Eisner's "Very Repressive Regime"

Life at the Mouse House is just awful, insists Roy Disney, who says he quit the board to encourage a shareholder revolt

Two days after his bombshell resignation from the Walt Disney board, Roy Disney, 73, is still smarting -- and fighting mad. Disney delivered his resignation on Nov. 30. In an accompanying letter to Chairman and CEO Michael Eisner, Disney cited his concern over Eisner's management, including "timidity" of investing in the theme parks, an inability to establish a clear succession plan, and a "creative brain drain" at the company.

In an interview with BusinessWeek Online on Dec. 2, the former Disney (DIS ) vice-chairman talks about why he chose to resign his board seat, his run-ins with Eisner, the company's relationship with animation giant -- and potential rival -- Pixar (PIXR ), and why Chicken Little got a sex change. Edited excerpts of Disney's conversation with Los Angeles Bureau Chief Ronald Grover follow:

Q: What made you retire from the board?


Well, they actually told me that they weren't going to put me up for reelection. I got the word from [SCE Corp. Chairman] John Bryson [head of Disney's Governance & Nominating Committee] about two weeks ago, I think. He just said I had passed the mandatory retirement age, and I wasn't going to be up for a vote. I figured that I was being pushed out, and that's not the way I intended to leave the board.

Q: In your resignation letter, you listed several things that are wrong with Disney -- ABC's ratings are down, the new theme park in Anaheim isn't doing well.


Yeah, everything was going great for the first 10 to 12 years [under Eisner]. But since then, it has been pretty flat, and a lot of frustration has grown out of that. I figured it was time to speak out for the shareholders. If you bought $1,000 worth of Disney stock seven years ago, it's still worth about $1,000 right now. If you bought two or three years ago, when it was $40 [per share], then you're really mad. [The stock now trades at around $25.]

Q: The reason the board cites for its intention not to put you up for reelection has to do with its mandatory retirement age of 72 for nonexecutives, and 75 for former chief executives.


That whole issue was bogus. The real reason is that they were trying to drop me. They used that whole age thing, but what they didn't say is that only applies to nonmanagement members of the board [who don't work at Disney]. I'm the chairman of the animation department here.

Plus, I would think that there would have been some benefit to have a Disney on the board. It was just a way of getting rid of a dissenting board member.

Q: What were the actual issues that you had with Michael Eisner?


They're all in my letter. And things are actually worse than [I described]. The morale around this place is just awful. You could see it in the fact that people were going home early, not looking forward to Mondays. And eventually, it shows in their work.

Q: Is Eisner the micromanager that people say he is?


He ran a very repressive regime. And he has a way of imposing his will. One example -- and it might sound small -- is that we are making this animated film about Chicken Little. And everyone knows that it's a story about a little girl who thinks the sky is falling.

Well, all of a sudden, Michael comes into a meeting and decides it should be a boy, not a girl, and walks off. He never explained it to me, but do you know how much money it cost us to change the little girl's room into a boy's room, and to do things like that?

Q: Disney and Pixar are in the middle of difficult renegotiations. Pixar has produced some of your biggest films of late, including Finding Nemo. Has Eisner stopped you from talking with the Pixar people?


Yeah, I wanted to go up there to Emeryville. I've known [Pixar top creative executive] John Lassiter for years, and so I wanted to go up there, take with me a few of the old animators that worked with Walt, like Ollie Johnson. Show them some films that we're working on, have a few laughs. We do it all the time.

So, I get this e-mail from Michael: No one from Disney should be having any contact with Pixar. Don't go. And so I canceled the trip. Seemed pretty small to me.

Q: How are those negotiations going?


I don't know. I'm not involved in them, but it can't be going well.

Q: So, what's next? How do you intend to force Eisner's resignation?


Well, it won't happen overnight. We're going to do a little educating for a while, talking to shareholders, let them know what we know. We're not going away.

Edited by Patricia O'Connell

Before it's here, it's on the Bloomberg Terminal.