TMF: James, we started back in 1984 with (Michael) Eisner's entrance to Disney (NYSE:DIS), and now we are talking in today's terms. Let's fast-forward 20 years from now. Looking back at Michael Eisner's time as a CEO, will history characterize him as a great CEO, a good CEO, an average CEO, or a below-average CEO?
James Stewart: Well, he will be a memorable CEO, I can tell you that, but I think he will be viewed by history as tragically flawed, if you can apply the word "tragedy" to what is, after all, a business career and not one in which anybody has had a dagger literally stuck into their heart. But he was enormously creative, enormously successful, highly intelligent, witty, charming, and wickedly funny sometimes.
All these are good qualities, but they were coupled with some very bad qualities as well. Impulsiveness, hastiness, a paranoia about people around him, an inability to choose a successor. What I think is the most serious flaw is a persistent dishonesty that led to serious problems with the company. Had he left a few years ago and created a third act in his life, as he liked to say it, I think he would be remembered in an unvarnished sense as one of the great CEOs in Hollywood history. Now there will always be this shadow of the last years of his reign.
TMF: James, for your book, Disney Wars, did Michael Eisner cooperate?
James Stewart: Well he did cooperate in a sense. I mean, he did, I did have many interviews with him. I spent a great deal of time with him, and by the way, some of the things he said in the interview (are) really fascinating and revealing, which I included in the book. The highlight for me was that I was allowed to portray a Disney character in Disney World. I was Goofy. I went through the training, somewhat abbreviated, and it was an amazing, amazing experience to do that.
But I wouldn't, in all honesty, call it true cooperation. I mean, true cooperation is when a source essentially shares everything with you. They get out their diaries, their letters, their email, and they rack their brains. They try to be as helpful as possible, and they don't hold back the bad from the good. Eisner was surrounded by public relations people. There were unguarded moments that I was able to capture, but he didn't share with me many of the things that I knew he had. He didn't -- when we narrated an event, he left out key things that I already knew about. So I appreciate what I was able to get from him, but I can't say it was really unfettered cooperation, and maybe no chief executive these days is really going to be willing to do that.
TMF: James, I want to spot you up with a few specific incidents, people, involving Michael Eisner. I want you to elaborate a little bit, share with us some insight. The first one is Michael Eisner's falling out and the subsequent contract dispute with former Disney Studios Chairman Jeffrey Katzenberg.
James Stewart: Well, I have to say this story was an author's dream, and the cast of characters is just amazing. It is some of the biggest names in the entertainment industry, starting with Jeffrey Katzenberg, who had a 19-year, intimately close working relationship with Eisner first together at Paramount and then at Disney. He had an amazing string of successes culminating in these classic and enchanting films like The Little Mermaid, Beauty and the Beast, and The Lion King. The Lion King, by the way, was an idea that Jeffrey Katzenberg based on his own coming-of-age experience.
He wrote a letter to Eisner saying that he loved Eisner. It was like a father-son relationship. They pledged to spend their lives together. Then after Frank Wells died, and Jeffrey called upon Eisner to make him president, as he believed he had been promised; Eisner not only refused but he denied that he had ever had made such a promise to Katzenberg, which led to a very bitter falling-out, Katzenberg's departure from the studio, and then setting up a rival studio of his own, Dreamworks (NYSE:DWA).
TMF: And you know, a lot of people have rumored that Katzenberg based the Lord Farquaad villain character in Shrek on Michael Eisner. Is that true or not?
James Stewart: I don't know. I can see why people would think so. Of course the whole Shrek2 fantasy is based on a kind of magical kingdom that could easily be perceived as modern-day Disney and Hollywood. So I am sure Katzenberg is having his fun with the story, but nevertheless, there is a serious edge to this. I mean, Eisner, in getting rid of Katzenberg, created a fierce competitor for the Disney animation studio, which then had a virtual monopoly on animated feature entertainment. The salaries of the animators soared as Katzenberg tried to hire them away. Last year, Dreamworks' animation unit far surpassed the Disney animation studio in total box office revenue.
TMF: James, how about the purge of Walt Disney's nephew, Roy Disney, from the Disney board?
James Stewart: This is where I think Eisner seriously overstepped the bounds of his power, when he and the board decided that they could get rid of their strongest critic, Roy Disney, and his ally, Stanley Gold, by forcing Roy off the Disney board. So Eisner dispatched one of his directors to a meeting with Roy Disney and he said, "Well, basically Roy, we have to tell you, you are not going to be renominated to the board." As Roy later put it, he said it was like somebody put a stake in his heart.
I mean, the Disney company is not just Roy Disney's life, which it has been for 50 years. It is his name. It is his whole identity. He is a legitimate heir to Walt Disney. He is not, as he would consider, a contender to the throne, like Eisner. In taking away his directorship of the Disney company, they were essentially taking away his identity and throwing him out.
So Roy Disney decided he was not going to take it lying down. He would quit before he could be pushed out, and he waged a national shareholder campaign to replace the directors and to withhold shareholder support from Eisner.
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David Gardner is co-founder of The Motley Fool and is the advisor of Motley Fool Rule Breakers.The Motley Fool isinvestors writing for investors.
