- The Washington Times - Friday, September 10, 2004

Michael D. Eisner, the chief executive who helped turn the Walt Disney Co. into the world’s second-largest media conglomerate but has come under fire recently for its financial slump, announced plans yesterday to retire in two years.

Mr. Eisner, in a letter to Disney’s board of directors, said he will step down when his contract expires on Sept. 30, 2006.

“Until then I shall continue to exert every effort to help the company achieve our goals, to assist the board in selecting the new chief executive officer, and to make the transition expeditious, efficient, and smooth and easy,” he wrote.

During Mr. Eisner’s tenure, Disney revived its dormant animation efforts, opened seven theme parks and, most dramatically, bought Capital Cities/ABC Inc., the parent of the ABC and ESPN television networks.

But Disney’s stock price has eroded since 1996, when ABC’s ratings began slipping and investors began questioning Mr. Eisner’s control over his board of directors.

Roy E. Disney, the nephew of co-founder Walt Disney, and ally Stanley P. Gold resigned from the board in November and championed a bitter campaign to oust Mr. Eisner.

The revolt marked a dramatic about-face for Mr. Disney, who helped recruit Mr. Eisner to Disney in 1984.

At the company’s annual meeting in March, investors withheld 45 percent of their votes to re-elect Mr. Eisner to the board, an unprecedented vote of no confidence in the chief executive.

The board stripped Mr. Eisner of his chairmanship but expressed confidence in his management skills. George J. Mitchell, formerly a Democratic senator from Maine and one of Mr. Eisner’s allies, was elected the new chairman.

Cable television giant Comcast Corp. made a $48 billion bid for Disney in February, but the board rejected it as too low. Comcast withdrew the effort after Mr. Eisner survived the campaign to oust him.

Gregory P. Taxin, chief executive of Glass, Lewis & Co. LLC, a San Francisco institutional investment research firm that has recommended withholding support from Mr. Eisner, said his retirement announcement “will relieve some of the pressure on the Disney board, and will likely go a long way to appeasing the concerns of many institutional investors as to a succession plan and also the poor financial and stock price performance over the past few years.”

In a statement, Sean Harrigan, president of the California Public Employees’ Retirement System (Calpers), one of Disney’s major institutional shareholders, said Mr. Eisner’s resignation “is the right move for shareowners. We believe he should resign from the board as well. It is not clear to us how a two-year lame duck CEO will benefit shareowners, and his continued presence on the board would prevent the company from the clean break that is needed to restore investor confidence.”

The statement also called on Disney to reveal its CEO succession plan immediately. Calpers was one of the institutional investors that withheld support of Mr. Eisner at the March meeting.

Shares of Disney rose 30 cents to $23.16 on the New York Stock Exchange yesterday, up slightly from Thursday’s close of $22.86.

Mr. Disney and Mr. Gold have continued their efforts to force Mr. Eisner from the company, saying they will run a challenge slate of directors at next year’s shareholder meeting.

“[Mr. Eisner] could read the writing on the wall like everyone else. He had a good run, but it’s been coming to an end for awhile,” said Gary Arlen, an independent media analyst in Bethesda.

Mr. Eisner has strongly endorsed Disney’s president, Robert A. Iger, as a potential successor. But the board could look to other executives in the company or even former Disney executives who now lead their own companies.

Likely candidates include Paul S. Pressler, chief executive of Gap Inc., or Margaret C. Whitman, chief executive of EBay Inc.

Mel Karmazin, formerly president of Viacom Inc., and Peter Chernin, president and chief operating officer of News Corp., are also often mentioned as possible successors.

A spokesman for Roy Disney did not return telephone calls. Some analysts predicted Mr. Eisner’s resignation announcement will not satisfy him.

“Roy Disney wants blood. He doesn’t care,” said Dennis B. McAlpine, managing partner of McAlpine Associates LLC, media research firm in Scarsdale, N.Y.

Mr. Eisner will celebrate his 20th anniversary at Disney this month and is set to preside over Disneyland’s 50th anniversary in July.

In his letter, Mr. Eisner told the board that Disney was in a turnaround and praised the board for weathering difficult times.

“I have been told by you, by friends, but mostly by outside observers, that it is quite extraordinary that we have been able to remain focused on our objectives and have managed to run the company so well amid the distractions that have taken huge chunks of time during the past several years,” he wrote.

Mr. Eisner, a workaholic who reads movie scripts at night, watches every television pilot and even helps in the design of theme parks, said he looked forward to the next two years.

“My affection for Disney will never retire. And, like our campaign, suggested by [wife] Jane in 1986 that seems to resonate for so many, I can only conclude by telling you what I am doing next. ‘I’m going to Disneyland!”

This article is based on wire service reports.


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