Eisner to leave Disney....

[MrRant 0]

Embattled CEO to retire from Disney in 2006 when contract expires; says 'I'm going to Disneyland.'

September 10, 2004: 10:19 AM EDT

 

http://money.cnn.com/2004/09/10/new...dex.htm?cnn=yes

 

NEW YORK (CNN/Money) - Embattled Disney CEO Michael Eisner will leave the media conglomerate in two years, the company announced early Friday.

 

Michael Eisner plans to retire as Disney CEO in two years, the company said Friday.

 

Eisner, who has led the company for nearly 20 years, sent a letter to the board of the Walt Disney Co. on Thursday saying he planned to retire at the expiration of his employment contract Sept. 30, 2006.

 

Eisner, 62, was stripped of the his position as chairman after about 43 percent of shareholders voted in May not to return him to the board. But he retained the support of the company's board, despite attacks from two former board members, Stanley Gold and Roy Disney, the nephew of company founder Walt Disney.

 

Shares of Disney (DIS: Research, Estimates) fell in European trading early Friday on the news.

 

In an interview published Sunday in the Los Angeles Times, Eisner said Disney President Robert Iger was his "preferred choice" to succeed him. Iger, a veteran broadcasting executive, told the newspaper he was interested in the job.

 

Analyst Tom Wolzein of Bernstein & Co. said other possible successors include former Disney executives who are top executives at other companies, such as eBay Inc. (EBAY: Research, Estimates) CEO Meg Whitman, Gap Inc. (GPS: Research, Estimates) CEO Paul Pressler, and Comcast Corp. chief operating officer Steve Burke.

 

Wolzein said other seasoned media heavyweights who could emerge as candidates include News Corp. (NWS: Research, Estimates) President and Chief Operating Officer Peter Chernin, Leslie Moonves, the co-chief operating officer of Viacom and the head of its CBS unit, and Jeff Bewkes, chairman of the entertainment and networks group at Time Warner Inc. (TWX: Research, Estimates)

 

CNN/Money is a unit of Time Warner.

 

Reuters suggested that other outside candidates could include Tom Freston, the other co-president of Viacom, who is competing with Moonves for the top job there that is to be awarded sometime before 2007. The service also mentions Yahoo Inc. (YHOO: Research, Estimates) Chairman and CEO Terry Semel, and even Steve Jobs, the CEO of Disney partner Pixar Animation Studios Inc. (PIXR: Research, Estimates) as well as Apple Computer (AAPL: Research, Estimates).

 

Roy Disney earlier this year urged the board to look at Mel Karmazin, who in June left his position as president and chief operating officer of Viacom Inc. (VIA: Research, Estimates)

 

Iger seen as the favorite

 

Analyst David Miller of Sanders Morris Harris said he believes there's at least a 60 percent chance that Iger will end up with the job, given Eisner's endorsement and the support for the CEO on the board.

 

"Michael's been in the position for 20 years. He's had his ups and downs, but its mostly up though," said Miller. "I think he's earned right to chose his own successor."

 

But Wolzein said he thinks Disney's board will conduct a true, broad search of possible candidates.

 

"That doesn't preclude Iger from getting the job, but it's in interest of company to do as broad a search as possible," he said.

 

MediaTech Capital Partners media analyst Porter Bibb said current weak ratings at ABC could hurt Iger's chances.

 

"After all he brought ABC to the table and it is failing," Bibb told CNNfn.

 

Iger joined ABC in 1974, and came to Disney with its purchase of the network.

 

In addition to the shareholder revolt, the company faced an unsolicited offer from Comcast, the nation's largest cable operator, for $54 billion. But the board rejected the offer as insufficient, and it was later withdrawn.

 

Eisner's letter makes no mention of his successor or even a reason for his plans to leave. But he does refer to the corporate turmoil of the last year.

 

"I have been told by you, by friends, but mostly by outside observers, that it is quite extraordinary that we have been able to remain focused on our objectives and have managed to run the company so well amidst the distractions that have taken huge chunks of time during the past several years," he said in the letter.

 

But in an interview with the Wall Street Journal published Friday, Eisner denied the critics had a role in his departure, which he said was "not asked for, not motivated by current circumstances at all."

 

He instead said the retirement plans satisfied both his personal and professional interests.

 

His letter to the board recalled how much the company has grown in his 20 years of heading it, with revenue rising to a projected $30 billion this year from $1.7 billion when he took over. It became a component of the Dow Jones industrial average in 1991.

 

He ended the letter with the company's famous advertising line, which he said had been suggested by his wife, Jane: "I'm going to Disneyland!"

 

Added ABC, ESPN

 

The company acquired television networks ABC and ESPN during his tenure, as well as independent film studio Miramax. It also opened several new theme parks.

 

But Disney has seen disappointing ratings at ABC and poor box office from many Disney films this year. The studio that pioneered animated movies aimed at children had no animated movie release during this past summer.

 

It sought to change gears and play catch-up with studios that now use computer-generated animation, which gives characters the 3-D appearance that's increasingly popular with modern movie goers.

 

Roy Disney charged that Eisner's management style chased away some key talented executives.

 

But at least some analysts said Friday that Eisner doesn't deserve all the blame heaped upon him in the last year.

 

"He's been such a lightning rod for criticism, oftentimes for things that were clearly not in his purview to make better," said Jeffrey Logsdon, analyst with Harris Nesbitt. "If theme park attendance goes down because of 9/11, is that Michael's fault?"

 

Logsdon said it is too soon to say if Eisner's departure will stop the turmoil among Disney shareholders, but he doubts there will be much lasting effect on shares. Top of page

 

-- Neither analyst quoted in this report has shares in Disney and their firms do not have investment banking relationships with the company.

[Alro 0]

That's the best news I've heard out of that company in a long time. Eisner lost his magic touch years ago and it is high time he move on.