Miller’s Memory Fails in Recalling Disney’s Defenses

Former Walt Disney Co. Chief Executive Ronald W. Miller had trouble during testimony Wednesday recalling some of the company’s defensive moves--including a proposed buyout of Roy E. Disney’s holdings--during a takeover struggle in 1984.

Miller, son-in-law of the late Walt Disney, is a defendant in stockholder lawsuits against the company, 10 other directors at the time and corporate raider Saul P. Steinberg. The shareholders contend that the defendants breached their fiduciary duty when the company bought Steinberg’s 11% stake in the film and theme parks company at an above-market price to ward off a takeover threat.

Miller was the second witness in the Los Angeles County Superior Court trial. He was preceded on the stand by Roy Disney, son of a co-founder of the company who had rejoined the Disney board shortly after the $325-million buyout of Steinberg’s interest. Roy Disney played a key role in ousting Miller less than three months later, according to evidence in the case.

Plaintiffs’ attorneys put a defendant, Miller, on the witness stand as an adversary to establish certain important facts in the case. But he frequently conceded facts only after his memory was refreshed by documents presented by the attorneys.

For example, Miller said he did not remember details of a discussion in March, 1984, of a possible management-led leveraged buyout with investment advisers to ward off a potential takeover. The talks took place about a week after Roy Disney, a major shareholder, suddenly resigned as a director in March, 1984.

Asked why a management buyout was discussed shortly after Roy Disney’s departure, Miller replied: “Apparently we felt Roy could conceivably look to try an LBO (leveraged buyout) of his own--though I didn’t suspect that.”

He also said he did not remember that, in that same month, an accountant firm discussed with the company strategies to deal with “outside ownership.” When his earlier deposition showed that a friendly LBO strategy was evaluated, Miller agreed that he said it.

Documents showed that another strategy discussed with the advisers at the time was a possible repurchase of Roy Disney’s holdings. While Miller conceded that a document labeled “Project Fantasy” showed that the company considered paying an above-market price for Roy Disney’s stock, he said he doesn’t remember seeing it. “I don’t remember discussing buying Roy’s stock,” he added.

Revived Memory

Miller also seemed reluctant in conceding that he might have heard talk that the company was “in play” after Roy Disney’s resignation from the board .

The “Project Fantasy” document, prepared for the company by investment banker Morgan Stanley & Co. in March, 1984, revived Miller’s memory that a possible leveraged buyout had been presented to Disney management.

Miller said he believes the LBO was proposed in late April, not in March. On March 29, Steinberg disclosed publicly that he had amassed more than 5% of Walt Disney Co. stock, setting off new speculation that drove up the company’s stock beyond the rise prompted by Roy Disney’s resignation.

Miller also failed to remember that the troubled company in late 1983 had hired New York lawyer Joseph Flom, nationally known for his work on both sides of takeover battles, because of fears of a takeover attempt.

After Miller testified that the hiring of Flom was “not particularly” related to a takeover threat, attorney William Lerach produced his deposition testimony in another case. When asked the same question on that occasion, Miller had replied, “Yes, certainly.”

Earlier Wednesday, some of Steinberg’s deposition in the case was read to the jury. Plaintiffs, legally unable to subpoena the New York defendant into a California court, put New York lawyer Michael Fuchs on the witness stand to read Steinberg’s answers to questions.