Chief executive officer, The Walt Disney Company
Born: March 7, 1942, in Mt. Kisco, New York.
Education: Denison University, BA, 1964.
Family: Son of Lester Eisner and Margaret Dammann; married Jane Breckenridge; children: three.
Career: NBC, 1963, page; 1964, FCC logging clerk; CBS, 1964–1966, commercial slotter for programming department; ABC, 1966–1968, assistant to the national programming director; 1968–1969, manager of specials and talent; 1969–1971, director of program development for the East Coast; 1971–1975, vice president of daytime programming; 1975, vice president for program planning and development; 1976, senior vice president for prime-time production and development; Paramount Pictures, 1976–1984, president and COO; The Walt Disney Company, 1984–2004, chairman and CEO; 2004–, CEO.
Publications: Work in Progress (with Tony Schwartz), 1998.
Address: The Walt Disney Company, 500 South Buena Vista Street, Burbank, California 91521; http://www.disney.com.
■ With an entertainment career spanning three decades, Michael Eisner had a tremendous impact on popular culture. As one of the most powerful people in the media industry, he was the target of both lavish praise and intense criticism, as Disney first defied and later fell short of expectations under his reign. His leadership was so significantly polarizing that the executive once credited with breathing new life into Disney might ultimately be remembered as a mercurial manager who robbed it of its magic.
Michael Eisner was raised in affluence. His maternal grandfather was the cofounder of the American Safety Razor Company,
and the family amassed a fortune selling military uniforms and razor blades. As was consistent with the family business, Eisner's childhood was filled with much discipline. His parents strictly rationed the children's visual consumption of both television and movies, requiring two hours of reading for every hour of TV watching.
Eisner enrolled in Ohio's Denison University as a premed student but quickly found that his true interests lay in English literature and the theater. In a 1998 interview with Larry King he said, "I just stumbled from one thing to another. I had a kind of a general feeling that I loved the entertainment business; I loved the creative business; I loved the fun of doing things, but I didn't grow up saying, 'I am going to be a movie executive'" (October 10, 1998).
After trying to woo a girl in his college's theater department by writing a play for her, Eisner was hooked. He worked his first industry job during the summers of his college years as a page at NBC studios in New York. He answered phones for Johnny Carson and gave out the restaurant gift certificates that Carson awarded to contestants.
After graduating in 1964 Eisner returned to New York to work at NBC as an FCC logging clerk—by his own admission merely a fancy way of saying that he wrote down the times the commercials came on. Within six weeks he had moved to the programming department at CBS, where he was responsible for placing commercials in the most appropriate slots during children's programs. Dissatisfied with this work, he mailed out hundreds of résumés, receiving exactly one response—from Barry Diller in the programming department at ABC, himself a mogul in training. Diller lobbied for Eisner to be hired as assistant to ABC's national programming director, a post which Eisner held from 1966 to 1968. While he and Eisner were of the same age, Barry Diller's career started sooner, and as such he was a boss, rival, and friend to Eisner ever since they met.
Eisner produced his first television special, Feelin' Groovy at Marine World , in 1967. In 1968 he was promoted to manager of specials and talent and within a year became director of program development for the East Coast. In this capacity the young executive was responsible for Saturday-morning children's programming. Among other projects he oversaw the production of animated programs based on the popular singing groups The Jackson Five and The Osmond Brothers.
In 1971 Eisner became ABC's vice president of daytime programming, where he helped sell the popular soap operas All My Children and One Life To Live . In 1975 he became ABC's vice president for program planning and development and was next made senior vice president in Prime Time Production and Development in 1976. In these posts he fostered programs such as Happy Days, Welcome Back Kotter, Barney Miller , and Starsky and Hutch . During Eisner's years in the programming department, ABC moved from a perennial third place to first place among the three major television networks.
In 1974 Barry Diller moved on to become chairman of Paramount Pictures. In 1976 Eisner's mentor offered Eisner the post of president and chief operating officer at Paramount, giving him an opportunity to learn the movie business. At Paramount, Diller and Eisner applied the lessons they had learned in network television to keep the studio's costs down. During Eisner's tenure as COO the average Paramount film cost only $8.5 million to produce, while the industry average was $12 million. Paramount soon moved from last to first place among the six major movie-production studios.
