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Can a Disney again spark magic in the kingdom?
By ROBERT TRIGAUX, Times Business Columnist
Published March 8, 2004
--------------------------------------------------------------------------------
At first glance, Roy E. Disney is a ringer in more ways than one for his dearly departed uncle, wholesome entertainment icon Walt Disney.
With an unassuming, aw-shucks manner, Walt's 74-year-old nephew seems better off introducing young audiences to Bambi and other Disney film classics than waging a bitter battle for control of a $27-billion entertainment corporation.
Well, looks can be deceiving.
In a savvy campaign to unseat Walt Disney Co.'s entrenched and increasingly maligned chief executive Michael Eisner, Roy Disney hit pay dirt last week. At the company's annual shareholders meeting in Philadelphia, Roy Disney persuaded an unexpectedly high 43 percent of the company's investors to withhold their support for Eisner's re-election as chairman and CEO.
The immediate effect? Eisner lost his title of chairman. Longer-term, big questions remain whether Eisner, 61, will keep his job as CEO - a position of extraordinary power and wealth he has held for 19-plus years - through 2004, much less until his contract ends in 2006.
Is Roy Disney, who has worked on and off at Disney most of his life, that smart or just lucky? Or is the Disney family name still that charismatic?
Is this the same guy who, after leaving the company in a huff, then rejoining it in 1984, was derided as "Walt's idiot nephew?"
And if Roy Disney succeeds in tossing out Eisner, could that instability make Walt Disney Co. more vulnerable to the acquisition offer by hungry cable giant Comcast Corp.?
Truth is, Roy Disney - bolstered by business partner and former Disney director Stanley Gold - has a long track record of taking on the executive suite when he sees big problems at Walt Disney Co.
When not working for the Disney corporation, Roy took his growing wealth and, with Gold's shrewd eye for deals, became a major and mostly successful investor in underperforming companies. Through his family-owned Shamrock Holdings, Roy Disney bought radio stations and real estate and attempted takeovers of such companies as Polaroid, Faberge and Helene Curtis.
With a fortune now hovering near $1-billion, Roy Disney's personal passion is racing yachts. He owns a castle in Ireland and enjoys flying there aboard his own Boeing 737 jet.
Roy Disney's current fight with Eisner bears a striking resemblance to his attempt two decades ago to overthrow another tired CEO who had let the magic and market value of Walt Disney slip away.
The two battles, while 20-plus years apart, are intertwined.
After driving out the old CEO in 1984, Roy Disney championed a new chief full of fresh ideas to lead Disney: Michael Eisner.
* * *
Roy E. Disney was born in 1930 in Los Angeles. His father, Roy O. Disney, co-founded Disney productions with younger brother Walt in 1923. After spending years as a kid surrounded by Disney cartoonists, the young Roy graduated from college in 1951. He studied English at Pomona College.
His career began as an assistant film editor for the TV series Dragnet. He soon joined Walt Disney Co., spending nearly 20 years producing and directing nature films. He left the company in 1977 after losing a power struggle over the company's direction with Ron Miller, Walt Disney's son-in-law and a former pro football player. Miller would become CEO.
With Gold as a financial adviser in 1978, Roy Disney started Shamrock, named for his 52-foot yawl.
By 1982, Roy was married with four children and a net worth of about $150-million, according to Forbes magazine.
After Walt Disney died in 1966 and his brother Roy passed away in 1971, the story goes, the company slowly lost its way and much of its creative magic. By the early 1980s, as his Disney shares sank in value, an emboldened Roy Disney tried to buy the company. But the move was soon eclipsed by two other takeover attempts of Walt Disney during a decade made infamous for leveraged buyouts and junk bond financing.
First, Disney nearly fell to corporate raider Saul Steinberg, then to Irwin Jacobs. Roy Disney and Gold then allied with the billionaire Bass brothers, who bought a 25 percent stake in Walt Disney.
Once the company was secure from further Wall Street attacks, Roy Disney and Gold tossed out the company's executives from uncle Walt's side of the family. Then they went searching for a new CEO.
That tale is well documented. As variously described by books such as Keys to the Kingdom: The Rise of Michael Eisner and the Fall of Everybody Else, The Disney Way and Storming the Magic Kingdom: Wall Street, the Raiders and the Battle for Disney, Eisner was looking for a new opportunity. He was finishing a run as president of Paramount Pictures during such film hits as Raiders of the Lost Ark and Terms of Endearment.
The choice of Eisner was controversial. But with the backing of Roy Disney and Gold, he would sign on with a six-year contract. Roy Disney returned as the company's vice chairman.
