Sarangel
<font color=red><font color=navy>Rumor has it ...<
- Joined
- Jan 18, 2000
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- 3,078
From MickeyNews.com:
In 1984, with Walt Disney Co. under attack from corporate raiders, former lawyer Stanley Gold engineered the hiring of Michael Eisner and Frank Wells, the team that brought the fabled company back from the brink. Now, the 61-year-old Gold, who runs Shamrock Holdings, Roy Disney's investment wing, is leading the fight to oust Eisner as Disney's CEO. The most recent skirmish: the annual meeting where 45% of Disney investors voted against Eisner's reelection to the board.
As a result, Eisner surrendered his title as chairman. Gold and Disney, both of whom remain large Disney shareholders, resigned from the board late last year and have vowed to continue to fight to unseat Eisner.
BusinessWeek Los Angeles Bureau Chief Ronald Grover caught up with Gold on May 14, two days after Disney reported stronger-than-expected earnings. The surprising quarterly results prompted some on Wall Street to say Eisner has won more time to prove his case and hang onto his job. Gold disagrees -- and he tells BusinessWeek Online why. Edited excerpts from the interview follow:
Q: On May 12, Disney reported a 71% increase in net earnings in its most recent quarter. Your assessment.
A: The growth was up, sure, but it will be the last quarter by which they'll show any growth. Those aren't my calculations -- it's theirs. If you look at their predictions of a 50% increase over last year, that gives you a dollar, 99 cents, 98 cents [earnings per share] for the year. If most of that is in the two quarters [Disney reported earnings per share of 60 cents for the first half], and you take what's left of that dollar over the last two quarters, they'll be flat or down.
I'm just talking the mathematics. That's not even arguing whether their 50% number is right.
Q: Is Michael Eisner as safer now than he was before?
A: I don't think he is safe or not safe. I've watched the board, and they haven't taken the proper action to find a successor or replace him, or improve their strategy. I have said publicly that if they don't do it, we'll do something to dislodge the board.
Q: When?
A: Well, their next annual meeting is at the beginning of next year.
Q: How optimistic are you that you can still unseat Eisner?
A: Very optimistic. I believe that the shareholders will ultimately understand, as they did in Philadelphia [where the annual meeting was held], that this is a company that doesn't perform, the board doesn't hold anyone accountable, and ultimately there will be a change in board and management in this company within a reasonable length of time.
The fact is that, even after the [earnings] release, the stock didn't move very much. [It rose 30 cents the day after the announcement, then declined 6 cents the next day.] That's a small amount that tells you the investing public doesn't believe that there's continuing performance or that he's the right guy to lead this company.
Q: And why do you think the board doesn't see the same thing?
A: They can't bring themselves to take action because at board meetings there's a controlling dictator in the room.
Q: Are you still thinking about a consent solicitation to call a special vote [allowed under Disney's bylaws] before the annual meeting is held?
A: When we have a strategy, you'll get a call.
Q: The board has said that it's beginning the succession process for Eisner.
A: [Board Chairman] George Mitchell says in public releases that they're looking at internal and external candidates, and Michael [Eisner] jokes about it [at the investor conference call]. It's very hard to believe anything that comes out of that company.
At the annual meeting, [Eisner] marched out his management team and said, in effect, that this is the best management team around. And after three weeks, he throws out everyone in the television department. Just track the public records. And the board says they back him 100%, and I don't know if you can believe that statement either.
Q: If you could bring in someone to take his place, who would that be?
A: There are four or five people who could run this company, but if I told you who they were, the Disney PR people would only trash them. They all have jobs and careers, and it would be foolish for me to name them.
Q: Is Disney President Bob Iger one of those?
A: No. In Bob Iger's own words, the last five years his primary focus has been on fixing ABC. Rewarding him with the job would be rewarding mediocrity, or in his case failure.
Q: Are there other internal candidates within the company capable of running it?
A: There may be one or two. But I'm not going to tell you. If I give you their name, then they'll just trash that person, and what good can come of that?
Q: How about News Corp. President Peter Chernin?
A: He'd be on the short list.
Q: Viacom President Mel Karmazin?
A: He'd be on the short list.
Q: Jeff Bewkes, Time Warner's chairman of entertainment and networks?
A: He'd be on the short list.
Q: Viacom's [MTV Networks chief] Tom Freston?
A: Probably be on the short list.
Q: What about [Apple and Pixar Chairman] Steve Jobs?
A: He's definitely on the short list. He has proven that he has creativity, talent, and the people on the creative side love to work for him. The result is that his product is very good, and it makes money. This is not rocket science.
Q: Have you talked to Jobs?
A: I'm not going to tell you who I talked to.
Q: Does Disney stay independent, even at this stock price?
A: I think it stays independent, because it's too big a bite for anyone. And with good management that stock pop will price, and it will be outside anyone's range. If they didn't come out when Comcast bid for it, they're not going to come out now.
Q: What did you think of the Comcast bid?
A: I like the Comcast guys. [Cable Unit President] Steve Burke is first-rate. I like [CEO] Brian Roberts. But I didn't think that they were offering enough money, and we didn't have enough information to analyze. It's all in the details. If I was operating this company and someone gave me a credible bid, I would certainly consider it.
I wouldn't have rejected it out of hand the way that this board did. But all things equal, I would prefer this company to be independent.
Q: Do you have any board members on your side?
A: I had Roy Disney and Andrea Van de Kamp, and Michael got rid of them both. The board members there now don't talk to me. I don't think that they can talk to me. You know the rules: Directors cannot talk to anyone without the permission of Michael and [board Chairman] George [Mitchell].
Q: So how long do you think Eisner has?
A: He won't be there next year.
