The Man Behind the Mouse

He’s a brilliant strategist and tough dealmaker, a company man who some call Michael Eisner’s ‘enforcer.’ So why don’t more people know who Peter Murphy is?

Jerry Bruckheimer and his team thought they were on their way to making a mega-budgeted World War II saga called “Pearl Harbor” in 2000 when the man who approved the project, Walt Disney Studios chief Joe Roth, suddenly left the company.

Rather than hand the project off to Roth’s successor, Peter Schneider, chairman Michael Eisner entertained second thoughts. Suddenly, the fate of “Pearl Harbor” was not in the hands of the new studio chief; it was mired in Disney’s corporate maze, stuck in the office of a man named Peter Murphy.

After calculating the risks and potential windfall based on an earlier Bruckheimer blockbuster, “Armageddon,” Murphy drew up the financial projections that could guide the project to success.

The movie eventually got the greenlight. The budget was $135 million, a hefty sum, but still one that forced Bruckheimer, director Michael Bay and the entire crew to take pay cuts, in exchange for a piece of the backend. By Murphy’s projections, the film would match, if not exceed, “Armageddon,” which grossed $201 million domestically. Eisner began predicting a hit. Yet when “Pearl Harbor” delivered $199 million, it was considered a disappointment.

Never heard of Peter Murphy? He’s senior executive vice president and chief strategic officer of the Walt Disney Co. He’s Ivy League educated, wonkish and smart, and very different from most of the creative execs, writers and producers with whom he works.

He’s now involved in deals affecting almost every sector of the company. As a member of Eisner’s inner circle, he’s a man on whom the Disney chief relies to reinforce his decisions — or make good on those that Eisner second-guesses.

And, to hear critics talk, he’s indicative of one of Eisner’s chronic problems. Many corporate execs at Disney, while hardworking and well-intentioned, are not well-versed in finessing members of the creative community. Like oil and water, the left- and right-brain types often clash. When Eisner changes his mind (as he did with the acquisition of Cap Cities/ABC and, later, over the terms of the deal to buy Fox Family Channel), it is Murphy who goes into battle with the proposed revisions.

As it is, strategic planning is becoming a rallying point for a number of vocal Disney critics.

In his campaign to oust Eisner, Roy Disney has said the Disney chief is running the company with “so-called strategic planners” in a “soulless, rapacious (search for the) quick buck.” Pixar’s Steve Jobs knocked the company for being short on creativity and long on “embarrassing” animated sequels.

Even Disney’s directors have taken note. According to one insider, some directors at a board meeting last year complained that there were more strategic planners than animators at Uncle Walt’s studio. Eisner turned to Murphy and asked rhetorically, “Why do we need so many accountants?”

But Eisner’s comments were disingenuous at best, says one source. “Peter is not making these decisions. Michael is. Peter’s just the fall guy.”

In fact, Murphy is a very tough fall guy, a loyal company man who has worked for Disney ever since he graduated from the Wharton School of Business in 1988. Other colleagues have left, some for lucrative positions at other companies, others to escape the often unnerving way that Eisner runs the company.

Murphy, however, steadfastly supports his boss, defends the company’s moves and talks in fluent corporatese, as when he calls Disney a “branded content delivery company.” He will play a critical role in the coming months as Eisner pursues new deals and directions to fend off takeover threats from outsiders like Comcast.

But few ever hear about Murphy’s starring role, as he flies below the radar. Even at the Disney gates, a security guard looks befuddled when Murphy’s name is mentioned. “We’ve never heard of him. Do you know what he does?”

To the creative types, however, Murphy is among those who deliver the news on whether a dream project will work or whether a venture has to be shut down. While Walt Disney Studios chairman Richard Cook oversees features, Murphy has been called in to size up prospects for big-budgeted film projects like “Pearl Harbor.” Some have gone so far as to call him Eisner’s “enforcer.”

One of the few times Murphy made the news was in 2002, when EchoStar threatened to pull ABC Family off its sat system. According to court documents, Murphy allegedly warned an EchoStar executive that if he pulled ABC Family from its schedule, Disney would “march on Washington” to oppose the satellite provider’s pending merger with DirecTV. Murphy later denied the exchange, and EchoStar’s merger eventually fell through.

