That Was the (Disney) Year That Was

Published December 31 2004

By C. W. Oberleitner

It has often been said that The Walt Disney Company is the one business you can refer to as being a "Mickey Mouse operation" without fear of being accused of being cynical. In 2004, that just may not be true any longer.

Disney wasn't the only media giant to make headlines in 2004. General Electric's NBC TV unit completed their acquisition of Universal Studios and Theme Parks, and Sony headed a group of investors that made a successful bid for MGM. But it was Disney, in part thanks to its lightening rod CEO Michael Eisner, that made the most news in 2004. Here are just a few of the Disney highlights (?) from 2004.

January

January 12, the Disney Company kicked off the New Year by announcing the closure of Walt Disney Feature Animation, Florida. This results in the loss of 258 jobs.

January 17, Roy E. Disney, son of company co-founder Roy O. Disney and Walt's nephew, kicked off the New Year as the featured speaker at the National Fantasy Fan Club (NFFC) kickoff convention in Anaheim, California. Disney briefly elaborated on the deteriorating creative environment at the Disney Company, under the leadership of then Chairman and CEO Michael Eisner. He told his audience about the updating of his SaveDisney.com website and asked them to register at the site promising that he and fellow former director Stanley Gold would have more to say as the Disney stockholders' meeting, scheduled for March 3, approached.

January 27, ten days later, Disney and Gold dropped the other shoe. In a letter posted on SaveDisney.com, the pair called for a vote of no-confidence for Eisner and three other members of the board, including presiding director and former U.S. Senator George Mitchell.

January 29, Pixar announced that it was ending discussions with the Disney Company to extend their existing five-picture deal, and that they would begin discussions with other studios to distribute its films. Pixar CEO Steve Jobs was quoted as saying,

After ten months of trying to strike a deal with Disney, we're moving on. We've had a great run together - one of the most successful in Hollywood history - and it's a shame that Disney won't be participating in Pixar's future successes.

February

February 7, ASIFA Hollywood held the 31st annual ANNIE Awards ceremony for excellence in animation. At the end of the night, the score stood Pixar 10, Disney 1.

The only Disney film in the television, home entertainment, or feature film categories to win anything was The Jungle Book 2 for Storyboarding in an Animated Feature Production, the only film nominated in that category.

February 10, writing for JimHillMedia.com, o-meon.com Editor and Publisher C. W. Oberleitner wrote (Got Proxy) about Disney stockholders reporting that they weren't receiving their proxy materials nearly as early as they had in previous years. The story was picked up by national new services.

February 11, the following day, Brian Roberts President, CEO, and son of the founder of cable giant Comcast laid out his plans, in a letter to Eisner, for Comcast to takeover Disney. That same day, Institutional Shareholder Services, a proxy advisory firm, recommended that Disney stockholders withhold votes for Eisner.

February 17, undaunted, Eisner announced that the Disney Company would buy the Muppets and Bear in the Big Blue House from the Jim Henson Company.

February 25, unimpressed by the nearly decade long struggle to bring Kermit, Miss Piggy, and company on board at the Mouse House, Glass Lewis & Co., a proxy advisory firm, also recommended a withhold vote to Disney stockholders. They were joined in short order by six state pension funds that announced that they, too, would withhold their votes for Eisner and several directors.

March

March 2, Roy Disney, Stanley Gold, SaveDisney.com, and dozens and dozens of TV, cable, newspaper, wire service, and Internet reporters roared into Philadelphia like lions. Disney and Gold held a press conference and a rally denouncing the performance of Disney Company stock and feckless, egocentric management of Michael Eisner.

March 3, Eisner presided over a marathon stockholders meeting that ran, without breaks, for more than six hours. At the end of the meeting, conveniently after the markets had closed and deadlines passed for network television news programs, Eisner called for the preliminary vote results. He received an altogether unprecedented 43% NO vote.

Following the meeting, the Disney board met and, later that evening, issued a statement saying that the stockholders of the company had spoken and sent a clear message, and that they had heard that message. The board announced that they were stripping Eisner of the title of Chairman; he would, however, remain CEO. Replacing Eisner as Chairman would be presiding director George Mitchell, who earlier that day had received a 24% NO vote.

March 5, Walt Disney Pictures releases Hidalgo. The $100 million-plus film goes on to a domestic gross box office of $67,303,450.

March 29, a judge dismissed the Winnie the Pooh rights case against Disney. Disney still faced an uncertain possibility it would end up in Delaware Chancery Court later in the year.

April

April 2, Walt Disney Pictures releases its final, for now anyway, hand drawn, animated feature film, Home on the Range. The $110 million plus film goes on to a domestic gross box office of $50,030,461.