In October 1978 half of the top 10 box office attractions belonged to Paramount. Films produced at the studio during Eisner's reign included Raiders of the Lost Ark, Saturday Night Fever, Grease, Heaven Can Wait, Ordinary People, Terms of Endearment, An Officer and a Gentleman, The Elephant Man, Reds, Flashdance, Footloose, Trading Places, Beverly Hills Cop, Airplane , and the first three installments of the Star Trek series.
Charles G. Bluhdorn, the chairman of Paramount's parent company, died and his successor Martin Davis disliked Eisner. Eisner told Larry King, "I was on the way out" (October 10, 1998). Fortunately, around the same time Roy Disney, Walt Disney's nephew, asked Eisner to run his family's company. Since Walt Disney's death in 1966, the studio had enjoyed periodic box-office successes and continued to earn profits from theme parks and merchandising, but many in the industry felt the company was suffering from a lack of direction. In September 1984 Eisner left Paramount to become the chairman and CEO of The Walt Disney Company.
Within a few years Eisner transformed Disney into the industry leader. In rapid succession, the studio turned out a new cycle of animated features such as The Little Mermaid, Beauty and the Beast, Aladdin, The Lion King , and Pocahontas . Each proved to be a box-office blockbuster and a merchandising bonanza. At the same time Disney diversified, releasing films for a wider audience through its Hollywood Pictures subsidiary and acquiring the independent Miramax to produce more offbeat films for the specialized urban market. As the value of Disney stock soared, market watchers described Eisner as the prince who had awakened Sleeping Beauty.
As quoted in the Philadelphia Inquirer , Nell Minow, the editor of The Corporate Library, an independent investment research firm in Portland, Maine, said of Eisner, "He thinks about things in a richly textured, multilayered way. He's extremely smart" (March 1, 2004). Barry Diller noted in London's Guardian , "Michael has a genuine creative sense and is a genuinely great businessman. You could count the number of people with that combination on one hand. I don't care who you put him in a room with—his ideas, his judgment, are pure pitch" (April 10, 1999).
In 1994, after a decade of contributions to the company, Disney's second in command Frank Wells was killed in a helicopter crash. Wells was known for handling the details of Disney's day-to-day operations but was often overshadowed in the public eye by the colorful Eisner. From 1984 to 1994 Wells and Eisner helped to increase annual revenues from $1.5 billion to $8.5 billion, and the company's market capitalization leapt from $2 billion to $22 billion, as revenue from theme parks and resorts tripled. Wells and Eisner had together reestablished Disney's dominance in animated feature films with a series of hits. Not only had Wells been instrumental to Eisner's success, but the two had been personally close. In his autobiography Eisner said: "If I was the rudder, he was the keel. For 10 years we never had a fight or a disagreement. I never once felt angry at him—not until he died instantly. Even then I felt angry only because Frank was not around to help me out with a very difficult situation, as he had so many times before. But mostly what I felt was an overwhelming sense of sadness and loss" (1998).
Wells's death marked the beginning of a decade of misfortune for Eisner and the Magic Kingdom. Less than 36 hours after losing his number-two man, Eisner found himself being aggressively lobbied by the head of Disney's film studio, Jeffrey Katzenberg, who felt he was next in line to head Disney's day-to-day operations. Katzenberg was in fact fired six months later, and five years of lawsuits began. The settlements were complicated by the long and controversial professional and personal relationship between Katzenberg and Eisner. Hearings brought to the surface years of animosity on both sides, culminating in embarrassing testimony by a visibly shaken Eisner in which he was confronted with disparaging statements he had made about Katzenberg to Tony Schwartz, the coauthor of his autobiography; as reported by Time magazine, one of the statements was, "I hate the little midget" (July 19, 1999).
In 1994 Eisner discovered he had severe cardiac disease and underwent bypass surgery. In a letter to the Pulitzer Prize–winning author Larry McMurtry, which was reproduced in his autobiography, Eisner called the experience a formative one: "Something happened to me that was a big deal. My life has a finite sense to it, and there is certainly a hollowness that comes with such realizations. Although I fear the ceiling of death, at the same time I accept death for the first time and even look at it without fear" (1998).
