Exit Eisner

THE MICHAEL EISNER ERA at the Walt Disney Co. officially ends today, when the 63-year-old chief executive steps down after 21 years at the helm. Unfortunately for Eisner, he is more likely to be remembered for the missteps and controversies of the last decade than for the phenomenal successes of his first 10 years, when Disney blossomed into a media powerhouse. That’s the way Hollywood operates, after all -- you’re only as good as your last screenplay.

Eisner’s tenure would have made for a tense drama. His “Machiavellian (and imperial)” management style, to quote a federal judge in Delaware, prompted many talented underlings to jump ship. And when former pal Michael Ovitz didn’t mesh with Eisner’s tight-fisted operational style, Eisner threw him overboard 15 months after hiring him as Disney president.

Naturally, Eisner had to pay Ovitz handsomely to leave -- the buyout was valued at about $130 million. This fabulous parting gift prompted a shareholder lawsuit, leading to an embarrassingly public dissection of the whole sorry episode.

Unlike Ovitz and such media moguls as News Corp.’s Rupert Murdoch and Viacom’s Sumner Redstone, Eisner was not a habitual dealmaker trying to build an empire through takeovers. Instead, he preferred to grow by squeezing more out of assets the company already owned. The main exception was in 1996, when Disney got into the TV broadcasting business by acquiring Capital Cities/ABC. Now Disney’s broadcasting and cable properties generate the largest chunk of its revenue.

This conservative streak saved Disney from making a colossal blunder during the late 1990s, when billions of dollars were bet and lost on dot-com-fueled fantasies. But the low-risk, low-reward approach also led Disney to bet on the wrong horse: It bought Infoseek, a second-tier Internet portal, instead of grabbing market leader Yahoo when it had the chance. As a result, Disney’s attempt to compete for everyday Web surfers was a dismal failure.

Still, Eisner deserves credit for breathing new life into the flagging Disney entertainment business. During his first dozen years on the job, Disney expanded its theme park business dramatically, released a string of hits by its own animators and by Pixar Animation Studios, took control of ABC and ESPN, built a burgeoning home-video business and gained a foothold on Broadway. The company’s revenue grew from $1.5 billion in 1984, when Eisner was hired, to nearly $31 billion last year, and its shares are worth more than 20 times as much as they were when he took over. The company may not dominate children’s entertainment the way it did in the days of “Snow White and the Seven Dwarfs,” but it is thriving.

The successes are easy to overlook amid all the contretemps Eisner generated with his iron-fisted rule. Instead of being celebrated for the corporate turnaround, he became a poster boy for poor corporate governance. In a way, he’s like an aging star on one of the teams Disney used to own: He stayed in the lineup long after he should have quit.