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MANAGEMENT GIANT

Michael Eisner
Timeline
1942 Born. 1960 Starts at Denison University, Granville, Ohio. 1966 Works with Barry Diller at ABC. 1969 Joins Diller as director of feature films and program development. 1971 Becomes head of daytime and childrens programming at ABC. 1976 Becomes president of Paramount. 1984 Appointed CEO of Disney Productions. 1987 Three Men and a Baby grosses over $100 million at the box office. 1992 Disneyland Paris opens. 1994 Katzenberg leaves. Shelves Disney America plans. 2000 Disney posts profit of $1.9 billion on revenues of $25 billion. 2002 Attacks IT industry for failing to adequately protect digital content. 2003 Campaign to oust Eisner begins. Eisner power reduced as his job split into two roles. He remains as chief executive. Disneys partnership with Pixar dissolved. 2004 Comcast make and then drop hostile takeover bid. Blocks US release of Fahrenheit 9/11. Eisner announces plans to step down in 2006. 2005 Disney announces that Robert Iger will replace Eisner as of September.

Summary
Michael Eisner, chairman and CEO of Disney, is what the famous company lacked for many years: a true successor to Walt Disney himself. The big cheese that made the mouse roar, he breathed life into a moribund Disney when he joined it in 1984, with his own personal team of mouseketeers, to work alongside president and COO Frank Wells. Eisner and Wells resurrected the magic kingdom. Eisners insight was that Disney should be in the family entertainment business in all its manifestations, so the Disney brand was stretched to encompass a mountain of merchandising, stores, books, videos, games, movies, and theme parks. His other claim to fame is the size of his pay check.

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Born during the Second World War, Eisner got an early taste of the entertainment business when, still a student, he spent three months at NBC studios. With the help of his fathers contacts, he obtained a job as a clerk at NBC. Next he worked at ABC (a company he later bought) with Barry Diller. In 1973, aged 34, he followed Diller to Paramount as president. Together with young, thrusting executives such as Jeffrey Katzenberg, Eisner helped make Paramount a hit factory. Katzenberg followed him when he moved to Disney to rejuvenate the ailing studio and make it an entertainment powerhouse once again. In the mid-1990s, however, the Disney magic lost its sparkle temporarily as Eisner contended with executive fallouts and the aborted Disney America project, and had heart bypass surgery. But by 2000 the company was back on track, and Eisners status as one of the highest paid executives in the United States looked to be deserved.

Background and Rise

Michael Eisner was born in Mt Kisco, New York on 7 March 1942. An affluent family, the Eisners lived in a large apartment on Park Avenue on the Upper East Side of Manhattan, where Michael attended a local private school, Allen-Stevenson. More interested in sport than studies, he soon discovered he had a strong competitive drive and preferred to be a leader rather than a follower. He displayed a self-confident streak that belied his young age and that remained with him all his life. Attending a reunion of a summer camp many years later, he arrived at the hotel, joined the others, sat down to a slap-up meal, and even sang the camp song at the appropriate moment. It was only when the director of his camp walked into the room, sidled over to him, and explained that he was attending the wrong reunion, that Eisner realized selfconfidence could sometimes be misplaced. After Allen-Stevenson came boarding school, and then, in 1960, Eisner started at Denison University in Granville, Ohio. The dissection class put paid to his idea of studying medicine so he switched to English as his major. During one summer vacation he managed to wangle a job at NBC; his father knew Robert Sarnoff, the son of RCA founder, David Sarnoff. Although he spent his three months at NBC as nothing more than a runner, working on the sets of shows such as The Price Is Right, he fell in love with the entertainment business.

