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DEALING FOR DISNEY

If Eisner Goes, Who Takes His Job?

As shareholders prepare to vote on whether to retain Disney's chairman, many observers already are picking out his successor.

March 01, 2004|Sallie Hofmeister | Times Staff Writer

At News Corp., some people already are envisioning the jobs they might snag at Walt Disney Co. should their boss, Peter Chernin, wind up succeeding Michael Eisner.

They're sheepish, but they can't resist. "I have to admit," said one person who works for Chernin, the media's conglomerate's chief operating officer, "I've thought about it."

Chernin is widely viewed by people in the industry, and by investors and headhunters, as the most logical candidate for Eisner's job, which hangs in the balance this week.

Disney shareholders will reelect directors at the company's annual meeting in Philadelphia on Wednesday, and the Disney board might be forced to make a management change if more than 20% oppose Eisner's reelection as chairman and chief executive.

In fact, Disney is prepared for Eisner to be on the losing side of up to 30% of the votes, considering that several of the nation's largest state pension funds said last week that they would oppose his reelection. New York's state comptroller even called for Eisner's immediate removal.

"If the vote is as significant as people suggest, the status quo cannot remain," said Charles M. Elson, director of the Center for Corporate Governance at the University of Delaware. "Some shareholders would be disappointed if he stayed on."

The Burbank entertainment company's shares have appreciated little over the last decade of Eisner's leadership, though the stock price has rebounded this year. Two major Disney shareholders, including Walt Disney's nephew Roy, are campaigning vigorously to unseat Eisner.

Fund managers say that at the least, Disney's board should separate the roles of chairman and chief executive. Some say Eisner, who turns 62 this week, could remain as chairman if Disney were to bring in a new chief executive.

"The way out of this mess is for the board to bring in a CEO and allow Eisner to quietly retire when he's 65," said one leading executive recruiter.

Such a scenario was discussed with Chernin, according to sources, but those talks disintegrated because Eisner refused to set a retirement date.

Finding a chief executive for Disney may not be easy. "There's not a long list," said Bill Simon, head of the media and entertainment practice at Korn/Ferry International, a leading executive recruiter. "This is a highly consolidated industry faced with a myriad of challenges. There's not a lot of talent who has managed this scale and breadth of businesses."

What's more, candidates would be throwing their hats into the ring at an uncertain time: Comcast Corp. has made an unsolicited bid to buy Disney. The Disney board rejected it as too low. But should the nation's leading cable TV provider end up landing Disney, the president of its cable operations, former Disney executive Stephen B. Burke, probably would oversee the entertainment giant for Comcast, leaving any new chief executive out of a job.

Here's a look at some of the people the industry is buzzing about and who might, or might not, make a headhunter's list:

Peter Chernin: Like Eisner, Chernin rose through the ranks as a creative executive. Because he oversees a broad portfolio that includes a movie studio, the Fox broadcast network and a group of cable channels, Chernin is considered among the best-qualified to run Disney.

And the 52-year-old has been eyeing the Disney post for the last year, according to people close to him, eager to report to a board rather than to a boss he never will succeed. At News Corp., Chernin is No. 2 to chief Rupert Murdoch, who controls the company and plans to turn it over to his two sons, who now are in their early 30s.

Despite months of negotiations, Chernin has yet to sign a new employment contract with News Corp. But his current agreement, which expires this fall, allows him to exit at any time to run a rival company.

Bob Daly: The former chairman of Time Warner Inc.'s Warner Bros. studios is winding down his role as chairman of the Los Angeles Dodgers since the team changed hands last month. But people close to Daly say he has little interest in taking a major industry role and at 67 is hardly a viable long-term solution for Disney.

Steve Jobs: Wall Street has speculated for some time that the co-founder of Apple Computer Inc. could sell his vaunted Pixar Animation Studios to Disney and end up succeeding Eisner as CEO. Such talk intensified when Pixar failed in January to renew a lucrative alliance with Disney that has led to blockbusters such as "Toy Story" and "Finding Nemo."

On the other hand, Pixar's success doesn't mean Jobs is ready to run an entertainment giant seven times its size. "He's got the vision thing and leadership skills, but it's a big leap," said a leading recruiter.

Mel Karmazin: The Viacom Inc. president is well regarded on Wall Street for his bottom-line orientation and probably would be set free of his current contract, which expires in 2006, because of his ongoing rivalry with his boss Sumner Redstone, who controls the entertainment conglomerate.

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