EDITORIAL: Michael Eisner Was the Greatest CEO in the History of The Walt Disney Company
In 1923, the Disney Brothers Cartoon Studio was founded by Walter Elias and Roy Oliver Disney. In the decades that followed, the animation studio would evolve into something far different and far larger than either of them could have ever expected. However, as the old adage goes, time waits for no man, and the reigns of the business would be handed off to other leaders over the years.
Since the founding of the company, seven people have held the title of Chief Executive Officer of The Walt Disney Company, and I believe that Michael D. Eisner, the fifth CEO in the history of the company, was the most successful person in the position.
What About Walt?
Walt Disney was, without a doubt, an inspirational leader, creative genius, and the driving force behind the success of what is, today, The Walt Disney Company. He was, however, never the CEO of the company.
When Disney Brothers Cartoon Studio was established, it, like many small businesses, did not have a CEO. In 1929, the studio was re-organized into a corporation, taking the name Walt Disney Productions. At this time, Roy O. Disney acted as the CEO, and was officially given the title in the 1960s.
Then Why Not Roy?
“Disneyland is a work of love. We didn’t go into Disneyland just with the idea of making money.” – Walt Disney
Roy O. Disney was certainly the perfect compliment to Walt, keeping Walt’s grandiose ideas tethered to the realities of budgetary constraints. While this was a wonderful partnership, this is where the problem lies with labeling Roy as the “Greatest CEO” – he was paired with Walt. Roy did not have to guide the company with its creative endeavors, instead he had the (admittedly challenging) task of finding ways to fund Walt’s grand plans. Essentially, he only had to manage one side of the equation, more akin to a Chief Financial Officer, whereas modern CEOs have had to guide the entirety of the business.
Beyond this, Roy was CEO during a different era in business. Walt Disney Productions stock was not publicly traded until 1957, and the relationships between publicly traded companies, their CEOs, and their shareholders were far different than they became starting in the 1980s and ’90s, where the CEO’s primary responsibility became to keep shareholders happy.
What Makes A Great CEO?
“Do a good job. You don’t have to worry about the money; it will take care of itself. Just do your best work — then try to trump it.” – Walt Disney
The measure of success for a CEO varies depending on who you ask and their relationship with a company. While shareholders who don’t care for Disney parks or movies may only care about profit, the opposite could be true for the most die-hard fans who might only measure the creative success of the company’s endeavors with no concern for profitability.
From my perspective, the benchmark is somewhere in between. A company needs to be profitable to continue to function, evolve, and grow. Businesses are generally for-profit, and ones that don’t make money eventually stop operating, and I think we can all agree that we don’t want Disney to stop operating.
At the same time, businesses need to innovate, reinvest, and evolve to be successful. These things cost money, so a good CEO will strategically spend the money it takes to make their products and experiences better.
Finally, there is the intangible measure of a leader. Do employees want to work for this person? Does the CEO inspire people to go above and beyond? Does he or she empower their employees to take chances, to fail, and to learn from their mistakes? It’s difficult to gauge these things, but what the employees of a company create can be a good indicator.
The Eisner Era
Michael Eisner became CEO of The Walt Disney Company in September of 1984. He took over a company that was creatively stagnant, posting mediocre financial results, and had barely survived a hostile takeover attempt. As a company, Disney in the early 1980s bore little resemblance to what it was in its heyday of innovation and creativity. Eisner’s tenure as CEO would last through 2005, and during those 21 years, he would be at the helm for some monumental successes, as well as some notable failures.
The Case Against Eisner
“To some people, I am kind of a Merlin who takes lots of crazy chances, but rarely makes mistakes. I’ve made some bad ones, but fortunately, the successes have come along fast enough to cover up the mistakes.” – Walt Disney
To be fair, Eisner made some questionable decisions and acquisitions as CEO. Though this is not unique to Eisner, as all of the company’s CEOs have had major mistakes during their tenure, it’s what will most commonly be cited against him and his legacy in the position:
• Infoseek acquisition – The $1.7 billion purchase of 43% of the Infoseek search engine in 1998, and then the remaining 57% in 1999, delivered little value to the company.
• Euro Disney Resort – While not a failure in and of itself, many cultural and financial blunders took place in the building and 1992 opening of the resort. Walt Disney Studios, the resort’s second park, was built with an extremely limited budget (which was clearly reflected in the park) as a result of the resort’s under-performance during the prior 10 years when it opened in 2002.
• Disney’s California Adventure – Also a victim of Euro Disney Resort’s poor performance, DCA was built on a reduced budget, and opened in 2001 to poor reviews and low attendance.
• Attractions – Within the parks, changes like converting the PeopleMover at Disneyland to Rocket Rods, and attempting to keep up with fads with endeavors like Videopolis, were misguided at best. Eisner was known for using his teenage son as a litmus test for what the general public wanted in a theme park, which occasionally backfired. He also allowed Journey into Imagination to be butchered, perhaps his most egregious offense.
Eisner’s time in charge of the company resulted in some investments with incredibly poor returns for several years after their debut, and to this day Disneyland Paris Resort is not nearly as successful as other Disney resorts around the world.
The Case For Eisner
For every misstep that Eisner took over the course of two decades, there are a dozen others projects that were huge successes, for both fans and shareholders alike.
Financially, despite the disappointing performance of some large investments mentioned above, The Walt Disney Company delivered record profits in 2005, Eisner’s last year as CEO. While things could have been better, they were far from bad when it came to money.
