The Walt Disney Company knows a lot about castles and kings, princesses and evil queens, having produced a matchless collection of live-action movies, children’s TV series, and, most distinctively, animated films, which we used to call “cartoons.” Maybe Disney should have considered this storyline:
Once upon a time, in a magical kingdom, a powerful king reigned over the land. All was well for more than a decade: his people prospered, his shareholders prospered, and everyone was happy. But then things started to get worse, and he banished those who questioned his rule. And then, the king made the mistake of messing with the wrong guy.
Michael Eisner became Disney’s CEO in 1984, transforming the company over the next decade from a dormant, inconsistent also-ran into a Hollywood juggernaut. But in later years Disney stagnated, and Eisner became renowned for his feuds.
His clashes included the fracturing of his relationship with a talented protégé, Jeff Katzenberg, the animation chief who quit in 1996 to form DreamWorks with Steven Spielberg and David Geffen. Though Katzenberg reportedly would have settled for $90 million, Eisner vowed he wouldn’t get a dime, and Katzenberg later sued and settled out of court for $280 million. There was Eisner’s relationship with super-agent Michael Ovitz, whom he brought in as his number two. Their prompt falling out sparked an embarrassing lawsuit and a $140 million payout. Not to mention strained relations with Harvey Weinstein of Miramax and Steve Jobs of Apple and Pixar.
Katzenberg, Ovitz, Weinstein, Jobs—Eisner had survived his scrapes with all those stars of Hollywood and the business world. He didn’t fare nearly as well, however, against an unassuming heir whose surname was known the world over but who himself was barely known at all: Roy E. Disney, the septuagenarian son of Roy O. Disney, who had co-founded the company with his younger brother, Walt. Roy E. Disney and his longtime partner and financial advisor, Stanley P. Gold, mounted an unrelenting three-year campaign against Eisner, advised by my firm from the start.
At first, their modest goal was to force the Disney CEO to listen up and share a little power with the board. But in late 2003, Eisner tried to maneuver Roy E. Disney off the board. Rather than waiting to be forced off, he abruptly resigned and took his campaign public.
Roy Disney’s crusade would result in Eisner’s surrendering the chairman’s title to an outside director after amassing the highest shareholder no-confidence vote ever lodged against a CEO. The following year, Eisner would retire as CEO and quit the board a full year before his contract was set to end. Robert Iger then took the Disney helm, healing the divisions that Eisner had inflicted and driving the company to renewed record growth. This would pay off fabulously for Disney investors.
With Michael Eisner’s departure, Roy Disney got what he really wanted all along, and the dispute was dropped so quickly, quietly, and completely that it seemed like just a dream—Dorothy waking up at the end of The Wizard of Oz. (I know The Wizard of Oz is an MGM film, but the analogy still works.)
Of all the campaigns I have waged in the past three decades or so, the Eisner fight was among the most satisfying. It was a stunning win for a small SWAT team that took on one of the biggest media and entertainment companies in the world and one of the most powerful CEOs in all of Hollywood.
Let me admit up front that by most measures, Roy Disney had no rightful claim to stewardship of the company. Nor did he claim or desire to. He also didn’t have much clout—on paper, at least—given his family’s stake of less than 1 percent in the company. In board meetings, he rarely spoke up, and although he was chairman of Disney’s animation division, he didn’t run the day-to-day business.
And he was starting this fight late, with the annual shareholder meeting just a few months away. Yet Roy Disney prevailed because of the genius of Stanley Gold, the longtime chief of Shamrock Holdings (the financial holding company for Roy Disney’s assets) and one of the most brilliant strategists I have ever worked with, aided by his chief outside legal counsel, David K. Robbins, and the small team of Shamrock executives he put together. Stanley also generously credits, in no small measure, the strategy we put in place to generate waves of favorable media coverage of our campaign, which built enormous support among Disney fans, institutional investors, Wall Street firms, and even Disney’s own employees—or “cast members,” as it calls them.
