DisneyWar - The Battle for the Magic Kingdom



Book Authors: James B. Stewart

Book Review by : S.S.George
Director, ICMR (IBS Center for Management Research)


Disney, self-serving style of management, misadventure, shareholders, James B. Stewart, Michael Eisner, EuroDisney, TimeWarner

Disney may be well-known for its dazzling theme parks, oh-so-cute cartoon characters, and its commitment to family values, but life at the company under Michael Eisner was anything but a fairly tale. As James B. Stewart describes in this book, Eisner's reign as the ruler of the magic kingdom was characterized by a particularly self-serving style of management, and several misadventures which cost the company's shareholders millions of dollars. But for Eisner, the story ends happily enough - even if he has lost his kingdom, he can still hold onto the millions he made during his years at Disney.

More than most companies, Disney is a company that goes to great lengths to project a wholesome, family-friendly image. However, after several years of negative press coverage about the goings on in the company boardroom, this image has taken something of a beating. Therefore, especially for the more cynical amongst us, it will probably not come as a surprise that for many years, corporate life in the company, like life in companies with far less squeaky-clean images, was characterized by backbiting, greed and politicking. The battle for the magic kingdom, like many corporate battles, was one in which no prisoners were taken.

James B. Stewart, the author of this book, is the man who wrote Den of Thieves, a best-selling book about Michael Milliken and the growth of his junk bond empire. Disney War is about another Michael - Michael Eisner, the CEO of Disney. A second Michael - Michael Ovitz, once Eisner's close friend - also makes a short and unedifying but incredibly lucrative appearance in the story. Like Den of Thieves, this book too features several little men with outsize egos. It is also a great read, rivaling a spy thriller in the tales of intrigue and deception between its covers.

Eisner was once hailed as a visionary, an extraordinarily successful and able leader, credited with transforming Disney into an entertainment giant. After reading the book, this picture of Eisner as a media and entertainment visionary becomes less convincing. His early years with Disney were certainly phenomenally successful, but much of this success is attributed in the book to Frank Wells, the President of Disney, who joined Disney with Eisner in 1984 and agreed to play the second fiddle to Eisner. Even early in his stint at Disney, Eisner was a notoriously difficult boss to work with, but Wells effectively moderated many of his excesses. The slide in Disney's fortunes was believed to have begun in earnest in 1994, with the death of Wells in a helicopter crash.

Much of the success of Eisner's initial years at Disney was due to its animation department. The animated film The Beauty and the Beast was released in 1991 to critical and popular acclaim, followed in 1994 by The Lion King, which went on to become an even greater success. But even at the height of Eisner's success, the seeds of destruction were already being sown, with project costs at the Disney's European theme park - later to be renamed EuroDisney - spiraling out of control.

The decision to locate the park near Paris was itself indicative of Eisner management style. Although Spain, the other option, had a much more favorable climate, and the Spanish government was willing to offer more sops to have the theme park built there, Eisner insisted that the facility be located in Paris. The theme park, once it was operational, proved to be far from profitable, and a huge drain on Disney's resources.

Several inglorious chapters in the history of Disney are examined in great detail in the book. Eisner's very public falling out with his former friend Jeffrey Katzenberg is one such story. Katzenberg was brought to Disney from Paramount Pictures by Eisner to head the company's motion picture divisions, a job which he handled with great success. Eventually though, Katzenberg was fired from the company, but he did not leave quietly. Katzenberg claimed that, according to the terms of the contract he had with Disney, the company was obliged to pay him a share of the future revenues from the projects he had worked on.

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