Disney power struggle flares
( 2003-12-02 10:57) (Agencies)
A simmering feud for control of Walt Disney Co. boiled to the surface on Monday as two prominent directors, including Roy Disney, quit the board to fight for the ouster of Chairman Michael Eisner, a move other directors called a "destructive course."
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| Facing an ouster from Disney's board due to his age, 73, Roy Disney (L), son and nephew of co-founders Roy Disney and Walt Disney, resigned on Nov. 30, 2003 and called for Chief Executive and Chairman Michael Eisner to go. Roy Disney still controls about 17 million Disney shares, which, while less than 1 per cent of the outstanding stock, remains a large voting bloc. [Reuters] |
Roy Disney, the 73-year-old nephew of cartoon pioneer Walt Disney, resigned from the board on Sunday, and his long-time ally Stanley Gold followed suit on Monday.
They vowed to work with shareholders to pressure the board into removing Eisner for poor performance in the past seven or so years, but cautioned they would first hold extensive talks with shareholders they had been barred from contacting while on the board.
"I don't think things change overnight," Gold told Reuters in a telephone interview. "There is going to be a lot of education" and talks with shareholders.
He said it was too early to say whether he and Roy Disney would nominate members to the board, or to name a potential new chief executive, although he said he wanted an entertainment industry executive to replace Eisner, perhaps from within Disney.
The move by Roy Disney, the last Disney family member to serve as a director, was reminiscent of his decision nearly 20 years ago to resign and then launch a management shake-up in which he and Gold recruited Eisner.
Roy Disney's spokesman said on Monday he would not go away easily this time, either. "He is not going quietly into the night at all," said the spokesman, Clifford Miller. "He feels that this has freed his voice."
The relationship between Eisner and Roy Disney has foundered in recent years as the Burbank, California-based owner of a movie studio, theme parks and the ABC television network has struggled to maintain earnings amid the weak economy.
Roy Disney, facing an ouster from the board due to his age, resigned on Sunday and in a three-page letter to Eisner called on the chief executive to do the same. He cited, among other items: "Your consistent micro-management of everyone around you with the resulting loss of morale throughout this company."
Echoing many of the points, Gold said that under Eisner the board intended to "squelch dissent" by forcing Roy Disney into retirement and that new policies muzzled board members.
"Perhaps acting independently, from outside the boardroom ... I can have greater success in shaping the policies, practices and operations of Disney than I had as a member of the board," Gold said.
In a joint statement issued after Gold resigned, the company's nine remaining independent directors on the 11-member board rejected his charges.
"Because the Board, after careful consideration, has refused to accept their principal recommendation to replace management, Mr. Gold and Mr. Disney have chosen their current destructive course of action," the statement said.
"It is a disservice to shareholders and to employees that the company faces this distraction at a time when its performance is improving," it added.
Gold responded in a statement that, "it has been extremely difficult to have debate on a board which considers disagreement with management "destructive."
Indeed, financial analysts said the rebellion comes at a time when Disney appears to be turning the corner financially.
While Roy Disney controls about 17 million Disney shares, less than 1 percent of the outstanding stock, his status as son and nephew of co-founders Roy Disney and Walt Disney, respectively, commands a certain respect.
Still some investors were doubtful whether Disney's and Gold's resignations would win them widespread support.
"Disney is turning this year," said Bernstein Research analyst Tom Wolzein. "There are significant improvements in earnings in fiscal 2004... The issue for investors is: Can they continue to keep the ship turning toward the right course?"
Some analysts cautioned that Disney's outlook was murky.
"I'm quite worried about the potential for growth of the assets, many of which are quite mature," said Pascal Volle of Mercer Management Consulting.
Walt Disney shares rose 8 cents on Monday to close at $23.17.
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