Man Without Qualities

Saturday, April 03, 2004

The Fall Of The House Of Eisner XV: Back On Track, At Last

Walt Disney Co. Chief Executive Michael Eisner says the company is in line with forecasts and back on track:

"I think we're pretty much where we said we'd be. There are no major changes from what I talked about ... at the annual meeting," Eisner said during a question and answer session at a Credit Suisse First Boston meeting that was Webcast.

Eisner said the theme parks continue to gain momentum as national and international economies pick up steam, and the company's film studio division looks strong with a slate of new movies coming out including big budget film "The Alamo."

Ah, yes, further evidence that The Happiest Place on Earth is not Disneyland; the Happiest Place on Earth is the inside of the Pump Head belonging a Chief Executive Officer in the throes of full scale commercial delusion.

A few details that Mr. Eisner, er, forgot:

Disney's most recent big budget release was Hildago, which has been called Sea Biscuit of Arabia. It was boring, slow, dry and very expensive - reportedly way north of the official $125 Million. It has grossed about $70 Million (including foreign).

Then there is The Alamo, mentioned by Mr. Eisner as a real winner a-coming. It is also reported to have cost way north of its official budget of about $150 million (including promotion). The inside word is that the movie has been a bomb with test audiences and has reportedly brought its director to tears more than once. Early reviews include passages such as "forget it" and "the filmmakers have obviously decided to use as their model those educational films. . .that are inflicted on soon to be history-hating students at the middle school level." The movie lacks a principal character. Best of all, the movie's shortcomings - and the huge financial disaster it promises for Disney - are all directly attributable to Michael Eisner, who pulled the plug on the original Ron Howard team to get the budget down. The budget didn't come down, but the movie came apart. Look for, say, $100 Million loss for Disney from this turkey Eisner is touting as a winner.

And let's not forget the almost inconceivably forgettable full-length animated feature Home On The Range. It, too, has tested disastrously with test audiences - and the company expects to lose a bundle on it. It was reviewed by the New York Times as seldom funny. At the very least, the movie may be the first film to require cortisone treatments from jamming its elbow in the audience's ribs so often. Does a studio exec live for reviews like that?

Not to fear, not to fear. Mr. Eisner also said Disney may look to get more deeply involved in the video game business when its top executives and board get together in upcoming strategy meetings.

Video games? That's pretty far from Disney's core competence - and games are very expensive to develop and market. Moreover, the video game industry has been getting tighter and harder to crack. But there is an opening for Disney: Some game companies - such as Electronic Arts Inc., the gaming industry's largest publisher, have found big money in turning out versions of movie hits such as "The Lord of the Rings: The Return of the King" and "Harry Potter: Quidditch World Cup." That's it! Synergy! All Disney needs to do is leverage its expanded video game business off all those big movie hits Disney has been turning out - and is now set to turn out.

You know. The ones Michael Eisner was talking about.

UPDATE: Some on the Disney board - such as Judith L. Estrin - seem to share the delusion.

Other board members, including Robert W. Matschullat and Gary L. Wilson, want the newly appointed chairman, George J. Mitchell, to expand the Chairman's office and take a more activist role in defining Disney's priorities and strategic vision. That's an interesting approach considering that Mr. Mitchell has essentially admitted the obvious in public: he knows next to nothing about business and has little business experience (he's never even held a real job), doesn't see his position in anything like these terms and wouldn't be able to fulfill the demands of such an expanded office in any event. Further, Mr. Mitchell was named chairman despite his own 20% no-confidence vote and has said that the board would be more involved in corporate strategy. But he has also told friends and colleagues that he does not want to remain chairman for long.

Crisis? Is Disney in crisis? When does the Board wake up to the fact that life is too short to keep Michael Eisner around?

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