Flashback: A Disney corporate retreat several years ago.It is evening, the program has ended and the various apparatchiks have retreated to their rooms, but a few senior execs remain seated around a table in the bar, chatting with Michael Eisner. “The day went well,” one exec offered, only to see his boss frown skeptically. “Everybody did fine,” Eisner replied, “but remember this: The keys to this company’s success are sitting around this table. Every one of those other guys could leave Disney tomorrow and we’d do even better.” With that, Eisner rose and bid everyone good night. Whereupon one of the Disney execs told his colleagues, “You all realize that what Michael really said was, ‘If everyone at Disney left tomorrow except for Michael Eisner, the company would do even better.’ ” I recalled that incident last week when I learned that Peter Schneider, the studio’s chairman, had exited, thus reviving the question, “Why the constant turbulence?” Ask Disney alumni for an explanation and you’ll often get variations of this incident. As a CEO, Michael Eisner can inspire. He can innovate. He can lead. But he also has a talent for making people feel expendable. And there are signs the company is paying a price. Disney’s animation oligopoly has been wrecked by “Shrek.” There have been cutbacks in its program of live-action films, but no clear game plan has emerged. Price discounts have been imposed at the new California Adventure theme park to kick-start attendance. The ABC Network has watched rival NBC spur upfront sales by slashing ad rates. Though the core businesses are still basically strong, to say the least, this is not a happy time in the vaunted Mouse House. Indeed, Disney’s problems point up a pivotal lesson for media mega-companies as they continue to engulf and devour smaller rivals. It is fine to talk about the glories of synergy and cross-promotion, but the success of these corporate leviathans, just as for the free-standing studios and networks of old, is still dependent on Big Ideas. Without the giant hits and the giant talents that generate them, there is nothing to cross-promote. Could it be possible that the corporate titans are so enamored of their sheer heft that they’ve become oblivious to the basic forces that fueled their growth? There are those who argue that Disney is suffering from a form of CFS — creative fatigue syndrome. The limp opening of “Atlantis” was a reminder that the Disney animation machine may be running out of steam. One top agent claims Disney has frittered away key talent relationships. “Pearl Harbor” is a big hit by any rational standard, yet still a disappointment both commercially and artistically, and Eisner’s aggressive forecasts for the pic did not help. And since Disney had to pay $250 million to Jeffrey Katzenberg to go away, who could ignore the significance of the DreamWorks label adorning not only “Shrek,” but also “A.I. Artificial Intelligence,” which will surely go down as one of its generation’s most riveting artistic achievements. So consider the ironies: Of all the corporate hierarchs, Michael Eisner is perhaps the only one who still truly loves movies. Eisner once told me that the reason he picked Peter Schneider for the top studio job was that Schneider shared his zeal, which I believe. A brilliant man, albeit a bundle of idiosyncrasies, Schneider nonetheless seemed to lack the political aptitude to handle what is arguably a very political job. More relevant, Eisner and Schneider never seemed on the same page in setting forth an agenda for live-action films. Eisner likes to talk about a return to middle-budget high-concept movies like “Down and Out in Beverly Hills.” Schneider wanted to re-energize Disney family films, but also favored a more eclectic program with some pricey tentpole projects mixed in. If Schneider occasionally felt confused, he also felt expendable, and his departure underscores the stressful atmosphere at the Mouse House. Those Big Ideas and the people who shape them tend to flourish in a supportive environment. For whatever reason, DreamWorks, which itself seems somewhat unstructured, if not eccentric, has shown an ability to make and market exemplary product. The big question at Disney is not who will replace Schneider, but rather, can the Disney corporate culture resuscitate its creative energies and retain the loyalties of those who can nurture them?
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