There have been plenty of important numbers in Disney history. 3 (little
pigs). 7 (dwarfs). 101 (Dalmatians). And now 43.
Few figures will prove as significant in company lore as the 43 percent
of Disney shares that last week were voted against Michael Eisner’s reelection
to the board. (A confirmed final count will be announced later this week,
although a Disney spokeswoman expected the preliminary numbers to be
“extremely close.”)
The board’s only official reaction was to “accept” Eisner’s
“resignation” as chairman, while he continued as Chief Executive
Officer. Although the separation of duties will appease several large
institutional investors, it won’t be enough to pacify his most vocal critics.
The board may have bought itself a little time, but clearly it looks like
Eisner’s days are numbered.
Let me count the ways…
24 (The percentage of shares withheld against new chairman George Mitchell.)
Despite faring markedly better than Eisner, Mitchell still received his
own eye-opening stamp of disapproval. For that, he earned a promotion.
Not so coincidentally, Mitchell is one of Eisner’s closest allies and
biggest boosters on the board.
There’s only one way Mitchell can now be seen as attentive to the shareholders.
That’s if he put friendship aside and kept Eisner on as CEO temporarily,
to maintain stability in the face of the Comcast bid, and took on the
chairmanship so the board would be free to spend the next few months recruiting
a permanent successor.
No matter. From here on, Mitchell has to be careful not looking too much
like Eisner’s cheerleader.
51 (The percentage of shares actually voted that went against Eisner.)
When the preliminary vote was announced, I expected Eisner to spin the
results by emphasizing how many more shares supported him than went against
him. But as it turned out, the only way Eisner could claim a majority
of support was if he counted the roughly one-seventh of shares that were
not cast as votes of confidence. As far as those who actually cared enough
to vote, a majority want Eisner gone.
24.08 (The per-share price of Disney stock the day before Comcast’s
bid inflated it by nearly $4 a share.)
Assuming Disney continues to ignore Comcast’s overtures, Eisner must
find a way to keep the stock above this level. The more Disney’s stock
price slips, the better Comcast’s offer appears, and the greater the pressure
becomes that Eisner be canned or the company be sold (after which Eisner
will be canned).
4 (The standing of ABC among television networks.)
From the day the company acquired it, Eisner’s albatross has been a drag
on earnings. Each year, its few modest hits are overshadowed by a pack
of dogs, and the ratings miraculously find a way to sink even further.
Yet this fall, Disney may have an opportunity unlike any it has had since
acquiring Capital Cities/ABC in 1995. With competing networks losing some
of their long-running, top-rated series, such as Friends, Frasier
and possibly Everybody Loves Raymond, viewers may be more willing
to give a new show a peek. ABC must fill the gap. It’s now or never.
Judging from ABC’s track record under Disney, it’s never. My advice:
unload the networks on Comcast, whose bid was partially motivated to control
costs of airing ESPN.
50 (The anniversary of Disneyland, to be celebrated in 2005.)
Disneyland’s Golden Anniversary should be arguably the biggest,
most marketing-friendly milestone in the history of the theme park industry.
Ideally, the promotion should begin this fall, last into 2006, and showcase
the original Kingdom at its brightest and shiniest, playing up both the
new and the nostalgic. During the rest of his contract, Eisner has no
greater opportunity to generate favorable press, fistfuls of cash, and
smiling, forgiving fans.
Unfortunately, decayed infrastructure and delayed decision-making may
leave us all dismayed. Eisner’s become conditioned to viciously control
costs, but if Disneyland’s budgets and creativity are cut too short, the
CEO will pay the price.
30 (The percentage growth in earnings promised by Eisner for 2004.)
Over the last few years, Eisner has made some daring projections that
have failed to materialize. But this is one promise no one will forget
and will certainly be a topic of conversation at next year’s shareholders
meeting.
12 (Months until the next annual shareholders meeting.)
The only way Eisner survives past next year’s annual shareholders lynching
is by delivering three things noticeably absent for years:
- Concrete proof that 2004 was an unparalleled financial and creative
success; - Believable promises that the following year will be even better, based
on current trends and exciting projects in the pipeline, - And an appearance that generates cheers not jeers. Now that he’s been
stripped of some of his power, Eisner can no longer survive as the Hated
Tyrant.
Take a deep breath, the Third Act has begun.
