WALT DISNEY CO. Can Eisner survive latest challenges?

Michael Eisner is trying to recapture the success of his early years leading Disney.
LOS ANGELES (AP) -- With two once-strong allies turning on him, Michael Eisner's micro-managing style of leadership at the Walt Disney Co. is again getting scrutinized.
Still, industry experts say Eisner may hold what Disney needs to weather a difficult period and also what will help him survive the latest challenges to the chief executive's position he took in 1984.
Roy E. Disney and Stanley Gold have called on Eisner to resign, saying he is to blame for a tumbling stock price, embarrassing management missteps and a focus on short-term profits over the company's core mission. But odds are that Eisner, credited with turning a sleepy theme park company and also-ran movie studio into a major media conglomerate, will keep his job at least until his contract expires in 2006.
"Mr. Eisner did a very good job for a long time for the company," said Harold Vogel of Vogel Capital Management in New York. "He now has stronger board and governance procedures than he ever had before, which would mute complaints of institutional holders, and institutions are not clamoring for him to leave."
Disney's resignation
In resigning their posts on Disney's board of directors this week, both Roy Disney, nephew of Walt, and Gold, singled out Eisner and his management style as the main factors in the decline of Disney's fortunes over the past seven or eight years.
"You had a very successful first 10 years at the company in partnership with Frank Wells, for which I salute you," Roy Disney wrote in his resignation letter.
"But, since Frank's untimely death in 1994, the Company has lost its focus, its creative energy and its heritage."
Wells died in a helicopter crash.
Eisner is famous for managing every aspect of Disney's business, from approving carpet patterns in hotels to commenting on TV and movie scripts.
Critics say he is loathe to share power and, in recent years, has insulated himself from criticism, rewarding executives who play it safe and alienating risk takers and critics.
His personal style has also clashed with others, including Harvey Weinstein, head of Miramax, the studio Disney bought in 1993, and Steven Jobs, the head of both Apple Computers and Pixar Animation Studios, which produced such animated film hits as "Finding Nemo" with Disney and is negotiating a new contract.
Hired Ovitz
In 1995, he hired his friend Michael Ovitz as Disney president, a disastrous decision that led to the departure of several executives and a multimillion-dollar severance that is the subject of a shareholder lawsuit. Ovitz left after just 18 months.
Eisner led the company solo until 1999, when he finally hired Robert Iger, who had been head of Capital Cities/ABC.
Analysts say that the division between Eisner and Roy Disney may be emblematic of growing demands by shareholders that companies be managed more aggressively for profit.
"It's the struggle between investing in the parks for attractions versus improving the bottom line for shareholders," said David Joyce, media analyst for Guzman & amp; Co.
Over the past five years or so, Disney has invested millions of dollars in new parks, but intends to spend more on marketing those assets rather than substantially expanding them, Eisner has said.
Disney has also cut hundreds of jobs in its animation department, slashed 4,000 jobs companywide, closed an unprofitable Internet venture and is selling its chain of Disney retail stores.
Eisner has been criticized for not producing the kind of growth and stability at Disney that can be seen at other media companies, including Rupert Murdoch's News Corp. and Viacom Inc.
But Eisner is also credited with having resisted the urge in the late 1990s to merge Disney with an Internet company, a move still plaguing media giant Time Warner.
In the end, Eisner's fate may be tied up with the direction of Disney's stock. Disney's stock has fallen from more than $40 per share in 2000 to under $14 in 2002. The stock has risen to more than $20 a share recently.
If Disney can deliver on its promise to raise earnings from 66 cents per share this year to $1.02 in 2005, Eisner may dodge calls for his resignation.
"The company knows what it needs to do and has already done a lot to be poised for the economic and tourism rebounds," Joyce said.