The “DisneyWar,” as James B. Stewart titled his book about the saga, is a textbook case of effective shareholder activism. In particular, the story of how Roy Disney got his groove back shows the power of public perception, which we leveraged in three ways:
1. Following my Rules of Engagement, three of which were especially important. Rule 3: Act preemptively to get your story out there first. Rather than wait for the Disney Company to throw Roy Disney off the board, we preempted it, having Roy quit and state his reason for doing so. Rule 6: Social media often are a means to an end. We fought much of this battle on the Internet, providing one of the first case studies of how to use this new platform in corporate governance contests and incorporate it into one’s efforts to tell the story to traditional media as well. A custom-made website let us trot out dozens of statistics and metrics underscoring Disney’s lagging performance. Rule 8: Put your opponent on the Wheel of Pain.
2. Dealing with the media. Using off-the-record backgrounders to educate reporters about our side of the story, identifying major news hooks both for daily stories and long-form feature stories, giving exclusives, spacing out announcements over a few days to generate new rounds of coverage, hosting a rally, reporting on a meeting with someone important, and issuing a response to breaking news.
3. Using multiple vehicles to reach our audience. We used digital and social media, direct mail, email, traditional media (including gossip columns), face-to-face meetings, and even the hosting of our own annual meeting the day before the Disney annual meeting to get our message across.
Telling Roy’s Story
The campaign we waged with Disney and Gold created a whole story, in a way, out of Roy’s opinion, and that opinion was that the Walt Disney Company had lost its way. The beloved company no longer was a trustworthy maker of uplifting, fun family fare. Instead, it was adrift, a bureaucratic, soulless business machine. The argument was old-fashioned, but this was Roy Disney. His family name was on the door. Stanley Gold, recognizing that we were talking to investors as well as Disney loyalists, tied Roy’s lamentation to Disney’s lackluster financial performance and lagging stock price in the years since the stock market crash in 2000. Disney had underperformed.
This was the storyline that Sitrick And Company wanted to get out preemptively before the Mouse House could ease Roy off the board. The story’s strength was that it was what Roy Disney truly felt.
For me the storyline is paramount. Too much of the PR profession focuses on process and PowerPoint presentations. We don’t do PowerPoints, except under duress. Too few people dealing with the media understand what makes a good story, much less how to tell it compellingly. Storytelling is the currency I trade in—offering up exclusives, countering a bad story with a better one demonstrating that the first story was wrong. In essence, pulling a Rule 3, preempting one story with my own.
Knowing the best story to sell requires knowing all the facts and knowing what reporters are looking for. Once I have the best storyline in hand, I ask the following questions: Who is our audience? What are we trying to accomplish by reaching it? Why should anyone care?
Getting ink isn’t enough, though many PR firms measure their performance by how many stories they can place in how many outlets. That isn’t a strategy, it’s a food fight. Throw everything against the wall to see what sticks. Those people who say any publicity is good publicity are, in my view, just making excuses for the bad press they have generated or received.
Most battles like Roy Disney’s focus on Wall Street, institutional investors such as mutual fund companies and pension funds that own a given stock, and analysts who recommend stocks and the financial press. But everyone under Roy Disney’s flag knew from the start that this campaign also needed to target legions of passionate Disney fans, calling them to arms to help Roy Disney rescue his family’s legacy.
To rally them, we deployed a relatively new weapon in corporate governance battles at the time: the Internet. We created a new website, SaveDisney.com, as a gathering place and megaphone for the entire campaign, providing daily announcements, exhortations to join the fight, instructions on how to vote against Eisner, and one-stop shopping for the media (“click here for copies of shareholder letters, press releases and links to recent news clips”).
Remember, this was in 2003, before the web had come into its own as a business platform, before Mark Zuckerberg “friended” his first pal on Facebook, which didn’t launch until early 2004, before Jack Dorsey sent the first tweet flitting across Twitter in early 2006.
This was a time to fight. Roy Disney had a story to tell, and we were committed to telling it to the fullest degree. In the contest of Roy the Royal Nephew against Eisner, SaveDisney.com allowed my team to create headlines and coverage multiple times a week as the story grew. The website itself prompted stories heralding a new advocacy role for the web and became a template for many activist campaigns to follow.
