Michael Eisner plans to step down as chief executive of the Walt Disney Co. when his contract expires in 2006, he said in a letter to the company's board of directors that comes on the heels of a very public battle with dissident shareholders over the company's performance and direction.
In the letter filed today with the federal Securities and Exchange Commission, Eisner said he will spend the next two years helping the board find a successor and continuing Disney's recent upswing after financial troubles the past several years. Disney is the parent company of ABC News.
"I expect the next two years will be critical to the future of our company and that we must take advantage of the positive projections we anticipate," Eisner said in the letter.
Eisner, who has led Disney for 20 years, faced a challenge in March when former board members Stanley Gold and Roy E. Disney, the nephew of company founder Walt Disney, led a shareholder revolt, claiming the company's shaky financial performance in recent years was a sign Eisner's authoritative style was not working. Eisner remained as CEO, but his position as chairman went to former Sen. George Mitchell.
Attendance at Disney's theme parks has slipped, and the company's media networks, including ABC, have struggled. The profits from Disney's animated films declined in recent years, and earlier this year the company failed to renew a deal with Pixar Animation Studios, the company that produced such hits as Finding Nemo and Toy Story during its partnership with Disney.
During the past few weeks reports have pointed to Disney Chief Operating Officer Bob Iger as Eisner's handpicked replacement. But some analysts say unless ABC turns in substantially improved performance this season, Iger could face a difficult battle to win the corner office.
Other possible replacements include former Disney theme parks executive and current Gap CEO Paul Pressler, former Viacom President and COO Mel Karmazin, and Steve Heyer, the former president of Coca-Cola.
Wall Street analysts say the long lead time to the resignation should be good for investors and allow the company to complete a thorough search for Eisner's replacement. The Disney board is scheduled to meet next week.
Disney shares climbed 30 cents today to close at $23.16 per share, up 1.3 percent, following Eisner's announcement.
Eisner became Disney's chairman and CEO in 1984 and the company saw huge growth during the first half of his tenure. It developed a strong TV presence with the additions of ABC and ESPN, and Eisner oversaw a huge expansion of the company's theme parks and a revitalization of the movie and animation divisions.
Before the recent challenges, the company thrived under Eisner's watch. Since he joined Disney, the company's annual revenues have grown from $1.7 billion to $25.3 billion, and operating income has gone from $291 million to $2.1 billion.
Eisner is expected to spend the next two years working on the company's financial performance to offset the past year's conflicts. The company showed positive financial results in its most recent earnings quarter and has beaten analyst estimates in six out of the past seven financial quarters.
"I shall continue to exert every effort to help the company achieve our goals, to assist the Board in selecting the new chief executive officer, and to make the transition expeditious, efficient and smooth and easy," Eisner said in the letter.