How Did Michael Eisner Make Disney Profitable?

[Buzz2001]

Interesting article at MSN.com.


http://slate.msn.com/id/2116794/?GT1=6334

 

[Disney Gator]

"As it became increasingly clear that Eisner had hit the jackpot with ESPN, these fund managers focused more and more on Eisner's inability to convert the enormous appreciation of Disney's assets into a stock-market payoff. One way to bring about that payoff would be to install new management who were willing to sell assets—even ESPN. Although Disney's shares had increased by 10.6 percent since 2001—which was a better performance than most of Disney's rivals—that was not enough to satisfy investors. In March 2004, 43 percent of shareholders voted to withhold their support from Eisner."

Thanks for the link to this article. ...and everyone says that Eisner is the greedy one.

 

[PKS44]

It is very convenient to look at the time frame of 1985 to 2005...the devil as always is in the details....Break down the performance into early and lately and it all looks a bit different....Eisner did well with his assets in the beginning...an analysis of his last 8 years shows he has stumbled...not enough to wipe out all the good he did...but enough to show he had to go....

 

[YoHo]

Was the home video release his decision? or the Decision of Wells? or some other studio person?

As for ESPN, he stepped in something good there. To bad he had to take ABC and the other cable nets too.

 

[DisneyWorld Delight]

page 91 - 92 of DISNEY WAR by James B. Stewart:

"Bill Mechanic, a young executive from Paramount followed Eisner and Katzenberg to Disney..."

He wanted to be a movie producer and he was upset when they placed him in charge of home video. He decided to try to sell classics as high priced collectibles. Roy and Katzenberg were opposed to the idea. Wells "conceded that there were overwhelming reasons not to do this, but it's important to have the debate." Eisner was skeptical, so eventually the team decided to offer Pinocchio for sale at $79.95. Mechanic changed the price to $29.95, had a huge ad campaign and all 1.7 million units sold!

 

[YoHo]

Thanks DWD, I knew I had read it, but I have no paitence to search through the book.

 

[DancingBear]

Right, so Eisner gets no credit for the fact that he brought Mechanic into the company and put him in charge of home video, or that he okayed the concept of releasing the videos. Or that he did so as the head of a company that, prior to his tenure, had been on the losing side of fighting Sony about the whole concept of VCRs.

And just where did Mechanic get the funding for his "huge ad compaign"?

 

[Disney Gator]

Right, so Eisner gets no credit for the fact that he brought Mechanic into the company and put him in charge of home video, or that he okayed the concept of releasing the videos. Or that he did so as the head of a company that, prior to his tenure, had been on the losing side of fighting Sony about the whole concept of VCRs.

And just where did Mechanic get the funding for his "huge ad compaign"?

Exactly, because he gets no credit for things that went right, but he receives all the blame for every little thing that went wrong. Makes perfect sense doesn't it?

 

[YoHo]

sigh.

Yes, and no, you people sure are myopic.

Sure, fine, Micheal Eisner gets the credit for hiring Bill Mechanic.

Who get's credit for losing Bill Mechanic?

Eisner.

Who gets credit for creating a corporate culture so offensivly bad that an outside consultant said it was impossible to fix?
Eisner.

Michael Eisner is fully responsible for the corporate culture at Disney. The Corporate culture at Disney is terrible. Offensivly horridly bad. It's so bad that Enron employees say jeez, it must really suck to be a VEEP at Disney.

(Hyperbole? maybe maybe not.)

So, looking at the big picture of the corporate structure ad governance, we can see the big grubby fngerprints of Eisner all over it.
It makes one wonder (and is backed up by sources such as Disney War) just how much of Disney's success snuck out despite Eisner. And how much of it was Well's. After all, even Frank Wells proportedly hated Eisner.


Prior to 1992, Wells had a hand in everything. After 92 wells was dead and the place started to go to hell. The good results become the except slowly but surely. it makes it a lot easier to assume that the credit rests elsewhere.

Or, you could be myopic and huffy and act like you've just matched wits with Plato and won. Whatever floats your boat.

