Of Mouse and Men

On the chessboard of corporate politics, Michael Eisner may be staring at an endgame.

Comcast Corp.’s $51 billion offer Wednesday for Walt Disney Co. presents Eisner, after two decades as Disney’s chief executive, with the unhappy choice of stepping aside or engaging in a fight that is sure to focus searing attention on his management shortcomings.

Either way, he appears to come up a loser. And the combative 61-year-old has rarely lost in a business career that began with a job as a lowly page at NBC and powered him past a generation of hard-charging peers to the top of a media conglomerate.

“Eisner is the last of the baby moguls who believed from the start in the sanctity of being a top corporate executive,” said Joe Roth, the founder of Revolution Studios who headed Disney’s studio unit from 1994 until 2000.

“He has always enjoyed running a large company,” Roth said. “He’s not going to turn it over willingly.”

In a brief statement Wednesday, Eisner said the Disney board would evaluate Comcast’s offer. At a conference of analysts and investors in the Fantasia Ballroom at Walt Disney World’s Contemporary Resort in Florida, Eisner said little about the bid.

Investors, analysts and Hollywood players were quick to note that Eisner himself had become an overriding issue for Disney.

“It is obvious that, if Comcast succeeds in its bid, Michael Eisner is gone,” said Jeffrey Bronchick, chief investment officer of the Los Angeles-based money management firm Reed Conner & Birdwell Inc., which owns nearly 1.5 million shares of Disney and about 900,000 shares of Comcast.

That would clearly cheer critics, who hold Eisner -- an aggressive manager whose hands-on style alienated a string of now-departed subordinates -- responsible for failures in the Burbank giant’s television network, cable and movie operations.

Even as news of the Comcast bid hit, Rockville, Md.-based Institutional Shareholder Services, the largest U.S. advisor to money managers on proxy-related issues, recommended that clients oppose Eisner’s retention as chairman. Disney called the recommendation “inexplicable and unjustified.”

In addition, a string of shareholder suits filed in Delaware Wednesday demanded that directors consider the Comcast offer and seek the highest possible value for the company.

Meanwhile, ex-board member Roy E. Disney, nephew of company founder Walt Disney, told reporters that Eisner’s situation reminded him of “The Wizard of Oz,” with the company’s rank and file chanting: “Ding, dong, the witch is dead!”

Yet Eisner’s departure under pressure would be an unwelcome milestone for a group of aging entertainment company chieftains -- Barry Diller, Michael Ovitz, Bob Daly, David Geffen, Jeffrey Katzenberg and others -- who grew up together in the 1970s and are looking toward the end of their era as aggressive younger tycoons make their grabs for power.

Raised by an affluent family on New York’s Park Avenue, Eisner first made his mark as a young programming executive at ABC, where he had a hand in hits such as the comedy series “Happy Days” and the miniseries “Roots.” In the mid-1970s, he teamed up with fellow ABC alumnus Barry Diller to run Paramount Pictures. On the heels of phenomenal success with pictures such as “Beverly Hills Cop” and “Raiders of the Lost Ark,” Diller departed to run 20th Century Fox, while Eisner soon took charge of Disney in a close partnership with former Warner Bros. executive Frank Wells.

Wells died in a helicopter crash in 1994, shortly before Katzenberg left Disney in a nasty management spat, leaving Eisner firmly in charge of the corporation precisely as its fortunes began to drift. Eisner underwent quadruple bypass surgery that year, believing he was close to death.

His boldest move came soon after, when Disney acquired the ABC TV network for $19 billion in 1996. Eisner argued at the time that Disney was uniquely equipped to maximize the network’s fortunes, but ABC has since dropped into fourth place and has become a drag on corporate earnings.

In 2001, Disney purchased from News Corp. an operation that became the ABC Family cable channel for $5.2 billion, only to see it founder.

One of Eisner’s biggest embarrassments came only two weeks ago when Pixar Animation Studios said it was ending talks to renew a lucrative partnership that had brought the studio more than a billion dollars in profit from animated hits such as the “Toy Story” films and “Finding Nemo.”

Pixar CEO Steve Jobs quickly made it clear that his deteriorating relationship with Eisner was a major reason for dumping the talks. On Wednesday, Comcast Cable President Stephen B. Burke, himself a former Disney executive, said he would reach out to Pixar, suggesting the valued partnership could be revived if Eisner was out of the picture.

In another feud, the heads of Disney’s Miramax Films unit, Harvey and Bob Weinstein, have been have been at odds with Eisner over money and control of the feisty independent film company, which the studio bought for about $70 million in 1993.

Disney has been trying to squeeze the Weinsteins’ compensation and lower its investment in Miramax, leading the brothers to offer on several occasions to buy it back.

Harvey Weinstein declined to comment Wednesday. But Hollywood observers were quick to note that Comcast CEO Brian L. Roberts was among Weinstein’s closest friends.

“If I were Brian Roberts, I would get on the phone with Katzenberg, Jobs, Harvey Weinstein and anyone else that Michael Eisner has alienated, and would say, ‘I’d love your business, come support us,’ ” money manager Bronchick said.

Eisner may find that reaching out, to a potential “white knight” acquirer or to big shareholders, is the key to survival. His stake of less than 2% of Disney shares -- accumulated through huge compensation packages over the years -- won’t guarantee his job.

Despite his reputation for proud isolation, Eisner has shown himself willing to fight from behind: he landed the Disney job at a time when the antagonism of a corporate boss, Gulf & Western’s Martin Davis, had made his Paramount position untenable.

Roth, who bumped up against Eisner during his tenure at Disney Studios, said he wouldn’t be too quick to bet against Eisner. “Michael will fight this tooth and nail,” Roth predicted, but added that ultimately “he will do the best thing for stockholders.”

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Terms of the offer

Here are details on Comcast Corp.’s bid to buy Walt Disney Co.:

* Comcast would issue 0.78 of a share of its Class A voting common stock for each Disney share.

* Comcast shares fell $2.70 to $31.23 on Nasdaq. At that closing price, the offer values Disney at $24.36 a share. Disney shares soared $3.52 to $27.60 on the New York Stock Exchange, the highest since mid-2001. The jump in Disney stock indicates that investors anticipate that Comcast’s offer will rise in value, or that another bidder will emerge.

* Based on Comcast’s closing stock price Tuesday, before the bid was made, the offer amounted to a 10% premium to Disney’s stock price. Based on Comcast and Disney closing share prices Wednesday, Disney stock is trading 13% above the bid’s value.

* Comcast said that based on

its closing stock price Tuesday

the total value of its offer was $66 billion, including the assumption of a net $11.9 billion

of Disney debt.

* Comcast said it anticipated that the stock swap would be tax-free to Disney shareholders.

* Disney shareholders would own 42% of the combined company, while Comcast shareholders would end up with 58%.

Source: Times research

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Michael Eisner

* Position: Chairman and CEO of Walt Disney Co.

* Born: March 7, 1942, in Mount Kisco, N.Y.

* Education: Bachelor’s degrees in English literature and theater from Lawrenceville School in New Jersey in 1960 and Denison University in Ohio in 1964.

* Career: Began at ABC in 1966 and was named vice president of daytime programming in 1971. As senior vice president for prime-time production and development, promoted programs including “Happy Days,” “Welcome Back, Kotter” and “Starsky and Hutch.” Became president and chief operating officer for Paramount Pictures in 1977 and in 1984 was named chief executive and chairman of Walt Disney Co.

Source: Associated Press

Times staff writers James Bates and Richard Verrier and researcher John L. Jackson contributed to this report.