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Disney CEO Eisner under spotlight
Board weighing up options

By Reuters

Published: Friday 13 February 2004

Top Walt Disney executives focused on the company's financial outlook in a presentation Thursday to analysts and investors anxious to grill CEO Michael Eisner later in the day about Comcast's hostile takeover bid.

CFO Tom Staggs pointedly avoided mentioning Comcast's surprise $50bn bid, eliciting chuckles from the audience when he called Wednesday a "pretty uneventful day".

"We realise our overriding goal is to manage the Walt Disney Co. in the best interests of our shareholders," Staggs said.

Eisner, 61, has overseen substantial growth at Disney in nearly 20 years as CEO. But the share price has stumbled in recent years and Roy Disney, the nephew of company founder Walt Disney, has spearheaded a move to oust Eisner from the board.

Comcast's bid for Disney puts still more pressure on Eisner. The top US cable TV operator said it launched its hostile bid after Eisner refused to enter talks.

Institutional Shareholder Services recommended on Wednesday that Disney shareholders withhold their vote to re-elect Eisner to the board, to show their disapproval with Eisner and Disney's corporate governance.

Thursday's presentations marked the second day of Disney's annual two-day investors conference, held at Walt Disney World in Orlando, Florida. Disney has traditionally used the annual forum as a pep rally to instil confidence among its vast array of shareholders.

Executives stuck to the script in morning sessions. Disney COO and president Robert Iger told analysts the company was poised for a growth spurt.

"We believe the company's performance in 2003 and the strong outlook for 2004 signal the beginning of the next period of growth for the company," he said.

But investors' focus was elsewhere as they hoped that George Mitchell, the presiding director of Disney's board, in a luncheon address on corporate governance topics, would also shed light on Eisner's status.

Before the luncheon, Mitchell told Reuters the company was committed to keeping shareholders' best interest in mind.

"We've asked for a thorough review," he said. "When we receive the analysis and review, we will meet, deliberate on it and make what we hope will be the appropriate response in the best interest of the company's shareholders.''

John Bryson, chairman and CEO of Ediston International, who holds a Disney board seat, told Reuters in Houston: "We just want to figure out the best path forward."

One analyst was cold toward Comcast's offer. "There's a reasonable probability Comcast will not make it," said Hal Vogel of Vogel Capital Management. "Financially they are not coming with tremendous power."

Sander Morris Harris analyst David Miller, who was at the meeting, said he believed it was unlikely a white knight would emerge to rescue Disney from Comcast but other options remain.

"There were other defensive and offensive moves Disney can make," he said, speculating that Disney could raise cash by selling off its radio properties and offering a dividend.

Some analysts and institutional investors in Orlando were already looking beyond Disney, asking wider questions about the media industry.

"This opens the whole field up," said Paul Kim, an analyst at Tradition Asiel.

"Although the Comcast-Disney thing is big, the more interesting question is what comes after and how will this have a ripple effect on the industry," Kim said. "Every institutional investor here is thinking about what's the next [mergers and acquisition] deal down the pike."