Michael Eisner retires today after 21 years at the helm
of the company, the second-longest serving chairman in the history of
the Walt Disney Company (after Walt) and the second-longest serving chief
executive officer in the company’s history (after Roy O. Disney). That
must mean that it’s time for the obligatory look back at his lengthy tenure.
While many Disney fans revile the man for some of the changes that he
spearheaded over the last few years, they will usually acknowledge that
his first ten years on the job were phenomenally productive for the company.
Let’s start back at the beginning.
In early 1984, Saul Steinberg and Irwin Jacobs both took shots at buying
out Disney. Both wanted to break it up and sell off the pieces to the
highest bidders. However, both of them were willing to accept greenmail,
or to be bought out. The Bass family (Perry, and his sons Sid, Lee, Robert
and Edward) were willing to be “white knights,” and had the
money to do so. After some persuasion by Roy Disney, Stanley Gold and
Eisner himself, the Basses agreed to champion the appointment of Michael
Eisner as Chairman and CEO, and Wells as President and Chief Operating
Officer. This displaced Ron Miller, Walt Disney’s son-in-law, who then
left the company completely and focused on Silverado Vineyards (link),
which he and his wife, Diane Disney Miller, had already been running for
three years, and began a long-running rift between the “Walt”
and “Roy” sides of the family.
But for 10 years, things were rosy for the company. Eisner had a number
of successes early in his tenure, including some with projects that had
been begun by Miller, such as Touchstone Pictures and the Disney Channel.
Michael Eisner poses with Mickey Mouse and former ally Roy E. Disney at
the dedication of the “Time Castle” in honor of Disneyland’s
40th birthday in 1995. Photo by Frank Anzalone.
In conjunction with Jeffrey Katzenberg, who followed Eisner from Paramount
Pictures to Disney, Eisner decided to begin releasing Disney classics
on video. This move was extremely controversial and is still debated in
some fan forums, as—while it was a huge benefit—it also had
the effect of removing the demand for the longstanding tradition of Disney
films returning to the big screen every seven years. Of course, with the
DVD market almost overshadowing the theatrical market these days, perhaps
the latter argument loses some of its strength. Yet a counter-argument
might also be made that the move also helped to create the huge home video
market that eventually hurt the theatrical market in the first place.
Eisner and Katzenberg (at Roy Disney’s urging) also helped to launch
a second golden age of Disney animation. The Little Mermaid, Beauty
and the Beast, Aladdin, and The Lion King were all released
in that first decade.
Disney’s live action films also began an upswing. By hiring stars whose
careers had faded despite their talents and putting them in inexpensive
yet well-told stories such as Down and Out in Beverly Hills, Ruthless
People, and Three Men and a Baby, the company made huge profits.
Many debate whether this was the beginning of Disney losing its identity.
Walt Disney had lamented the fact that there were certain types of stories
that he would not be able to tell because he was “Walt Disney.”
By telling these stories under the Touchstone label, the company felt
that it could tell the stories without diluting the Disney brand. The
big question was whether the public at large would agree, and in the early
years, it did.
Disney theme parks were also going strong. Eisner began a hotel construction
boom at Walt Disney World with the Grand Floridian, Caribbean Beach, Yacht
and Beach Clubs and the Swan and Dolphin Resorts, plus the addition of
the Disney-MGM Studios, Typhoon Lagoon and Pleasure Island.
Michael Eisner and Mickey Mouse preside over the opening of Mickey’s Toontown
at Disneyland in 1993. Photo by Frank Anzalone.
But sometimes, Eisner made missteps, as well. Tokyo Disneyland had opened
months before Eisner and Wells arrived. Feeding on the strong opening
of that park, Eisner decided that Europe was the next area that was ripe
for a Disney park. He began the search for a location, and Euro Disneyland
eventually opened in 1992. Of course, overly optimistic projections and
lack of consideration as to how Europeans approached their lodgings while
on vacation led to a massive overbuilding of resort hotels. While the
theme park did well right from the beginning, the resort property as a
whole lost money right off the bat.
While this was going on, Michael Eisner was also trying to become versed
on Disney lore—he had never seen a Disney film or gone to a Disney
theme park until he joined the company. In some ways, this was a good
thing, as he could bring in ideas that had not previously been considered.
On the other hand, it made it much harder for him to filter out ideas
that would dilute Disney’s brand identity. Stories tell of how, after
Eisner would go on about a new idea that he had, Frank Wells would have
to tell him, “We can’t do that, Michael—we’re Disney.”
But the team of Eisner and Wells worked well. Eisner did have many good
ideas, and Wells kept him from going too far.
Michael Eisner (left) and Frank Wells (right) as a very successful team
for the first 10 years of Eisner’s tenure, until Wells’ untimely death
in a heli-skiing accident. Photo by Frank Anzalone.
Then, Wells died in a tragic helicopter accident, and Eisner lost the
only man who could say no to him and make it stand. A few months later,
Eisner had a heart attack and required a open heart bypass operation.
No succession planning had been done for Wells or for Eisner. Nobody thought
that it would be needed.
