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Disney - Succession Problems in the Magic Kingdom?

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Case Details:

Case Code : HROB079
Case Length : 19 Pages
Period : 1984-2005
Pub. Date : 2006
Teaching Note :Not Available
Organization : The Walt Disney Company
Industry : Media, Entertainment, and Gaming
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"The timing of Mr. Eisner's exit gives Disney's board plenty of time to set in place an orderly succession plan." 1

- Katherine Styponias, Prudential Equity Group analyst, in September 2004.

"He (Eisner) had been in charge of Disney for a decade, long enough, you'd think, for him to develop a crop of up-and-comers. Yet, by his own account, he had failed to do so." 2

- James Surowiecki, Staff Writer at The New Yorker, in October 2004.


On March 4, 2004, Michael Eisner (Eisner), Chairman and Chief Executive Officer (CEO) of The Walt Disney Company (WDC), faced a revolt when 43% of shareholders withheld their votes for his re-election to the Board. As a result, the WDC Board split the roles of Chairman and CEO.

Former U.S. Senator George Mitchell (Mitchell) was unanimously elected Chairman; Eisner, however, continued as CEO. Eisner had been the second-longest serving Chairman of WDC, after Walter Elias Disney (Walt Disney) and the second-longest serving CEO of WDC, after Roy O. Disney (Roy Sr.). Later during an interview on ABC Network,3 Eisner said he planned to carry on as WDC's chief executive till his contract expired in 2006. The posts of Chairman and CEO were separated following intense criticism and demands from the shareholders and from former WDC director Roy E. Disney4 (Roy) and Stanley P. Gold (Gold) for Eisner's ouster. Ironically, it was Roy and Gold who had brought in Eisner after the ouster of Ron Miller5(Miller) as CEO in 1984.

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Following the board meeting in March 2004, Mitchell announced that finding a successor to Eisner was the next important activity for the Board.

There was a lot of media speculation and many prominent names were thrown up: Bob Iger (Iger) - President and Chief Operating Officer (COO) of WDC, Steve Jobs (Jobs), Chairman and CEO of Pixar Animation Studios (Pixar),6 Mel Karmazin (Karmazin), COO of Viacom,7 and Peter Chernin (Chernin), President of News Corp.,8 among them. In October 2004, the WDC Board hired Heidrick & Struggles, an executive search firm, to find a suitable candidate to replace Eisner as CEO. According to some industry analysts, one of the key reasons for the shareholders' revolt against Eisner was his failure to re-establish the creative soul of WDC which stood for technological innovation in animation and creative story telling.

Disney - Succession Problems in the Magic Kingdom? - Next Page>>

1] Marla Matzer Rose, "Eisner Successor Speculation Swirls at Disney," www.entertainment-news.org, September 13, 2004.

2] James Surowiecki, "Good Grooming," www.newyorker.com, October 04, 2004.

3] The American Broadcasting Company (ABC) is a television and radio network owned by the Walt Disney Company.

4] Roy E. Disney is Roy O. Disney's son and Walt Disney's nephew.

5] Ron Miller is the son-in-law of Walt Disney.

6] Pixar Animation Studios, based in Emeryville (California), is a developer of computer generated animated feature films. Pixar created some of the most successful computer generated animation hits like Toy Story, Toy Story 2, A Bugs Life, Monsters Inc., Finding Nemo, and The Incredibles.

7] Viacom (Video and Audio Communications), is an international media conglomerate with interests in broadcasting (CBS & MTV networks), motion pictures (Paramount), cable television, publishing (Simon & Schuster), radio (Infinity Broadcasting), and outdoor advertising.

8] News Corporation (News Corp), owned by media tycoon Rupert Murdoch, is one of the world's largest media conglomerates.


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