons of the world, even though Disney had never had an impropriety in its life, that we had to go through the process to pick the next CEO. Which must have been for you a nightmare. In that it was clear you were gonna get it in the end, at least it was to me. But to you, you had to sit there and watch the board interview in front of you all these candidates that weren't as qualified as you are. I mean, you never said anything to me like, "Who the hell are these people?" But you must have felt that. No?

BOB IGER:
Well-- it was-- it was not clear to me what the outcome would be. But-- it worked out alright for me. And I'm thoroughly appreciative of the opportunity. It's a great company.

MICHAEL EISNER:
What you did though is something that in a million years I couldn't do. You kept your cool. For a year. I would have told everybody off. I would have been-- of course I wouldn't have gotten the job either. But you sat there and you allowed the newspapers to speculate on all these people that could do it better than me and better than you.

BOB IGER:
There were moments when it was-- it was-- challenging for me. But I've spent over 30 years in business-- trying to use patience as-- often as I could. And I guess it took a fair amount. But it's something I wanted a lot. I'm not sure that I had-- any real choice other than walking away. Had I behaved differently, I probably wouldn't have gotten it.

MICHAEL EISNER:
Well, I think that-- the board made the right decision. I think the Walt Disney Company has never been in better shape. I think it's under the stewardship of an excellent CEO. Knowing that your schedule for the rest of this day is meeting, meeting, meeting till the end of the day-- I'm kind of relieved that it's you rather than me, (LAUGH) having done that for a long time.

BOB IGER:
I was gonna ask you that question.

MICHAEL EISNER:
No, I'm relieved. I-- I like watching what's going on. I think the board should-- you are the-- the president-- and CEO; the board should make you the chairman and CEO as soon as possible in my opinion. (LAUGH) And-- I thank you for coming. And I-- I wish you-- one, I love the Disney Company, two, I'm an investor in the Disney Company. I wish you continued success. So, thank you.

BOB IGER:
Well, that's-- that's a--

MICHAEL EISNER:
What-- oh, wait a sec, wait a sec.

BOB IGER:
I see you are wearing that…

MICHAEL EISNER:
Yes, I wore a Mickey Mouse tie, my last Mickey Mouse tie, which I decided symbolically I-- it's my favorite one too. So I'm giving--

BOB IGER:
That look-- that's looks--

MICHAEL EISNER:
--you my Mickey Mouse tie. And that's really--

BOB IGER:
Thank you.

MICHAEL EISNER:
--I'm now really out of Disney. (LAUGHTER) I-- that's it, my tie is gone. I still have my Mickey Mouse underwear, but that's not here. (LAUGH) Thank you--

BOB IGER:
Boxers--

MICHAEL EISNER:
--Bob.

BOB IGER:
--or briefs?

MICHAEL EISNER:
Both. (LAUGH)

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