Once in charge, Eisner wasted little time leveraging the remarkable assets of Walt Disney Co. Classic Disney movies were promoted anew for theaters and for sale as the video cassette market exploded. Theme parks rarely advertised were pumped up with big ad campaigns. New animated movies, especially The Lion King, lifted Disney's aura as the entertainment leader just as Wall Street drove up Disney's market value to staggering heights.
In his heyday, Eisner reaped enormous rewards. Over his tenure as Disney CEO, he has earned more than $1-billion in salary and stock. Eisner's honeymoon ended about five years ago when Walt Disney's performance slipped badly.
To Roy Disney, CEO Eisner compounded his company's woes by growing more arrogant and driving away talent, by micro-managing too many details in such a huge corporation and by trying to do too many things on the cheap. Witness the public's lukewarm receptions to Disney's newer and clearly less creative theme parks, Animal Kingdom and California Adventure.
Under Eisner, Disney's profits are now a third lower than they were in 1998. There is corporate fatigue.
To Roy Disney, as the magic - and the money - began to fade again, it felt like 1984 again.
Which brings us back to last week's annual shareholders meeting in Philadelphia.
Roy Disney and Gold, who both quit Disney's board late last year to mount a dump-Eisner campaign at www.savedisney.com were given 15 minutes at the podium to address shareholders.
Gold spoke first to receptive shareholders. With less than a minute of the allotted time remaining, Walt Disney's nephew took his turn at the podium and defied Eisner, seated nearby, to stop his remarks.
Roy Disney was interrupted only by applause. Six times. With two standing ovations.
"The Walt Disney Co. is more than a business," he told the packed room. He called the company "an authentic American icon" and said its talent and creativity must be better supported.
"I don't care what the current management may tell you. You can't fool all the people all the time," he said. "Nor can you succeed in our business by trying to get by on the cheap. Consumers know when they are getting value for their money.
"Speaking as someone with the last name of "Disney,' it is my firm belief that we are not a commodity," he said.
Is it still within Roy Disney's reach to sweep out the old and revive Walt Disney Co.? The entertainment world is more competitive and complex than ever. Consumers have more entertainment choices than ever before. And Wall Street has less patience.
Nor have we heard the last of Michael Eisner. He may be embattled, but he still wears the mantle of CEO.
By ROBERT TRIGAUX, Times Business Columnist
Published March 8, 2004
--------------------------------------------------------------------------------
At first glance, Roy E. Disney is a ringer in more ways than one for his dearly departed uncle, wholesome entertainment icon Walt Disney.
With an unassuming, aw-shucks manner, Walt's 74-year-old nephew seems better off introducing young audiences to Bambi and other Disney film classics than waging a bitter battle for control of a $27-billion entertainment corporation.
Well, looks can be deceiving.
In a savvy campaign to unseat Walt Disney Co.'s entrenched and increasingly maligned chief executive Michael Eisner, Roy Disney hit pay dirt last week. At the company's annual shareholders meeting in Philadelphia, Roy Disney persuaded an unexpectedly high 43 percent of the company's investors to withhold their support for Eisner's re-election as chairman and CEO.
The immediate effect? Eisner lost his title of chairman. Longer-term, big questions remain whether Eisner, 61, will keep his job as CEO - a position of extraordinary power and wealth he has held for 19-plus years - through 2004, much less until his contract ends in 2006.
Is Roy Disney, who has worked on and off at Disney most of his life, that smart or just lucky? Or is the Disney family name still that charismatic?
Is this the same guy who, after leaving the company in a huff, then rejoining it in 1984, was derided as "Walt's idiot nephew?"
And if Roy Disney succeeds in tossing out Eisner, could that instability make Walt Disney Co. more vulnerable to the acquisition offer by hungry cable giant Comcast Corp.?
Truth is, Roy Disney - bolstered by business partner and former Disney director Stanley Gold - has a long track record of taking on the executive suite when he sees big problems at Walt Disney Co.
When not working for the Disney corporation, Roy took his growing wealth and, with Gold's shrewd eye for deals, became a major and mostly successful investor in underperforming companies. Through his family-owned Shamrock Holdings, Roy Disney bought radio stations and real estate and attempted takeovers of such companies as Polaroid, Faberge and Helene Curtis.
With a fortune now hovering near $1-billion, Roy Disney's personal passion is racing yachts. He owns a castle in Ireland and enjoys flying there aboard his own Boeing 737 jet.
Roy Disney's current fight with Eisner bears a striking resemblance to his attempt two decades ago to overthrow another tired CEO who had let the magic and market value of Walt Disney slip away.
