More Woes for Eisner: Key Exec Takes Gap Job
Michael Eisner’s efforts to turn around ailing entertainment giant Walt Disney Co. were dealt an unexpected blow Thursday when his theme park chief and loyal lieutenant, Paul Pressler, was hired to revamp the troubled Gap Inc. clothing chain.
Pressler said his decision to succeed retailing legend Millard “Mickey” Drexler stems from his desire to advance his career by becoming a chief executive.
“It was a gut-wrenching decision,” he said. “I wasn’t looking for the job. I wasn’t looking to leave Disney.”
Still, the move couldn’t come at a worse time for Chief Executive Eisner, who has seen a parade of top executives leave in recent years.
Pressler had been viewed by some as a potential successor to Eisner. His departure is likely to revive criticism from investors and some board members that the CEO has not mapped out a clear succession plan.
Prudential Securities analyst Katherine Styponias said in a report that Pressler’s departure “is likely to raise the succession issue in the minds of investors.”
Eisner, facing one of the most difficult chapters in his 18-year tenure, is losing one of his rising stars, a tightfisted manager, while immersed in a struggle to placate shareholders and directors frustrated with the company’s lagging stock price and earnings.
Just Tuesday, Eisner weathered an uncomfortable five-hour board meeting full of pointed questions on how he plans to solve the company’s problems.
High on Eisner’s list of challenges are theme parks, whose performance is especially critical if he is to succeed. A severe drop in tourism stemming from the soft economy and last year’s terrorist attacks has pushed vacation bookings down 10%. In addition, the $1.4-billion Disney’s California Adventure in Anaheim has failed to live up to expectations since debuting early last year.
The division’s importance to the company was underscored when Disney’s stock went into a tailspin in August after Disney warned that results would be bleaker than expected.
Disney’s theme park problems are especially significant given that the unit is usually Disney’s most consistent breadwinner. It accounts for $1 out of every $3 of Disney revenue and has served as a company cornerstone since Walt Disney christened Disneyland in 1955. Encompassing Disneyland, Disney World, hotels, cruise ships as well as theme parks in Asia and Europe, the division last year generated $7 billion in revenue and $1.6 billion in income.
Pressler’s departure was disclosed to top Disney executives in an e-mail late Wednesday by President Robert Iger. The news is especially painful to Eisner because Pressler has been a favorite since joining Disney 15 years ago. Before that, he worked briefly in the toy industry and helped produce the 1985 animated “Care Bears Movie.” In his autobiography, “Work in Progress,” Eisner lauded Pressler as “a natural, charismatic leader with strong creative instincts.” In a statement Thursday, Eisner called Pressler “a tremendous asset” to Disney.
Pressler, whose office is down the hall from Eisner’s on the top floor of the Team Disney building in Burbank, was among a handful of executives often mentioned by analysts as potential successors.
He was well-liked by Wall Street and his subordinates. Pressler is credited with guiding the theme parks through tough times caused largely by events beyond his control.
“This is an inopportune time for Disney. Pressler was one of Michael’s top lieutenants. Disney can ill afford to miss a step in this world right now,” said Jordan Rohan, analyst with SoundView Technology Group and a former Disney executive.
But many employees and customers chafed at Pressler’s relentless cost-cutting measures, such as closing rides and shows early, cutting customer service training and making some workers wash their own uniforms. At Disneyland, Pressler tried to end a discount program for the disabled, but relented after a backlash. Last year, Disney cut 4,000 jobs, the bulk of which were in the theme parks.
“We have a responsibility to create value for shareholders. I think we’ve done a good job making the right choices. In a few instances, we have cut too far, but we’ve adjusted,” Pressler said.
Disney expects to announce a replacement by next week. Among the leading candidates are Walt Disney World Resort President Al Weiss, a 30-year veteran; Disneyland President Cynthia Harriss; and Disney Cruise executive Matt Ouimet.
Pressler, 46, was consistently on the short list of executive recruiters. He confirmed in an interview that he recently spurned overtures from AOL Time Warner Inc. Pressler said that he turned down Gap when first approached and that Eisner tried to persuade him to stay. He said he sought no assurances that he would someday become Disney’s chief executive.
Former Disney executive Stephen B. Burke, president of Comcast Cable Communications Inc. and one of Pressler’s best friends, said the opportunity to head Gap was too tempting for the young executive.
“When you have a chance to be the CEO of a business this large that has as many interesting facets, it’s an opportunity that is very difficult for someone to pass up,” Burke said.
Pressler’s departure is the latest in a series of high-level defections that have long plagued Disney as executives leave for better jobs, depart out of frustration or have been removed.
“There’s no surprise that there’s quality, senior people leaving Disney. It’s in a state of flux right now. Really good people are leaving the company,” said William Simon, managing director of executive recruiter Korn/Ferry International’s entertainment and media practice.
Pressler first won praise at Disney’s consumer products unit and for expanding the chain of Disney Stores. In 1994, he was tapped to run Disneyland, commuting to Anaheim from his home in Pacific Palisades. During the four years at Disneyland, Pressler was credited with boosting profit even when attendance fell, in part because of his cost cutting.
He was promoted to president of the theme park division in 1998 and became its chairman two years later. He oversaw the biggest expansion in the company’s history with the opening of three parks in 18 months: California Adventure, Tokyo DisneySea and another Disney park near Paris. He also was instrumental in Disney’s plans to build its first theme park in China.
Pressler also oversaw Disney’s plans to make Anaheim a major tourist destination, working with city officials on public works projects to accompany California Adventure. As part of that effort, he oversaw the company’s struggling Anaheim Angels and Mighty Ducks of Anaheim sports franchises.
“I think he set a higher standard for the appearance of the resort area,” Anaheim Mayor Tom Daly said, “and the city wanted to make the resort area more attractive, more convenient for pedestrians. We wanted to upgrade it. And he was an enthusiastic partner in that upgrade process.”
But the Anaheim strategy has stumbled. California Adventure has fallen well short of its original attendance target of 30,000 people a day. In a recent interview with The Times, Pressler said the park suffered from perception problems he did not see. Although the park was originally billed as a hipper alternative to Disneyland, many guests were clearly not interested.
“We took some chances, tried to do some things a little differently, and they didn’t all work,” he said.
Times staff writers Claudia Eller, Bonnie Harris, E. Scott Reckard and Kimi Yoshino contributed to this report.