Since its founding in 1923 Walt Disney Productions has won a cherished place in popular culture. Through cartoon characters Mickey Mouse and Donald Duck, such film classics as Snow White and the Seven Dwarfs and two famed tourist attractions—Disneyland in California and Walt Disney World in Florida—Disney has created a fantasy realm securely based in solid Middle American values. But that wholesome image was tarnished last year when the Burbank, Calif.-based company found itself embroiled in a cutthroat corporate drama. When it was over, Disney’s oldfashioned management style, typified by former president Ron Miller, the sonin-law of founder Walt Disney, had been swept away by a slick, aggressive new guard led by chairman Michael Eisner, former president of Paramount Pictures, and president Frank Wells, a former Warner Bros, executive. Supported by a major new shareholder—the powerful Bass family of Texas—the new team promises to put the magic back into Disney’s shattered kingdom.
Even before the 1984 debacle, the Dis-
ney name had lost some sparkle. One problem was box office disasters such as the 1983 Something Wicked This Way Comes. As well, the entertainment company faced heightened competition in consumer products from such non-Disney cartoon characters as the Smurfs and Strawberry Shortcake, and disappointing attendance at its theme parks. The result: a steady earnings decline from $135 million in 1980 to $93 million in 1983. At the root of the trouble was a failure to adjust to the 1966 death of Walt Disney or to capture a youth market more attuned to Star Wars than to the Mickey Mouse Club.
Still, under the old regime Disney had slowly begun to change. The 1984 hit film Splash, a PG-rated farce about a love affair between a man and a mermaid, was by Disney standards a daring bid to broaden its appeal. Indeed, so radical was the departure that a group of old-guard employees held a prayer meeting to protest the film’s release.
Last spring, facing widespread shareholder dissatisfaction, a hostile management fought off takeover bids by financiers Saul Steinberg of New York and Irwin Jacobs of Minneapolis. In September Miller, who was blamed for Disney’s poor handling of the takeover threats, tendered his resignation. Since then Eisner and Wells have worked to restore confidence. Indeed, the harddriving Eisner, who at Paramount was associated with such hits as Raiders of the Lost Ark and Terms of Endearment, has pledged, “We are going to make Disney into the Swiss watches that Paramount and Warner Bros, were.”
The core of that strategy is to turn Disney into a major film studio, eventually producing between 12 and 15 pictures a year. Other plans include wider release of its library of film classics through video cassettes, pay and network television and the use of Star Wars creator George Lucas to develop attractions for Disney theme parks. As well, the two-year-old Disney Channel, available on pay television in the United States, expects to break even in 1985.
Disney’s transformation into a major studio is a risky venture which will take at least a year to produce results. But already many Wall Street observers are impressed. Said investment analyst Dennis Forst of the Los Angeles firm of Bateman, Eichler, Hill and Richards: “They are off to a fast start. I am optimistic.” Added Erwin Okun, vice-president of corporate communications at Disney: “Miller was a wonderful person, but he set a relaxed pace. With these guys [Eisner and Wells] everything has to be done yesterday.” Under them, a remodelled Disney is moving back into the fast lane of the American imagination.
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