In Business This Week: Headliner
Michael D. Eisner: Disney's New Family Values
Walt Disney Chief Executive Michael Eisner isn't exactly whistling while he works on improving results in his movie division. Despite a string of hits such as Enemy of the State and The Waterboy, Eisner has partly blamed the live-action business for lower 1998 earnings and for an 18% drop in fiscal first-quarter profits. "Either the films and marketing cost too much," Eisner wrote to shareholders in December, "or the audience rejected our ideas."
Flops such as Mighty Joe Young have prompted Disney to revamp its studio operation. Animated film chief Peter Schneider was put in charge of Disney's family film unit. Eisner aims to cut by one-third the production and distribution budget, which was $1.5 billion last year. The company will seek deals with other studios to share the costs of big-budget action films, and Disney will make more lower-priced family films.
Studio chief Joe Roth has embraced big-budget films in the past. But he says he's comfortable with the new plan. "We're still going to make big-budget films, we're just not going to do as many of them."EDITED BY KELLEY HOLLANDReturn to top
Saying Sayonara to Long-Term
YOU WON'T HAVE MYRON SCHOLES TO KICK AROUND ANYMORE. The 1997 Nobel economics laureate announced on Feb. 2 he was retiring from Long-Term Capital Management, the Greenwich (Conn.) hedge fund that nearly collapsed last year. "Things are pretty well in hand here," Scholes told BUSINESS WEEK. By the end of 1998, LTCM's positions were up about 11% from Sept. 23, when the Federal Reserve Bank of New York got 14 big banks and brokerage firms to inject $3.6 billion and take a 90% stake in the firm. A spokesman says LTCM is not trying to raise money, but partners have been making presentations. Scholes, 57, is moving to San Francisco and plans to write, lecture, and spend time with his family. Fellow Nobelist Robert Merton remains at the firm.EDITED BY KELLEY HOLLANDReturn to top
A Patriot for Hilton?
HILTON'S DEAL-LOVING CEO, STEVE BOLLENBACH, is bidding $1 billion to buy hotel assets from struggling Patriot American Hospitality. The move is an effort to break up a prior deal in which investment group Apollo Real Estate Advisors agreed to take a 30% stake in Patriot American. Bollenbach, who bought eight hotels for nearly $1 billion in 1998, is said to covet Patriot American's extended-stay Summerfield Hotel chain and also wants selected upscale hotels run under the Wyndham and Sheraton brands. Hilton refuses comment, but sources say a deal could happen by mid-February.EDITED BY KELLEY HOLLANDReturn to top
AT&T and MCI Pick Different Paths
HOW BEST TO ENTER THE LOCAL PHONE MARKET? AT&T and MCI WorldCom disagree. On Feb. 1, AT&T unveiled a joint venture with Time Warner to let AT&T offer local service over Time Warner's cable network. That comes as AT&T is about to buy Tele-Communications Inc. and use its phone network. On Feb. 3, MCI WorldCom said it would offer local service, too. Its plan: Instead of building a network, it will buy capacity from Bell Atlantic and resell to New York residents.EDITED BY KELLEY HOLLANDReturn to top