Jeffrey Katzenberg, at the time the head of Disney’s studios operation,
thought that he was next in line for Wells’ job, and that he should be
the designated successor for Eisner, based on his success at the studios.
Eisner, however did not trust his loyal lieutenant, and eventually told
him that he would not be part of the succession plan, leading Katzenberg
to leave the company on unhappy terms.
Eisner’s personality would not let him be perceived as anything except
the winner—the most talented, the most intelligent, the most successful
individual, and that competitiveness and lack of ability to compromise
would drive away many valuable players over the years. The list almost
reads like a who’s who of Hollywood: Steven Spielberg (after Roger
Rabbit), George Lucas (after the Indiana Jones attractions), Steve
Jobs (during the term of the Pixar contract), and many others. And let’s
not forget all of those from inside Disney: Katzenberg, Joe Roth, Richard
Frank, Paul Pressler (say what you will about his theme park talents,
but the man was excellent at running Disney’s retail operation), Meg Whitman,
and more.
Michael Eisner completes a ride through at the launch of of the Indiana
Jones Adventure at Disneyland (link)
with George Lucas, one of the former business partners that Eisner caused
massive friction with over the years. Photo by Frank Anzalone.
In the end, this was one of the areas that led to Eisner’s downfall.
His failure to come to terms with Jobs and Pixar on a new agreement was
one of the points harped upon by many both inside and outside the company
during Roy Disney’s Save Disney campaign.
During the 11 years after Frank Wells’ death, Eisner oversaw many changes
to the company. Looking to control a distribution channel for the television
programs produced by their studio, Disney purchased Capital Cities/ABC
in 1995. [It was from this transaction that incoming CEO Robert Iger joined
the company.] Disney continued to build hotels and theme parks. Disney
launched a third movie brand, Hollywood Pictures, then merged it back
into Touchstone. They also bought Miramax Films from Bob and Harvey Weinstein,
two others who earlier this year finally left Disney after conflicts with
Eisner.
In 2001, in another move that helped lead to Eisner’s departure, Disney
bought Fox Family Channel, with its library of films and TV shows, as
well as its contract with Major League Baseball. That was just one of
many decisions to backfire on Eisner that year. That January, Disney was
forced to shut down its Go.com portal operation and write off a huge loss.
In May, Disney’s California Adventure theme park opened to tepid reviews
and small crowds.
While it’s an easy argument that Eisner has diluted the Disney brand
and that the company no longer is true to its roots, it’s also true that
the entertainment industry has changed tremendously over the last 20 years,
and there’s a reasonable possibility that the company would not have survived
the changes intact if it were not for Eisner.
Michael Eisner speaks at Disneyland’s 50th birthday celebration on July
17, 2005. Photo by Frank Anzalone.
Let’s look at some of the raw numbers of Eisner’s tenure at the company:
Market capitalization has increased from $2 billion to $58 billion. Revenues
have increased from $1.5 billion to $30.8 billion, net income from $98
million to $2.3 billion. $100 in Disney stock purchased when Eisner took
over would now be worth about $1,900 today.
The company bought (or created) two top-tier professional sports franchises,
and later sold them. Disney now owns over a dozen book imprints and over
a dozen magazines. The company launched a hugely successful retail operation,
then ran it into the ground and eventually sold it off. Disney now owns
five record labels and an interactive software division. They run over
a dozen major Web sites.
The four theme parks have grown to 11, plus the two ships of the Disney
Cruise Line. Company-owned hotel rooms have grown from 2,500 to 32,000.
Disney now fully or partially owns dozens of broadcast and cable networks
around the globe. The company has launched an extremely successful theatrical
division. The film library has grown from 156 titles to over 900 titles.
The animation studio expanded and produced new masterpieces, including
the first-ever animated film nominated for an Academy Award Best Picture.
Of course, the animation studio has since been severely cut back and retooled
to work entirely with computer-generated animation.
But in his push to make the numbers look good for investors and financial
advisors, Eisner may have done a great deal to the company’s long-term
outlook. There are many complaints that the studio’s output, while more
fiscally conservative, is also bringing in a lot fewer bucks at the box
office. Walt Disney Imagineering, the division responsible for coming
up with new ideas for the theme parks and for designing continuity and
detail into them, has been decimated by layoffs to a perhaps unprecedented
extent. The studio has turned its back on traditional animation, the area
that it once dominated, after a few poorly performing films that were
substantially altered from their original vision by marketing staff with
no moviemaking experience.
Outgoing CEO Michael Eisner and incoming CEO Robert Iger pose with Mickey
Mouse and Disneyland’s new star at the Hollywood Walk of Fame at the July
15, 2005 dedication ceremony. Photo by Frank Anzalone.
Was Michael Eisner good or bad for the Walt Disney Company? The answer
is yes, because he was both. He presided over tremendous expansion of
Disney assets, but he also was a major contributor to the sacrifice of
quality to profits and the dilution of the company’s valuable brand. Whether
the negative impact of these changes was a product of poor decision making
on his part or of the change in how businesses are run in 21st Century
America is an interesting subject for debate, as is the impact of Eisner’s
reign on the long-term outlook of the Walt Disney Company. Time will tell.
