DisneyWar - The Battle for the Magic Kingdom

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.

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In 2004, Roy E. Disney, son of co-founder Roy O. Disney resigned from the board of the company, and with fellow board member Stanley Gold began a campaign to oust Eisner. Thanks to their Save Disney campaign, in March 2004, an unprecedented 43 percent of the shareholders of the company voted against the reelection of Eisner as the Chairman and CEO. George Mitchell, a former U S Senator and Eisner loyalist then assumed the position as Chairman, with Eisner continuing as the CEO. Although Eisner had stated that he would continue as CEO till his contract expired in 2006, in March 2005 the company announced that he would be stepping down in September 2005 itself, with Robert Iger, his deputy, becoming the new CEO. There are few heroes in this book, though all the major players in the book do not come off equally badly. Roy Disney, for example is portrayed as a decent person, fighting to uphold Disney traditions and the Disney way - but, as a Disney board member, he too went along with many of Eisner's excesses for far too long a time. One of the surprising things about the book, given its unsparing view of the man and the company, is the fact that Eisner co-operated at all its writing. Stewart had access, with Eisner's permission, to company executives. He also shared several lunches with Eisner, and even attended some company meetings.

More than anything else, DisneyWar demonstrates the difficulties of creating a truly independent board of directors. The board of Disney was an especially tame board even by the standards of the day. Most board members were personally beholden to Eisner, with some of them drawing fat fees from the company for consulting or other services. Eisner even conveniently interpreted rules regarding the independence of directors to oust those of the directors who actually dared to take an independent stand. In all this though, the shareholders of the company were the real losers.

By the time this review is printed, Eisner will no longer be the CEO of Disney. In a recent judgment, a Delaware court ruled that the board of directors had acted properly in the hiring and firing of Michael Ovitz. However, the judge had little good to say about Michael Eisner and his handling of the board. A couple of excerpts from the judgment :

"By virtue of his Machiavellian (and imperial) nature as CEO, and his control over Ovitz's hiring in particular, Eisner to a large extent is responsible for the failings... that infected and handicapped the board's decision-making abilities."

"Eisner stacked his (and I intentionally write 'his' as opposed to 'the Company's') board of directors with friends and other acquaintances who... were certainly more willing to accede to his wishes... than [act as] truly independent directors."

After reading DisneyWar, words that ring true indeed.