The Walt Disney Company, founded by Walt Disney, is one of the worldÆs premier entertainment conglomerates, with annual revenues of $27 billion. Associated in consumerÆs minds as a family entertainment company, the company is run by CEO Michael Eisner who over the past two decades turned the company around since its dismal earnings in 1984 when he took the helm. After a long string of success, however, the company has stalled and Eisner was recently removed as the Chairman of the Board at a stockholderÆs meeting of over 3000 shareholders.
The main problem is that Disney earnings have declined annually since 1997 and the stock is currently trading at 1994 levels. Many blame EisnerÆs leadership as the cause behind DisneyÆs stalled performance, despite his having turned the company into a moneymaker for the first dozen years of his leadership.
The shareholders who gave a no vote to Eisner, ousting him as Chairman of the Board, argue that company is not efficiently operating. Forced into retirement, Roy Disney maintains the company is overextending itself by extending its brands, including acquisition of cable channels, international theme parks, and others. As he said at the shareholder meeting, ôBranding is something you do to cowsàwhen thereÆs nothing original about your product,ö (Orwall, Steinberg and Lublin 2004, A1). Disney President Robert Iger insists management efficiency is at a high point, noting the 30% earnings growth in 2004 and the 60% rise in stock price during 2004, (Orwall and Steinberg 2004, B1).
Michael Eisner refutes claims that the company is in jeopardy and points to this yearÆs growth as evidence. He also points to DisneyÆs record year at the box office with hits like Finding Nemo and Pirates of the Caribbean. Others charge that Eisner has been ineffective by slashing spending at theme parks, which critics say has lead to closed rides, peeling paint and dissatisfied customers. Inf...