Disney in the middle of bad spell but Eisner is confident of a happy ending

A few weeks ago the unthinkable happened at Disneyland in Anaheim, California. The Happiest Place on Earth closed up early because business was slow. No announcements, no press releases, just a quiet shutting down of amusement rides because of a lack of customers.

That was only the beginning of Disney's woes. The company's stock price has plummeted more than 25 per cent. Since last year, there has been a string of unprofitable movies. Box offices revenues dropped 46 per cent in the last quarter of 1997 and 76 per cent in the first quarter of 1998.

Now, with rival entertainment company DreamWorks scoring a huge early box office success this week with its animated feature Antz, (featuring the voices of Woody Allen and Anne Bancroft) and its theme parks vulnerable to recession, Disney appears to be in for some hard times. On September 11th, Disney warned that its fourth-quarter earnings would be 38 per cent lower than analysts had predicted.

As the stock is now trading around its 52week low, many analysts have downgraded it to "neutral" or "sell".

It is in the midst of this bad period that Michael Eisner, the Disney CEO - who is largely known to the public for the size of his compensation package $740,000 (£490,000) annual salary, eight million stock options worth $150-$190 million, on top of existing stock options of 6.7 million shares, worth in the $300 million range - has hit the market with a book called Work in Progress, a 450-page tome that is part business book, part memoir, and part an articulation of Eisner's vision of a Disney world.

Eisner has been at the helm of Disney for 14 years, during which time the company's market value has climbed from $2 billion to $75 billion. It has grown far beyond its roots personified by founder Walt Disney's, Mickey Mouse character. Disney now owns television stations, several movie studios, theme parks and sports teams. It is running a successful musical on Broadway, The Lion King. Eisner, a devotee of architecture and design, has commissioned a Disney Concert Hall in downtown Los Angeles. He has also commissioned a choral symphony for the millennium. With $22.5 billion in revenues last year, Disney is the second-largest multinational entertainment company in the world.

Eisner grew up on Park Avenue in New York, the son of well-heeled parents. He went to private school and his parents were determined that he should get an education in culture, but Eisner seems to think none of this prepared him for the world of entertainment. He originally was a pre-med student, but eventually found himself drawn to theatre.

His first job was an usher at the NBC television network. In his book, Eisner methodically details his first jobs in the industry, including his first job interview with a man he thought was Leonard Goldberg, a vice-president of ABC Television.

It turned out that Eisner was actually being interviewed by Barry Diller, an assistant. Diller is now a media titan in his own right. "Thanks God I didn't call him Mr Goldberg," says Mr Eisner. It would turn out that Diller would also eventually hire Eisner as president of Paramount Studios.

Eisner was clearly a young man on the rise. At one stage in his career, he wrote hundreds of letters to potential employers. And he recalls getting 75 rejection letters. But Eisner says his sense of optimism is a trait that has always stayed with him.

In 1994, Eisner needed more than optimism. By then he had been employed by Disney for 10 years. His running of Disney had been a team effort, a partnership of sorts with Frank Wells, the company's chief financial officer. Wells was a father figure to Eisner, a man he could confide in and trust completely. They spoke on the telephone a dozen times a day.

But on Easter Sunday in April 1994, Wells was killed in a helicopter crash in Nevada. It was a devastating business and personal loss to Eisner and to Disney, and it would have reverberations for years to come. It was significant to Eisner that within 36 hours after Well's death, the third ranking executive at Disney, Jeffery Katzenberg, came to him with an ultimatum; either he was given Well's position as president, or he would leave.

Eisner was offended, but the matter was important; Katzenberg had been thought by many to be the creative force behind Disney's revitalised movie division. Could Eisner allow him to leave? A protracted and agonising process began, with Katzenberg threatening to leave and Eisner secretly courting Michael Ovitz, the head of Creative Artists talent agency and widely called "the most powerful man in Hollywood". Three months later, Eisner was attending a conference of high-powered executives in Sun Valley, Idaho. By this definition, high powered means Masters of the Universe: Bill Gates of Microsoft; John Malone of TCI, one of the largest cable television operators in the world; and Warren Buffet, the legendary investor and one of the richest men in the world. During this conference Eisner began to experience chest pains. It is an insight into his nature that he didn't want to cause a scene and excused himself saying he had a sudden craving for frozen yoghurt. Within hours of his arrival back in Los Angeles, Eisner was undergoing emergency heart bypass surgery.

Eisner says the surgery and his confrontation with mortality changed him. He eats healthy foods, exercises, and no longer "sweats the small stuff". But the tone of his book is as far from emotive as possible. Few insights are offered, other than the conclusion that naming Disneyland in Paris "EuroDisney" was a mistake, a name that Europeans associated with business and commerce. (The name was changed to Disneyland Park.) The real reasons for the breakdown of his friendships with Katzenberg, (who left Disney to form rival DreamWorks with Steven Speilberg) and Ovitz, (who also left Disney after 18 months with a severance package of $100 million) are left largely unexamined.

Eisner has said in numerous interviews that he is unconcerned about Disney's stock plunge. In fact, he told the Los Angeles Times; "Failure reduces envy, and in that respect people may like us better. If a bad time means that we're only making an enormous amount of money as a corporation rather than an obscene amount of money, I would say I can adjust to those failures pretty easily."

Businessweek magazine, in reviewing Eisner's book, put it this way; "In the end, a reader comes away persuaded that Eisner has probably done something special to build Disney into a powerhouse company. But it will fall to another book to explain just what that something is."