Where Eisner went wrong

[manning]

If you haven’t read this transcript, you will find it at Savedisney.com under Kim Master on Motley Fool Radio. It is in three parts

On The Motley Fool Radio Show on NPR, David and Tom Gardner recently talked about the wonderful -- and not so wonderful -- world of Disney with Kim Masters, author of The Keys to the Kingdom: How Michael Eisner Lost His Grip. She attended the annual shareholder meeting last week and shared her thoughts with us.

I find this one comment enlightening

TMF = Tom and David Gardner of the Motley Fool
Masters = Kim Masters


TMF: We know about Michael Eisner's pay package. We know that in relative terms, I think it is fair to say that he has been very well paid for a stock performance than hasn't been very good over the last five to 10 years. Why do you think he has made so many enemies?

Masters: Well, he plays hardball to the point where it hurts him. This has been consistent. He did it with Jeffrey Katzenberg, the former chairman of the studio. He fired him. Jeffrey Katzenberg had a contractual right to a percentage of the money that was made from the projects he developed, like The Lion King. And instead of settling for about $90 million, which Eisner could have done, he engaged in years of fighting and protracted public humiliation. Michael Eisner ended up on the witness stand admitting that he "hates the little midget." Then, they paid Katzenberg close to $270 million instead of $90 million.

What they got for their money was humiliation and loss. This happened again and again. They fought with Pixar (Nasdaq: PIXR). And I just always believed that if you lose the relationship with Pixar, you have made the catastrophic mistake that Michael Eisner has always feared. He had always said he has seen one big mistake bring down companies or individuals. I think he made two big mistakes. He underestimated Roy Disney Jr. and he allowed the Pixar relationship to go away. You don't negotiate that kind of hardball tactic with talent that is so incredibly important to your company, but Michael Eisner did.

 

[AllisonG]

Thank you for posting that article. It's just another nail in Eisners coffin.

 

[Micca]

Part of the secret to big biz success is the right people in key places. When you lose a Katzenberg, Roy Disney, the Pixar crew, you're cutting your own throat.

 

[Luv2Roam]

Even the Pooh lawsuit is an example to this.
Disney probably could have settled years ago for a decent settlement on both parts.
Instead they have paid lawyers for at least ten years, have more garbage slung at them and lose anyway.

 

[DancingBear]

Eisner screwed up in fighting Katzenberg's payoff, but Katzenberg was out once he figured out they weren't going to make him President, and it was not just Eisner who didn't think Katzenberg belonged in the Presidency.

The Pixar battles have been chronicled here extensively--Jobs wanted out of that relationship as soon as he saw that Pixar could do better. There is no indication that Jobs wanted to extend this relationship earlier, and the deal Pixar wanted in the recent round of negotiations was not good for Disney. Perhaps Eisner shouldn't have been in this position in the first place, and kept the capacity in-house, but "losing" Pixar isn't a big slam against Eisner IMO.

They haven't lost the Pooh lawsuit--it won't even go to trial until next year.

 

[manning]

Perhaps Pixar didn't want the deal and made it impossible to make. Pixar went shopping before the annual meeting and then put things on hold until mid-march. When Eisner refused to leave, Pixar extended its hold.

It could be Jobs is waiting for Eisner to leave and then would make a deal with Disney.

One of the first visits Roy made after resigning was with Pixar.

One wild card (and a long one) is Roy putting something together with Pixar and a few others with money and try for Disney. A very long wild card, but who knows what may happen, they said it couldn't be done in 1984.

All of the cards have not been played yet and won't be until the very last moment. What we have seen so far is manuevering for position.

 

[airlarry!]

DB, I think you are dead on with the Katzen thing. He wasn't President material IMHO, but Ei$ner screwed up by fighting a losing battle on the contract. It cost him dearly.

But, I still think it is mere supposition to assume that Job$ wanted out for any reason other than the working relationship with Ei$ner, and you must admit by now that the very public comments by Job$, Lassiter, Andrew Stanton, Dick Cook, Mr. Disney, and many others, have proved my point that it was Ei$ner's fault, plain and $imple, that Pixar is walking away.

Every indication shows that the directors of Pixar considered this the perfect relationship, in fact that they were the Disney Company's sister company, and that Ei$ner tried his best to torpedo the relationship, first with the purchase of the Secret Lab, the push for Dinosaur, the dumping of 2d for 3D training, and the hardball negotiations on the contract.

 

[crusader]

Pixar doesn't want to be anybody's sister company. They want to be the "Dreamworks" of animation.

They aren't going for a deal less than flat fee distributorship and I say let them go if they continue to push for heavy renegotiation on the rights under the existing contract.

Why should Disney further strengthen the positioning and bargaining power of their greatest animation competitor right now?

Not a good move in my opinion.

 

[Luv2Roam]

They haven't lost the Pooh lawsuit--it won't even go to trial until next year.

Is there anyone whop thinks they won't lose? Of course I am sure many do -- and miracles can happen. Disney keeps losing the small battles along the way. I see it as prep to lose at the end on this one.