Goodbye, Mr. Eisner.

[MadonnasManOne]

Today, Michael Eisner departs as Disney's CEO.

MSN.com has an article about the financial impact Michael Eisner had on Disney, during his time at the company.

link: http://www.slate.msn.com/id/2116794/

How Did Michael Eisner Make Disney Profitable?

Not with cartoons.

By Edward Jay Epstein

Q. "How's your wife?"
A. "Compared to what?"
—Henny Youngman routine

What is the proper measure of a Hollywood mogul? For entertainment reporters, it's often a mogul's personal behavior. The more incidents of arrogance and insensitivity they uncover, the more they assume that a mogul is an ineffective leader. During the contentious period surrounding Michael Eisner's announcement that he was resigning from Disney, a frenzy of items appeared, casting him as a villain worthy of one of his animated hits. It will be recalled that Eisner alienated a host of would-be moguls—including Jeffrey Katzenberg (whom he called a "midget"), Michael Ovitz (whom he called a "psychopath"), Roy Disney (whom he kicked off the board), and Harvey Weinstein (whom he forced out of Miramax). These men, by one means or another, yielded an El Dorado of gotcha items to the press. What was lost in this morality tale was the story of Eisner's transformation of Disney. He turned a faltering animation-and-amusement-park company into one of the world's most successful purveyors of home entertainment. He'll depart as Disney's CEO quietly on Friday, without a gold watch ceremony. The lack of fanfare seems to mark him as a man who failed and sullied the good name of Mickey. But if you look at Eisner's metrics—the numbers that Wall Street believes are unambiguous indicators of a company's performance—Disney boomed under Eisner.

Eisner's Metrics, which are all public numbers:

Category 1984 2004 Percent change
Disney's Revenues $1.5 billion $30.8 billion +2,000
Disney's Income $294 million $4.49 billion +1,600
Disney's Tax-Free Cash Flow $100 million $2.9 billion +2,900
Stock Price (adjusted for splits) $1.33 $28.40 +2,100
Market Value $1.9 billion $57.4 billion +3,000
Disney's Enterprise Value
(market value plus debt minus cash)
$2.8 billion $69 billion +3,200


In 1984, when Eisner took command, the "Mouse House" produced only one animated picture every three to five years. Its entire film library had only 158 features, and its single cable channel, the Disney Channel, lost money. In addition, Disney had virtually no income from sales of videos. To keep afloat, the company depended on its amusement parks and its Mickey Mouse licensing. Yet even with these assets Disney had a tax-free cash flow of just $100 million. Its share price, reflecting this precarious financial position, was $1.33 (adjusted for splits).

In 2005, Disney was one of the richest companies in America. Its enterprise value—Wall street's favored measure of an entertainment company—had increased 32-fold since 1984 and stood at $69 billion. Its tax-free cash flow had increased 29 times, to $2.9 billion. Its film library had grown to 900 features, which were licensed on TV and sold on video and DVD, and its home-entertainment division accounted for nearly one-third of the revenues of the entire industry. Its share price, reflecting this robust health, had risen to $28.25.

Eisner's success becomes even more impressive when compared with his peers. Between 1984 and 2005, TimeWarner wrote off $99.7 billion; Vivendi-Universal, $40.6 billion; Viacom, $21.2 billion; News Corporation, $7.2 billion; and Sony, $2.7 billion. Among the six companies ("the sexopoly") that now dominate the TV industry, Disney alone did not write off any loss during this time.

How did Eisner succeed in adding $65 billion in enterprise value to Disney at a time when his rivals were faltering? Having come from television, Eisner saw that Disney's future would be in home entertainment—not in movie theaters.

Consider just two decisions he made that brought about this corporate transformation. The first came in the mid-'80s. At the time, Disney studio executives (including Katzenberg) were arguing that to release the company's beloved animated movies on video cassette would kill any profits to be made from re-releasing them in theaters. Eisner perceived the situation differently, and he put the videos into stores. Within a few years, video sales were providing almost all the profits for Disney's movie division and, by 2004, Disney raked in $6 billion from videos and DVDs sales.

The second decision came in 1995, when Eisner bought his old alma mater, Capital Cities/ABC, for $19 billion. With this single coup, Disney got not only the ABC network and TV stations, it also got 80 percent of a sports network, ESPN. Since the cable operators needed this sports network to attract subscribers, Disney charged them a "carriage fee" just for the right to intercept its satellite signals. Disney was able to ratchet up this charge, which is effectively a tax on cable households, by 20 percent a year, getting as much as $2 a month for every subscriber signed up by cable operators.

