Anxiety Reigns at Disney

For some people, Walt Disney Co. is now the unhappiest place on Earth.

Fallout from this week’s extraordinary events -- culminating in Michael Eisner’s being stripped of the corporate chairmanship -- has left Disney insiders reeling with anxiety about the fate of their leader, their company and themselves.

“We’re all hiding under our desks waiting for the next bomb to drop,” said one top executive. “The general feeling is that something else is going to happen. Everyone is talking about it. What about Comcast? How long will Michael be here?”

The Disney board’s decision Wednesday to remove Eisner as chairman but allow him to remain as chief executive is continuing to draw heat from Wall Street and pension fund managers, who contend that he has lost the confidence of investors. Forty-three percent of shares tallied this week at Disney’s annual meeting did not support Eisner’s reelection as a director.

For those inside the Disney kingdom, however, the tumult is about more than finances or corporate governance. It’s about their futures in a company many view as a special piece of Americana.

Senior Disney executives, all of whom agreed to talk only on the condition of anonymity, said many in their ranks were succumbing to the emotionally charged atmosphere.

“It’s extremely distracting, and everyone has a sense of powerlessness. I know I do,” said one top manager. “I’m finding it a struggle to get focused and to get everyone else focused.”

In a sense, some analysts say, the worries inside Disney could work against Eisner’s survival. He needs the operation running at peak performance, recording strong double-digit percentage growth, to counter critics demanding his ouster.

“There is some risk of collateral damage,” said media analyst Jordan Rohan of Schwab Soundview Capital Markets.

Reviewing a lunch conversation he had with a Disney executive on Thursday, Rohan added: “The general feeling is that the whole company has been kicked in the teeth.”

The executives said that employees at all levels had been waiting for Eisner to address their concerns. In recent days, he has defended himself on television and in newspaper interviews, including with The Times.

“I know Michael is trying to give people the impression that everything is OK, but inside the company I don’t think anyone feels that way,” said one division head.

Disney spokeswoman Zenia Mucha said Eisner would speak to recent events Monday in one of his trademark “cast member” e-mails to 70,000 employees. She said Eisner and Disney President Robert Iger also would field questions during regularly scheduled breakfast sessions each holds with employees.

Most staffers, she said, understood that they must “concentrate on delivering results for shareholders.... They’re not allowing themselves to be distracted by the noise.”

Pressed further, however, she said: “It is certainly understandable that some employees have some anxiety and uncertainty, and that will be addressed by their division heads and by corporate.”

Disney executives said that, on a practical level, they were soldiering forward with the business at hand despite the uproar at the annual meeting and cable giant Comcast Corp.’s unsolicited takeover bid, which remains on the table.

Walt Disney Studios Chairman Dick Cook, who had just returned from the shareholder meeting in Philadelphia, spent much of Friday at the Disneyland Hotel in Anaheim attending the final day of the company’s international home entertainment convention.

“It’s easy to get distracted by outside forces,” he said in an interview. “But we can’t do it. It’s imperative that we keep our eye squarely on the ball.... When all is said and done, and you add up the numbers, it’s all about how well we do.”

One test of those numbers comes this weekend with the opening of “Hidalgo,” a big- budget movie competing against Mel Gibson’s runaway hit “The Passion of the Christ” and Warner Bros.’ action comedy “Starsky & Hutch.”

Rohan, the analyst, said that even if the company performed well in the months ahead, any protracted uncertainty over Eisner’s future could keep the workforce on edge.

“It’s unsettling at the very least,” he said. “The question is: How long is this going to last? When can this controversy be filed in the annals of business history and no longer affect company morale? The key is timing.”