How Did Michael Eisner Make Disney Profitable?

[YoHo]

Of course, at the time of that quote, what did Gold Know of Eisner besides his track record? Hell, Miller wanted to bring him in to run the studio.


Speaking of Ron Miller, It's hard to find a single startegy that Disney took in the 80s that wasn't also proposed by Ron Miller. Or was first spoken of under Miller. Perhaps if Card Walker had not been so rude to Roy E. or had the buisness sense, we'd be looking at a company run by Miller with the same success.


Obviously, we don't know if that is true, but it is possible. Miller was activly courting Eisner. He was looking for Eisner's studio successes low money good return singles and Doubles. He was looking to increase profits at the parks. It makes one wonder what exactly the Eisner team did that was so earth shattering?

 

[DancingBear]

I don't cite the Gold quote to say that's how Eisner/Wells turned out, but as an example of how an effective partnership could be better than the sum of the parts.

As for doing anything earth-shattering, there is an element of luck and good timing in the Eisner/Wells situation, just as in many business ventures, or how the economy did under Clinton, or whatever. And Eisner's ego was probably over-inflated by the Company's successes, which contributed to his worst tendencies becoming exaggerated after that point.

But, even if Eisner wasn't the genius that Wall Street put him up to be (doesn't it seem that The Street is constantly putting people out there as business geniuses that later take a fall), they accomplished stuff. If Eisner had stepped out of the picture 8 years ago, his legacy at Disney would have been a very positive one.

 

[Bstanley]

It isn't hard to understand why people question who should get the credit for Disney's wild success from 1984 to 1994 - Disney hasn't been nearly as successful since then and The Big ME is the only constant the whole time.

As much as I'd like to give Frank Wells the credit for the success - it should be pointed out that there were many others involved. In fact quite a number of people who worked at Disney during the glory years are now successfully running other Fortune 500 companies.

And that really demonstrates The Big ME's biggest failure as the head of Disney IMHO - the company hasn't grown/imported truly talented management like it used to. Most of the problems that Disney has experienced are just the symptoms of a corporate culture where The Big ME makes the decisions alone - either because he doesn't let people manage because he doesn't trust their judgement, or because they simply aren't capable of managing.

Let's hope that Mr. Iger gets along with people better.

 

[raidermatt]

It isn't hard to understand why people question who should get the credit for Disney's wild success from 1984 to 1994 - Disney hasn't been nearly as successful since then and The Big ME is the only constant the whole time.

That really sums up my take on it, especially if you are just looking at the company's creative output and business results.

I think when you dig deeper, you find that at best, Eisner's positives were put to use when part of the team that ran Disney, while that same team was able to mitigate his negatives. As the team disintegrated and was replaced by the growing power of Eisner, so did the checks and balances.

But that brings up the question of whether it was worth having Eisner as a part of the team for that first 10 years, given what happened since. I say no, that in retrospect, the company would have been better off with a different "creative executive" who was more willing to work with a team, played better with others, AND most importantly, had a better understanding and appreciation for what Disney was all about.

The film library still would have been utilized, resorts still would have been built, The Lion King still would have been made, etc. But I'm convinced the company would be much better off today.

Yes, hindsight is 20/20 (though in this case maybe not, since that is really what we are debating). And since I was in high school when the Eisner/Wells team was installed, I certainly wasn't in a position to see through Eisner at the time. Even some of his harshest critics admit it also took them time to figure out what he was all about.

Without getting into the details about Eisner's "qualities", I'm just saying that in the end, the company would likely have been in a better position if they had gone in a different direction with his position.

Of course, there's also the question of who they could "sell" at the time to make the coup work, and Eisner was a plus in that regard. Still, I believe they could have found someone better, had they realized what they were getting into.

 

[DancingBear]

First, again, if Eisner had walked away somewhere in 1994-1996, he would have looked pretty golden, and most of the crap would not have been out there.

Second, who's arguing that Eisner was the best possible CEO imaginable? Can't you always say there could have been someone else? But who else? Who of the crop of potential candidates in 1984 has had an unblemished record of success since then? And, as you say, not everyone was a realistic candidate given the internal politics at Disney at that time (including the squabbles between the Walt and Roy sides of the family, the Bass brothers, etc.).

