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KARTIK RACHIT SHIVANI SONAM VARUN VIPIN
THE WALT DISNEY ERA
Walt Disney was born on December 5, 1901 Served in American Red Cross in France during
World War I Founded 1st studio ,Laugh- O- Grams Inc in 1922 Started Disney Brothers Cartoon Studio in 1923 In 1926 Co. name was changed to Walt Disney Studio In 1927 They completed the “Alice Comedies” series In 1928 negotiated with Universal Pictures
Walt Disney Productions
In 1928 WDS was renamed as Walt Disney
Productions Character of Mickey Mouse was introduced Introduced ‘Silly Symphonies’ Launched characters like ‘Donald Duck’, ‘Goofy’, ‘Pluto’
In 1932, Flowers and Trees was 1st
commercially released full-color cartoon film In 1934, created a full length animation feature of the famous fairy tale ‘Snow White’ In 1938, Snow White and the Seven Dwarfs was released In 1940 ‘ Pinocchio’ and ‘Fantasia’ were released In 1941 ‘ Bambi’ and ‘Dumbo’ were released
New subsidiary called WED Enterprises was
created for Amusement theme park In 1950 1st live-action film ‘ Treasure Island’ was released WDP produced 1st television special ‘ One hour In Wonderland’ Hosted a weekly show on ABC called ‘Disneyland’ Followed by television shows like ‘Mickey Mouse Club’ and ‘Zorrow’ In 1954, WDP set its own distribution company called the ‘Buena Vista Pictures Distribution Inc.
Disneyland amusement park
was opened at Anaheim, California on July 17, 1955 In 1960 animated movies ‘Sleeping Beauty’ ‘101 Dalmatians’ were released In 1966 Walt Disney died Before death bought 43 square miles land in Florida Roy Sr. continued with Walt Disney’s vision
In 1967 - The Jungle Book In 1969 - The love Bug In 1970 - The Aristocrats In 1971 - Roy Sr. died, Don Tatum took over as
Chairman and CEO with Card Walker as President In 1977 – Tatum gave up the CEO post to Walker Miller was named the president of WDP
WDC after the Disney Brothers
Walker took over CEO after Tatum retired & during his tenure, Company did not do well. No major Additions to the theme Parks. EPCOT project did not do well resulting into decrease in animation Employee & due to poor earnings performance Walker resigned & Miller took over & ROY resigned. In 1983, Disney share price fall from US$ 84.13 to US$ 45.63. In 1984, Steinberg & Jacobs( corporate raiders) announced that he had purchased 6.3% stock of the company which later increased to 12.1% with a intention of having 25%
Eventually WDP had to pay Steinberg US$32 million to relinquish his Disney stock. In order to protect the company, Roy & Gold teamed up with bass brothers( bought 25% stake) They framed a new leadership team with EISNER as CEO & Chairman & Frank Wells as President & COO EISNER was working at PARAMOUNT & churned out huge hits like Saturday night fever, star trek etc After EISNER & WELLS had taken charge, ROY returned to the company as Vice Chairman of the Board of Directors & head the animation department, resulted into a huge success of movie called SPLASH featuring TOM HANKS..
