I just read AL Lutz's column at Mice Age. Let me ask a simple question... Who, What, or How the heck did Eisner come into all of this?!:mad:


Did Walt not have family to take over his dream?

Basically how I understand it is in the 90s the stock prices were so low that coperate raiders were going to take over and sell off Disney part by part. Eisner and co. came in and took over.

Eisner and Co. did a bunch of good things for Disney. Lion King, Little Mermaid, Beauty and the Beast are some of them. They finished work on Indy (which was greenlighted before Eisner and Co.). And then they destroyed it :crying:


I think I have all the facts correct. If I don't, please don't hate me, just correct me. Thanks!

Edited to add: That was an article by Kevin Yee and I think theres a discussion about it floating around here somewhere, I just can't find it.

I thought everyone knew this. Please excuse the length here. Once I got started, I couldn't stop. And please excuse the spelling errors, I type faster than I spell.

In 1984 the Disney Company was on the verge of a hostal take over by several companies who wanted to divide it up and sell off the pieces. Roy Disney (Walt's Nephew) was very much against this, so he brought in Michael Eisner, Jeffery Katzenberg and Frank Wells to take over the reins of the struggling company. At that time they all had been working at Paramount, NBC and other places and all had been very successful (it was Eisner who while working as Progamming Chief greenlighted "Roots" when no one else was willing to take a chance) and it was a hit. Eisner was made the CEO of The Disney Company, Jeffery was put in charge of the Animation Division and Frank Wells ran the money end. All went well and the Walt Disney Company (as they renamed it) was growing by leaps and bounds. Eveything they touched was a huge success. The stock split several times. Jeffery turned out all the hit animation movies from "The Little Mermaid" to "The Lion King". Frank Wells ran the finances and was the only person who could say "NO" to Michael Eisner. When Frank Wells died in a tragic Helicopter Crash while returning from a Ski Trip (the next time you ride "The Matterhorn" when you go thru the Crystal Cave look for the boxes and crates left behind by "The Frank Wells Expidition". This was done by the Imagineers as a tribute to Frank) there was no one left at the Company to rein in Michael and he became a meglomaniac trying to put his name on everything. He wanted a kingdom and since Disneyland already had Walt's identity pretty much imprinted on it (being the only one of the Disney Theme Parks that he actually walked in after it was completed) he chose to ignore Disneyland and concentrate on Walt Disney World, builing high cost attractions and expanding, exapanding, expanding. Poor Disneyland suffered during those times. It soon became very clear to those who watch this sort of thing, that eventually all reason was lost in the quest for "the Bottom Line". He brought in his "Pal" Paul Pressler from the merchandising devision of the Company and made him President of Disneyland (After forcing Jack Lindquist who had managed Disneyland for 40 years out) and Paul quickly brought in his merchandising people (Cynthia Harris and others) getting rid of all the people who knew how to run a Theme Park, and basically turned Disneyland into a giant Disney Store with a few rides and shows. When rides started to go sour or break down, he shut them down rather that spend money to fix them properly, or as in the case of Space Mountain, used the "banc-aid" approach to keep the ride going until it got to the point last month of so much gone wrong they had to shut it down in order to redo it in time for the 50th.
Michael Eisner has gotten to the point where he is so out of touch with reality that all the Parks (which sustained the company thru the lean years of bad movies and even worse TV shows) so that now they pull money from the Parks to pay for big budget movies and even more horrible TV shows. It is rumored now that Michael sees the writing on the wall as the stock plummets, people bash his company openly in the news and on the Internet, and wants to make one more huge blockbuster something (a ride that becomes a "Classic", a blockbuster movie (something bigger than Pirates and from his studio not Pixar), or a huge programming block that skyrockets ABC to #1 in the ratings. Then he will collect his bonus, stock options, etc and split for greener pastures. When this happens we will all breath a great sigh of releif and hope that whoever replaces him will not be worse, but will in fact recoginze our beloved Disneyland as the Crown Jewel in the Companies assets (along with WDW and all the other Disney Theme Parks) and realiaze that it isn't 911, or terrorists threats that are threatoning the Parks, it's the companies own short trem goals that are killing them. You have to spend money to make money. The Japanese know this, look at what they have done with Disney Seas, while we get DCA.
All we can do at this point is cross our fingers and hope for the best.

