Disney EchoEar Grand Mouseter
Joined: Aug. 2001
||Posted: Dec. 01, 2003 9:14 am/pm
Before the opening bell Disney stock is up fractionally on the news of Roy Disney's departure from the Board of Directors of Disney. Overseas in London trading in Disney stock was very light. An analyst for Credit Suisse says one of the things that must be resolved is the succession issue for Michael Eisner, CEO (means someone needs to be named and groomed who will lead the company when Michael Eisner retires or should Eisner die or become incapacitated while CEO).
On CNBC they had the Wall Street Journal writer who broke the story about Roy Disney's resignation, last name is Elfman. Elfman said, among other things, that Disney has instituted a strict code of conduct on its Board in the wake of all the corporate business and governance scandals of the last few years, which includes a mandatory retirement age of 72. Elfman also said that when Roy Disney and fellow Disney Board member Stanley Gold have criticized Michael Eisner in the past, neither of them offered alternative suggestions for what they think should be done iin managing the Disney company better, all they offered were just criticisms. Elfman sees the same thing in Roy Disney's parting letter, criticism with no ways offered for doing things better as Roy Disney would see it.
The discussion among the anchors and guest stock analyst on CNBC, after Elfman's appearance, mentioned that Roy Disney, while still having a lot of shares in the company and still maintains voting rights over the block of shares he sold earlier this year, does not have enough of a percentage of ownership of stock to make that much of a difference now that he is outside the company. They point out that Disney's recently instituted board governance rules are rather strictly enforced, when perhaps considering the experience and expertise of those being asked to leave due to their age (Roy Disney, Ray Watson and the man from Cap Cities) the rules should be interpreted more to be like "guidelines". [Now doesn't that sound like what the pirate Barbossa told Elizabeth Swann in "Pirates of the Caribbean: Curse of the Black Pearl" about the Pirates' Code ? ] The panel said it would take ten people to replace Mr. Murphy, the man who had headed up Cap Cities/ABC at the time Disney took it over, that's how much expertise Murphy is said to have and they said it's more too bad Murphy was leaving given how much help ABC needs to improve in the ratings. They also said it was doubtful Roy Disney could gather much shareholder support to get Michael Eisner out. Not very many shareholders hold huge blocks of Disney stock, mostly small shareholders, and the stock this year has shown very good improvement vs. the past few years when it was down. They said Eisner is responding to earlier criticism of him and his actions and actions of the company have resulted in a turnaround which should please shareholders and blunt any shareholder revolts against the CEO.
Now, with all that said, I would point you to Wall Street guru Peter Lynch, who used to direct the successful Fidelity Magellan mutual fund and wrote a book called "One Up on Wall Street". Part of Lynch's philosophy in choosing stocks to invest in is not just to read balance sheets and stock reports, but actually use that company's products, shop in it's stores, experience it as consumers do. Based on that model, Disney fans may drool over this character or that movie, or enjoy visiting theme parks all the time to the exclusion of all else. But we fans also see the Disney's company's products and services all the time over the long haul, and we have long memories. We know the difference between "new product" of Walt's time, the time after he died, the time shortly after Michael Eisner took over, and the time after Frank Wells died and Paul Pressler headed theme parks, for instance. We note how things stayed the same or changed for the better or worse. As I read on other sites people agree with Roy Disney's words to Michael Eisner, not 100% but very high percentage majority. However it still has to be played out 1) Who will be placed on the Disney Board to replace Disney, Watson and Murphy, and 2) Where Disney goes from here, and 3) Just when will Michael Eisner step down, and is he digging in his heels or is he trying to repair past mistakes, and 4) It's true: It's one thing to gripe and criticize, but putting people in strategic places, making strategic decisions, following through and implementing those decisions, adequately funding new people and new decisions, adequately funding new attractions and ongoing maintanance, and whether a fickle market allowed to slide away will be lured back long term, and putting responsible and meaningful and ongoing oversight over all this.... As the saying goes, aye, there's the rub.
Rich says CNBC is trying to get interviews with Michael Eisner and others at Disney. Well, aren't all the financial press trying to do that, too? With a Board of Directors meeting already set early this week in New York, should be interesting. Monitor financial news media for the latest.
Anyone with comments, suggestions, opinions, reactions?