EISNER Rein at Disney
EISNER brought his two executives from paramount named Jeffery & Richard who handled motion picture division & television business Operations respectively. Disney gave a huge no of hits like- “The little mermaid, Aladdin, The Lion King,” Beauty & the Beast. Company launched Disney stores to merchandise its branded products. Existing themes parks were extended & new rides were added, Resorts were constructed like Beach clubs so as studios like MGM, Typhoon Lagoon. Euro Disney was opened in Paris in 1992 which later changed to Disneyland Paris
Acquisition of Miramax Films & Capital Cities broadened its films Portfolio. In 1994 Wells died at Helicopter crash & Eisner suffered a heart attack and Katzenberg resigned & formed Dream works (competitor to WDC) Katzenberg sued WDC for US$581 million as compensation. In 1995, Michael Ovitz become president but quit after 14 months & was being paid US$140million. In 2000, WDFA faced stiff competition from rivals like DW. Pixar-Disney combine became critical and ABC networks faced a decline in the viewership. Terrorist attack of the company woes 9/11 coupled with recession added to
January 2001 – WDC closed its portal Go.com,
laid off 400 employees and accounted for a non-cash write-off of US$790 million. March 2001 – WDC reported that it would lay off around 4000 full time workers. This was expected to result in saving of US$ 400 million. 2002 – WDC was reorganized into four major business segments viz. Disney Studio Entertainment; Disney Parks and Resorts; Disney Consumer Products; and Disney Media Networks
D i e y S tu d i E n te rta i m e n t sn o n
n d a ti n o f W D C o tri u te s m o ti n p i re s u n d e r W a l D i e y Pi re s a n d D i e y To o n S tu d i s b o ctu t sn ctu sn o na Vi sta In te rn a ti n a lse rve d a s stu d i ’ s I te rn a ti n a ld i b u ti n a rm o o n o stri o
D i e y Pa rks a n d R e so rts sn
p a rks a cro ss th e w o rl , a l n g w i 3 5 re so rt h o te l , 2 l xu ry cru i sh i s a m d o th s u se p e W a l D i e y W o rl R e so rt i Fl ri a a n d T h e To kyo D i e y R e so rt, Ja p a n t sn d n o d sn
Disney Consumer Products
Extends the Disney brand to merchandize One of the largest licensors in the world It is divided Disney Hardlines, Disney Softlines and Disney Toys
D i e y M e d i N e tw o rks sn a
e s a va st a rra y o f p ro p e rti s o n th e Te l vi o n , C a b l , ra d i a n d I te rn e t l e e si e o n
Problems faced by the company
Roy resigned criticizing Eisner for his
‘micromanaging’ leadership style and loss of morale in the company. He also mentioned that Eisner was responsible for the company being perceived as ‘rapacious, soulless and always looking for a quick-buck rather than long term value leading to loss of public trust. Gold also resigned on similar lines, charging the board inefficient and lack of strategic focus. He believed that company faced management failures and there was no accountability of those failures. Roy and Gold started a campaign against Eisner and gathered other dissident shareholders.
January 2004 – Pixar warned that their
partnership with Disney would end in 2005. Pixar was responsible for the content while Disney took care of the marketing and distribution. The main concern was that WDC, always and innovator in animation technology, had missed out on Digital animation revolution. Disney was turning out the lights on Pixar without having turned them on at Disney in computer-generated animation Disney had not developed its digital prowess
THE ISSUE OF SUCCESSION
On March 3,2004, an overwhelming 43% of
shareholders withheld their votes for Eisner’s re-election to the board. As a result, the Board separated the roles of CEO and Chairman, in effect, reducing Eisner’s power. Therefore former U.S. Senator George Mitchell became the new Chairman, while Eisner continued to remain CEO
In April 2004, it was revealed that Eisner had
received a ‘No Confidence’ vote from 72.5% and Mitchell from 63.7% of the votes cast at the company’s annual 2004 meeting. Meanwhile Eisner had made it clear that his intention was definitely to serve the CEO contract out to its completion till 30th Sept 2006. However as the ouster of Eisner started gaining momentum, the most important agenda was to find a successor.
The problem lied in the fact that WDC had no
succession plan. The Board had no clear names on hand. to Eisner.
Many names were put forward as likely successors
Iger, WDC President & COO (Internal Choice) Steve Jobs, Chairman & CEO of Pixar Mel Karmazin, COO of Viacom Peter Chernin, President of News Corp. Terry Semel, former Warner Brothers Chief Meg Whitman, CEO of e-bay Paul Presserler, CEO of GAP Inc. Steve Burkes, second-in-command at
Roy and Gold, two former directors insisted that
an immediate search for a new CEO should be launched and at the conclusion of this search Eisner should be removed. WDC Board to hire an independent recruiting firm. They also charged that Eisner wished to install Iger as the next CEO in order to retain his position in the company as Iger was essentially Eisner’s man. search firm Heidrick & Struggles to help it name a CEO successor by June 2005. concrete succession plan.
