Disney stock steady

While Frank Wells’ death clearly sent Walt Disney Co. reeling, analysts said the company is resilient enough to endure the tragedy, and investors took the news in stride. The company’s stock fell a scant 38 cents to $ 41.63 on a day when the Dow Jones Industrial Average fell 42.61 and entertainment issues were off broadly.

In part, that’s because Disney shares fell more precipitously during last week’s bull run than the market in general. Investors looking to buy Disney on the cheap got their opportunity.

Disney has had one of Hollywood’s longest-running management teams, with company chairman and CEO Michael Eisner, Wells and a handful of other top execs guiding the Mouse for nearly a decade. And while Wells’ skills running of day-to-day operations won’t be easy to replace, the experience at the top should mitigate potential pitfalls.

No power vacuum

“As tragic as the loss is — and Frank was a major force in Disney’s development — there would not appear to be a power vacuum that will set the company back in any perceptible way,” said David Londoner, an analyst with Wertheim Schroder & Co.

But investors also recognize that Disney isn’t a one-man show. While Eisner clearly has been the one to garner the public eye, Wells was on an equal footing inside the company.

“They overlapped to a degree,” said Harold Vogel, an analyst with Merrill Lynch. “They were sounding boards to each other.”

Eisner and Wells took over a teetering Disney in 1984 and turned the company into an industry stalwart. Revenue at the company climbed from $ 1.5 billion to $ 8.5 billion. The company’s stock soared, climbing 1,500% over the decade.

Key to restructuring

To many, Wells was seen as the operational exec, tending to the nitty-gritty of everyday business. He was perhaps more involved in Disney’s vast theme park operation than other top execs. And he was intimately involved in the recent complete restructuring of the troubled Euro Disney park in France.

“It’s ridiculous to minimize it,” said Jessica Reif, an Oppenheimer & Co. analyst. “He was extremely complementary to Michael Eisner. So, of course it’s going to be a loss.”

Virtually all large companies like Disney have contingency plans for anexecutive’s death, covering everything from succession plans to helping employees cope. The challenge, though, is trying to regain the executive’s skills.

“It’s not the functions they perform. It’s the intellectual capital they bring,” said Karen Stephenson, a professor at the John E. Anderson Graduate School of Management at UCLA. “And that intellectual capital is rarely written down.”

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