Originally posted by Lost Boy
I thought everyone knew this. Please excuse the length here. Once I got started, I couldn't stop. And please excuse the spelling errors, I type faster than I spell.Lost Boy -- Please be considerate of other readers by first clicking on the "Preview Post" button, then adding extra returns to break up the block of text. Posts with such long blocks of unbroken text are like a large ball of knotted yarn; one risks making the reader lose interest. I realize you were probably on a roll while you were typing... that's fine. But when you're done, please preview first before posting.

[This applies to everyone who goes on a roll and forgets to periodically hit the Enter key.]

Whether he hit the return key or not: Very well put! And the problem is that the entire organization needs a charismatic leader who can LEAD. Every other business entity underneath him will take their cues from this man (Eisner). He has done little to live up to his title, in my opinion, and that of many others.

I'm going to jump in with a little more objective discussion of what happened to Disney (and if I get the facts wrong, please let me know).

In the early 80's, Disney had become a shadow of its former self. The company had been floating adrift since Walt & Roy's deaths, and the stock price was in the basement. Disney was ripe for a take-over, and the best value the coporate raiders found in the compnay was to buy it and sell the pieces (theme parks, movie library, studios). Rumor has it that the company was operating in total paralysis because they were always trying to do what Walt would do, and Walt wasn't there.

In order to fight off the hostile takeover bid, Roy Disney enlisted the help of Stanley Gold and his family. They were able to buy back enough of the company. They recruited Eisne and Wells as CEO and President of the Company, repectively, they were both involved actually in some of the take-over attempts, but Roy recruited them as the new head honchos. Eisner brought with him Katzenberg, who worked for him at Paramount, to run the studios (both live action and animation). So you had Eisner as CEO and Wells as President of the Walt Disney Company.

Eisner had a fabulous track record in the business. He was instrumental in developing shows like Happy Days for ABC, made Paramount a major movie producer (working for Barry Diller now of USA Networks/Vivendi). He and Wells developed the company, diversified it's offerings, and created fantastic growth through the mid 90's.

As mentioned in 1994, Frank Wells died in a helicopter accident while mountain climbing (I think that was the case). Eisner took over the CEO and President's job. Katzenberg left shortly thereafter, presumably because he was passed over for the President position. There were also many creative differences devloping between Eisner and Katzenberg on what the companies animted studios division should do.

After 1994, there was a slow-down in growth at Disney. Some say its due to the lack of a counter-point to Eisner, some say economic conditions, some say the purchase of ABC was a large burden on the company. There are many possible reasons, but it's hard to pinpoint only one.

Now, impact on DL... Eisner moved one of the "golden boys" within the oragnization in the latter part of the 90's to run DLR. Paul pressler had been in charge of the Disney Stores and had turned them into a revenue generating machine. He was made the president of DL. By the way, Indy was greenlit by Eisner/Wells. After still successful run at DLR, Eisner created the position of Prsident of DisneY Resorts and included sports franchises and WDI in the position. Some say this is where Pressler was out of his element, since he had no real experience in this type of work.

However, last year, Pressler left for President of The Gap (again, some say he was miffed that he didn't get the President position that Bob Iger was appointed to), and Jay Rasulo was appointed to Presslers old position. Rasulo was formerly Head of EuroDisney SCA and was responsible for making DLPR profitable.

Now for my interpretation of what happned to Disney... Esner basically spent the latter part of the 90's promoting too many "yes men" who were more concerned with making sure the boss was happy rather than telling him the truth (afraid to tell the bad with the good). Now, since Iger has been named President, there has been a counterpoint to Eisner (Iger has a long track record of success at capital Cities/ABC), and other positions seem to be falling into place. Besides Rasulo, Dick Cook was put in charge of the Studios (he is a career Disney employee, worked at DL when he started with the company, and seems to understand what Disney means), ABC is redirecting itself to get away from reality shows and focus more on family sitcoms (as they were in their heyday), and their cable television operations are attempting to become a cohesive unit.

So, there may be more balance at the top of Disney, so there may be some changes in the not to distant future in how the compnay operates. When will Eisner leave? when he decides, he'll not be booted off (since the company is still performing as well as its peer group, if not better, in the stock market).

Wow!!! I want to thank all of you for the info. I really had no idea what was up with this company. what books would you guys recommed on this subject? I had heard there are a couple out there.... I just don't know the names. Lostboy you did great. I had no problem following you.