April 9, Walt Disney Pictures releases The Alamo. The $100 million-plus film goes on to a domestic gross box office of $22,414,961.

The final official vote totals for the 2004 Disney Company stockholders meeting are certified. Eisner's final withhold vote total is 45.37% and George Mitchell's bumps up to 25.69%. Eisner also received a NO Confidence vote from 72.5% of the votes cast by the Walt Disney Company 401K trustee. George Mitchell received a NO Confidence vote from 63.7% of the votes cast by the trustee.

April 26, this day's edition of Forbes.com named Michael Eisner one of the worst performing CEOs in the country. They expected Eisner to receive over $120 million in compensation for 2004.

Tarps and fences continue to come between Disneyland visitors and popular attractions as it suddenly dawns on the Disney Company that after a decade of benign neglect and differed maintenance, the park may not look its best for its 50^th Anniversary celebration scheduled for 2005.

May

May 5, marks the official opening of The Twilight Zone Tower of Terror at Disney's California Adventure. It was the first new E-ticket attraction to be added to DCA since that park's opening on February 2001. Tower of Terror was also the first major E-ticket attraction, not including DCA's initial attractions, to debut at the resort since the Indiana Jones Adventure opened back in March 1995.

Over in Disneyland, on a stage set up in front of Sleeping Beauty's Castle, The Disney Company finally and officially took the wraps off its long awaited plans to celebrate Disneyland's 50th Anniversary. Billed "The Happiest Celebration on Earth, A Global Salute to the 50th Anniversary of Disneyland," the nearly one-hour special event featured a live band, singers and dancers, lots of WDC executives, and guest stars Art Linkletter and Julie Andrews. Curiously, no one from the Disneyland Resort management team participated in the event.

Following the presentation, which in addition to a new fireworks show and parade at Disneyland featured the announcement of five new major attractions at Walt Disney World in Florida, fans of Walt Disney's original theme park were heard asking the question,

Why does Disney want us to go to Florida to celebrate Disneyland's 50^th Anniversary?

The fifth was a busy day for The Mouse. It was also the day that controversy broke out between Eisner and Miramax head honcho Harvey Weinstein over the distribution of Michael Moore's controversial film Fahrenheit 9/11.

June

June 16, Walt Disney Pictures, in conjunction with Walden Media, releases Around the World in 80 Days. The $110 million-plus film goes on to a domestic gross box office of $24,008,137.

June 23, Lions Gate Films releases Fahrenheit 9/11. Weinstein repurchased the film from Disney and negotiated the distribution rights with Lions Gate. Disney promised to donate any profits it received from the film to charity. The $6 million film goes on to a domestic gross box office of $119,194,771.

[To date, there are no reports from any charity about receiving any Fahrenheit 9/11 profits from the Walt Disney Company.—Editor]

July

July 7, Walt Disney Pictures releases King Arthur. The $120 million-plus film goes on to a domestic gross box office of $51,882,244.

Also on the 7^th, JournalSpace.com blogger, A Fly on the Wall, reports,

Two electronic bugs were found in Disney honcho Michael Eisner's office on the Burbank studio lot during a routine security sweep over the long July 4 weekend, according to a source inside the Mauschwitz exec building…

Eisner routinely pays for a security sweep by electronics experts every few months out of his own pocket.

July 17, this was the 49^th Anniversary of the opening of Disneyland. The only official event to mark the occasion was the kickoff demonstration for the Happiest Faces on Earth promotion. "The Happiest Faces on Earth . . . A Disney Family Album" is part of the ongoing preparation for Disneyland's eighteen month-long 50th Anniversary celebration. By noon that day, all traces of any activity marking Disneyland's 49^th anniversary were gone.

The following week, the NFFC, The Club for Disneyana Enthusiasts, held its National Convention. Not to be out done by Roy Disney, who addressed the NFFC's Kickoff Convention in January, executives from the Disney Company contacted NFFC's convention organizers and asked to address the organization. This was ostensibly done to promote "The Happiest Homecomings on Earth," the worldwide celebration of Disneyland's 50th Anniversary.

Unlike Roy Disney, who addressed conventioneers on a sunny Saturday morning in January from the NFFC's stage, the Disney Company showed up in full force. Walt Disney Parks and Resorts President Jay Rasulo arrived with a task force of singers, dancers, technicians, costumed characters, Disney executives, a host of public relations specialists, photographers, and assorted personal assistants and security people to address an audience of roughly two hundred people.

Following the presentation, many of those present asked,

Why does Disney want us to go to Florida to celebrate Disneyland's 50^th Anniversary?