Perhaps nowhere has Murphy’s presence been felt more than at Miramax, where Harvey and Bob Weinstein’s relationship with Eisner runs hot to cold. Roth had been Miramax’s point man at Disney, but when he left, Murphy began to play a bigger role. The maverick producers started dealing with a strategist who was not known for cultivating creative relationships.

It is Murphy, for instance, who delivers orders to Miramax to pare budgets and meet projections. The jousting has gotten so extreme that Miramax execs have groused that they wish the strat planners would “just leave us alone.”

According to insiders, Murphy has tried to revise the Weinsteins’ accounting and bonus structures to conform to Disney’s more rigid practices.

As one Miramax manager bristles: “They squeeze people and don’t reward them for jobs well done.”

Skip Brittenham, the Weinsteins’ attorney, is much more diplomatic: “Peter is a very capable guy who is a good listener.”

Murphy looks like a former hockey player, a bit portly in girth and ruddy in complexion. Wire-framed glasses make him look older than his 42 years, and a dazzling white smile and fleshy lips soften his square face. He speaks quickly in a flat voice with a hint of Yankee yaw.

From atop the Team Disney building in Burbank, he disputes his role as Eisner’s enforcer, explaining as his face flushes, “This is a company with $27 billion in revenue and dozens of divisions. Michael and (Disney president) Bob Iger need help in running the company and a lot of things get delegated.”

Despite the criticisms of Eisner, colleagues praise Murphy as a brilliant thinker. Indeed, some of his recent ventures include MovieBeam, a video-on-demand service that has garnered positive reviews. His recent agreement to license Microsoft’s antipiracy software was all but obscured two days before the news of Comcast’s takeover bid. Yet the Microsoft deal could ultimately protect Disney’s films and content for the digital world of PCs, TVs, PDAs and cell phones.

“He’s one of the smartest guys I know,” says Rob Moore, a former Walt Disney Studios executive who is now a partner at Revolution Studios. Stephen Bollenbach, the Hilton Hotels chairman who was Disney’s chief financial officer during the acquisition of Cap Cities/ABC in 1995, says he’s “got all the right credentials, is well-educated and works real hard.”

In contrast to the theatrics and bluster of other studio execs, Murphy possesses an ordinary-guy demeanor. That may explain his anonymity in the industry, on Wall Street, and even among his own studio’s rank-and-file. “I get things done in a pretty low-key way,” he admits. “I measure my own success by getting a good deal done for the company. I often take aggressive positions, but that’s part of doing good deals.”

You could easily picture Murphy as an investment banker or venture capitalist. Born in Boston and raised in Huntington, Long Island, Murphy went to Dartmouth College, where he studied economics and government. He went to Wharton to specialize in strategic planning, even though his mother was disappointed: “She considered it a vocational school.”

A summer internship at the Washington Post Co. convinced him that media firms were “an incredibly exciting place to work.” He also met his future wife, Ann, then a staffer for Massachusetts Rep. Gerry Studds, before heading west.

At the time, Eisner and his then-chief strategist, Larry Murphy (no relationship), were injecting novel notions like branding into Disney’s culture, marketing Mickey and Minnie like Procter & Gamble products.

Murphy signed on with the Walt Disney Co. and found himself working with an elite corps that included Meg Whitman, who would leave to start eBay; Richard Nanula, who is now CFO at Amgen; and Toby Lenk, the online chief for the Gap.

The younger Murphy began to make his mark by formulating ways to expand Disney Channel around the globe. He helped form a business plan that projected a burgeoning indie film market to justify Disney’s acquisition of Miramax. But nothing quite changed his career as when Disney acquired ABC in 1995.

At the time, federal ownership rules had just been lifted, and Eisner wanted to acquire a network. When NBC became available, Eisner balked at the high price. But in spring 1995, new CFO Bollenbach convinced Eisner that Disney really could afford to buy a network if it assumed some debt. Murphy helped devise a strategy and Eisner was ready to move. Disney went on to buy Cap Cities/ABC for $19 billion, at triple the price of NBC.

After that, Murphy was promoted to CFO of the network. He was charged with helping Disney digest its acquisition, and felt pressure to slash costs.

Disney’s strat planners saw ABC as another way for the corporation to exploit its brand. Yet, in meetings, the network and creative managers began to collide with Disney’s strategic thinkers.