With the success of ESPN, Disney gained such enormous leverage over the entire cable industry that, in 2004, the company earned a record $1.94 billion in bottom-line operating income from its cable channels alone. To put this number in perspective, it was nearly triple the $662 million Disney earned from all its movie production and distribution, stage plays, records and music publishing, television library sales, videos, and even its booming DVDs (which accounted for about 80 percent of the $662 million).

These numbers did not go unnoticed by the fund managers who controlled two-thirds of Disney shares. As it became increasingly clear that Eisner had hit the jackpot with ESPN, these fund managers focused more and more on Eisner's inability to convert the enormous appreciation of Disney's assets into a stock-market payoff. One way to bring about that payoff would be to install new management who were willing to sell assets—even ESPN. Although Disney's shares had increased by 10.6 percent since 2001—which was a better performance than most of Disney's rivals—that was not enough to satisfy investors. In March 2004, 43 percent of shareholders voted to withhold their support from Eisner. This vote further fueled the bad publicity, and Eisner picked Robert Iger to be his successor. Fittingly, Iger headed Disney television, and, when he officially takes over as CEO on Oct. 1, he should continue Disney's transformation into a home-entertainment empire.


Related in Slate
--------------------------------------------------------------------------------
In 2002, Daniel Gross wrote about Eisner's improbable survival as CEO of Disney. In 2004, he found Eisner's continued reign even more improbable and documented Comcast's attempt to take over the company. Last August, Kim Masters wrote about the operatic relationship between Eisner and Michael Ovitz. In 1998, Mark Crispin Miller and Tim Ferguson discussed Eisner's book Work in Progress.

Edward Jay Epstein is the author of The Big Picture: The New Logic of Money and Power in Hollywood. (To read the first chapter, click here.)

.

[Wonderlicious]

Ding Dong The Witch is Dead
Which old Witch? The Wicked Witch

...wait...

...this isn't the Wizard of Oz thread over in Off Topic. I must have posted in the wrong thread.

Or looking at those lyrics, have I?

[KingTritan]

Ding Dong The Witch is Dead
Which old Witch? The Wicked Witch

...wait...

...this isn't the Wizard of Oz thread over in Off Topic. I must have posted in the wrong thread.

Or looking at those lyrics, have I?

you stole my post, i thought of that song as soon as i read the topic

[Escapay]

Goodbye so soon
And isn't this a crime?
We know by now that time knows how to fly
So here's goodbye so soon
You'll find your separate way
With time so short I'll say so long
And go
So soon
Goodbye

You followed me, I followed you
We were like each other's shadows for a while
Now as you see, this game is through
So although it hurts, I'll try to smile
As I say

Thought a Disney song would be appropriate.

Escapay

[Zoltack]

Well it's about time!
Not only was he getting old but his ideas as well.

[Roger Rabbit]

Haha, escapay stole my thunder. I thought of that song too.

[Andy]

I dont like him either and im glad hes gone, but whats to say Iger is going to keep to all of his "promises"?

[Disney-Fan]

Ding Dong The Witch is Dead
Which old Witch? The Wicked Witch

Amen.
He may have saved Disney, but he ruined Disney's image to the ground these past years...

[Wonderlicious]

All this Oz talk has to make me break some news to you...

Well, I have some bad and good news from a source inside Hollywood that wishes to remain confidential. First, the bad news. It appears that he isn't going into retirement just yet. But the good news is, we can laugh at him as he's making a fool of himself. Supposedly, him and Jeffrey Katzenberger have reconciled on the hush and the CEO has been given a starring role in a film version of The Wizard of Oz over in preproduction at the studio, which is supposedly going to be closer to the original book than the 1939 musical. I believe that Dakota Fanning is set to be Dorothy and the Lion will be voiced by Hank Azaria (who voices numerous characters on The Simpsons). Due to his gender and age, you may think that Eisner is going to be the Wizard. Well, he won't be. Shockingly, he will be playing the Wicked Witch of the West, and the first still of him in the costume has also surfaced along with the news, which I'll link to to save bandwith.

http://img.photobucket.com/albums/v337/ ... hewest.png




















Gotcha

[Alan]

well, at least he was a nice man.

