Disney’s Michael Eisner Is Alone Again, Naturally

Michael Eisner is flying solo again.

Whether he finds a new co-pilot--or even wants one--is anyone’s guess.

The man who eliminated fat from his diet and began walking a treadmill for 45 minutes a day following quadruple bypass surgery two years ago has so far ignored the urgings of friends and family to also cut back on his obsessive work habits. By all accounts, Eisner still lives and breathes Walt Disney Co. during virtually every waking hour, even though he has made some lifestyle adjustments such as working from home on Wednesdays.

Eisner’s reluctance to give up even a few inches of the reins of the world’s second-largest entertainment company was one of the major factors leading to the announcement Thursday that Disney President Michael Ovitz, the former Hollywood superagent brought in last year to shoulder some of Eisner’s burden, is leaving the company.

Eisner refused to share power, or give Ovitz any real authority over Disney’s powerful division heads. Ovitz never even got the chief operating officer title that most corporate presidents routinely get.

The Ovitz debacle raises the question of whether anyone can adequately fill the role of president at the company either as an heir apparent to Eisner, or someone who can take some of the burden off him.

“The corporate culture here acted like a body rejecting a transplant organ,” one Disney investor said.

It also illustrates that the company still sorely misses the late Frank G. Wells, Disney’s longtime No. 2 executive who died in a helicopter crash in Nevada in 1994. One of the industry’s most respected executives, Disney President Wells shunned the public spotlight. He was one of the best negotiators in the business and by all accounts was exceptionally deft in dealing with Eisner and preventing friction with other executives.

Eisner’s image as the gregarious captain of Team Disney--formed largely by images of him frolicking at theme parks with Disney characters and hosting a Disney family television show in the 1980s--belies the reality that he is one of the most competitive and tough business executives in Hollywood.

He also is one who gets heavily involved in parts of the business he feels needs his help, which today includes ABC and the feature animation business.

Even before Disney bought ABC earlier this year, Eisner was under pressure to find someone to help run the company because of its size. With ABC, the company is now a $21-billion-a-year giant that many investors and analysts contend is too big for one man.

Others say that with Ovitz gone, Eisner, who dislikes traveling, clearly lacks an executive who can try to develop Disney’s international business, one of its biggest needs.

“Ovitz, for all his faults, was on a plane to Europe every month. They need someone to do that,” one Disney investor said.

Disney defenders say that the reality is one man doesn’t run the company, that the company division heads and other executives are a talented group and that the bench strength extends well beyond Eisner’s executive suite. They also contend that the company is under no pressure to name a successor soon.

“There’s no need to go running out and fill a slot Ovitz held,” said Disney director Ray Watson, who sits on the company’s executive committee. “There’s no need to do anything. There’s very strong management at the company.”

Watson said that like any company, the succession issue will be looked at by Eisner and eventually the board of directors, but indicated that that would be later than sooner.

Rumors around Disney were that ABC President Robert Iger might eventually fill the spot, but high level sources discounted it. For one thing, elevating Iger to the job could potentially alienate division heads, such as movie chief Joe Roth. In addition, Iger needs to turn around the company’s lagging ABC network. They add that Iger comes from the ABC camp, and, although well-liked by Disney veterans, could still be perceived as an outsider.

Analyst Harold Vogel, who follows the company for Cowen & Co., said he expects that Eisner may “audition” executives by setting up something like an “office of the president,” giving several executives a chance to prove themselves. But sources at the company say nothing is in the works.

Murky succession isn’t a unique problem to Disney in entertainment, and neither is having an autocratic executive at the top.

At two other major concerns, Rupert Murdoch’s News Corp. and Sumner Redstone’s Viacom Inc., similar issues smolder. Murdoch has said he wants his children to eventually take over his empire. At Viacom, Redstone fired his No. 2 executive, Frank J. Biondi Jr., earlier this year and has yet to designate a clear second-in-command.

On the operations side, Eisner depends largely on two executives--Senior Executive Vice President Sanford Litvack, a former federal antitrust lawyer in the Carter administration, and Richard Nanula, the company’s youthful chief financial officer. Both are said to have clashed with Ovitz.

Disney executives dismissed concerns that the company needs a second-in-command because of Eisner’s health. They say he appears to be in the best shape of his life, having lost weight since his heart problems because of his diet and exercise.

Still, the lack of an executive to take more of the burden is said to be of major concern to Eisner’s wife, Jane, who had hoped that Ovitz would work out.

“Jane isn’t going to let him die on the job,” one former top Disney executive said. “One of the key persons in all this, which everybody should keep in mind, is Jane. She doesn’t want him to take every call at every hour of the night and day, even though he wants to do that.”

Disney shares were unchanged Friday in trading on the New York Stock Exchange, closing at $70.25.

* BIG BUYOUT

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