The Return of Chairman Eisner?

Published January 25, 2005

By C. W. Oberleitner

With much of the media preoccupied following the Disney Company's lead, focusing their attention on Disney President Bob Iger's transition from "also ran" to "heir apparent" to succeed Michael Eisner as Mouse House CEO, o-meon.com Editor C. W. Oberleitner takes a look at what might be going on in Mickey's, or should we say Michael's, other hand.

Between the Lines

Buried amid the recent flurry of news stories coming out of the Walt Disney Company was an announcement by the Disney board of directors about a change in the company's corporate governance polices. In early January, the Disney board announced that in response to long-standing requests by shareholders, investment fund managers, and analysts, it would make permanent the policy separating the offices of chief executive and board chairman.

According to sources familiar with Disney Company operations, this act by the Disney board has done more to ensure that Michael Eisner will remain a fixture at the company, and that Bob Iger will be named CEO, than all of the recent increases in revenues, theme park attendance, and TV ratings combined.

"Think about it," said one executive at a rival studio. "Who would want that job now?"

By "who" he meant the crop of external executives often sited as possible Eisner replacements. "Bob Iger is about the only one I can think of who'd be willing to settle for what Disney's offering," he continued.

Indeed, sources see this as a move by Disney to actually discourage qualified applicants from pursuing the office of chief executive.

Being top gun and able to call all the shots at a major media conglomerate is the primary reason most of the executives, mentioned by the press as potential Eisner successors, would even consider a move to The Mouse.

News Corp President and COO Peter Chernin is one such candidate. His new contract permits him to leave News Corp with little notice to become chief executive of another company, such as Disney.

"Peter would be crazy to go after that job now," said a former Fox studio executive. "It would be a lateral move. He can't succeed Rupert (Murdoch News Corp CEO and Chairman), and Disney's just put a ceiling on their job."

Nor is it likely that any of the other prominent executives, frequently mentioned as potential Disney CEO candidates, will be enthusiastic about pursuing the job either.

Why? Because, chief executive isn't the only high-level job up for grabs at Disney. George Mitchell, the current chairman of the Disney board, will reach retirement age just weeks after the board has said it will name the company's new CEO.

This means two things. First, under Disney's formalized new rules, the next CEO has no hope of incorporating the offices of chief executive and chairman. Second, whoever is offered the CEO's job will, in very short order, have a new and, as of yet, unnamed boss.

Misdirection

The announcement formalizing the separation of the two offices came a few weeks after news that Michael Eisner was backing way from earlier statements made to the press, in which he indicated that he would not retain his seat on the Disney board.

Late last summer, while attending entertainment industry investment banker Herb Allen's annual retreat for top media executives in Sun Valley, Idaho, Eisner was quoted as saying he saw no reason that one person could not hold both positions. He went on to say that he knew former Senator George Mitchell was not happy being thrust into the job of Disney board chairman and that he (Mitchell) was eager to hand it over to someone else.

In October, the Disney CEO told a Fortune magazine interviewer,

I have not asked the board to stay on the board or be chairman after the end of my contract. My assumption is that I would not continue on the board or as chairman.

In December, in response to questions from employees at an ABC staff meeting, he said he would remain an active member of the board of directors, and perhaps be able to have a more active role in some of the creative elements of the company.

Analysts have long theorized that Eisner never really planed to leave Disney. Rather, he plans to preserve the status quo by installing his current number two-man, Disney President Bob Iger, as CEO. Eisner would retain his seat on the board, and would replace George Mitchell as chairman once the former Senator reaches the mandatory retirement age of 72 in August of 2005. Now it's beginning to look like those predictions may be coming true.

Recently, stories have begun to appear in the press suggesting that Eisner will stay on at Disney as "Chief Creative Officer" after his successor takes over the CEO's duties.

"This is classic Eisner," said an author familiar with the Disney CEO. "He's like a stage magician focusing your attention with one hand and doing precisely what he wants with the other, while you're not looking."

Now that it's becoming apparent that Eisner intends to keep his seat on the board and maintain an active role in the company, the question of who will replace George Mitchell as chairman takes on new significance.

Or as one Disney observer put it, "What truly qualified executive would seriously want to be the next CEO at Disney with Michael Eisner's shadow hanging over them?"

this business of show

Michael D. Eisner
Chief Exeutive Officer of
The Walt Disney Company.

Walt Disney Company corporate headquarters in Burbank, California.