The climax of the campaign, though, was still to come: a shareholder protest, a pro-Roy Disney and anti-Eisner pep rally that would be staged the day before Disney’s annual shareholder meeting in Philadelphia. The SaveDisney confab has been called a brilliant stroke, a real event close enough to the actual shareholder meeting—across the street, actually—to ride on its coattails. Brilliant or not, it worked, and it was indicative of the kind of “fun” you can have working with a genius like Stanley Gold.
I have worked alongside Stan in many cases in the years since our first one in 1989, when he and Roy Disney were bidding unsuccessfully for Polaroid, but still made millions on their stock. We have cooperated on so many cases and our strategies meld so well that I lose sight of which parts were his and which were mine; the safe bet is the smarter ideas were his.
Stanley Gold, Roy Disney’s close friend and advisor, is a shrewd financier and a great field marshal. Some clients don’t know what they want, and I have to step up and create it, but Stan Gold always knew exactly what he wanted. I could add to it, build on it, and execute from there.
Disney and Gold were, in fact, among the first clients to sign on with Sitrick And Company after I went out on my own. I had handled all aspects of communications at Wickes Companies as one of a handful of senior vice presidents in a company of sixty thousand employees, as Wickes in the mid-1980s undertook a bankruptcy reorganization, acquisitions, divestitures, litigation support, and crises—all of which would become core segments of my business.
Gold, for his part, relied on Sitrick And Company for media strategy and communications with key constituents. He had known me well for twenty-five years by this time and had kindly recommended me to other clients. He would tell other CEOs that my firm will be 100 percent on your side, and that I will be available twenty-four hours a day, which is pretty much true. When you call me in the middle of the night, I have been known to wake up three staffers, put them to work, and show up on your doorstep at eight o’clock the next morning with a draft of a new press release.
Clients prize this doting devotion. For all the sophisticated technique and black arts involved in the type of strategic communications we practice, the single most important element is service: serve the client, do whatever it takes—as long as it is legal and ethical. I probably shouldn’t have to add that last qualifier, but these days you dare not fail to do so.
As we circled our target at Walt Disney Company, my collaboration with Stan Gold must have irked Michael Eisner, for at one point in late 2002, as I later was told, at a board meeting as directors discussed a new Los Angeles Times story critical of Eisner’s tenure, the Disney chief executive and chairman fixed his gaze on Gold and announced that he knew where the story had come from: “I know this is Sitrick, Stanley.” I admit that I loved hearing that story from Stanley Gold, who chuckled as he told it. Yet in this instance, I had not planted any story, truth be told. There would be plenty of time for that.
The initial audience in the Roy Disney fight was select: Disney directors. Roy had been on the board since 1967, holding the title of vice chairman, and was also chairman of the Disney animation unit. Gold had been on the board since 1987. They had been in business with Eisner since 1984, when Roy Disney, under freakishly similar circumstances, resigned from the Disney board to push for the ouster of the CEO (Walt’s son-in-law, Ronald Miller). This was five years before I began working with them.
Disney and Stanley Gold had helped recruit Michael Eisner, a hotshot executive at Paramount, who brought along his protégé Jeff Katzenberg. The first decade was great, but the bursting of the Internet bubble in 2000 and the 9/11 terror attacks a year later had delivered a one-two punch to the company’s theme park business. The film studio was struggling, and the ABC network, acquired in 1995, was floundering. Disney stock, at forty dollars per share as the year 2000 began, had fallen 60 percent, to fifteen dollars, by mid-2002.
Stan Gold and Roy Disney began making noises about Disney’s lagging performance. Roy disclosed plans to sell 43 percent of the family stake over a five-year period. You don’t sell off 43 percent of your stake if you believe in the company’s future, do you?
Who’s Who
As part of my preparation for storytelling, I look at the characters involved, and in the Disney feud we had two vivid ones in Roy and Stan. Roy Disney played the good cop, Stanley Gold the bad cop. Roy was avuncular, folksy, and beloved among the Disney animators in the days before Pixar (and by everyone I ever met who knew him). He also was the spitting image of Walt Disney (without the mustache).
