It’s Quitting Time Again at Disney: Studio Boss Resigns

It’s become a familiar refrain in the last six years: A top Walt Disney Co. executive chafes under the demanding style of Chief Executive Michael Eisner, then quits to do something else.

Add studio chief Joe Roth, one of Hollywood’s most powerful and successful executives, to the swelling ranks of about 75 high-level Disney alumni that include such familiar names in the entertainment business as Jeffrey Katzenberg, Michael Ovitz and Geraldine Laybourne, most of whom have left since 1994.

Roth’s resignation comes at an especially difficult time for Eisner and Disney, the world’s second largest entertainment company. The Disney chief is already under the gun to bolster the company’s lagging earnings and fix problems that include an ailing consumer products unit and a troubled home video operation. Although it has climbed since the beginning of the year, Disney’s stock over the last five years has been a disappointment for investors.

This week’s mega-merger announcement between America Online and Time Warner Inc. has put Eisner under additional pressure, raising questions about whether Disney is being left behind in the digital entertainment race. Rumors have swirled, so far mere speculation, that Disney could even be one of the next candidates to combine with an Internet company.

Sources close to Disney’s board said that some members are increasingly concerned by the executive departures and that Eisner needs more executive “firepower” at the highest levels, with some believing he needs to go outside the company to recruit an executive or two. One board member who spoke on condition of anonymity said Eisner has recently acknowledged that he may need some help in running the company.

Eisner is known to have made informal overtures to former Warner Bros. Chief Robert Daly last fall, shortly before Daly opted to become chairman and part-owner of the Los Angeles Dodgers.

Disney’s former president, Frank G. Wells, died in a helicopter crash in 1994 and Ovitz, another former president, left in 1996 after a ill-fated year as Eisner’s second-in-command.

But Eisner flatly denied that a plan to bring in executives was being discussed.

“There’s been no talk of that. Absolutely and completely unequivocal,” Eisner said.

Roth’s departure, confirmed by Disney after a Times report on Wednesday, stemmed largely from his desire to form his own movie company and break the shackles of working within the increasingly difficult constraints of a big public media company. Other executives have left Disney for lucrative opportunities running companies elsewhere or were fired for poor performance.

Yet both Wall Street and Hollywood executives agree that Eisner and Disney suffer from too many high-level defections, many of which are traceable in part to Eisner’s often-harsh and controlling management style.

“It’s not as good an atmosphere to work in as it used to be,” said one top entertainment executive who requested anonymity. “I don’t think it’s hard to get top people from Disney if there’s a job available.”

But Eisner, in an interview, argued that “there’s less to this than meets the eye,” adding that he believes the media and others make too much of Disney departures such as Roth’s.

Eisner took a beating from company critics after the embarrassing $250-million payout last summer to Katzenberg, who was Roth’s predecessor, to settle a breach-of-contract lawsuit.

Indeed, people close to the situation said that the ease with which Eisner released Roth from his contract, which Eisner could have enforced until well into 2001, was a result of his desire to avoid another contentious, public executive divorce.

Eisner said that the company does not have unusually large turnover when its gigantic size is taken into consideration. He added that many of the executives have left because they were offered the chance to run or buy major companies ranging from major airlines to hotel chains.

“Every headhunter head hunts Disney,” Eisner said in an interview Wednesday. “Where would you go? You go to the companies that do very well. It may not be convenient, but it’s a compliment.”

Despite his success as a studio chief and desire to move on, Roth is known to have bristled at periodic public criticisms Eisner would make about the film division and such financially disappointing films as the recent, critically acclaimed movie “The Insider.”

Roth was especially upset when Eisner in the company’s 1998 annual report singled out Disney’s live-action film division for criticism, saying that “in too many instances, profit did not materialize from the revenue achieved by our films. Stated more bluntly, either the films and marketing cost to much or the audience rejected our ideas.”

Eisner said that he is only being honest with shareholders. “In my annual reports, I tell our shareholders what’s right and what’s wrong without being mean,” he said.

Roth will be succeeded by Peter Schneider, the studio president whose background is primarily in animation.

Roth praised Eisner for giving him freedom to make the films he wanted to make.

“He has been incredibly supportive. Is he a demanding boss? Absolutely. . . . Am I more sensitive in a corporate environment than other people? Sure. But that’s not the reason I’m leaving. I want to be my own boss and the timing seems right to go out there and do something great,” Roth said.

Roth leaves as the studio recorded another record year at the box office, with $2.6 billion in worldwide revenue from such hits as “The Sixth Sense,” “Tarzan” and “Toy Story 2.”

At the same time, Roth’s timing on raising money for a new venture is ripe given the strong economy, the interest in films by foreign companies looking to fill TV networks.

Internet companies also are looking at how they may forge alliances with entertainment companies as demonstrated by the huge America Online-Time Warner merger announced earlier this week.

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Executives Who Left

Some of the top-level executives who have left Disney in the last six years:

Katzenberg

Ovitz

Roth

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HIS NEXT MOVE

Joe Roth will start fund-raising for his new venture into independent movie-making. C1