ABC, Stuck in 4th Place, Installs New Executive Cast

Walt Disney Co. undertook its own extreme makeover Tuesday by replacing the top management of its struggling ABC network, which has drained the company’s bottom line and jeopardized the standing of Chief Executive Michael Eisner.

News of an overhaul was long expected -- entertainment Chairman Lloyd Braun had already quietly departed his office in anticipation of a shake-up. But many were stunned by its sweep.

The most surprising casualty was ABC Entertainment President Susan Lyne, once hailed as the answer to ABC’s chronic programming problems who believed she was headed for a promotion, not the door.

The new crew at the top is made up of Disney insiders who have not managed the complicated affairs of a broadcast network, especially one mired in fourth place. But they bring a record of successes from their own sphere -- the high-stakes world of pay TV.

Promoted as co-chairs of Disney’s media networks unit were Anne Sweeney, who oversees the company’s entertainment cable channels, and George Bodenheimer, president of cable juggernaut ESPN.

Disney executives declined to discuss the reasons behind the changes. Privately, however, they acknowledged that the moves were motivated, in part, by a desire to demonstrate decisiveness at a time when the company and its chief executive were under fire.

Last month, shareholders dealt Eisner an embarrassing no-confidence vote of 45%, an amount that might topple an executive of lesser skill and clout. As it was, Eisner was stripped of the chairmanship he held for nearly two decades.

The shake-up comes days before a key meeting of Disney’s board of directors, which has been under increasing pressure from investors to improve the company’s financial performance and tackle ABC’s long-standing problems.

Meanwhile, cable giant Comcast Corp. has launched an unsolicited bid for Disney, citing ABC’s poor ratings performance in recent years as evidence that the current management cannot protect shareholder value. This season, ABC has trailed CBS, NBC and Fox Broadcasting Co. in total viewers. Last week, ABC’s top-rated show, “The Bachelor,” ranked 15th among the key 18-to-49-year-old demographic, followed by “Extreme Makeover,” which was 19th.

In Hollywood’s creative community, the news induced angst among some producers banking on ABC executives to pick up their shows for the fall season. But others simply took it in stride, another spin of the revolving door at ABC that has seen the departure of more than 10 top executives since 1996, when Disney acquired the network.

Bruce Helford, executive producer of “The George Lopez Show,” said he was caught in the ABC riptides while he developed “The Drew Carey Show” under the stewardship of a previous entertainment president. “I’ve been through regime changes before,” he said, “and there’s nothing to be concerned about when you’re doing good work.”

Advertisers were not so optimistic. In mid-May, they will gather in New York to view the offerings of all the networks and decide how to divvy up about $9 billion that they will spend on commercials during the coming television season.

“It’s very unfortunate that there is still all of this turmoil at ABC,” said one of Madison Avenue’s biggest buyers, Bill Cella, chairman and chief executive of Magna Global. “They just can’t seem to dig themselves out from all of their problems.”

Disney President Robert Iger announced the changes to 300 ABC staffers at a 4:30 p.m. meeting in the first-floor commissary of the network’s Burbank headquarters. Alongside him was one of the day’s big winners, Sweeney, whose cable duties were expanded to include oversight of the network.

Iger said executives made “some tough choices” over the weekend. That, according to network sources, included passing over the popular Lyne for the newly created job of president of ABC Primetime Entertainment. The position went to Stephen McPherson, who heads Disney’s Touchstone Television studio, which was responsible for creating the hit show “CSI: Crime Scene Investigation.” The studio also has developed such modest successes for ABC as “According to Jim” and “8 Simple Rules for Dating My Teenage Daughter.”

Iger told the troops that Disney wanted only one person in charge of prime-time programming, a break from the recent dual-leadership configuration that caused conflict and additional layers of decision-making.

Network sources said Lyne was blindsided by the decision. Although not explicitly promised the job, Lyne believed she had it in the bag, the sources said. Instead, on Monday she was offered a position with little authority, effectively forcing her out. “It was a non-job,” said one of the sources.

Company executives said Lyne was sidelined because the network had not improved during her tenure, the same reason they cited for the departure of fellow programming executive Lloyd Braun. “It came down to performance,” said one key Disney executive, adding that the consensus at the top was that it was time for a clean sweep.

Those in Lyne’s camp say she was not given enough time to demonstrate her abilities.

A former journalist, Lyne came to ABC in 1998 to head its movies and miniseries division. She was elevated to the position of entertainment president two years ago in an effort to restore credibility to the network after its fortunes tumbled following the overuse of the game show “Who Wants to Be a Millionaire.”

Last month, Lyne presented a preview of ABC’s development plans for its new fall schedule to advertisers. “Susan was hamstrung and we’re probably just seeing the result of her frustration,” Cella said of her departure. “It’s very unfortunate.”

One of her fans was Disney’s president. During an investors conference in Florida last month, Iger said: “I believe in Susan, strongly. I think she has the goods to turn it around....I’m rooting for her.”

Some industry insiders wondered why Disney did not look outside its own borders for leadership and was relying on two executives without broadcast network experience to right ABC.

“This is an evolutionary not a revolutionary change,” said Tim Wallace, managing director of UBS Investment Research.

Lowell Singer, a media analyst at investment bank S.G. Cowen, said, “This shows that Disney management does not have a long-term plan for addressing the problems at ABC.”

Despite her lack of experience in the broadcast business, Sweeney has made many fans in the investment community for her role in helping to turn the once-sleepy Disney Channel into a cash cow for the company.

“Certainly, she has a good record,” said Janna Sampson, portfolio manager at OakBrook Investments near Chicago, which owns 500,000 shares in Disney. “Obviously investors are going to watch for results and see whether she is able to translate her success on the cable side over to the broadcast side.”

In other moves, network President Alex Wallau will remain at Disney but in a lesser role; Mark Pedowitz, Disney’s longtime business affairs executive, was elevated to run the television studio; Rich Ross, president of the Disney Channel, was promoted to head of Disney Channel Worldwide; and Paul Lee, CEO of BBC America, agreed to join the company as president of ABC Family.

Brad Adgate, research director for Horizon Media, which buys ad time for clients, said the timing of the moves was lousy.

“It’s just more turmoil from the top on down,” he said.

“There’s a lot of work to do over there. ABC has a lot of holes to fill. The new regime definitely has their work cut out for them.”

Times staff writers Richard Verrier and Sallie Hofmeister contributed to this report.