For example, lots of folks have been throwing Steve Jobs' name around with Disney, but he's certainly had his ups and downs, and his share of critics for his personal style and such--they threw him out of the company he founded, after all.

I wish another Walt had been in charge, but I also wish that I win the lottery and retire.

 

[YoHo]

DB, I think you're missing the point. Sure, other CEOs have had failures, but Eisner's failures are so directly tied to the fact that he;s a horrible manager of people, backstabbing and cruel. Would Barry Diller have been the same?

Eisner was not capable of working with other managers. Wells mitigated that. Who else? Anyone that could work with other intelligent and competent managers without creating a culture of fear.

This isn't a complex question who else. Eisner doesn't have magical powers that make him a brilliant entertainment exec. He's paranoid, delusional and has a huge Ego. That can't possibly be hard to find in Hollywood.


If Eisner had walked away in 94, there would be a lot of former Disney employees that complained about him, but nobody would listen. And again, if he had walked away then, his successes would still be as part of a team. They wouldn't be HIS successes.

 

[DisneyKidds]

But that brings up the question of whether it was worth having Eisner as a part of the team for that first 10 years, given what happened since. I say no, that in retrospect, the company would have been better off with a different "creative executive" who was more willing to work with a team, played better with others, AND most importantly, had a better understanding and appreciation for what Disney was all about.

This sums up my opinion perfectly. Eisner, as part of a team, was a good man for the job that the moneymen needed done, at a critical juncture in Disney's growth as a company. There was a lot of low hanging fruit to be had, and a rather obvious plan for picking it. Eisner did bring some Hollywood clout. All in all, with the right team around him, he gave Disney what it needed and took advantage of the relatively easy money to be made. However, given that 20/40 hindsight, he was not likely the best man to be the long term, sole leader of the Walt Disney Company. Had anyone anticipated the directions he would take the creative core of the company in the future I'm not so sure he'd have been the man.

I've always said that Eisner deserves a modicum of credit for the successes from the mid 80's to the mid 90's, but in giving those kudos you have to recognize that it wasn't him alone that brought them about. So give him credit, but hold him to his faults.......and unfortunately those faults have outweighed the credits over the long term. Moreso than just having more checks in the negative column, he has entirely changed the corporate culture of the Walt Disney Company and has had a negative impact on too many crucial business relationships. Those will be the hardest things to correct when Michael is gone.

 

[DancingBear]

Part of what a new CEO gets credit for is building a team of folks to get things done. He wasn't just part of a team, he was the leader of the team. Plenty of executives come in to a situation where "everyone knows what has to be done" but they can't do it.

MGM had a valuable film library, too.

 

[DancingBear]

If Eisner had walked away in 94, there would be a lot of former Disney employees that complained about him, but nobody would listen.

The fact is that even now not many folks are listening. Certainly not the institutional shareholders. Most of the issues that folks complain about here (and over there) aren't things that the public takes a lot of note of. Eisner's legacy to most of the world can still be saved, without too much of a stretch.

If ABC has a good 2005-2006 season, Iger re-ups with Pixar, Ouimet gets Disneyland sufficiently cleaned up for the 50th, Scott Rudin makes some movie for Miramax that gets an Oscar nomination in the next couple of years, and WDW continues attendance gains, most folks aren't going to think of Eisner as that egomaniac who destroyed the creative core of the Disney company.

 

[YoHo]

The institutional shareholders seemed to be listening last year. Everyone's been waiting to see what the board will do. Don't mistake that for total indifference. (although much of the minutiea we discuss probably is inconsiquential.)

In addition, Disney War has actually been making a pretty big splash. If Iger manages to do all those things sustainably, then nobody is going to think anything new about Eisner, they're going to think good thoughts about Iger. Eisner's already dead and gone. His reputation is not salvageable at this point.

If Iger manages all that it will just cement Eisner's incompetence in everyone's mind and suddenly, NOBODY of consequence will be giving Eisner credit for ANYTHING positive during his tenure.

Frank Wells and a Host of underlings that are currently very successful elsewhere will be the beneficiaries.


