Man Without Qualities

Tuesday, December 03, 2002

Corporate Governance In Disneyland II

The Walt Disney Company is not making much money turning out mostly tired, unexciting retreads of old warhorses.

But Mr. Eisner wants you to think it's all OK because he is putting the company in the vanguard of corporate governance reform!

Just think: Somebody had to make this up. Now THAT'S imagineering!

Disney's shenanigans and the effort at market manipulation (I mean "investor relations") might be more amusing if it weren't so obviously part of a formal public relations strategy, as noted by Holman Jenkins in the Wall Street Journal way back on October 23:

Disney needs a plan for using its assets more productively to generate earnings. Michael Eisner , its long serving chief, may have run out of ideas; he may be unwilling to do what is necessary. If so, he should go. But instead the company is bogged down in an esoteric discussion of who constitutes an "independent" director, as if replacing Sidney Poitier on the board is a substitute for investors taking charge and deciding where the company needs to go. ...

Mr. Eisner , no wonder, has become Disney's biggest champion of governance reform. He's brought in Ira Milstein, a legendary lawyer and expert on good governance; he's been meeting with gadflies and soliciting their advice. Yet such steps are no substitute for radical changes in Disney's business model, dismantling much of what Mr. Eisner spent his career building. (One idea: dump everything except the theme parks, retail outlets and animation studios, and turn Disney into a real estate investment trust, paying out 90% of its earnings to shareholders as tax-free dividends).

Nothing like this is going to happen with out a fight over control of the company, which Mr. Eisner has forestalled by changing the subject to governance reform.

Right you are, Mr. Jenkins. And the Disneisnerian bog just goes on and on and on.

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