The two battles, while 20-plus years apart, are intertwined.
After driving out the old CEO in 1984, Roy Disney championed a new chief full of fresh ideas to lead Disney: Michael Eisner.
* * *
Roy E. Disney was born in 1930 in Los Angeles. His father, Roy O. Disney, co-founded Disney productions with younger brother Walt in 1923. After spending years as a kid surrounded by Disney cartoonists, the young Roy graduated from college in 1951. He studied English at Pomona College.
His career began as an assistant film editor for the TV series Dragnet. He soon joined Walt Disney Co., spending nearly 20 years producing and directing nature films. He left the company in 1977 after losing a power struggle over the company's direction with Ron Miller, Walt Disney's son-in-law and a former pro football player. Miller would become CEO.
With Gold as a financial adviser in 1978, Roy Disney started Shamrock, named for his 52-foot yawl.
By 1982, Roy was married with four children and a net worth of about $150-million, according to Forbes magazine.
After Walt Disney died in 1966 and his brother Roy passed away in 1971, the story goes, the company slowly lost its way and much of its creative magic. By the early 1980s, as his Disney shares sank in value, an emboldened Roy Disney tried to buy the company. But the move was soon eclipsed by two other takeover attempts of Walt Disney during a decade made infamous for leveraged buyouts and junk bond financing.
First, Disney nearly fell to corporate raider Saul Steinberg, then to Irwin Jacobs. Roy Disney and Gold then allied with the billionaire Bass brothers, who bought a 25 percent stake in Walt Disney.
Once the company was secure from further Wall Street attacks, Roy Disney and Gold tossed out the company's executives from uncle Walt's side of the family. Then they went searching for a new CEO.
That tale is well documented. As variously described by books such as Keys to the Kingdom: The Rise of Michael Eisner and the Fall of Everybody Else, The Disney Way and Storming the Magic Kingdom: Wall Street, the Raiders and the Battle for Disney, Eisner was looking for a new opportunity. He was finishing a run as president of Paramount Pictures during such film hits as Raiders of the Lost Ark and Terms of Endearment.
The choice of Eisner was controversial. But with the backing of Roy Disney and Gold, he would sign on with a six-year contract. Roy Disney returned as the company's vice chairman.
Once in charge, Eisner wasted little time leveraging the remarkable assets of Walt Disney Co. Classic Disney movies were promoted anew for theaters and for sale as the video cassette market exploded. Theme parks rarely advertised were pumped up with big ad campaigns. New animated movies, especially The Lion King, lifted Disney's aura as the entertainment leader just as Wall Street drove up Disney's market value to staggering heights.
In his heyday, Eisner reaped enormous rewards. Over his tenure as Disney CEO, he has earned more than $1-billion in salary and stock. Eisner's honeymoon ended about five years ago when Walt Disney's performance slipped badly.
To Roy Disney, CEO Eisner compounded his company's woes by growing more arrogant and driving away talent, by micro-managing too many details in such a huge corporation and by trying to do too many things on the cheap. Witness the public's lukewarm receptions to Disney's newer and clearly less creative theme parks, Animal Kingdom and California Adventure.
Under Eisner, Disney's profits are now a third lower than they were in 1998. There is corporate fatigue.
To Roy Disney, as the magic - and the money - began to fade again, it felt like 1984 again.
Which brings us back to last week's annual shareholders meeting in Philadelphia.
Roy Disney and Gold, who both quit Disney's board late last year to mount a dump-Eisner campaign at www.savedisney.com were given 15 minutes at the podium to address shareholders.
Gold spoke first to receptive shareholders. With less than a minute of the allotted time remaining, Walt Disney's nephew took his turn at the podium and defied Eisner, seated nearby, to stop his remarks.
Roy Disney was interrupted only by applause. Six times. With two standing ovations.
"The Walt Disney Co. is more than a business," he told the packed room. He called the company "an authentic American icon" and said its talent and creativity must be better supported.
"I don't care what the current management may tell you. You can't fool all the people all the time," he said. "Nor can you succeed in our business by trying to get by on the cheap. Consumers know when they are getting value for their money.
"Speaking as someone with the last name of "Disney,' it is my firm belief that we are not a commodity," he said.
Is it still within Roy Disney's reach to sweep out the old and revive Walt Disney Co.? The entertainment world is more competitive and complex than ever. Consumers have more entertainment choices than ever before. And Wall Street has less patience.
Nor have we heard the last of Michael Eisner. He may be embattled, but he still wears the mantle of CEO.
The magic will remain intact.
