Michael Eisner will step down as chief executive officer of Walt Disney Co. in 2006 after more than two decades in which he boosted sales almost 18-fold, added seven new theme parks and faced calls for his ouster.
Eisner, 62, said in a letter to the board of the second- largest media company he will retire as CEO after helping the company select a successor. The letter was received by e-mail from Disney's London-based spokeswoman Joyce Lorigan.
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``We are and should be proud of how we have managed and strengthened the company during difficult times,'' Eisner said. He praised the company's employees for remaining focused ``amidst the distractions that have taken a huge chunks of time during the past several years.''
Eisner has come under pressure from former Disney directors Roy Disney and Stanley Gold, who resigned from the board in November to wage a campaign for his ouster. Comcast Corp. in February made a $54.1 billion unsolicited bid for Disney, which was withdrawn in April. Eisner in March relinquished his role as chairman to Disney director and former U.S. Senator George Mitchell after investors withheld 45 percent of shares voted for Eisner's re-election to the board.
``It's good news, Disney without Eisner is much better than Disney with Eisner. But what is disappointing is that he's not going for another two years,'' said Antony Gifford, who helps manage about $2 billion of U.S. stocks at Henderson Global Investors in London. ``We believe that Disney has some attractive assets that are worth more than the share price suggests. But Eisner wasn't the man to unlock that value.''
Gifford said he owns Disney shares.
Eisner told the Wall Street Journal in an interview that he didn't make the decision to step down because of pressure from Roy Disney and Gold, who have accused him of mismanaging the company, or Comcast's takeover bid. The Journal earlier reported Eisner's plans to step down.
Roy Disney, the 74-year-old nephew of founder Walt Disney, said yesterday he would press ahead with efforts to oust Eisner because he is doing ``an awful job'' running the company.
Disney shares have fallen 2 percent this year, after gaining 43 percent in 2003. The shares yesterday declined 3 cents to $22.86 in New York Stock Exchange composite trading.
Eisner said in an interview last week with the Los Angeles Times that he wants Disney President and Chief Operating Officer Robert Iger to succeed him. Eisner has told the board that Iger is his ``preferred choice,'' the newspaper reported on Sept. 5.
Eisner didn't mention Iger in his letter.
Other possible successors include News Corp. President and Chief Operating Officer Peter Chernin; Jeffrey Bewkes, chairman of Time Warner Inc.'s entertainment and networks group; and former Disney executives such as EBay Inc. CEO Meg Whitman and Gap Inc. President and CEO Paul Pressler, the Journal said.
Iger, 53, joined Disney following the company's $19 billion acquisition of Capital Cities/ABC Inc. in 1996. Disney named Iger to his present job in January 2000 after he held positions running ABC and Walt Disney International.
Born in Mount Kisco, New York, on March 7, 1942, Eisner got his start in the entertainment industry as a page at the NBC television network in 1963, according to Who's Who. He moved to CBS in the mid-1960s, working in the programming department and later became a manager of talent and specials at ABC.
As president of Paramount Pictures in the 1970s, he worked with Barry Diller, helping produce such hit movies as ``Saturday Night Fever'' and ``Grease.''
Eisner brought the thrift he learned under Diller to moviemaking when he joined Disney in 1984, helping lead a turnaround after sales slumped and the company became the target of corporate raider Saul Steinberg. In the 1980s, Eisner and former studio chief Jeffrey Katzenberg produced low-budget films such as ``Down and Out in Beverly Hills.''
Katzenberg, 53, who sued Disney after being passed over for president in 1994 and later won more than $117 million, is now poised to become a larger threat to Disney's animated film unit. Katzenberg helped start Glendale, California-based DreamWorks SKG in October 1994. In July, Katzenberg said DreamWorks would raise as much as $650 million in an initial share sale of its animation unit that will let the company double film production.
Investors have blamed Eisner for hiring Michael Ovitz, a former Hollywood agent, as Disney president in a handshake deal in August 1995 without consulting Disney's board. Ovitz was given a $140 million severance package when he was ousted 15 months later, which some investors are trying to recoup.
Disney shareholders contend in a lawsuit that Ovitz violated his legal obligations to the company by changing the terms of his compensation and severance packages after he joined the company in October 1995. A trial in the case is set for next month. The suit, which also accuses Disney directors of not fulfilling their board duties when they approved Ovitz's pay and severance plans, has provided ammunition to Eisner's opponents.
Eisner received another blow in January when Pixar Animation Studios Chief Executive Steven Jobs ended talks to extend a film distribution agreement with Disney.
Emeryville, California-based Pixar has produced five successful films since 1995, including two versions of ``Toy Story'' and the 2003 blockbuster ``Finding Nemo.'' The current distribution accord continues for Pixar's next two films, the November release of ``The Incredibles'' and next year's ``Cars.''
During the 1990s, after Katzenberg left Disney and co-founded DreamWorks SKG, Disney shifted to making more expensive movies. Eisner told investors in November that he had strayed from his strategy. Low-cost films such as ``Freaky Friday'' and ``Bringing Down the House'' helped boost results last year.
The company's film studios, including Miramax Films, rank third this year in domestic box-office market share with $860.5 million through Sept. 6. Last year they were No. 1, with sales of $2.22 billion.
The company last month said third quarter profit climbed 20 percent because more tourists visited parks such as Walt Disney World in Orlando, Florida, and advertisers spent more on cable- television channels including the ESPN sports network.
Sales for the quarter ended June 30 increased 17 percent to $7.47 billion.
Eisner has invested $11.4 billion in Disney's resorts over the past decade, adding parks such as California Adventure, next to Disneyland, in 2001. He added rides such as ``Mission: Space'' in Florida and the ``Tower of Terror'' in California during the past year.
Disney's ABC broadcast network is ranked fourth among the top four networks, while Viacom Inc.'s CBS is No. 1. ABC lost 8.2 percent of its prime-time viewers for the September-June TV season, according to Nielsen Media Research.
Disney has said ABC will be profitable in fiscal 2005. Ratings have fallen since the 1994-95 season, when it was the most- watched network.