If you’re reading this, however, I suspect you are not merely a shareholder, or may have never been a shareholder. You are probably a fan, someone who loves the parks, movies, a myriad of other Disney ventures, or a combination of all of these. It’s in these areas, these experiences, that Michael Eisner truly shined.
“I do not like to repeat successes, I like to go on to other things.” – Walt Disney
Eisner’s background was in TV and movies – he was President and CEO of Paramount Pictures before joining Disney. Paramount released hit films such as Raiders of the Lost Ark, Grease, and the Star Trek series during his time there, and TV shows such as Happy Days and Cheers. As expected, he brought this same success to Disney.
During “The Disney Decade” of the 1990s and the surrounding years, Eisner oversaw the release of a plethora of memorable films – The Little Mermaid, Beauty and the Beast, The Lion King, Hocus Pocus, Aladdin, Who Framed Roger Rabbit, The Nightmare Before Christmas, Pocahontas, Mulan, Lilo & Stitch, Pretty Woman (through Touchstone Pictures), and Honey, I Shrunk The Kids. He also launched the Pirates of the Caribbean film franchise with The Curse of the Black Pearl in 2003, and partnered with Pixar Animation Studios on features such as Toy Story, Toy Story 2, Finding Nemo, The Incredibles, and Monsters, Inc.
The movie catalog of Eisner’s tenure is, for many, the epitome of Disney film making. He not only saw the value in Disney returning to its roots via top-notch movies, but fully embraced the idea of original and creative ideas and partnerships to move the company back to the top.
For all of the successes Disney saw in theaters, their theme parks enjoyed equally impressive growth and development. These are the contributions that Eisner made to the Disney company and legacy that many fans, including myself, value the most.
First off, Eisner pushed the company to add additional parks around the world. Disney-MGM Studios (now Disney’s Hollywood Studios), Disney’s Animal Kingdom, Disney’s California Adventure, Euro Disney (now Disneyland Paris), Walt Disney Studios, Hong Kong Disneyland, and what is often regarded as the best Disney park in the world, Tokyo DisneySea. Of the twelve Disney parks around the world, seven were opened under Michael Eisner. As was already addressed, not all of these were immediate successes, but with nearly 15 years of hind sight since his departure from the CEO position, these investments have proven both valuable and profitable.
Beyond the parks themselves, Eisner greenlit an extensive list of attractions and entertainment, including some of the most popular, innovative, and ambitious rides in Disney history, both as part of new park openings and to improve existing parks:
The Twilight Zone Tower of Terror
The Great Movie Ride
Space Mountain: De la Terre à la Lune
Indiana Jones Adventure
Journey to the Center of the Earth
Rock ‘n’ Roller Coaster Starring Aerosmith
ExtraTERRORestrial Alien Encounter
While these attractions and shows may not be on everyone’s list of favorites, they’re all, at a minimum, great additions to the parks. There are also some smaller or less original (but still enjoyable) projects, such as the Buzz Lightyear series of rides and Phantom Manor, on Eisner’s resume.
Despite the billions of dollars spent on these new parks and attractions, and the record profits in 2005, the parks were still affordable for the majority of Americans. An adult 7-day base ticket was $199 in 2005, while the same thing today costs up to $521 – a 262% increase, despite only 32% inflation during the same time period.
Beyond movies and parks, Michael Eisner was directly responsible for some other very positive acquisitions, new product lines, and partnerships.
In 1996, the acquisition of Capital Cities/ABC gave Disney control of the ABC and ESPN networks, among others. The purchase was incredibly valuable at the time, giving the company more reach into American homes than ever. Since then, as live sports continue to be one of the few broadcast events drawing viewers to their TVs to watch in real time, having these networks in their portfolio has been hugely beneficial.
Disney Cruise Line, established in 1996, was estimated to have had about $1 billion in revenue in 2018. As the cruise line continues to grow with the addition of new ships and sailings, that number will continue to increase. In addition to the financial benefit, Disney is able to further capture the traveling public who want a different experience from the theme parks.
Finally, Eisner utilized partners in mutually beneficial ways. He recognized that it wasn’t always necessary (or financially responsible) to buy out every company that had something he wanted to incorporate within Disney. Partnering with George Lucas and Lucasfilm, for example, allowed Lucasfilm to continue doing what it did best, but granted Disney the ability to build exciting new attractions with stories that we knew and loved. Partnering with Pixar Animation Studios ushered in a new era of animation and success for The Walt Disney Company.
What Would Walt Do?
Perhaps what was (and still is) most endearing about Michael Eisner, despite the mistakes made along the way, was his creative spirit and willingness to embrace new ideas, experiences, and stories. From 1984 thru 2005, we as fans were the beneficiaries of an age of innovation, original works, and new experiences that changed our perspective of The Walt Disney Company.
Is it what Walt would have done, though?
“Courage is the main quality of leadership, in my opinion, no matter where it is exercised. Usually it implies some risk – especially in new undertakings. Courage to initiate something and to keep it going – pioneering and adventurous spirit to blaze new ways, often, in our land of opportunity.” – Walt Disney
Eisner, while a fallible leader of The Walt Disney Company, allowed new ideas to be developed, grew the company in many ways, kept the experiences accessible to guests of all walks of life and income levels, and delivered experiences to viewers and guests that would have seemed impossible before his tenure – and noticeably missing after. Most of all, he didn’t try to be someone else or copy the success of the founder – he took his own chances.
Yes, Michael Eisner did exactly what Walt would do, and he’s done it better than any other CEO in the company’s history.