“A lot of times, we’d be sitting in a meeting, trying to come up with ideas to improve ratings,” says a former network manager. “But someone at the table would inevitably ask, ‘Do we have to run these ideas by the strat planners? If so, let’s just come up with a smaller idea.’ ” The group would then dumb-down their ideas in order to avoid the strategic-planning gauntlet. “They’d tell us our idea would take too long, or it was too soon or too late.”

Other divisions also felt this tension. A designer for the California Adventure theme park in Anaheim recalls being supervised by a strategic planner who said, “Michael has told us that it is time to start harvesting the brand.” That meant building a “cheap amusement park with ordinary iron rides right off the shelf and pasting ‘Disney’ at the gate.” (Attendance at California Adventure has been less than stellar.)

Stories of micromanagement began to filter into the press, and a stream of executives departed, including Bollenbach and exec VP John Cooke. Also among them was Larry Murphy, who resigned in 1998. But not Peter Murphy, who not only stayed but was elevated to his boss’ position for a job well done. It’s a seat he’s held ever since.

To be fair, since Eisner took over the company in 1984, strategic planning has played a big part in transforming Disney from a lackluster studio to a media powerhouse. But after the company became more efficient, strategic planning began to rule the company, say critics. What was once a resource for making wise creative decisions has been carried too far.

“The strat planners are Michael’s eyes and ears,” says a former Disney manager. “He doesn’t trust his executives and frontline people, so Peter and the strat planners go in to make sure they’re right.”

Indeed, to hear Roy Disney and his supporters, this overemphasis on strat planning is its chief problem. Michael McConnell, one of the managing directors of Disney’s Shamrock Holdings, wrote in an online editorial that Disney’s “strategic planning, marketing and finance schemes (dictate) the terms to creatives.”

When Eisner wanted to buy Fox Family Channel in 2001, several directors did not want to include Fox Family’s expensive baseball rights contract, say sources. During negotiations, Murphy tried to untangle the properties. When he couldn’t, Eisner decided to buy the entire company package anyway.

Later, a Disney company director called Murphy and asked, “How much was it?”

Murphy told him $5.2 billion.

“Without baseball? That was supposed to be the deal, Peter.”

“Michael did it anyway,” Murphy answered. “I did my best.”

At the next board meeting, Murphy made a presentation, explaining that with some new creative programming, the channel could achieve 20% annual gains. The board felt reassured and formally approved the $5.2 billion deal.

The deal hasn’t produced 20% annual returns and Murphy admits that ABC Family, as the channel was renamed, “is not doing as well as it might.”

But he strongly supports these deals and Eisner (who did not respond to a request for comment). Murphy says that the Cap Cities/ABC merger has “proven to be a great deal” and reminds people not to forget that it also included powerhouse ESPN. As for ABC Family, he says, “We are little more than two years into it. I’m still optimistic that it was the right acquisition since it gave us access to 81 million homes in the U.S.”

In that sense, the deal has paid off. But ABC Family is still struggling to devise some new creative programming.

And that is where Disney — under Eisner — has fallen off balance. The Pixar deal is ending. The recent release “Hidalgo” posted lackluster results, and there are doubts about other films on this year’s feature slate. The studio had a giant hit last year with the entertaining “Pirates of the Caribbean,” but it is also part of a larger trend of making movies based on decades-old theme park rides.

Some critics clearly long for the days when Uncle Walt was in charge. But like wooden skis and rotary phones, those days are gone. As analyst David Miller of Sanders Morris Harris says, “We’re in a different phase now, when large-cap growth companies have to exploit the underexploited.”

And in that regard, Murphy is a managerial Merlin, part investment banker, part seer, in the increasingly barbarous quest for bigger profits. In an industry dominated by quarterly financial reports, Murphy stands out as one of the architects of such a world. Some believe that Murphy, perhaps more than any other, could “be the one who winds up helping Disney,” says analyst Harold Vogel.

Maybe then the guard at Disney’s gate will recognize his name.

Kathleen Sharp (www.kathleensharp.com) is the author of “Mr. and Mrs. Hollywood: Edie and Lew Wasserman and Their Entertainment Empire” (Carroll & Graf).

Photographed by Vera Hartmann

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