As for a Manager assembling a team. Again, just who are you referring to? Katzenberg? He didn't come up with one single storyboard for those Animated features and according to those involved he wasn't all that liked around Feature animation. Most of that success can be attibuted to Animators already in Disney's employ and the recruiting of Ashman and Menken. And can we not attribute that to Musker's and Clements? Two peole in Disney's employ prior to Eisner's arrival?

Both worked on Fox and the Hound in 81 and Clements worked on Pete's dragon.

 

[Plus4206]

Exactly right DB. Because of this board and others I know more about ME then I ever wanted too & I actually know very little. But to all the people I interact with - friends,family,co-workers, customers,etc - I'm a freakin' ME genius. IMO about 99.999 % of the population have no idea that Walt had a "philosophy". They can't even seperate Pixar from Disney. Gotta admit, ME's done such a great job marketing other companies products that the general public doesn't even know the difference.

 

[raidermatt]

DB, I understand your arguments about perceptions. As with anything, the majority look only at the surface of a given topic, and in this case, that surface says the following:

Eisner had 10 great years. He stumbled, and alienated a lot of important people. But just before he was pushed into the abyss, he righted things enough so that he can (apparently) peacefully ride off into the sunset.

But being the geeks that we are, we are trying to understand the reality of what happened.


When I say that they could have found a better person, I don’t mean just in the Utopian sense. I mean I’m sure there were other legitimate choices who were better suited for the position. I just don’t think Gold and Roy were asking all the right questions about who they needed.

That’s not to say there were 100’s of better choices. Only that there had to be at least several other legitimate ones.

In my view, Eisner’s two most damaging flaws are (1) his lack of ability to deal with the creative types and those he views as a threat, and (2) his lack of understanding of and appreciation for what Disney was all about. He came into the job viewing Disney as an antiquated company that needed to be ran like any other Hollywood studio should be ran.

While that was true in some ways, it ignored the things that made Disney unique and that should have survived the modernization process. Unfortunately, Eisner didn’t get that then, and never did figure it out.

That’s not to say Disney’s leader needs to be a true “fan”, but they do have to have an appreciation for those things that made Disney different, and retain them even if others refuse to do the same things.

MGM had a valuable film library, too.

In many ways, this illustrates just what I’m talking about. Disney’s film library was unique in that its animated films have a level of timeless appeal that others wish they had. Coming up with a limited release strategy for Disney films was much easier than trying to make that kind of money re-releasing MGM musicals from the 40’s and 50’s. It had MUCH greater sustained value on a title for title basis.

I actually think they have did a pretty good job with it, though its not as if they came up with a magic plan nobody else could have thought of. Even today, they change the strategy every few years.

Point is, they were given gifts in the library and land that you just can’t compare to other studios. To reverse your analogy, I don’t think that anything Disney has done indicates they could have handled MGM’s library any better than it was. The strategies Disney employed simply wouldn’t have helped because they didn’t have the loaded lineup they had at Disney.

As Kidd’s said, it and the land were the textbook definition of low hanging fruit.

 

[raidermatt]

IMO about 99.999 % of the population have no idea that Walt had a "philosophy". They can't even seperate Pixar from Disney.

Last things first... the Pixar thing is just plain incorrect. Sure, there are still many who don't differentiate, but there are also plenty who do. That's why a Pixar film is guaranteed to open big, while a Disney animated film has to "prove" itself first.

But on your first point, I largely agree, but what does that prove? Most who visit Disneyland have no idea how or why it was created. But the fact remains that they love it because of how and why it was created, even if they don't realize it.

Can they tell you what forced perspective is? Do they realize that many movie-making philsophies were translated into the park to make you feel like you were IN the story? Do they know the steam trains are authentic? Do they know the chandelier is real?

Of course they don't. But that philosophy is still the thing that made them come back.

So just because the general public doesn't know about it, that doesn't mean it isn't true.

Same with the CEO situation. Just because the majority of the public doesn't realize (and frankly, doesn't care) that the company could be in a better position, that doesn't have any bearing on whether its true.

 

[YoHo]

Just to clarify on the Video release schedule. Disney had been releasing it's films to Theaters every 7 years for some time prior to Eisner's arrival. The only change was moving from the theater to Tape. Again, not much of a challenge.

