The long-running saga of succession at the Walt Disney Company has been only marginally advanced by the announcement that embattled CEO Michael Eisner, who has run the company for 20 years, will resign in September 2006.
The news was shaped to give the impression that Eisner, known as the "Iceman" in his grander days, is gracefully bowing out of his own volition, but few observers of the institutionally neurotic and highly controlled entertainment giant believe Eisner would ever surrender his post without being pushed. They say the stage is set for a long and potentially bloody battle over who will succeed him.
Eisner's reluctance to set an order of succession in place is almost as well-known as his unwillingness to delegate authority.
Eisner is a divisive figure, and so central to the corporate image of the organization that analysts have found it hard to imagine the company without him. But critics say that, under him, the company has lost its way, and the legacy of Walt Disney's fantastic imagination has been mislaid.
Eisner's decision not to seek to renew his contract has not appeased board members Roy Disney and Stanley Gold, who launched a bid last year to have him removed. In the spring, the pair succeeded in convincing 45 percent of other investors to withhold votes for him in a board election and Eisner subsequently resigned his chairmanship of the company.
In a letter, they have urged board members to replace Eisner sooner, asking that it conduct a "worldwide search for a strong visionary leader." In an interview, Gold added: "The company should not suffer another two years with a pall hanging over it."
Moreover, they seem to believe that Eisner's retirement may be a ruse. They fear that by retiring and nominating Disney president Robert Iger as his chosen successor, he will then seek to regain chairmanship of the firm.
"While Mr. Eisner's announcement looks like a major change, it is in truth mere window-dressing," Gold and Disney wrote. "His `succession plan' is for a company led by Michael Eisner and his obedient lieutenant Bob Iger to be handed over to ... Michael Eisner and Bob Iger."
Still, the dissident duo may have a difficult time convincing shareholders that Eisner should leave.
Disney is set to deliver 50 percent earnings growth this year, and Wall Street has welcomed the news that the company will have time to find a successor. But the pair maintain the upturn in earnings is unsustainable and that Disney's stock price and annual earnings are about the same as they were five years ago.
Iger, who is a former head of Disney's struggling ABC network, must now make himself and his achievements known to Wall Street. As the internal candidate, and Eisner's choice, he may suffer the effect of any backlash from shareholders who believe Disney needs a new style of leadership that does not keep such a tight hold over the company's divisions.
As Iger prepares his bid, the name game is starting in earnest. There are potential candidates within America's biggest entertainment companies: News Corp's president and chief operating officer Peter Chernin; Viacom's co-presidents Les Moonves and Tom Freston; Yahoo's Terry Semel. Further, it has been suggested, Disney may not even need an entertainment executive -- opening the way for eBay's Meg Whitman or Gap's Paul Pressler (who is a former Disney man). Steve Burke, chief operation officer of Comcast, the firm that launched an unsuccessful bid to acquire Disney earlier this year, may also be in the running.
"The key issue is the resolve of shareholders to find the right candidate versus internal pressure to take the internal candidate," says headhunter Ben Worsley. "The question is, can the external candidate genuinely be stronger than the existing candidate? Then there are the risks in selecting an external candidate and hoping they will fit into the company's culture."
But such is Eisner's reputation that many are uncertain what a two-year period of transition will actually amount to. He has run Disney with such a tight fist that there is no senior management that can step in to relieve him, and any succession now depends on his willingness to grant his replacement transitional power.
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