They urged the non employee members of the
In October 2004, the Board hired the executive
However WDC could not still come up with a
Impact of the Stalemate
The fight between Roy and Eisner created an
unfavorable environment similar to the one in 1984. Confidence in the Disney brand – and the prospects for whoever succeeded Eisner – has eroded even among those who believed that Disney could essentially do any wrong when it came to creating magic among customers. This also had a negative impact on employee morale. The image if the company took a beating as the WDC Board came under a barrage of criticism. 43% of the company’s shareholders withheld their votes gainst Eisner’s re-election was evidence of their reduced faith in Eisner’s leadership Also, the company’s stock had underperformed,
Roy and Gold, two former directors insisted
that an immediate search for a new CEO should be launched and at the conclusion of this search Eisner should be removed. They urged the non employee members of the WDC Board to hire an independent recruiting firm. They also charged that Eisner wished to install Iger as the next CEO in order to retain his position in the company as Iger was essentially Eisner’s man. In October 2004, the Board hired the executive search firm Heidrick & Struggles to help it name a CEO successor by June 2005. However WDC could not still come up with a concrete succession plan.
The Final Choice
In March 2005, WDC announced the Iger would
succeed as the CEO after Eisner retired in september 2005. Heidrick & Struggles claimed that there was a thorough and exhaustive search for the process of considering potential candidates and it met the most rigorous standards. Roy and Gold were still dissatisfied as they believed that Iger was Eisner’s man and said that the investors had been ‘conned’. They were also dissapointed that Board had not been able to find a suitable external candidate to replace Eisner. They believed that the need to have a clean break from the prior regime and to change the leadership culture at Disney was eveident to everyone else except the Board.
Q1) Analyze the performance of Disney under Eisner. Identify the key issues that led to his ouster?
Performance of Disney under Eisner
Eisner, Wells and new team turned around the
performance of WDC & called a golden decade. The Little Mermaid, Beauty and the Beast, Aladdin, The Lion king became popular. Disney stores were launched to merchandise products with first in Glendale, California. Broadened its film portfolio by acquiring Miramax Films and Capital Cities/ABC
WDC’s performance slowed down as it had
increased the salary of animators to retain them on facing tough competition from Dreamworks. Closed its portal Go.com and laid off 400 employees to save US $ 350 million. In 2003 there was increase in share prices of WDC by 34 % with increase in attendance in theme parks.
Key issues leading to Eisner’s ouster
Poor Governance norms at WDC that lead the
Ovitz payout. Abrasive management style, insecurity, micromanagement lead to exit of highly talented executives. Leadership style was criticized and held responsible for loss of morale in company.
Also perceived as rapacious, soul-less, and
looking for quick buck rather than long term value Also blamed for cannibalization of certain company icons for short term gains. Eisner was again held responsible for ending of the long running partnership with Pixar in 2005 .
Q2) “Succession planning is something most companies turn to only when it is too late”. Comment on this statement and its relevance to the succession problems at WDC.
Relevance of Succession Planning
In march 2004, 43% of shareholders wanted
Eisner’s re-election. In April 2004 Eisner & the new appointed chairman, Mitchell received No confidence vote. Because of absence of name of successor company was ready for any kind of emergency, voluntary or non-voluntary succession. Governance being criticized by six state pension funds.
Iger, WDC president & COO was also one of
the option but his lack of success in ABC networks was going against him. Questions were being raised if Jobs, chairman & CEO could satisfy leadership needs at Disney. Warner Brother’s chief was not considered because of his age. Retirement of Eisner was opposed by Roy & Gold and said to install alternative set of directors. Fight between Roy and Eisner created an unfavorable environment.
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