DON'T LOUSE UP THE HOUSE OF MOUSE:

Leaving Board, a Disney Heir Assails Eisner (LAURA M. HOLSON, 12/01/03, NY Times)

Roy E. Disney, a nephew of Walt Disney, said on Sunday that he was leaving the Disney board of directors and called for the resignation of the chairman and chief executive, Michael D. Eisner.

In a three-page letter that was hand-delivered to Mr. Eisner's Manhattan apartment, where the executive was spending the weekend, Mr. Disney complained that Mr. Eisner had done little to revive the Walt Disney Company over the last seven years and still had not decided who would be his successor. Mr. Eisner, who took over Disney in 1984, has been under increasing pressure over the company's sagging fortunes.

"Michael, it is my sincere belief that it is you who should be leaving and not me," Mr. Disney wrote. "Accordingly, I once again call for your resignation or retirement." [...]

The complaints in Mr. Disney's letter are not new although rarely has he stated them so vociferously. He wrote that Mr. Eisner had depressed shareholder value by micromanaging his employees and not stemming the ratings loss at ABC quickly enough. Mr. Eisner's management style, Mr. Disney wrote, resulted in a "loss of morale throughout this company." He also accused Mr. Eisner of forcing colleagues who worked with Mr. Disney in the feature animation division (where Mr. Disney is chairman) to spy on him. "For whatever reason, you have driven a wedge between me and those I work with even to the extent of requiring some of my associates to report my conversations and activities back to you," Mr. Disney wrote. "I find this intolerable."

The next year will be very important for Mr. Eisner, Disney's board and shareholders alike. The company has shown promising results recently with its ABC network, although a full turnaround is not expected for another year or two. Travelers are beginning to return to the theme parks after fears about airline safety and a recession kept many away. Disney's movie division, unlike many of its peers, has scored one hit after another this year, including "Pirates of the Caribbean: Curse of the Black Pearl" and "Finding Nemo," the animated film created by a Disney partner, Pixar Animation Studios. "Haunted Mansion," based on the theme-park attraction of the same name, was the top film in the United States during the five-day Thanksgiving holiday weekend, with ticket sales of $35 million.

But the company, whose stock price has outperformed major indexes this year, has significant challenges. In his letter, Mr. Disney challenged the "timidity" of Mr. Eisner's investment in the parks, which are central to the company's profitability and image. Just last week, safety officials in California ruled that a crash on a Disneyland roller coaster was the result of workers failing to properly maintain the ride. And Disney has yet to resolve its relationship with Pixar, which wants a bigger stake of future movie profits and could walk away from its joint venture if the two cannot agree on terms of a new deal.

Purely anecdotal, but we were disconcerted by how badly Disney World needed some sprucing up and by the unprecedented site of seeing managers instructing employees in front of customers.

Posted by Orrin Judd at December 6, 2003 8:02 AM