Stanley Gold, as the bad cop, was financially shrewd and fearless, with an ever-present cigar clenched between his teeth, although it was never lit. (Though he will hate reading this, Stan is likewise beloved by everyone close to him, as well.) While other Disney directors were reluctant to criticize Eisner, Gold wrote several letters to board members starting in August 2002, unapologetically expressing his concerns. He made sure to send a copy of each letter to Michael Eisner personally, a classic Stanley Gold touch.
Eisner at first tolerated Disney and Gold, but gradually he moved to consolidate power and rid the board of obstinate characters—this was our view, at least, of what he was doing. Disney had reduced its board to twelve members from seventeen, in the process offloading Andrea Van de Kamp, a Sotheby’s executive and chairman of the Performing Arts Center of Los Angeles, who had been a vocal critic. According to an article in the L.A. Times, Van de Kamp, in an email to Eisner and some board members, said she was being singled out by Eisner for having sided against him—and with directors Stanley P. Gold and Roy Disney—on various issues. A new rule banned directors from talking to the media. Eisner also had the board reclassify Stanley Gold as no longer an outside director, removing him from a powerful board committee.
Then, again in our view, Michael Eisner blew it, to put it rather bluntly. He pushed for a new corporate bylaw that imposed a retirement age of seventy-two for board members, then brought up the issue with the board’s nominating committee. Roy Disney already was seventy-three years old at the time, though the new retirement age rule didn’t apply to board members who also were part of management, as Roy was. Worse, rather than delivering the news personally, Eisner sent another director, John Bryson, whom Roy knew only casually, to deliver the news. Meeting Roy for lunch on a Friday in November 2003 at a nondescript wine bar in a mall in Pasadena, Bryson told him the slate of directors up for election at the next shareholder meeting would not include Roy’s name.
In all my years of counseling companies and CEOs, I have come to realize how important hurt feelings can be. Always keep in mind: business is a relationship, and how you make other people feel often is as important as the facts of any case. Disney was so offended that something inside the usually docile man snapped. His wife, Patty, later told the New York Times Sunday magazine (in a sympathetic profile) that Roy “was gray when he walked in. . . . He looked like he had been kicked in the gut.” After his lunch with Bryson, Disney told Stanley Gold that one of the first thoughts he had was “I’m not the one who should be leaving. Eisner is the one who should be leaving.”
Stanley Gold understood immediately that Roy Disney was going to make Eisner regret insulting him. He summoned me for a meeting the next morning, a Saturday, at the Shamrock offices in Burbank with Roy and Patty Disney, their son, Roy Patrick, Stanley Gold, longtime Shamrock lawyer David Robbins, and a few other Shamrock executives.
Roy Disney was direct, telling everyone, “I want him out.” To me, Roy seemed not so much angry as he was hurt, injured by Michael Eisner’s disregard. The question, though, was how could we push Michael Eisner out of his job? He controlled the board, and no one investor had a large enough stake to oust him.
And as Robbins pointed out, with Disney’s annual meeting set for March, it was too late to stage a proxy battle and offer a rival slate of directors to be voted on by Disney shareholders. Stanley Gold then suggested an effort to organize a no-confidence vote, a campaign to persuade shareholders to vote their shares so as to withhold approval of Michael Eisner’s reappointment to the board.
It would be purely a symbolic protest, with no binding effect on Disney directors, and given that the company had two billion shares outstanding, and some 2.8 million individual shareholder accounts, it would be extremely difficult to make much of a statement at all. Robbins, the lawyer, and I knew the challenge was especially daunting, given that the largest no-confidence vote in corporate history was 20 percent, and Robbins pointed this out. Stan Gold pulled the cigar out of his mouth, fixed his gaze on the both of us and said, “That’s why I have you two.” “Great,” I whispered to David, “guess that’s that,” both of us chuckling, but we knew Stan was not kidding. Roy Disney told his new team to get ready for a fight.
I have known David Robbins since the late 1980s and have always viewed him as one of the savviest corporate lawyers I’ve met. He has a deep knowledge of corporate law and raider tactics, yet Robbins can also go beyond the fine print and improvise. He in turn likes my creative approach to strategic communications. Roy and Stanley felt we made a good team. We agreed.
