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Luv2Roam
09-24-2002, 06:40 PM
Leadership on Agenda for Disney Board
Tue Sep 24, 2:11 AM ET

By Doug Young

LOS ANGELES (Reuters) - Anxious shareholders will be waiting at the gates to the Magic Kingdom on Tuesday, when the struggling Walt Disney Co. holds what many believe will be a pivotal board meeting with changes to long-standing corporate governance and leadership issues on the agenda.

Topics for discussion at the meeting in Burbank, California are expected to include a succession plan for Chief Executive Michael Eisner, corporate governance issues like guaranteeing board member independence and review of a long-term strategic plan, according to sources close to the board.

The board, which Eisner chairs, is also expected to discuss a reduction in its size from a current 16 members, in a bid to become more responsive. Eisner discussed the reduction in an August conference call and the company has set a target of implementing that by year end.

Board members Stanley Gold and Roy Disney, the latter one of the company's biggest shareholders, are two of the biggest proponents of change, according to sources close to the board.

The meeting -- one of six to a dozen regular meetings the board is required to hold each year -- has grown in importance in recent weeks since Disney said last month that business trends were weak at its important theme parks division.

Those remarks cast gloom over a company already plagued by its struggling ABC television network, which plunged from No. 1 to No. 3 in the ratings in just two years.

The bad news sent Disney shares tumbling, with the stock down about 15 percent amid a broader downturn for media stocks. Shares closed down 17 cents on Monday to $15.07, or near lows not seen since 1995.

ABC BLUES

The biggest drag on Disney's earnings -- which have dropped for four straight quarters -- has been the struggling ABC network, which finished behind CBS and NBC just two years after finishing No. 1 on the brief success of its "Who Wants to Be a Millionaire ( news - web sites)" quiz show franchise.

Disney's troubles multiplied in August when it said that its theme park business -- a company mainstay that accounted for 40 percent of operating income last year -- was showing signs of weakness.

Analysts said the negative theme park outlook was more a result of the weak economy and less a Disney-specific issue, but shareholders fled from the stock nevertheless.

In a bid to ease shareholder concerns, Eisner and Disney Chief Financial Officer Tom Staggs met with investors and analysts earlier this month in New York to answer questions.

A gadfly shareholder, Providence Capital, also convened its own meeting, in which it called on the company to be more responsive to shareholder concerns, and for a separation of Eisner's dual roles as chairman and CEO.

While much may be discussed at the Tuesday board meeting, investors should not look for many immediate results, most notably any change in the company's top leadership, according to one analyst who spoke on condition his name not be used.

"Investors want a near-term situation to be corrected, and that's not going to happen," he said. "What Disney is doing now is focusing on their businesses. ... I think people will say, "OK, let's see how they perform now."

RECENT CHANGES

Indeed, Disney has made major recent changes that could soon bear fruit at ABC -- the weak link in its business that has clearly underperformed its peers.

Several of the network's top officials left earlier this year, most notably former programming chief Stu Bloomberg.

In his place, ABC promoted Susan Lyne to its new president of entertainment, with a mandate to take the show back to its roots of providing family-friendly entertainment.

The jury is still out on the network's fall lineup of new sitcoms and dramas, but strong results by a handful of shows that premiered last week provided at least a glimmer of hope that some success may be in the offing.

Still analysts said one week is far too little to spell success, especially since most of the competition last week was reruns as the other major networks prepared to launch many of their new seasons this week.

"We'll see how (the network) does," said the analyst. "If it has another really bad year, there's going to be more pressure on the board to act."

wdwguide
09-24-2002, 06:57 PM
It is a bit ironic that Gold and Disney are pushing for the size of the board to be reduced, considering that they own their place to basically blackmailing Miller and Watson into increasing the size of the board to accomodate them back in 1984.
It's even more ironic that the problems that the company has right now are quite similar to those back in 1984 - underperforming film studio, questionable and overpriced aquisitions, management debate, depressed stock price, etc.

BTW, I just noticed that Ray Watson is still a member of the board - has he been with the company the whole time, and does anyone know what his position on the current issues is?