|
|
|
 |
|
|
|||||||||||
| HOME PAGE FOR THE WORLD'S BUSINESS LEADERS | |||||||||||||
|
|||||||||||||||||||||||
| |||||||||||||||||||||||
|
|
|||||||||||||||||||||||
|
Home > Magazines > Forbes Magazine |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
On The Cover
Disney The Sequel Under fire for a year, Michael Eisner plots a surprise comeback at the Magic Kingdom--and prepares to hand it over eventually to his heir, Robert Iger, despite widespread doubts in Hollywood.
Rarely in the 18 years he has reigned over the Magic Kingdom has Eisner taken so much abuse. And never has he been what he is right now: the underdog. Once the invincible titan of Hollywood, Disney has struggled in recent years with a merger hangover at ABC and problems in myriad other businesses. Its annual sales of $25 billion are up only 10% since 1998. Its stock languishes below $20, down almost 60% from an alltime high two years ago; Viacom is down a mere 17% in the same period. Disney's total market value is now all of $38 billion--never mind that Disney's ESPN sports channel alone is worth a hefty $20 billion; the other parts would bring in perhaps $50 billion if chopped up and sold. Disney's theme parks and resorts are struggling, battered by the weak economy and fears of terrorism. In the fiscal year ended Sept. 30, attendance fell and the unit's operating income dropped 26%, to $1.2 billion. And the ABC network, which in 2000 earned $500 million in profits, lost $500 million this year. Eisner's once-sterling reputation has taken a battering in the media. His fellow moguls have made sport of criticizing him (mostly behind his back, of course) for a host of misdeeds, from micromanaging to scaring off successors to wielding too much control over Disney's board. "Some of the criticism comes from things that are valid and within our control," Eisner concedes in an exclusive interview at Disney's base in Burbank, Calif. Most other chief executives would have been axed by now. But this is Michael Dammann Eisner, the former Paramount Pictures wunderkind who took the top job at Disney in 1984 and awakened a sleeping giant. He exploited dusty gems like Fantasia and 101 Dalmatians and built new franchises à la Beauty and the Beast and The Lion King. Along the way, $10,000 invested in Disney stock when he took over was worth almost $410,000 by the peak in 2000, triple the rise in Standard & Poor's index of 500 stocks. Even after Disney's tumble, that initial $10,000 is at more than $176,000 today--a 17.1% annual return for 18 years, versus 12.6% for the S&P. Thus Eisner has earned a generous amount of time to fix Disney's shortcomings. But time may be running out. Board members representing the family of founder Walt Disney are signaling that they are losing patience. Eisner must restore Disney's magic, and soon, to avoid an ugly end to a brilliant career. He also must clinch his plan to name his own successor, rather than have that right snatched away by a disenchanted board. For the first time Eisner, who is 60 and has four more years left on his contract, is making it clear that he wants to hand the keys to the kingdom to his 51-year-old sidekick, President and Chief Operating Officer Robert Iger--a well-liked manager dismissed by some in Hollywood as a corporate suit. Iger, in turn, may not ascend unless he can revive an ailing ABC. For both men, it is do-or-die time. As dire as it all sounds, Eisner & Iger say they have put the pieces in place for a blockbuster comeback. "I've never felt more comfortable about our position," Eisner says. "Even though we've had some problems, we are a company that has great assets, and we're here for the long run." Iger adds: "We are well positioned. There are no big holes in the company." Counterpunching off the ropes, the two execs have invested $5 billion in recent years to spruce up Disney theme parks and resorts, which could pay off handsomely once tourism rebounds. They have assured ESPN an enviable lock on all four major pro sports--football, baseball, basketball and hockey--for five years. On the big screen, Disney is reaping a tidy profit on cheaper box-office hits such as Sweet Home Alabama (which cost $35 million to make and has taken in $120 million in U.S. ticket sales), defying Hollywood's penchant for $100 million gambles. And rather than wait for hit films to inspire toy spinoffs and the like, Disney now draws on a horizontal array of properties to build new billion-dollar consumer businesses overnight. Some of the most promising ideas come from a stable of cable outlets including the Disney Channel, Lifetime, Soapnet and ABC Family (formerly the Fox Family channel, which was acquired for $5.3 billion from News Corp. and Haim Saban in 2001). To fund these moves, Eisner & Iger are embarking on a garage sale, aiming to raise $4 billion or more by peddling 64 radio stations, the Mighty Ducks hockey team and other ancillary businesses. They want to whack a substantial portion off of Disney's net debt of $13 billion over the next 18 months. Sidebar Network Reworked - Chart Disney Grows Up--And Down -
LVMH Suit Could Open Legal Floodgates - 11/26/02 1:50:00 PM ET LVMH claims it was on the wrong end of Morgan Stanley's "unfair" research. Is this the start of a trend? FedEx Has A New Gadget - 11/26/02 2:00:00 PM ET The delivery giant sets a new tracking system--and ambitious daily delivery goals. SEC Enforces Regulation FD - 11/26/02 8:33:44 AM ET The SEC imposes penalties for selective disclosure, showing it takes the 2000 rule very seriously. Bond At The Box Office - 11/25/02 6:00:00 PM ET James Bond still courts danger--and ticket buyers. But he doesn't do it the way he used to. Charity Begins With The Boss - 11/21/02 6:30:00 PM ET Heads of large nonprofits get pay raises despite 78% drop in profits.
 |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
 |
|
|
Market data provided by Reuters. Disclaimer Stock quotes are delayed at least 15 minutes for Nasdaq, at least 20 minutes for NYSE/AMEX. U.S. indexes are delayed at least 15 minutes with the exception of S&P; 500 which is real-time. Forbes 40 Index powered by Telemet. News may include latest headlines from Reuters. |
|||