 

[Disney Gator]

Nobody is being myopic or huffy. I just don't see that much that is wrong with Disney. I go see the movies and go to the theme parks...seems pretty good to me. I really don't care what the corporate culture is like at Disney. I still have fun at the parks and the theater. Where is all this bad stuff that is going on?

 

[wtg2000]

In basketball they talk about quick-fix coaches who can instantly turn around a limping program but tend to sour after a few years and move on. Other coaches are good at maintining winning teams. Other coaches can take talentless teams and wring something out of it. Other coaches can take multi-ego/talent teams and meld them into a winner (Phil Jackson comes to mind).

Perhaps the same is true of CEOs. In 1984, Disney was basically a blank slate. Touchstone had just been launched, the property at WDW sat mostly empty, home video was just starting and Disney had a vault full of properties, the concept of specific retail stores was coming in, etc. Overall, their assets were being hugely underused.

After the purchase of Cap/ABC, Disney was no longer a sleepy little company that needed turning around. There was no longer a "$100 million dollars behind every door" as Frank Wells had said. Perhaps it takes a different type of CEO to run this "new" company.

 

[crusader]

Or, you could be myopic and huffy and act like you've just matched wits with Plato and won. Whatever floats your boat.

Funny, I was just thinking the same thing about certain posters myself.

So if we read a few books and listen intently to ex-employees expose their boss we too can become the Dalai Lama of corporate management for less than the price of a park hopper. Great! Where do I sign?

 

[DancingBear]

Anybody says anything positive about Eisner, and instantly they're branded as an Eisner apologist.

I have no problem with holding Eisner accountable for any number of bad things at the Company, particularly after Wells' death, from the particular (the handling of Katz's firing, the hiring and firing of Ovitz, the decline of in-house animation, fools managing Disneyland) to the general (creating a hostile environment for creativity).

And I agree the MSN article is selective in the stats it chose, and is myopic in itself for not considering larger underlying "corporate culture" type issues.

But there are the folks, like our mutual friend LandBaron, who don't give any credit to Eisner for anything, during any time period. And you are the one who chose to enter the thread by trying to take the home video credit away from Eisner.

I hold Eisner accountable for all of the good and bad during his tenure, and agree that the bad has outweighed the good for some time now, and he must go. Why am I the myopic one?

 

[Plus4206]

RE: "Anybody says anything positive about Eisner, and instantly they're branded as an Eisner apologist."

That statement has been the one constant on this board for years.

 

[DisneyWorld Delight]

There is a season for everything. Eisner was great at making money and poison to relationships. It is a good thing someone else will have thier chance to make a mark. That being said, if it all goes downhill, we may wonder what ever happened to Eisner?

 

[dcentity2000]

Some would hold, in spite of all, that his profit making abilities were down to some cosmic fluke.

Yeah, right



Rich::

 

[YoHo]

I used the term Myopic in refrence to the perceived inability to reconcile the blaming of Eisner for failures and not crediting him for success. Those of us who regularly do this have explained ourselves. Explanations that are regularly ignored in favor of the vitriol and bluster of the apparent contradiction. It's like I'm speaking to congress here.

Michael Eisner was not the only man brought in to Disney in 84. In fact depending who you ask, he may have been the junior partner. Therefore, at best, he gets no more then 50% credit for EVERY action positive and negative that this company took until Well's death. Eisner simply didn't have the power back then to be the credit. It's so easy to forget that, because he was the face of Disney. Cathrine Zeta-Jones is the pimp for T-Mobile, does that mean I can credit and blame her for that company's success and failures? I know, not an accurate comparison, but I say fight fire with fire and it makes a good soundbite.

If you want to hear me praise Eisner? We can talk about his successes at Paramount then, or his Gong show creative meetings. Or his apparent early ability to pick movies. A skill he seemed to lose early in his Disney tenure.

The simple answer is to look at what the failures are and what the successes are and make the easy extrapolation as to where the most credit goes. Disney's biggest issues are corporate culture related. That is directly tied to Michael Eisner.




