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it hurts real bad
ABC parent's chief opens up in pitch to investors
By Jeff Bercovici
What was until recently the Magic Kingdom of Walt Disney is of late the much-maligned fiefdom of Michael Eisner, and yesterday Eisner took his case to stockholders, in the form of an apology for the media conglomerate's stumbling performance.
Things are worse than they ought to be but they will get better, he wrote in a letter to stockholders that is personal, if rambling, and entirely lacking in the upbeat phrasing of years past.
"I want to make clear my disappointment with the fact that the overall equity value of the company as I am writing this has not risen as it has in the past," he wrote.
But Eisner immediately notes his past successes, writing, "It doesn't work to point out the tremendous value creation during most of the years since 1984 nor the enormous growth of Disney to become a worldwide media company. We are a public company, and we want you to own a growth company."
Just when things will get better is unclear, but by Disney's own forecasts it is still some time off.
Back in November the company predicted declines in operating income through the rest of its fiscal 2002, which ends Sept. 30.
A decade ago, before Disney bought ABC, when it was a movie and theme park company, Eisner seemed just the right person to build it into a major media conglomerate that would still remain true to its founder's squeaky clean ideals.
It worked for a long time, then less and less as the conglomerate began to falter, its stock prices driven by dissatisfaction among investors and increasingly among the analyst community.
These ills seemed to compound in 2001, when net income dropped 68 percent for its fourth quarter.
Disney ills are indeed wide-ranging, and the prognosis for a turnaround in any ailing sector is not good.
ABC is having a disappointing season, stuck firmly in fourth place, and its ad sales are suffering along with those of the industry in general. Theme park attendance is off following the Sept. 11 attacks, and one new park was tracking below-expected attendance even before the attacks.
Disney lost billions on an internet venture that sought to create a massive online presence for its scattered entertainment properties.
Eisner has slashed hundreds of millions of dollars in expenses, along with hundreds of jobs over the past year, and there's a general uneasiness around the conglomerate that more cuts are coming.
Surely a general economic turnaround will come in 2002, but how quickly is the unknown.
In the meantime, Eisner must keep his conglomerate together and quite possibly fend off a takeover.
In a year that promises much takeover talk, Disney is a very hot prospect among analysts, with the most likely contender being cable giant AT&T Comcast.
January 4, 2002 ©
2002 Media Life
-Jeff
Bercovici is a staff writer for
Media Life.
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