After facing his own vulnerability and having become concerned about his lack of a successor, in 1995 Eisner orchestrated the hiring of the Hollywood super agent Mike Ovitz as Disney's president. Hoping to push Disney's assets even further into the entertainment landscape, Eisner announced in 1996 that the company would acquire Capital Cities, the owners of the ESPN and ABC television networks—the latter being Eisner's old employer.
Ovitz's management got the ABC merger off to a dismal start, however, and his 16-month tenure scarred the company. Just five weeks after hiring Ovitz, Eisner believed that his friend needed to be fired. Yet he hesitated out of the fear that Ovitz would commit suicide. A little more than a year after joining Disney, Ovitz left with a severance package that included a $38.9 million cash payout and stock options valued at more than $100 million.
While temporarily hurting profits, the $19 billion merger with Capital Cities appeared strategically sound. The principle of the deal was to marry typical Disney content with ABC's broadcast and cable distribution; the challenge lay in the execution. While ESPN and other cable properties grew, no unit of the company was as besieged as ABC, which lost money for the first time in a decade in spite of a fantastic advertising marketplace because audiences were splintering and programming costs kept climbing. Under competitive pressure Disney agreed to spend a whopping $9.2 billion for the rights to televise National Football League games on ABC and ESPN through 2008. In one particularly bad year following the acquisition, operating income for the company's broadcasting segment—which included ABC, 80 percent of ESPN, the Disney Channel, ABC Radio, and stakes in Lifetime, A&E, the History Channel, and E! Entertainment—grew by just 3 percent.
Throughout the rest of the 1990s Disney seemed less able than ever to cope with adversity. Some analysts said that the company had grown so big and its problems so far-reaching that they could not be counteracted by a couple of hit movies or TV shows or additional Disney stores. Some were troubled by Eisner's persistent failure to designate a clear successor to himself as the head of the company.
While Disney's 1998 net income surpassed that of its three major competitors combined, all other key indicators were down—some shockingly so. For the first nine months of fiscal 1999, excluding a one-time gain from an asset sale, Disney reported declines in operating income of 17 percent, net income of 26 percent, and earnings per share of 27 percent. Some Wall Street analysts cut their fiscal 1999 earnings estimates as many as five times, and 13 of 25 analysts issued a "hold" on the stock, according to Zacks Investment Research. The company had simply stopped growing, and the stall was not merely a momentary dip: Disney was not expected to match its fiscal 1997 earnings until 2001 at the earliest—a major setback for a company that for the decade after Eisner took over in 1984 had delivered annual increases in both profit and returns on equity of 20 percent.
In Fortune magazine Eisner defended what he saw as a premature burial of his company: "We're in a transition period.
I would rather have every quarter be up. It was for 13 years. Everybody loves you. But you can't manage a company like ours quarter to quarter, maniacally, so that the media will write good things about you. I don't think our problems are in the fabric of our company. And I don't have my head in the sand. The criticisms of me and Disney today are as shortsighted as were the praises of me and Disney in the high economic times" (September 6, 1999). In 1999 Jeffrey Katzenberg and Disney finally settled a bitter breach-of-contract lawsuit which analysts estimated paid Katzenberg $250–275 million, including the $117.5 million that he had received in late 1997 when the case had been partially settled.
Eisner's critics contended that for all his creativity, charisma, and grand plans, he presided over an insular and arrogant corporate culture where the acting authority was hierarchical, centralized, and slow. According to popular wisdom Eisner insisted on making too many decisions himself, clogging the decision-making process. Working with Disney was notoriously difficult—so much so that a group of partners, including Coca-Cola, AT&T, Delta, and Kodak, used to meet informally to trade tips on how to cope.
Yet Eisner had a powerful defense. As he told Fortune , "If there's an area where I think I can add value, I dive in. I heard from a friend that the cast members at Disneyland Paris weren't as helpful as those at Walt Disney World; he recommended better training. Is that meddling or is that insisting on a high standard of excellence? Yes, at certain times I paralyze people. I'm never satisfied. It gets people crazy, I know that. But I leave my best executives alone. There's no brain drain. We have unbelievably strong management" (September 6, 1999).
As the lions circled, Eisner's fellow mogul and longtime peer Barry Diller stood firm. Diller told the Guardian , "He's developed into the most potent executive of them all. The deeper you dig with Michael Eisner, the better it gets. On the way there he will drive you crazy, though. Why? He's a complex character. He's paranoid. Michael is very suspicious of motives" (April 10, 1999).
