- The Washington Times - Sunday, November 30, 2003

From combined dispatches

LOS ANGELES — Walt Disney Co. Vice Chairman Roy E. Disney has resigned from the media giant’s board of directors, sources close to the company said yesterday. He reportedly called on Chairman Michael Eisner to resign as well.

Mr. Disney’s resignation may be a pre-emptive move to avoid being forced off the board of the Walt Disney Co. The board’s governance and nominating committee decided not to recommend Mr. Disney for another term because he is 73, over the mandated retirement age of 72, said the sources, who spoke to the Associated Press on the condition of anonymity.

Two other board members reportedly will not be renominated: Raymond Watson, 76, and Thomas Murphy, 77.

The full board is scheduled to meet today and tomorrow in New York.

The story was first reported in the Wall Street Journal, which said Mr. Disney sent a scathing three-page letter to the board yesterday, criticizing Mr. Eisner’s leadership over the past seven years.

In his letter, Mr. Disney tells Mr. Eisner that “it is you who should be leaving and not me,” the Journal reported.

Mr. Eisner, 61, who last year was paid $6 million in salary and restricted stock, has served as chairman and chief executive officer of Disney since September 1984. During that time, the company has become the world’s second-largest media company.

Mr. Disney, nephew of company co-founder Walt Disney, has been one of Mr. Eisner’s most vocal critics as the company’s stock price has declined, ratings have fallen at its ABC television network and revenues have dropped at the Burbank, Calif., company’s theme parks. Disney shares had fallen in each of the past five years before rebounding this year.

“There are a number of areas where you could say that [Mr. Eisner] deserves some criticism, but I’m curious as to why it’s happening now and didn’t a year or two ago,” said Vic Hawley, a fund manager at Reed Conner & Birdwell Inc. in Los Angeles, which he said owns about 1.5 million Disney shares.

ABC ranks third in total viewers in prime time among the four major broadcast networks, according to Nielsen Media Research.

Operating income at Disney’s parks and resorts, including Disneyland in California, Walt Disney World in Florida and the company’s cruise ships, fell 4.3 percent in the latest quarter to $225 million. Revenue slipped 0.7 percent to $1.65 billion.

But Disney’s film business is outpacing its competitors this year and analysts believe the studio probably will break the annual Hollywood box-office sales record of $2 billion.

Disney, seeking to defuse charges of poor corporate governance, began making changes last year, cutting the number of seats on its board to 12 to 15, hiring consultant Ira Millstein to recommend board changes and naming former Sen. George Mitchell to a presiding director’s post to lead at least two executive sessions each year without Mr. Eisner or other members of management present.


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