[The Little Merman]

All this Oz talk has to make me break some news to you...

Well, I have some bad and good news from a source inside Hollywood that wishes to remain confidential. First, the bad news. It appears that he isn't going into retirement just yet. But the good news is, we can laugh at him as he's making a fool of himself. Supposedly, him and Jeffrey Katzenberger have reconciled on the hush and the CEO has been given a starring role in a film version of The Wizard of Oz over in preproduction at the studio, which is supposedly going to be closer to the original book than the 1939 musical. I believe that Dakota Fanning is set to be Dorothy and the Lion will be voiced by Hank Azaria (who voices numerous characters on The Simpsons). Due to his gender and age, you may think that Eisner is going to be the Wizard. Well, he won't be. Shockingly, he will be playing the Wicked Witch of the West, and the first still of him in the costume has also surfaced along with the news, which I'll link to to save bandwith.

http://img.photobucket.com/albums/v337/ ... hewest.png




















Gotcha

!!! I swear, one day you'll just kill me Wondy!

*tlm

[DonaldFauntleroy]

Didn't Disney go downhill because of him?

[MickeyMousePal]

Wonderlicious Wrote:

Ding Dong The Witch is Dead
Which old Witch? The Wicked Witch

Amen to that!!!!

[Alan]

Wonderlicious Wrote:

Ding Dong The Witch is Dead
Which old Witch? The Wicked Witch

Amen to that!!!!

aren't witches supposed to be women?

[Timon/Pumbaa fan]

Just in!!!

Bob Iger has kidnapped Micheal Eisner saying that "He is out with the old, in with the NEW!!!" Now Eisner is trapped in "A Bug's Land" that poorly themed land at California Adventure and he has to watch his sequels everyday!

[PatrickvD]

so what's Iger doing to turn Disney in the supposed 'right direction'? How do we know this is good?

[Escapay]

Wonderlicious Wrote:
Amen to that!!!!

aren't witches supposed to be women?

In reference, yeah, witches are women and warlocks are men. But I think the practice itself would be called witchcraft for both, not warlockcraft for men.

Escapay

[Kenai]

Goodbye so soon
And isn't this a crime?
We know by now that time knows how to fly
So here's goodbye so soon
You'll find your separate way
With time so short I'll say so long
And go
So soon
Goodbye

You followed me, I followed you
We were like each other's shadows for a while
Now as you see, this game is through
So although it hurts, I'll try to smile
As I say

Thought a Disney song would be appropriate.

Escapay

Rock on! A perfect tribute from the underrated Ratigan, slyly voiced by Vincent Price, of course.

Well, for the last 3 years of what's happened to the company can easily be blamed on him. However, there's always a bright side. Eisner did turn the company around from mediocrity back in the early 80's. Under his era we were introduced to lots of exciting new movies, merchandising and more out of all the theme parks. So, while he had lots of screw-ups recently, he was also responsible for a lot of things.

You've done what you can, Eisner. Now.... happy retirement.

[Mr. Toad]

Didn't Disney go downhill because of him?

The answer to that is complicated. Michael Eisner did a fantastic job with Disney in his first decade. Disney had been run into the ground by Disney's son in law among others. Roy Disney recruited Eisner to recessitate it, which he did. However, the President of Disney at the time was Frank Wells and the two did very well together. Frank Wells covered for a lot of Michael's shortcomings in the people skills department. After the first decade, Frank Wells was killed in a helicopter crash and Eisner became the duel CEO/President(I hope I have the titles correct). Without the balancing effect of Wells, Eisner did not do nearly as well, making several crippling personnel decisions and burning many bridges.

So in the final analysis, it was great to have him. We would likely never have had the Disney renaissence without him. However, he overstayed his welcome by a good bit and it is more than time for him to go.

[jediliz]

Goodbye so soon
And isn't this a crime?
We know by now that time knows how to fly
So here's goodbye so soon
You'll find your separate way
With time so short I'll say so long
And go
So soon
Goodbye

You followed me, I followed you
We were like each other's shadows for a while
Now as you see, this game is through
So although it hurts, I'll try to smile
As I say

Thought a Disney song would be appropriate.

Escapay

Is that from the Great Mouse Detective?


Does this mean that its possible that the 2D classic animation MIGHT get revived? And maybe they'd have the Disney Saturday Movie on every week on ABC or at least more often.

Here's hoping.