Finding Disney


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David Jefferson

Michael Eisner isn't the first guy in Hollywood you'd expect to find giving a lecture on humility. This is the mogul with chutzpah enough to take Walt's place as host of "Wonderful World of Disney," push Mike Ovitz out of the corporate jet with a $90 million parachute--and earn hundreds of millions of dollars doing it. But there Eisner was last month with his No. 2, Robert Iger, at a management retreat, rallying Disney's ESPN team with a pep talk on the importance of humility and being good winners. "You guys are No. 1," he told the cable-sports executives, each of whom had been presented with a biography of pitcher Sandy Koufax. "That's why we gave you the Koufax book,'' Eisner said. "Don't get carried away with it."

THAT'S A LESSON Eisner has learned the hard way. Coming off the heady days of what Eisner dubbed the "Disney decade," the stock plunged from $44 in mid-2000 to below $14 as the company's list of ailments grew longer than the lines at its theme parks. Orange Alerts and a lousy economy have kept tourists away from Disney World in droves. ABC fell to fourth place in prime time among 18- to 49-year-old viewers. The Disney Stores are struggling, and may be sold. Most troubling of all, Disney lost its crown as the undisputed leader in animation: it was ex-Mouseketeer Jeffrey Katzenberg--and DreamWorks--who won the first-ever Oscar for best animated movie, "Shrek," while Disney last year delivered the biggest animated bomb in its history, "Treasure Planet." Even as Disney looks forward to a hit with the release of "Finding Nemo" this Friday, the elation is tempered by the knowledge that the film's maker, Pixar Animation Studios, could soon take its profitable animated movies elsewhere.

The fallout is that Eisner has found himself cast as a Disney villain. When Stanley Gold, the board member who recruited Eisner in 1984, began calling for his ouster last August, it became obvious that Eisner had to drastically rethink his strategy. And so, with narrative symmetry worthy of a Disney film, Eisner dusted off blueprints for a better mousetrap that he brandished back in 1984 when he rode in from Paramount on his white horse. Those plans were profoundly simple: make the most of what you've got; don't aim for the fences--go for doubles and triples; when you win, don't let it go to your head. "There's a new ethic here. It's the old ethic revisited," Eisner says. "We got a little bit off of it, joined the crowd. Now we're back."

That may be overstating it--the stock is still bumping along at $18--but there are clear signs that Eisner is serious about giving his company, and his management style, a makeover. The strategy at Disney's film studio, for example, is strikingly similar to the one it had in the '80s: keep one eye on the past and the other on the bottom line. Under Dick Cook's watch, the studio has shied away from pricey dramas like "The Insider" and "Beloved" that cost twice what they took in. Compare that to recent hits "Sweet Home Alabama," "Bringing Down the House" and "Chicago" from its Miramax unit; each cost $30 million to make and brought in more than $425 million domestically, combined.

It isn't that Disney won't splurge on blockbusters. Jerry Bruckheimer's "Pirates of the Caribbean," which arrives July 9, cost $125 million, almost as much as his films "Armageddon" and "Pearl Harbor." The big difference with "Pirates" is that it's a sequel to an established "hit," the theme-park attraction of the same name. Bruckheimer rolled his eyes when the studio approached him with the idea. "I said, 'Pirates of the Caribbean? The ride?!' " But he liked the script. "If we got it right, we've got the next 'Raiders'," Bruckheimer boasts as he walks around a cavernous set that seems to have been airlifted from Disneyland (who said synergy was just pixie dust?). Next up, "Haunted Mansion" with Eddie Murphy.

Trickier will be finding the next blockbuster in Disney's animation department. Disney's last four animated films combined made less than half of what Pixar's did ($357 million vs. $856 million). With Steve Jobs threatening to walk, Disney is readying its own fare like "Elgin's People," which features a computer-generated rag doll voiced by Dolly Parton, animated in three dimensions (how else?). Meanwhile, Eisner wants to extend the lives of Disney's older characters by reanimating some classics for a new look. Imagine a 3-D Peter Pan soaring over a digitized London.

Reanimating ABC is another matter. After making some headway last fall, ABC stumbled again in the spring by looking to the bottom of the barrel for a quick escape from its mess (how else to explain arming Lorenzo Lamas with a laser pen to point out contestants' physical flaws on "Are You Hot?"). ABC has now stopped trying to find the next "American Idol" blockbuster. "We're not looking for the instant hit," says Susan Lyne, president of ABC Entertainment. ABC's new mantra is "comedy, comedy, comedy"--a throwback to the days when it was No. 1 with family sitcoms like "Roseanne" and "Home Improvement." The fall schedule unveiled this month includes four new sitcoms and six returning ones. Advertisers seem encouraged by the lineup, which is light on reality--"Extreme Makeover" and its plastic surgery winners notwithstanding.

Perhaps the company's most extreme makeover these days is of Eisner himself. Gone (or at least in hiding) is Michael the Micromanager, whose alleged meddling sent one talented executive after another screaming from the Magic Kingdom. Now he's trying to share the spotlight with Iger. For years after the 1994 death of Disney president Frank Wells, Eisner was uncomfortable sharing the executive suite. But in Iger, Eisner seems to have found a counterbalance. "There aren't that many highs and lows with me," says Iger, who increasingly acts like Eisner's chosen successor (he's even got a new look, often dashing around the lot in untucked suede shirts). What's unclear is how long the honeymoon will last, or whether the board will want Iger in the corner office.

Still, Eisner can't help himself from getting involved in the details when he's passionate--about making a movie or, better yet, making a deal. "I've been nervous about these gnomes since day one," Eisner warned his animators during a recent meeting. Eisner fears the protagonists of "Gnomeo & Juliet," a tale of forbidden love among lawn ornaments, may look klutzy and tacky. His new animation chief, David Stainton--whom Eisner plucked from the TV-animation division with an eye toward holding down feature costs--assures him the gnomes will be nimble and their gardens only "a bit garish," with a supporting cast of plaster frogs, a Greek torso and a pink flamingo. Eisner likes the flamingo. "Remember the flamingos in 'Fantasia 2000'?" he muses. "That came from 10 years of my wife and a major shareholder sending uglier and uglier flamingos to each other as a joke."

For now, the board seems willing to believe Eisner still has the touch, and the right strategy. Even Gold has stopped calling for his head, at least in public (Gold declined to comment). Former senator George Mitchell, one of Disney's directors, said the board unanimously approved management's turnaround plan at a meeting this month, and didn't give Eisner any "specific deadline or ultimatum" to implement it. "We recognize that some of these actions will take time." Wall Street analysts are also taking a wait-and-see attitude. "We expect Disney's stock to hinge on ABC and park recovery prospects, both of which look increasingly promising to us," advises Smith Barney's Jill Krutick.

Of course, it wouldn't take much to snap Michael's mousetrap: another bad season at ABC, too many terrorist threats, finding Nemo but losing Pixar. "For now, it's about patience, then reaping the benefits for the next five to six years," Eisner told his ESPN managers. "And then retiring," quipped Iger. Eisner's response? "Speak for yourself." Spoken like a believer in happily-ever-afters.