Summer doldrums 


Given that execs of the Walt Disney Co. usually are obsessed with mice, it's sort of intriguing that they've become so concerned lately about chickens.

Which chickens? All the big, fat, ugly ones that have suddenly come home to roost.

With both Pearl Harbor and Atlantis: The Lost Empire underperforming at the box office and the new Disney's California Adventure theme park doing so poorly that the Mouse has actually begun to give away tickets to the place, these surely seem like bleak times for Michael Eisner.

Or -- more to the point -- for those executives who work directly under Eisner.

You see, there is one hard and fast rule at today's Disney Co. Eisner may make mistakes (witness the millions spent on the Disney Institute), but he never, ever takes the blame.

It's simple, really. Eisner has the corporate board of directors in his pocket. In his 16 years as CEO, Eisner has loaded up the board with family friends and cronies. Among those expected to hold Eisner accountable are his attorney, his architect, the principal of a school his kids attended and the president of a university to which Eisner donated $1 million. No wonder he can operate with impunity, as all who recall the coming and going of Michael Ovitz can attest.

Or at least Eisner used to operate that way. Apparently embarrassed by reports in the financial press about how Disney's board was among the worst in corporate America, Eisner has agreed to some significant changes in the way the Mouse does business.

For example: Starting later this year, Disney's corporate directors no longer will serve three-year terms. Instead, they must be re-elected on an annual basis. It's hoped that this particular move will allow the Mouse to respond faster to forces in the marketplace, should Wall Street deem it necessary.

The change can't come fast enough. Brokers and investment analysts have tired of the Mouse promising a lot and delivering little. That may explain why Goldman Sachs took Disney off its recommended list of stocks late last week and tagged the world's second-largest media corporation as a "market out-performer" (a.k.a., a dog). Goldman Sachs also said it doubts Disney will meet its projected earnings through September 2002. Which means it could be more than a year before the corporation can turn this situation around.

Wall Street is used to Eisner's bag of tricks. Consider the recent resignation of Disney Studio head Peter Schneider. With both of Disney's big summer features going bust, it seemed inevitable that Eisner would find someone to take the fall. Schneider's reported severance included the chance to produce plays for Broadway through Disney's Buena Vista Theatrical Group -- provided, of course, that he agreed to go quickly and quietly. Which is why Schneider took the money and ran.

Following his departure, Disney's PR flacks went into overdrive, talking about the exciting opportunities that lay ahead for Disney Studios, how the company was on the prowl for a creative young executive, how they wanted someone to reinvigorate the operation, etc.

Wall Street didn't buy it. They just saw that Eisner had found another executive willing to fall on his sword. After all, Schneider had only been in charge of Disney Studios since January 2000. That was barely enough time for him to order personalized stationery for the office, let alone make enough bad business decisions to sink an entire studio with two disappointing projects. Indeed, both films already were in the works at the time that Schneider signed on to the job.

That current lack of credibility with the financial community may be Eisner's biggest problem at the moment. Wall Street and major-media watchers know he's the one who pushed for concessions on "Pearl Harbor" and personally insisted Disney Feature Animation begin aggressively containing costs on all in-production projects early last year.

Given Eisner's penchant for finding patsies to sacrifice for projects that don't produce, now might be a good time for Barry Braverman to start brushing up that resume. Braverman is the Imagineer who was the chief creative force behind the foundering California Adventure project. As such, he's likely to be the next Disney employee expected to do the Ovitz Two Step, which is gracefully snatch the oversized paycheck out of Mickey's hand as he waltzes you out the door.

Whether Disney's presumably emboldened corporate board will take any action itself down the line remains to be seen. Here, certainly, is an opportunity for the board to stop Eisner from trying to make mistakes disappear by throwing money at them. But it's more likely that they'll just chicken out.


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