Another Eisner criticism was that he did not truly value other people and ousted anyone who gained too much power, as with Katzenberg and Ovitz. Other strong executives left the Disney fold of their own volition, among them the former CFOs Stephen Bollenbach and Richard Nanula, the Internet guru Jake Winebaum, and the former ABC executives Geraldine Laybourne and Steve Burke. Still, to Eisner's credit, as of early 2004 many talented executives remained, including the ESPN president George Bodenheimer and the consumerproducts chairman Andy Mooney.
Three years after the terrorist attacks of 2001 Disney's theme parks were still recovering, offering discounted prices in order to keep attendance figures up. The $5.2 billion purchase of Fox Family Channel in 2001, which became ABC Family, was proving to be a failure. During the recession, when advertisers tightened belts, ABC stumbled to last place in ratings among the four major broadcast networks. While Disney films generated a record $3 billion at the box office in 2003, the company could only take part of the credit for the star performer Finding Nemo , which had been coproduced by Pixar. Critics said that the fabled Disney theme parks were losing their luster.
The knocks against Eisner's survival tactics were plentiful. He was accused of undermining the company's creativity by dismembering much of its vaunted feature-film animation unit. Critics said he had manipulated a board that had been constantly reshuffled to remain beholden to him. In a final blow the last link to the company founder Walt Disney—his nephew Roy—resigned from the Disney board in 2004 to voice his displeasure with Eisner. As quoted in the New York Times , in his resignation Roy Disney blamed Eisner for creating among employees, shareholders, and customers alike a "perception that the company is rapacious, soulless, and always looking for a quick buck rather than creating long-term value, which is leading to a loss of public trust" (February 15, 2004).
The grumbling over Eisner's mismanagement came to a boiling point at a March 2004 shareholder meeting in Philadelphia. In front of three hundred livid shareholders, Eisner gave a ninth-inning plea regarding his personal turnaround and commitment to the company: as reported by Newsweek , he said, quite simply, "I love this company" (March 15, 2004). Investors did not care. In an unprecedented showing 43 percent voted against his reelection as chairman. Although the former Senator George Mitchell was named nonexecutive chairman and the vote was clear evidence of public opinion against him, Eisner vowed to stay on at Disney until his contract ended in 2006 and not be forced out.
Considering that Disney had just started to regain some of its magic—stock value and profits were rebounding, and the company anticipated double-digit earnings growth through 2007—the shareholder meeting showed just how low Eisner's standing had sunk. Disney diehards believed Eisner had sacrificed the company's soul for synergies and profits; for example, to cut costs Eisner had eliminated the street sweepers at Disney Land. In Newsweek the shareholder Roxann Grzetich of Chicago said, "The deterioration in the appearance of the parks is awful" (March 15, 2004).
The week after the fateful meeting Eisner turned 62; still, he had yet to name a successor. Eisner insisted on staying while everyone else wondered when the chief Mouseketeer would finally lose the keys to the kingdom.
See also entry on Walt Disney Company in International Directory of Company Histories .
Bates, James, and Michael Cieply, "As Spender, Ovitz Was $6 Million Man," Los Angeles Times , February 28, 2004.
Berenson, Alex, "The Wonderful World of (Roy) Disney," New York Times , February 15, 2004.
Corliss, Richard, "Enough Is Enough!" Time , July 19, 1999, p. 76.
Eisner, Michael, Work in Progress , with Tony Schwartz, New York, N.Y.: Random House, 1998.
Gunther, Marc, "Eisner's Mousetrap," Fortune , September 6, 1999, p. 106.
Hattenstone, Simon, "Michael Eisner: Master of the Mouse," Guardian (London), April 10, 1999, p. 6.
Jefferson, David J., and Johnnie L. Roberts, "The Magic Is Gone," Newsweek , March 15, 2004, p. 52.
King, Larry, " Work in Progress : Michael Eisner on His Life at the Helm of Disney," CNN Larry King Weekend, October 10, 1998.
Tanaka, Wendy, "Eisner Put Stamp on U.S. Pop Culture," Philadelphia Inquirer , March 1, 2004.