Very encouraging at the end, Instadude. I knew about Jay Rasulo, but didn't know about the other points you made. I really hope they can turn it around! Thanks for the info. You too, Lost Boy.

Yet more "objective" info.

In the early 80s, interest rates were peaking above 15%. Why buy stocks that grow at an average of 6% a year when you can put your money in treasuries at 15%? Right, you wouldn't, and people didn't, and stocks got hammered.

Most of the "Hostile Take Overs" were bond funded, and were just to unlock the equity to use it to trade more bonds. Think Enron type accounting, but 15 years earlier. Buy a company, sell off the parts with no real value, borrow money against the rest, and use that money to trade bonds. As the rates came down in the late 80s, so did the house of cards.

As far as DisCo sinking money into WDW, there was room to grow there. They could build 3 and 4 parks, dozens of resorts, and fill them with people vacationing for a full week. DL is a 1-2 day park. Even with a second or third gate, it will never be a week long vacation resort. You'll always be able to stay at a non-Disney hotel right across the street.

Through the 90s, Disney grew and grew and grew.... Stocks grew and grew as interest rates fell and money flowed back into the markets. Soon, the "trading" had switched from bonds to stocks. It wasn't about interest rates, it was about revenue growth and short term moves. Get the numbers up this quarter so the traders will keep trading our stock.

Eventually, I think, DisCo reached market saturation. They were getting every penny possible from their fans. You had the week long resort on the east coast, DL on the west coast, a DisStore in every mall, ABC, DisChannels and ESPNs on TV, same old formula movies that weren't getting the same returin on investment.....

The answer, as they saw it, was diversity! Instead of making movies for families, they made a couple movies for teenage boys. Both flopped. They built a new park for yuppies that take vacations with the goal of sipping wine and eating at a Puck restaurant. The park flopped. DisStores "focused" the product line to kids clothes and toys. The result was ever shrinking sales and ever lower reason to visit. They bought FoxFamily for a huge amount of debt, and immediatly began losing revenue because they had no programming. All their family programming had already been WAY over used on DisChannel. It isn't like ABC is generating good re-runnable programming lately.

Now, the company has a huge debt load(12 billion, up from 7 billion 2 years ago), flat revenue, and shrinking profits. What is most scary about that is that the stock proce still shows that traders expect the company to increase profits soon. Based on this year's projected profit, the stock has a P/E (price/earning) ratio of 35. Historical average for large companies is 15-20. Compare Disney's 35 to slow growth companies like Ford (14.7) and Coke (19.9).

It's easy to say, "he's neglecting DL, so he needs to go."

It's a lot harder to figure out how to build revenue, when you can't borrow any more money, and your shareholders expect you to increase bottomline profits ASAP. If you spend, you hurt profits. If you cut, you hurt revenue.

There are 2 ways out. Only spend on things that have immediate payback. Cut anything that will reduce revenue less than the amount of your savings.


This is a short term solution designed to fit current market conditions. In the long run, the economy will turn, driving up interest rates a bit. This will pull some money back out of stocks. Revenues will climb, but stock prices to remain flat, bringing P/Es back to reasonable levels. DisCo will sell off some assets, focus on what's left, then eventually try to grow into new areas.

With the success of Pixar movies and other movies, DosCo will return from chasing the teen boy market with their movies, and get back to making good family entertainment. They'll add some e tickets and some more imaginatively themed attractions to DCA. Eventually it will be an okay park. After DCA is fixed, Disneyland will get some much needed attention. ABC won't always be the 4th horse in what used to be a 3 horse race.

Long term, DisCo will be okay. Right now, like so many other companies, they are suffering from a hangover from the excessive party of the 90s. In fact, many companies are in far worse shape.

dshimel,

Your post here is compelling. Well Done! You write with confidence and optimism.

I'd like to do some additional reading on this topic. I'm curious as to your resources for information. Can you point me to where I could find more info?

Actually, everyone's post on this thread is very impressive. With all the "bad news" being written about DLR, it's nice to see a different perspective. In fact, it's encouraging.

I didnt know there were rules on grammer here also. Wow I better go back to high school for a refresher before I ever post anything long. :rolleyes:

And just FYI i heard eisner is a raging alcoholic. For real.

Originally posted by johnnyrad
And just FYI i heard eisner is a raging alcoholic. For real.

Wow. I had never head that, and I travel in some pretty "in-the-know" groups.;)

If I had all his bad press, I think I'd be an alcoholic too...