Video: Eisner relinquishes keys to the kingdom

By Jerry Cobb Reporter
updated 9/29/2005 8:39:34 PM ET 2005-09-30T00:39:34

In two decades he transformed a struggling animation studio and its pair of amusement parks into a global entertainment powerhouse with 11 theme parks, a dozen television channels, a top-rated broadcast network, one of Hollywood’s biggest film studios and more than $30 billion in annual revenues.

In fact, Michael Eisner’s record at Disney will be hard to beat says Laura Martin, an analyst with Soleil-Media Metrics: “That is a feat almost unprecedented in corporate America over a 20-year period,” she said.

In many ways he was a pioneer. It was Eisner who perfected synergy in Hollywood, taking creative content from one division in a company and exploiting it across multiple business lines notes Martin.

“I think Michael Eisner did the best job of any of his competitors in the industry of really creating a very tightly knit, integrated entertainment conglomerate around that strong animation position that he had,” Martin said.

But things changed dramatically for Eisner and Disney in 1994 when his chief lieutenant, company president Frank Wells, died unexpectedly

Under pressure to find a new second in command, Eisner hired his friend, Hollywood super agent Michael Ovitz, who wound up leaving the company after just 14 months on the job with a $140 million severance package. Angry shareholders sued Eisner and the company board for negligence.

“Some of that difficulty and turmoil was obviously self-inflicted by the personality traits that Mr. Eisner brought to the job,” said Hal Vogel, president of investment firm Vogel Capital Management.

Eisner was also blamed for a string of bad business moves, including a billion-dollar bath on failed Internet investments and the disastrous acquisition of the Fox Family Channel.

Eisner clashed with Pixar chief Steve Jobs, who decided not to renew a lucrative partnership with Disney. He also fought with Disney studio chief Jeffrey Katzenberg, who left and launched DreamWorks — now a major Disney competitor in the red-hot animation field.

But Eisner’s biggest mistake was taking on Walt Disney’s nephew Roy Disney, who launched a shareholder revolt after he was forced off the company board in 2003.

At the company’s annual meeting a year later, Disney dissidents handed Eisner a resounding vote of no confidence, prompting his resignation as chairman and his ultimate departure from the chief executive suite.

“[Eisner] was a colorful and charismatic figure, and there aren’t as many of those these days,” said James Bates of the Los Angeles Times. “And it’s kind of that personality, that charisma that helped to make the company what it is today.”

Incoming Disney CEO Bob Iger has already put his own stamp on Disney — he recently made peace with Roy Disney, reached out to Steve Jobs and decentralized the company’s corporate structure. But Eisner says he’ll keep his hand in the entertainment business, and he’ll keep his seat on Disney’s board until next year’s annual meeting.

© 2012 CNBC, Inc. All Rights Reserved


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