Eisner remains under siege as Comcast exits

Disney nephew reaffirms his effort to oust CEO


LOS ANGELES - The Magic Kingdom is no longer under assault, but its king remains under siege.

Comcast Corp., the nation's largest cable operator, abandoned its $54.1 billion hostile takeover bid for Walt Disney Co. yesterday, but it is hardly a triumph in the storied career of Michael D. Eisner, Disney's chief executive. Eisner still faces a raft of issues, most notably restive shareholders so convinced that he has mismanaged the company that they forced Disney's board to strip him of his chairman's title last month.

Comcast's withdrawal might be temporary relief for Eisner. Yesterday, a day after Disney's board expressed confidence in Eisner at the end of a two-day retreat, Roy E. Disney, Walt Disney's nephew and a former board member, reaffirmed his commitment to force Eisner's ouster.

The widespread disapproval for the performance of Eisner, who has run Disney for 20 years, became clear at the March shareholder meeting in Philadelphia. As demonstrators, curious tourists and costumed Disney characters created a circuslike atmosphere outside the convention center, investors withheld more than 45 percent of their votes for Eisner's re-election to the board.

Analysts and investors are also concerned about whether Disney can deliver on the company's promised turnaround this year and beyond, given the troubles at the ABC network and the animation division.

Disney and Eisner welcomed the end of Comcast's hunt with little fanfare, choosing not to crow but to say nothing. Comcast's bid offered little to Disney investors but the promise of new leadership in Steve Burke, the former Disney executive who is president of Comcast. With that bid withdrawn - and no other bids for Disney in sight - Eisner's hold on the top job looks increasingly secure, at least until his contract expires in September 2006.

Corporations are typically reluctant to change top management when they are under siege. With a Comcast takeover no longer a threat, however, the board no longer has a reason to delay tackling the management issue.

"The question comes back to, `So now what?'" said Greg Taxin, an executive at Glass, Lewis & Co., a shareholder advisory business that recommended shareholders withhold their votes for Eisner's re-election as a director.

"They no longer have to rationalize that they need a strong leader to fend off a company which approached them in an unwelcome way. The board has gotten what they've wanted all along, an independent Disney irrespective of whether that is the best method to create shareholder value."

Eisner, a successful television and movie executive, joined Disney in 1984. Charged with restoring the glory and profits of a company whose creations had enraptured millions, Eisner became the driving force in the company's growth.

He was the face of the Wonderful World of Disney on Sunday nights, chatting up Tinkerbell as he introduced shows. He oversaw the revitalization of the animation division, which created hits such as The Little Mermaid and The Lion King. And he spurred the development and expansion of the theme parks in the United States and abroad.

But beginning in the late 1990s, Eisner's magic seemed to fade. The animation division's popularity was supplanted by competitors such as Dreamworks and Pixar Animation Studios. The ABC network has slipped to fourth, and last, among the major networks. And the live-action movie division has suffered as films such as The Alamo tanked at the box office.

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