July 30, Walt Disney Pictures releases The Village. The $60 million-plus film goes on to a domestic gross box office of $114,197,520.

August

The Disneyland Resort announced that, effective August 19, 2004, "T" Irby, Senior Vice President of Resort Operations Support, has made the personal decision to transition to project-based work and will focus on leading specific efforts in Security, Workers Compensation, Safety and Risk Management, as well as support of their Emerging Leaders program.

Irby was one of the last executives from the Paul Pressler/Cynthia Hariss era still working at the resort.

September

September 6, Disney dismissed claims that its new Hong Kong theme park will only have enough activities to keep visitors occupied for four hours, saying it will offer a full day of fun.

September 8, Frank Thomas, legendary Disney animator and One of Walt Disney's "Nine Old Men," died at age 92. Thomas created timeless animation for such films as Pinocchio, Bambi, Peter Pan, and 101 Dalmatians.

September 9, Michael Eisner announces that he will resign as CEO of the Disney Company when his current contract expires in the fall of 2006.

Financial analysts around the country immediately begin to speculate that he plans to install Disney President Bob Iger as his replacement, retain his seat on the Disney board, and, perhaps, even seek the chairmanship when George Mitchell retires.

September 10, Delaware Chancery Court Judge William B. Chandler III ruled Friday that Disney shareholders could proceed with claims that former super agent Michael Ovitz didn't deserve the payments and stock options, valued at $140 million, he received when he left the Disney Company in 1996 and violated legal duties by accepting the severance.

The ruling cleared the way for the lawsuit, which seeks to hold Ovitz and Disney directors liable for the severance package, to go to trial in October.

September 13, Roy Disney and Stanley Gold issue a statement demanding the Disney board hire an executive recruitment firm and launch an immediate search for Eisner's replacement. They insist that Eisner leave the company by the 2005 annual stockholders meeting and renew their threat to put forward an alternative slate of directors and thereby launch a proxy fight at the 2005 meeting.

September 17, Walt Disney Pictures releases Mr. 3000. Disney does not release the film's production costs. It goes on to a domestic gross box office of $21,811,187.

September 21, USA Today reported,

Eisner: Not asking to stay on board

"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 as chairman," Eisner, 62, told Fortune magazine. The comments came out as Disney's board held a three-day meeting that ends today.

Also that day, the Disney board of directors issued a statement saying,

The Board will engage in a thorough, careful, and reasoned process to select as the next CEO the best person for the company, its shareholders, employees, customers, and for the many millions of others who care so much about The Walt Disney Company.

To that end, they announced that they would hire an executive search firm, consider internal as well as external candidates, and complete the process by June 2005. They made special note that Disney Company President Bob Iger was their only internal candidate.

September 23, wholly owned Disney subsidiary Miramax Films announced it would layoff an additional 13% of its workforce above and beyond cuts made earlier in the year.

September 28, Roy Disney and Stanley Gold effectively call a truce in their battle with the Disney board when they issue a "cautious" statement endorsing the board's plan to seek out Michael Eisner's replacement.

No mention is made in the announcement of the duo's threat to run an alternative slate of directors. Roy Disney, however, a few days after the release of the joint statement tells a reporter "that he and Gold could still run an alternate slate if they believed the board's plan to find a successor to Eisner was a 'charade'."

September 29, while addressing the Royal Television Society's annual conference in London, Disney President Bob Iger said that Disney and Pixar had "outgrown one another," and that the deal between the two companies was virtually dead.

October

October 1, Walt Disney Pictures releases Ladder 49. Disney does not release the film's production costs. It goes on to a domestic gross box office of $73,527,901.

October 5, The Disney Company was sued on Tuesday by the family of Marcelo Torres, who died on Disneyland's Big Thunder Mountain Railroad ride last year, and by four other passengers injured in the derailment of the popular rollercoaster.

In what Disneyland officials described as a move to recapture some of Walt Disney's original vision by "restoring the magic" to the park as it gears up for its 50th birthday next year, Jungle Cruise skippers were once again issued pistols to fend off angry hippos on the popular Adventureland attraction. Additionally, they said, engineers were devising a safe way to return the lunch-recycling spins to the teacups in the Mad Tea Party ride.

October 20, the Delaware Court of Chancery began hearing a lawsuit filed by Disney shareholders contending that the board breached its fiduciary responsibility when it failed to oversee CEO Michael Eisner's hiring of his friend, Michael S. Ovitz, as president in 1995 and then, 14 months later, signing off on Ovitz's $140 million severance package.

October 25, Disney Company Chairman George Mitchell on Monday said the company's board of directors had chosen Heidrick & Struggles to help it find a successor to CEO Michael Eisner.