Of course, I might ask this question. What difference does it make to you what I personally think of the Disney Company?


And Crusader, to be fair, most of us have been saying the exact same things Disney War et al have been saying long before said book came out. It sorta re-enforces the opinion. Especially given the reputation of Mr. Stewart

 

[raidermatt]

One of the reasons Disney was at the mercy of the corporate raiders was that the sum of its parts was greater than the whole. In other words, they weren't utilizing many of their assets. The two I've seen pointed to most were the film library and the real estate at WDW.

So one of two things was going to happen. Either somebody was going to come in and do something with those assets, or they were going to be sold to somebody who would do something with them.

Roy and the Bass Brothers won out, and they brought in Eisner and Wells. No matter who they brought in, they were going to have to come up with strategies for the library and real estate. Its not like Eisner and/or Wells were geniuses for doing it. Everybody knew it had to happen, which is why so many wolves were at the door. It was a slam dunk.

The only question was HOW, and that's where the arguments come in, especially with respect to how WDW was developed.

I really don't get the fascination with making sure Eisner gets credit for this, or doesn't get credit for that. What's the point? The worst of CEO's can still be tied to good things that happened at their company, and conversely the best can still be tied to negative things.

The only real point is the leader as a whole. And in that sense, I truly believe Eisner was the wrong guy from the start. Yes, many good things happened financially for the company during the first 10 years of his tenure. That was a time when he did not have the autocratic authority he later achieved. How much of it was specifically tied to him and him alone? I don't know, but it is telling that as his power grew, and those with power around him left, the results grew more and more spotty, both financially and creatively.

Did he morph from a "good" leader into a "bad" one? I don't know for sure. I do know that based on what we hear from those who have worked with and under him over the years, it doesn't look like he changed his style. It seems it merely became amplified as his power grew.

Its also important to remember that Eisner was brought in primarily to provide some Hollywood clout. Wells was seen as the right business guy for the company. In fact, the preferred arrangement was Wells as CEO with Eisner as President, however, Eisner would not accept that, which is why it was setup so that neither reported to the other.

So does it really matter if I "give him credit" for The Lion King? The point is he was the wrong guy from the start. The company was not saved by him. He was part of a team brought in to follow through once the company had been saved by the money men. Unfortunately, they made a mistake with respect to Eisner. The financial results over those first ten years, coupled with Wells' untimely passing, gave Eisner the clout to consolidate his position. He did so to the point that when some finally did want to do something about it, it was too late (which of course was a shortcoming on their part).

 

[DancingBear]

Excellent post, Matt.

I disagree to a point, in that I think Eisner was a better CEO until Wells' death. Whatever the circumstances of their respective titles, Eisner and Wells made a good team. Wells may not only have been keeping Eisner's worst tendencies in check, but his presence may have extracted the best out of Eisner. Ovitz obviously did not have that power.

[From "Storming the Magic Kingdom":

"You're wrong, Phil," Gold retorted. "You think creative talent can be bought as a commodity. You see guys like Eisner as a little crazy or a little off the wall. I don't mean to be difficult with you," he went on, "but every great studio in this business has been run by crazies. What do you think Walt Disney was? The guy was off the wall. His brother Roy kept him in check."]

Also, as the face man behind the great rise of the Company, Eisner had value not only for his Hollywood clout, but as someone "The Street" perceived as a strong visionary leader.

As to "how much was tied to him and him alone" the answer is none of it. Hell, you couldn't even say that about Walt. But at some point the buck stops with the top dog.

 

[raidermatt]

On the Gold quote, I could see using it to compare Eisner to Walt if Wells' death had resulted in Eisner turning into some kind of creative monster. But where Roy might have mitigated Walt's eccentricities, Wells mitigated Eisner's flaws in dealing with people.

Now, I'll agree in that because of that, Eisner did a better job with Wells than without. But I still submit that what drove him was quite different than what drove Walt, and that combined with his people skills challenges made him the wrong guy.