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Eisner to step down at Disney
(Agencies)
Updated: 2004-09-11 09:08
Walt Disney
Chief Executive Michael Eisner will step down from the media conglomerate in
September 2006, ending a two-decade reign after a shareholder revolt nearly cut
it short earlier this year.
Eisner: Already stripped of his role as Disney
chairman | Eisner informed the board
of his decision in a letter made public Friday which signaled the end of tenure
of one of Hollywood's most powerful and well-paid moguls.
Eisner, now 62, was a young and relatively unknown executive when he took
over the faded Hollywood icon and theme park company, revitalizing it and vastly
expanding its depth and scope of activity.
But he has also been the target of intense criticism in recent months,
warding off a takeover bid from cable operator Comcast Corp and defending his
stewardship to former allies Stanley Gold and Roy Disney, the nephew of founder
Walt, who helped recruit Eisner to Disney and now want to kick him out.
The company's board responded to a revolt at the March annual meeting by
stripping Eisner of his role as chairman. It is also forecasting improving
profits through 2007 and after Eisner and executives have repaired relations
with some unhappy shareholders.
Disney shares rose 1.4 percent in early trading.
Barry Hyman, chief investment strategist at Ehrenkrantz, King, Nussbaum, said
Wall Street would be pleased by Eisner's move, which would clear up uncertainty
at Disney.
"Two years should be plenty of time to find a successor and that may ease
some of the pressure on the company," said Hyman, who does not own shares of the
company.
On Eisner's watch, the company aggressively moved into television by buying
the ABC television network and the sports cable juggernaut ESPN.
But regard for Eisner has slipped some in recent years, as the company
overpaid for the ABC Family cable network and expanded its parks just as the
travel downturn began.
In an interview with the Wall Street Journal, Eisner said Disney's recent
crises played no role in his decision to step down.
Disney forecasts profit from continuing operations will rise by more than 50
percent this year, and continue to rise next year by double digits. But the sale
of the money-losing Disney Stores likely will crimp net profit this year.
Iger preferred successor
Eisner's letter kicked off a race to succeed him,
and he has already said he wants Disney President and Chief Operating Officer
Bob Iger to win. Iger, a veteran broadcasting executive, has said he would like
the job, although given problems at network ABC, which Iger supervises, he is
not considered a sure bet.
"There are quite a few good candidates for the job, both inside and outside
the company," said Steve Previs, an analyst with Jefferies International in
London. "(Eisner) has said he prefers Iger, but I don't think that will have too
much weight because of his battles with the board."
The board under Chairman George Mitchell, appointed to the role in March, is
already undertaking succession planning, although Mitchell has not named CEO
candidates. The board also has historically bent to Eisner's will, and it is not
clear how independent it will be making a decision on the next CEO.
Analysts have named such contenders as News Corp. Chief Operating Officer
Peter Chernin; former Viacom Inc. President Mel Karmazin; and Jeff Bewkes, who
chairs Time Warner Inc.'s entertainment and networks group; eBay Inc. CEO Meg
Whitman; Gap Inc. CEO Paul Pressler; Tom Freston, co-president of Viacom; Yahoo
Inc. Chairman and Chief Executive Terry Semel, and even Steve Jobs, the chief
executive of Pixar Animation Studios Inc. and Apple Computer.
The board may also change if Roy Disney's group runs and wins election for
its own slate of directors. At Disney's March 3 annual meeting, 45 percent of
voting shareholders, including some major pension funds, withheld support for
Eisner's re-election to the board.
Disney shares were up 33 cents at $23.19 in early trading on the New York
Stock Exchange. They began the year at $23.33
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