October 26, Michael Ovitz told the Delaware Chancery Court that despite his decade's long friendship with Michael Eisner, the Mouse House Big Cheese never backed him during his 14-month stint as Disney Company President.

A few days later, Ovitz testifies,

I was best friends with this guy and his family," said Ovitz, who was Hollywood's most powerful agent before becoming Disney's president. "I loved this guy like a brother. We spent holidays together. I was at the funeral of one of his parents; he was at the birth of my first son. We were together Thanksgiving, Christmas. I was very close to his children. He was close to mine. My wife was his wife's best friend….

What to this day, and until the day I die, I will never be able to understand … how I spend 25 years with a man and his family, and within 60 days of taking this position he decides that I'm a number of things that he had 25 years to figure out if I was or I wasn't.

November

November 5, Walt Disney Pictures and Pixar Animation release The Incredibles. The $92 million-plus film is still in theatres. As of December 29, it had a domestic gross box office of an estimated $246,140,488.

November 12, former Disney directors Roy Disney and Stanley Gold find themselves about to testify on behalf of the Disney Company, and Michael Eisner's management of it, during the shareholder suit being heard in Delaware Chancery Court.

November 15, Disney CEO Michael Eisner tells the Delaware Chancery Court that Ovitz's previous statements about the relative closeness of their relationship were "hyperbole." In the days that followed, Eisner said Ovitz was a poor fit at Disney, that "he started to rub people the wrong way."

Eisner concluded his testimony saying that following repeated consultations with Disney chief counsel Sanford Litvack, he determined that Ovitz was legally entitled to the final payments specified in his contract.

No one asked Eisner why he decided to accept the advice to pay Ovitz, without hesitation, while at the same time ignoring similar counsel to settle a claim of severance filed by former head of Disney film production Jeffery Katzenberg. Katzenberg's claim went all the way to court before being settled for an undisclosed amount.

November 19, The Disney Company reported a 24% increase in fiscal fourth-quarter profit. The increase was attributed mostly to earnings of its ESPN sports channels and the favorable resolution of a federal tax dispute that helped offset a drop in earnings at its film unit. Disney shares were down 19 cents that same day prior to the earnings report.

On the same day, Walt Disney Pictures releases National Treasure. Disney does not release the film's production costs. Still in theatres, as of December 29, it had a domestic gross box office of an estimated $145,834,991.

December

December 1, the Disney Company board of directors elected Fred H. Langhammer, chairman of Global Affairs of The Estee Lauder Companies Inc., as a new independent director.

December 3, Roy Disney and Stanley Gold lay down their arms. In a letter to the Disney board of directors they, begrudgingly, agree that the board appears to be addressing most of their issues and concerns. They go on to say,

We do not intend to present an alternate slate of candidates for election to the Board at the Disney Company's 2005 Annual Meeting of Stockholders. Our decision is based on the actions the Board has taken in recent months in response to the shareholders' unprecedented 45% no-confidence vote in Mr. Eisner at the 2004 Annual Meeting. Needless to say, we are assuming that the Board will continue to act in good faith to fulfill the promises it made to Disney stockholders over the course of the last nine months.

On the same day Disney and Gold publish their letter to the board, Michael Eisner is attending an "ABC All-Hands" meeting, where he confides, "off the record," to several employees that he plans to remain an active member of the board after his current contract expires, and that he may seek a more active role in the creative elements of the company.

December 6, in an angry letter to supporters, posted on the SaveDisney.com website, Roy Disney fires back,

It is our belief that his (Eisner's) plan has always been to get Bob Iger elected CEO so he can stay on the Board as a puppeteer--the Stromboli, if you will--behind the scenes. We will all be asked to "ignore that man behind the curtain."

This outcome would clearly be unacceptable to everyone associated with SaveDisney...much less to the good of the Disney Company itself.

December 7, amid industry wide rumors that its first major computer animated film, Chicken Little, is in trouble and reports that Pixar would like to begin releasing all of its films in the summer, both studios announced new release dates for Chicken Little and Cars, the final Disney/Pixar collaboration. Cars will now roll into theatres June 2006; Chicken Little will scratch its way into theatres in November 2005.

December 13, the non-jury trial brought by Disney shareholders over the $140 million severance package given to former Disney President Michael Ovitz recessed for the holidays. It is expected to resume January 11.

December 20, the Disney Company settled Securities and Exchange Commission allegations that it failed to tell shareholders in a timely manner that the children of three company directors worked for the entertainment giant and that other board members had financial ties to the company.

December 28, the Disney Company layoffs an unspecified number of employees at Walt Disney Imagineering.

(Phew! —Editor)

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