Legacy Content

Page 3 of 6

Tragedy Turns the Tide

"You had a very successful first 10-plus years at the company in partnership with Frank Wells, for which I salute you. But, since Frank's untimely death in 1994, the Company has lost its focus, its creative energy, and its heritage…"

1994, however, was also the year that Frank Wells died in an accident while skiing with Clint Eastwood and others. Michael Eisner was obviously devastated and struggled to keep his composure at the company memorial services, which Disneyland Resort cast members were able to watch live in the Main Street Opera House, which had long been used to showcase a different kind of President.

Most people within the Company failed to grasp role Wells had played in the success of Disney during the previous decade, as Eisner, being CEO, had been given most of the public praise as well as criticism.

Changes were already underway at the Disneyland Resort, with Paul Pressler, a bright, upwardly-mobile retail executive having moved into the President position to replace the retiring old-school Disneylander Jack Lindquist. Paul had been leading The Disney Stores through rapid growth just prior to his move to Anaheim. As is customary for hot-shot company-hopping executives, Paul bought along people he had grown accustomed to working with at his previous job.

Paul was brought to the Disneyland Resort to spearhead the expansion efforts, since he'd done so well at expanding the Stores. Disney had also signaled their intentions to invest in Anaheim by starting up The Mighty Ducks, an NHL team based in the new Arrowhead Pond.

By this time, The Walt Disney Company was a far much larger company involved in many more businesses than Walt and Roy had lead. It was a far much larger company than Michael and Frank had been brought on board to revive ten years earlier. The loss of Frank Wells would have been tough -possibly fatal to the corporation- in 1984, and it would prove disastrous for the larger incarnation in 1994.

Jeffrey Leaves
Jeffrey Katzenberg Chairman of the studios, did what anyone in his position would do- he asked to be promoted. He wanted to take over Frank's role. You can quibble about his tact, about his timing about how he approached Michael on the matter. I wasn't there, so I can't say. Investors would have liked to see Katzenberg promoted, especially after "The Lion King". Plus, there was now a "succession question", as Frank's death left Michael the sole person in the cockpit of a massive airliner.

Michael spurned Jeffrey, and the fallout had major and lasting impacts.

Jeffrey, the man referred to as "The Golden Retriever", bolted. When he set up a film/TV/music studio with entertainment gods Steven Spielberg and David Geffen, he was able to form a serious feature animation operation that, for a while, gave artists either at or headed for Disney an alternative, thereby raising salaries (and production costs) substantially. He also took his former employer to court and was awarded hundreds of millions of dollars in owed compensation, thereby riling Disney shareholders. The war of words between Eisner and Katzenberg didn't help the Company, either.

Learning Your ABCs, Bringing in Another Michael

"The failure to bring back ABC Prime Time from the ratings abyss it has been in for years and your inability to program successfully the ABC Family Channel…"

Ah, but 1995 was sure to be a better year, right? Disney bought Cap Cities/ABC, which Eisner reasoned was necessary with the new realities of broadcast, cable, satellite, and online communications. It also gave Disney the very successful ESPN brand, made corporate siblings out of Disneyland Park and ABC, which had once owned a stake in Disneyland Park, and put Eisner over one of his former places of employment. So far, so good.

Michael also brought in Michael Ovitz, who was one of the most powerful people in Hollywood at the time. In less than a year, Ovitz would be gone and owed tens of millions of dollars- further riling shareholders. Later, Ovitz would completely meltdown and lash out at Hollywood, further cementing his loss of power.

"The creative brain drain of the last several years, which is real and continuing, and damages our Company with the loss of every talented employee…"

Katzenberg and Ovitz were just the start of a long list of prominent executives, managers, and artists to lave the company, and Eisner hasn't had a clearly groomed successor since the death of Frank Wells, even with the promotion of ABC veteran Bob Iger.

Eisner oversaw the purchase of the Fox Family Channel, which had billions of dollars of debt which the Company assumed so it could have ABC Family. Really, Disney was paying several billion dollars for a single cable channel.