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 videocassette 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). 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. 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.
But few things mark him as a man who failed and sullied the good name of Mickey. From the huge loss of Jeffrey Katzenberg years ago, to the recent split with movie moguls Bob and Harvey Weinstein, Eisner was increasingly perceived as doing more harm than good. 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.
CURRENT CEO
Robert Iger President, Chief Operating Officer and a Director of the Registrant since January 2000. In that role, he partnered with Mr. Eisner in overseeing all aspects of the company's worldwide operations including its filmed entertainment, theme parks and resorts, media networks and consumer products businesses. Previously served as President of Walt Disney International and Chairman of the ABC Group.
Iger made his first move at the helm of Disney when in March 2005 he sacked Peter Murphy, the company's Chief Strategic Officer and pledged to disband the company's strategic planning division. The division, which Eisner had created, was charged by many inside and outside the company with stifling creativity.
Iger also made bold moves in restarting negotiations with Disney's film production partner Prixar Animation Studios and by reconciling the company's differences with former shareholders Roy E. Disney and Stanley Gold, who in July 2005 dropped their Save Disney campaign. Disney, Gold, and Pixar chairman Steve Jobs had all been alienated by Iger's predecessor, Eisner.
On the first day of Iger's term at the helm of the media conglemorate, he fired many senior staff at the Muppet Holding Company, the subsidary of Disney which controls The Muppets. Eisner had personally hand-picked this staff himself when the Muppets became Disney property in April 2005. This action of Iger's can be a sign that Disney is entering a new era with no baggage from past CEOs.
IGER’S TO DO LIST
Disney has renewed growth over the past couple of years by streamlining its operations, by reviving theme-park traffic that lagged after Sept. 11, 2001, and by performing CPR on ABC.
At the theme parks, Iger isn't in a position to raise ticket prices to generate income, because the economy wouldn't support such a move. Growth on this front will have to come from new park openings. Disney plans to open a park in South Korea. New parks are good for the long-term, but the costs associated with building could dampen results over the near-term. There's also no guarantee that the new park will be well received. Euro Disney, though successful, has never lived up to its original hype.
More urgent is the need to fix the company's sagging film division. Keeping the Weinstein brothers and Miramax in the fold is a good first step, but Disney needs to breathe life back into its animation studio. Renegotiating a distribution deal with Pixar isn't enough.
Iger's biggest challenge, though, is making Disney's beloved characters relevant in the digital age. Mickey, Donald, Winnie-the-Pooh and Kermit are being marginalized by the onslaught of hipper animated characters found everywhere from theaters to computers to television sets. Kids today are much more likely to tote a Spiderman, Batman or Mr. Incredible action figure than a stuffed Mickey Mouse or Donald Duck. Turning around that trend is crucial to the long-term prospects of the company.