Defining Moments
Despite his persistence and enthusiasm, however, and help of his fathers contacts, Eisner struggled to find a job in entertainment. Eventually, he was offered the job of a clerk for $65 a week at NBC. He accepted immediately. Shortly afterwards, he took a weekend job at WNBC radio as traffic researcher. His job was to borrow other radio stations traffic reports and pass them on to the morning DJ. Eisner was in no position to argue about the ethics of the situation and did as he was told, although he occasionally embellished his traffic bulletins with imaginary streets named after past girlfriends. By 1966 he had obtained a job working as Barry Dillers assistant at ABC (Diller was to become one of the most respected executives in the entertainment business). ABC proved an excellent training ground for the ambitious Eisner, who became involved in all aspects of the television business and quickly learnt that hit TV shows were like
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gold dust. Eisner estimates the odds of achieving even an average success at only one in 4,000. In 1968 he turned down a job offer from the advertising agency Foote, Cone, & Belding, but recommended one of his superiors, who landed the job. Eisner promptly took up the position that had been vacated. Diller, meanwhile, had been promoted to work on a partnership with Universal Studios to produce made-for-television films. In 1969 Eisner joined him as director of feature films and program development. In 1971 Eisner became head of daytime and childrens programming at ABC. With ABCs daytime ratings languishing at the bottom of the table, it was a win-win situation for him. Sure enough, daytime television improved considerably under his control, so that, several Eisner-instigated shows later, he was back with prime-time development, this time as vice-president. In 1976 Eisner decided to move out to Los Angeles. After a string of successes, including Happy Days and Starsky & Hutch, he was headhunted by Barry Diller, now at Paramount, and offered the job of president of Paramount. He was only 34. Between 1977 and 1982, profits at Paramount increased from $30 million to over $100 million, largely due to the new culture of aggressive creative risk-taking introduced under Diller and Eisner. Hit TV shows such as Taxi and Mork & Mindy, together with films such as Saturday Night Fever, Elephant Man, Grease, Star Trek, Ordinary People, Airplane, and Raiders of the Lost Ark brought the dollars flooding into the Paramount coffers. In 1984, after some political infighting at Paramount, Eisner, by now one of the top film executives in the country, moved on to become CEO of Disney. When Eisner joined Disney in 1984 the company was in the doldrums. He set about transforming the declining film and theme park company into an entertainment giant. Key to this transformation was an injection of new blood in the form of Jeffrey Katzenberg, still in his early thirties. Under the labels Touchstone Pictures and Hollywood Pictures, Katzenberg gave the go-ahead to a string of hit feature films including Down and Out in Beverly Hills and Three Men and a Baby, a film that grossed over $100 million at the box office, the first Disney film ever to do so. Of their first 17 films, 15 made money. Eisner, with his tremendous experience in television, also rejuvenated Disneys TV output with top ten shows such as Ellen and Home Improvement. Eisner and Disney were attacking on all fronts. Eisner repackaged classic Disney animation for home video. Titles such as Bambi, Cinderella, and the more modern Aladdin and The Lion King elevated Disney to the number one Hollywood studio in home video sales. By the early 1990s Disney, now trading as the more commercial-sounding Walt Disney Company rather than Walt Disney Productions, was posting revenues of over $5 billion and profits close to $1 billion. The days of Disney being built on the fortunes of a small mouse were long gone. From 1985 right through to 1990 the company posted record profits for 20 quarters in a row. It was only in the mid-1990s that the Disney magic began to lose a little of its sparkle. Although Eisner pulled off a major coup when he acquired the ABC broadcast

