Reporter's Notebook

First published March 03, 2004

By C. W. Oberleitner

If it's Wednesday this must be Philadelphia. C. W. Oberleitner checks in with his thoughts on yesterday's SaveDisney.com press conference and rally.

Dateline Philadelphia

Today the battle to remove Michael Eisner as the CEO and Chairman of the Board of the Walt Disney Company moved to the city of brotherly love. The day began with a brief series of rain showers that soon gave way to unseasonably warm weather. If Michael Eisner and the rest of Team Disney are hoping for repeat of the blizzard that kept thousands away from last year’s annual WDC shareholders’ meeting it appears they are out of luck. Today is supposed to be even sunnier and warmer than yesterday.

Disney Si, Comcast No

I’ve been in Philadelphia for several days now. In addition to taking in all the historical sites I spent a lot of time talking to Philadelphians about this week’s meeting. Not everyone was aware that the Mouse was about to hold its shareholders’ meeting in the Pennsylvania Convention Center, however, virtually everyone I spoke with knew about Comcast’s unsolicited bid to take over the Magic Kingdom.

As I walked around Philadelphia or struck up a conversation waiting in line for a meal, I asked folks how they felt about Comcast’s attempt to bring Mickey and pals to their hometown. I have to admit I was more than a little surprised by their answers.

Not one of the Philadelphia residents I spoke with wanted Comcast to succeed at gaining control of Disney. Every single person I spoke with, and I stopped counting somewhere around fifty, said they far preferred to see Disney remain independent. Most said they doubted the cable TV giant would be able to run a creative company like Disney. Still others said they feared what Comcast might do to the WDC. Few believed Comcast would keep Disney whole. Many were convinced all it wanted was Disney’s cable assets. And, a surprising number went on to say if I thought Michael Eisner had ruined customer service I should, "Wait and see what Comcast will do to it."

"They’ll slow all the rides in the parks down." A Comcast customer told me in reference to a high speed Internet ad currently being run by Comcast. "Then charge everyone three times more to ride them when they return them to normal speed."

Stay On Message

Tuesday was Super Tuesday with presidential primaries all around the country. I mention this only because the first rule of presidential politics, if you’re a candidate, is to "stay on message." In other words it doesn’t matter what question a reporter asks you always find a way to phrase your response in a way that includes the key points of your candidacy. Judging by his performance at Tuesday morning’s SaveDisney.com press briefing and later that afternoon at the SaveDisney.com shareholders’ rally Stanley P. Gold could be running for office.

Mr. Gold’s message to the media and Disney shareholders:

The current board is trying to spin the pension fund complaints against the company as being little more than a request to separate the roles of CEO and Chairman at Disney. This is wrong.

At the WDC shareholders’ meeting they will probably make a big deal about splitting those positions and Michael—as Gold referred to him—will probably step down as Chairman and stay on as CEO.

This is NOT acceptable to Mr. Gold, Roy Disney, Shamrock Holdings and SaveDisney.com. "I want to make one thing perfectly clear. We are not and will not be happy if Michael Eisner stays with this company." Said Mr. Gold.

Gold was asked why he and Roy, while on the Disney board, approved the deals for ABC/Cap Cities and the FOX Family (now ABC Family) Channel and were now critical of those acquisitions. He said at the time the deals were proposed Eisner and his management team presented the board with very impressive revenue and growth projections for both properties. Now, he went on, both assets were severely underperforming. "ABC Family doesn’t even generate as much revenue as it did when Rupert Murdoch and Hiaman Saban owned it."

Both Mr. Gold and Mr. Disney refused to speculate about either Mr. Eisner’s eventual replacement or the future direction of the company. Saying, instead, they preferred to focus on the objective of removing Michael Eisner from the company. Roy Disney did say that while the executive team at Shamrock Holdings did have a short list of a few people in mind they thought would do an excellent job running the company they had not discussed the matter with any of them.

"It wouldn’t be fair." Mr. Disney said. "If we open talks with somebody and it gets back to their current employer, then these folks could find themselves out of a job." He went on to say that while the objective was to remove Eisner he didn’t really know exactly when that goal would be accomplished thus making it even less reasonable to engage someone in talks to replace Eisner.

The question was asked if Pixar CEO Steve Jobs would be a good candidate to replace Eisner. Roy said he felt Steve possessed a lot the skills, talent and imagination to do the job. He said Jobs would be a fine candidate but that he hadn’t talked to him about it.

All is Forgiven

When asked about Pixar and the possibility of renewing their agreement with the WDC, Roy Disney said it was his feeling Pixar, "…would come back in a minute…" and do business with the company if Michael wasn’t there. Roy was then asked about the nature of the deal Jobs had demanded for Pixar and how bad it was supposed to be for the WDC.

"Its bad," Roy said, "because Michael allowed things to get so bad between the two of them (Jobs and Eisner)." While he did not say whether or not he believed Steve Jobs would alter his demands Roy did say he remained convinced that something could be worked out between the two studios if Eisner simply wasn’t there.

Roy also said that the media needed to understand that things did not become as bad as they are between Steve and Mike overnight. "This happened over the course of five years." He said. He went on to stay that despite repeated warnings Eisner did nothing to improve relations between the two partners and that like ABC, and the ABC Family Channel this was yet another example of a mismanaged asset.

From JHM to the WSJ

I asked what Roy and Stanley had to say to Disney fans on the Internet who have begun voicing concerns that the pair may have inadvertently brought the wolf to the door in the form of Comcast’s unsolicited take over bid. To my surprise Roy Disney addressed his response to a column Jim wrote about the Shamrock folks moving away from the Disney fan community and more towards institutional investors.

"I read that column," Roy said, "and, I almost wrote Jim about it. I got busy and I didn’t get around to it. But the more I thought about it, he’s probably right. We haven’t been talking to them as much."

At this point Stanley Gold jumped in and reminded everyone that because Disney is so deeply loved by its fans the stock is one of the most widely held by individual shareholders, of any company in the world. That having been said, the individual shareholders still only comprise a tiny fraction of the company’s two billion shares. They (Shamrock) have to pursue institutional shareholders, like the pension funds, if they ever hope to achieve their goal of removing Michael Eisner form the company.

The line to get into the SaveDisney.com shareholders’ rally stretched down the stairs from the Millennium ballroom, out onto Market street, around the corner and two thirds of the way down 12th Street. Over 600 people had to be turned away. Next up it’s Team Disney. Already the local Philadelphia media is a buzz about the 75 giant Mickey Mouse statues the Company has placed all around the atriums of the Pennsylvania Convention Center. Today we find out if they’re just being used to misdirect people’s attention from what’s really going on inside the hall.

Stay tuned.

C’ya real soon!