Walt Disney Co. Chief Executive Michael Eisner faces a public power struggle after more than a year of turbulence in the company, but the timing of the rebellion is to his advantage, analysts said Monday.
“Disney is turning this year,” said Bernstein Research analyst Tom Wolzein. “There are significant improvements in earnings in fiscal 2004.”
Disney’s leading critic, founder Walt Disney’s nephew Roy Disney, helped put Eisner in his top position at the company in 1984 and was his backer through the company’s subsequent turnaround.
But Sunday, he stepped down from the board of directors and called for Eisner’s resignation, blaming him for the ABC television network’s anemic ratings, weak theme park attendance and low company morale.
“It is my sincere belief that it is you that should be leaving and not me,” Disney wrote in a letter to Eisner.
The company, meanwhile, said it will force Disney, 73, into mandatory retirement under board rules set last year. He is the last family member active in the company, founded in the 1920s by his uncle Walt and his father, Roy O. Disney, who was the business manager.
And Monday, Stanley Gold said he was resigning, effective immediately, from the Disney board and repeated Roy Disney’s call for Eisner’s resignation.
” I hope that my resignation will serve as a catalyst for change at Disney,” said Gold, CEO of Shamrock Holdings, which manages the Disney family’s investment in Walt Disney.
The resignation of Gold, who helped Roy Disney put Eisner in the CEO office, came as Disney’s board began two days of meetings in New York.
For years, Eisner has faced criticism for failing to appoint a successor and for an autocratic style of leadership that has led to the departure of top subordinates. Criticism mounted over the past year as Disney results sagged, but the recent upturn could strengthen his hand, analysts say.
“The issue for investors is: Can they continue to keep the ship turning toward the right course?” Wolzein said.
Some observers cautioned that the company’s prospects for future growth were still murky. They said regardless of who wins a power struggle, there are long-term issues surrounding the company.
“I’m quite worried about the potential for growth of the assets, many of which are quite mature,” said Pascal Volle of Mercer Management Consulting.
Volle, a former Disney consultant, noted that ESPN and Lifetime cable channels were performing well in a competitive industry, but he added, “It’s difficult to see where further growth will come from.”
He added that theme park growth is driven by the success of the film studios. “It doesn’t seem as if they have the creative talent needed from the studio,” he said.