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network, this was counterbalanced by a spectacular and acrimonious falling-out with his longtime co-worker, both at Paramount and Disney, Katzenberg. This followed Katzenbergs departure to found DreamWorks with industry luminaries Steven Spielberg and David Geffen. Eisner got angry, reportedly, because of leaks of financial information to the media, which he attributed to Katzenberg. Katzenberg in turn claimed he was owed substantial bonuses, worth several hundreds of millions of dollars. In court, Eisner admitted he might have said of the diminutive Katzenberg, I hate the little midget, and that he believed his one-time associate had a dark side. The dispute rumbled on for several years before it was settled privately. It was an unfortunate end to what had been such a profitable partnership. A little later, Eisner had more executive problems when he hired Mike Ovitz, talent agent, as his number two, only to see him depart just over a year later. On top of the problems following Katzenbergs departure, Eisner also had to handle the ongoing saga of Disney America. The plan was to build a park that provided a historical experience focusing on Americas past. The problem was the proposed site for the ventureoutside the town of Haymarket, Virginia. What Eisner hadnt factored into his decision to locate Disney America in Virginia was the proximity of some of the richest families in the United States. Only hours after being publicly announced in November 1993, the project was facing a barrage of criticism. Up against some of most powerful and effective lobbyists in the country, Eisner eventually had to back down, despite the money and time spent on the planning. Then, to cap it all, he had to undergo heart bypass surgery. Eisners troubles were reflected in the balance sheet: profits dropped 28% from 1998 to 1999. But by 2000 Disney was back on track with a profit of $1.9 billion on revenues of $25 billion. And Eisner benefited personally from Disneys recovery; his base salary rose from $750,000 to $1 million, securing his position as one of the highest-paid CEOs in the United States. Eisner watched the growth of digital media distribution with some trepidation, fearing that it could harm revenues and profitability. In 2002, he provoked anger by suggesting to a US Senate Committee that IT and software companies had failed to provide adequate protection for digital media because piracy helps sell computers. The past few years have continued to be uncomfortable ones for Eisner. After a campaign by senior executives and members of the Disney family to oust him in 2003, Eisner was able to hang onto his job as CEO, but his role as chairman was hived off and given to former US senator George Mitchell. The problems surrounding Eisner picked up momentum. Disneys partnership with innovative animators Pixar home of such smash hits as Toy Story, A Bugs Life, and Finding Nemowas dissolved, and the furore surrounding the distribution of Michael Moores documentary Fahrenheit 9/11, was deeply damaging. Although Eisner had announced plans to step down as chief executive in 2006, the Disney board intervened controversially in March 2005 when it announced that its president, Robert Iger, would be taking over Eisners role from September of that year.

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Context and Conclusions

Michael Eisner has had three extraordinary careers. At ABC and Paramount he earned a reputation as a producer of hit shows. He carried that reputation to Disney and added to it by demonstrating an ability to revitalize a corporation. His instinct for what an audience wants was honed in the screening rooms of ABC where he nurtured hit shows such as Happy Days. And by surrounding himself with the best talent in the industry, he managed to stay in touch with viewer tastes. Hollywood can be incestuous, backbiting, and an extremely difficult environment to work in. It is testimony to Eisners political skills and entertainment instincts that he managed to stay at the top for so long. The entertainment industry will watch his next move with interest.

Close But No Cigar

David Geffen Very close in this case, since David Geffen is undoubtedly one of the major powers in Hollywood. Like Mike Ovitz, Geffen started out in the mailroom at the William Morris talent agency. Working his way up, he made big money boosting the careers of rock acts such as The Eagles and Jackson Browne. At Warner Brothers, he discovered that life in a big studio didnt suit him, but he still managed to persuade them to help finance his own record label, Geffen Records, which had hits with artists such as Aerosmith, Guns n Roses, and Cher. At the same time, he enjoyed success with the Geffen Film Company and films such as After Hours and Beetlejuice. He sold his record company to MCA. It in turn was sold to Matsushita, at which time his stock was worth some $700 million. In 1994 Geffen made his biggest claim yet for media moguldom when he linked up with Jeffrey Katzenberg and Steven Spielberg to found DreamWorks SKG, a new Hollywood studio.

The Best Sources of Help

Books: Eisner, Michael, with Tony Schwartz. Work in Progress. Harmondsworth: Penguin, 1988. Flower, Joe. Prince of the Magic Kingdom: Michael Eisner and the Re-making of Disney. Chichester: John Wiley, 1991.

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