And I agree with Matt, the comment on Pixar is 100% false. MOST people do distinguish between the 2 now. that's why Pixar feels it doesn't need Disney anymore. Disney's Distribution channel is all it needs and there are others that have that.

 

[Plus4206]

I don't know Matt. A lot of people I know think Disney owns Pixar. When they buy the Incredibles DVD, they think they are adding to their Disney library.

I'd be willing to bet the average person doesn't even know Walt was dead 5 years before WDW opened.

My point is that regardless of what we here know and think about ME, the masses will love what they find at WDW and DL and ME will get the credit for it.

 

[raidermatt]

But again, the point of this discussion isn't what the masses think of all of this. I've already acknowledged they don't care about most of the background. That doesn't change the impact of all of that background stuff.

Even at that, though, there's some inconsistencies. You're right that people don't know or care about much of this, but it also follows that a lot of them don't even know who Michael Eisner is. Certainly a person who has forgotten most of what Walt was about isn't going to remember Eisner at all in the final analysis.

Still, that's all just public perception of the politics behind the situation.

My point is that regardless of what we here know and think about ME, the masses will love what they find at WDW and DL and ME will get the credit for it.

It is not ordained anywhere that the masses are going to love whatever is created at WDW and DL. People still have to make it happen. And the real point here is that "better" things would have been created with a "better" leader at the helm, putting the company in a "better" position.

That's my contention. Telling me what the public perceives with regard to Eisner has no bearing on that.

 

[Plus4206]

Matt and Yoho: I know you guys are left coasters and I don't know how often you guys visit WDW but I'll assume that you, Matt, visit once a year or so because you're a DVC member.

My question: Would you visit WDW as often as you do had Eisner not expanded the resort to it's present day expanse. How often would you fly cross country to stay at a high dollar resort like Poly or CR if all that was availible was MK and Epcot ?

 

[YoHo]

Me Personally, I'm sorry to say I haven't been to WDW since 2000 (I took a cruise in 2002 for my honeymoon, but I didn't go to WDW, just the Disney cruise). Prior to that I went oh once every 3 or so years.

The simple answer is I only have stayed in the Poly, the contemp and once at Old Key West and I'd never stay there again. So, does that answer your question?

I have serious issues with significant parts of the expansion under Eisner and I always have. I think catering to the every year or even multiple times a year crowd is a mistake and I as much as I love Disney, I'd never pay the prices to go so often.


I do go to DL twice a month though. It's easy and I make the most of my annual pass. Quite Frankly though, Eisner has done absolutly nothing to DL to make me more inclined to go. I like some of the attractions especially Indy, but I would go just as often without it.

 

[Plus4206]

On my 2nd trip to WDW in '97 I bought into DVC. Since I've gone three times a year. While the parks aren't the draw they used to be, WDW itself is. The reason I go so often is that while I'm there I can do as little or as much as I chose without feeling like I've wasted my vacation time.

While I'm not certain of what WDW consisted of pre ME, I doubt I'd have purchased DVC or returned as often had it not been expanded to what it was in '97. So in that sense I'd say ME made Disney profitable.

But I'll also admit that the same or better ( or possibly worse) WDW may have existed under any other CEO. But we'll never know for sure.

BTW: Don't misinterprete my "parks aren't the draw they used to be" as an indication I think the parks are in a tailspin. It just means that I don't feel obligated to hit the parks everyday for 15 hours or so. I take relaxing trips now. I get my monies worth without being a commando.

 

[YoHo]

In 1984 WDW consisted of

MK
Epcot
Disney Village (DTD)
Poly
Contemp
Campground
Golf resort (various names now shades of Green)
Disney village treehouses or whatever they were called.
I think 2 of the Golf courses.
River Country
I believe Discovery Island in some form or another
The Disney Village other hotels.

In addition, at least 2 resorts were on the drawing boards for the MK area along with the Hotels that became the Swan and Dolphin.
The Studios was a planned land at Epcot.

So, a lot has happened, but a lot was there.

Obviously DVC was not there, but truth be told, I'm not a big fan of that as a Business move. At least, not to the levels it's being funded. It seems to be the only construction regularly going on.

By 1997 I had been to Disney World 5 times and was planning my 6th trip.