Eisner is STILL Eisner
URBANK, Calif. — Under the headquarters roof held up by the Seven Dwarfs, Michael D. Eisner is nervous.
Mr. Eisner, chairman of the Walt Disney Company, is nervous not because "Pearl Harbor" has fallen short of expectations. He is nervous not because ABC is still working off its "Who Wants to Be a Millionaire" hangover. He is nervous not because the new Disney's California Adventure theme park seems half-empty.
After all, at a company built on films, television programs and vacation attractions, such routine disappointments come with the job. Rather, Mr. Eisner is anxious because he is feeling pressure to change Disney's architecture. While Sneezy, Sleepy, Dopey & Company are the company's literal and figurative pillars, Mr. Eiser feels pressure to add cables, antennas and satellites.
"I'm a little nervous," he said in an interview here. "I am nervous of the monumental pressure of The L.A. Times and The New York Times and Variety and all that stuff. `How come Disney is not buying Telemundo?´ `How come Disney is not buying NBC?´ `How come Disney isn´t fighting Rupert to get DirecTV?´ `How come Disney doesn´t own 12 million cable homes?´ `Why doesn´t Disney buy AT&T Broadband and get in the pipe business?'
"I'm nervous that we'll all — including me — lose sight," he says. "I have to tie myself to the vision and I have to say to myself, `What is Disney?´ "
Mr. Eisner clings to the vision because it is getting a bit lonely in his corner of the media world. And he knows it. For years, media moguls and gadflies alike have argued about whether greater power accrues to the owners of content (like films and television programs) or distribution (like cable and satellite systems). Now, many big media companies are concluding that it is more powerful to own both. AOL Time Warner is largely the result of America Online's desire for Time Warner's cable systems. The News Corporation is vying for the DirecTV satellite system. Even Viacom, where Sumner M. Redstone enjoys proclaiming that "content is king," has built a new television network, UPN, to complement its acquisition of CBS.
And then there is Disney, the company that the producer and animator Walt Disney founded in 1923 and that first offered stock to the public in 1940. Such is its tradition that Mr. Eisner, chairman since 1984, paints even the acquisition of Capital Cities/ABC six years ago as an investment in content rather than distribution. Where others saw a television network, Mr. Eiser saw ESPN's sports properties and ABC's television library. If the other conglomerates are about the media, Mr. Eisner wants Disney to be about the messages.
"What makes the company different is that everybody right now, the other big companies, are run by very gifted businessmen who are out vociferously championing the control of the conduit to the public in one way or another," Mr. Eisner said. "But for us, the main product is intellectual product, or content. And all those words are so antiseptic that it's hard to talk about it and much harder to write about it. But if you sit in a theater and you see `Dinosaur´ or `Atlantis´ or a Garry Marshall movie or you watch a television show in a group or you go to a theme park and you see people react, then you start to understand content. And it is our single driver."
That may be so, but it appears that a fair number of Disney executives who are not named Michael D. Eisner are spending a lot of time thinking about how to bypass, co-opt or otherwise handle the distribution channels (particularly cable television operators) that Disney relies upon to deliver content to consumers. And those executives are coming up with some innovative and provocative plans, like using the broadcast television airwaves to deliver movies for video-on-demand services.
The outside pressure that Mr. Eisner feels is mounting at this particular moment for a reason. Because reporters and Wall Street analysts are fickle and shortsighted sorts, it is unlikely that Mr. Eisner would be feeling heat to diversify were Disney's core content units enjoying a run of incredible success. But they aren't.
At first glance, there seems to be no single overarching reason why most of the company's content businesses are falling short of blockbuster success just now.
For the company's media networks operation, the biggest problem may simply be living up to its own record. During the company's fiscal year that ended last September, the networks posted stellar results for essentially two reasons: a sizzling advertising market and the ABC hit show "Who Wants to Be a Millionaire." Now, the advertising market has fallen off the stove and "Millionaire," while still among the top- rated prime-time programs, is no longer the phenomenon it was. ABC also failed to generate a strong lineup of new hits last fall — although ESPN became even stronger, largely because of its expanded National Football League schedule.
After networks, Disney's biggest unit is its theme parks and resorts operation. As the company has added new parks and cruise ships, revenue at the unit has grown steadily.
But attendance has fallen off this year at the company's United States parks, perhaps because of the overall slowing of the economy and the rise in gasoline prices. Moreover, the company's new park in Anaheim, Disney's California Adventure, has not yet hit its stride. During a recent visit, the park's signature roller coaster was closed, construction was underway outside a key attraction and, most important, the crowds were less than overwhelming. There are strengths, including a popular attraction based on "A Bug's Life."
Meanwhile, there have been disappointing results from the company's studio operation, which is dominated by the movie business. Revenue and operating income at the unit have fallen each of the last three fiscal years. Part of the decline is a result of the company's scaling back of its home-video release schedule. Another part, however, is a result of box-office turkeys; Mr. Eisner cites "The Insider" and "Kundun" among the duds. And while this summer's much- hyped "Pearl Harbor" will be profitable, it will not be a world-beater of "Titanic" scale.