David and I also agreed that we should keep it focused on business, not personal, issues. Shareholders care about stock price, not personal antagonisms. This is almost always my approach, the exception being “personal” issues like embezzlement or the like. There was nothing remotely like that here. Let the other side go ad hominem and whisper that Roy Disney was “Walt’s idiot nephew,” a cheap shot that someone had made many years before, though it was entirely unwarranted and completely inaccurate. We would make sure it blew up in their faces, striking back with the contrary evidence and pointing out to reporters that the other side’s personal attacks reveal the lack of facts behind their case.
Disney and Gold wanted to strike back forcefully, and we knew our first blows would have to fall with military precision and balletic grace. The plotting started at a meeting of thirty people, including myself, my partner Terry Fahn, David Robbins and Shamrock staff, and Dan Burch of MacKenzie Partners in New York. One of the top proxy wranglers in the country, Burch was critical for gathering the votes of institutional investors. A few of us would hold strategy sessions by conference call every Monday morning for months to come.
The public push to dethrone the Disney king would start with a bold, preemptive strike. Rather than wait to be ushered off the board in a few months, Roy E. Disney would resign now and call publicly for Michael Eisner to resign or retire. Stanley Gold would resign too, but that would come later.
Disney’s resignation letter had to emphasize the right themes, for it would establish the outline not only for that day’s story but for the whole campaign. It had to show his sharp financial concern and reflect his regret at having to resign. It also needed to go first to the Disney board and Eisner himself, so that it was real news. Otherwise, Eisner might call it a PR stunt—as I would, if I were in his shoes.
My staff ensured that copies of the letter were delivered to the board, and we had a copy delivered to Eisner’s apartment in New York, where Eisner was staying that night. The letter was slipped under his door while he was watching a football game.
We were able to arrange for a four-way exclusive, setting up the story of Roy’s resignation to run online in the Wall Street Journal, New York Times, Los Angeles Times, and Bloomberg on a Sunday afternoon just minutes after the letter was delivered to the board. Normally, I would go to just one media outlet—two at the most—but this story was too big. The story broke at 4:30 p.m. Eastern Time.
Roy Disney’s letter was short and bittersweet, just 660 words. He accused Eisner of driving “a wedge” between Roy and his Disney colleagues and requiring them to report back to Eisner on what Roy was saying (“I find this intolerable.”). He said Eisner “discussed” with the board’s nominating committee leaving Roy Disney’s name off the slate of directors, “effectively muzzling my voice on the board—much as you did with Andrea Van de Kamp last year. [A]fter 19 years at the helm,” he charged, “you are no longer the best person to run the Walt Disney Company.”
“It Is You Who Should Be Leaving, Not Me”
Roy’s letter went on to specify seven failures, from “timidity” in theme-park investments to flops at ABC and Family Channel, the latter of which he said “have had, and I believe will continue to have, significant adverse impact on shareholder value. . . . The perception by all of our stakeholders—consumers, investors, employees, distributors and suppliers—that the company is rapacious, soul-less, and always looking for the ‘quick buck’, rather than long-term value which is leading to a loss of public trust,” he wrote.
Then Roy concluded with the same thought he had when John Bryson told him he was getting pushed off the board: “[I]t is you who should be leaving and not me.” The letter ended, “I don’t know if you and the other directors can comprehend how painful it is for me and the extended Disney family to arrive at this decision,” a line that would be quoted widely and sympathetically.
The next morning, Monday, December 1, the four-way scoop went Page One in print, triggering a flurry of coverage in hundreds of other outlets. Some reported that Stan Gold would stay on the Disney board (they never bothered to ask). When one reporter did ask me, I pointed out that Roy Disney and Stanley Gold were separate individuals and that Roy’s letter related only to Roy. This was the truth, and I refused to comment further. It is important to point out that I never stated or asserted that Gold would stay on the Disney board. I never lie to reporters. Ever. (See my Rule 10.)
Not lying is as much a matter of good business sense as it is a matter of high morals (though it is a matter of morals, and I don’t do it in my business or personal life). If I ever lied to a reporter and were caught (and almost every lie is exposed eventually), it would hurt the credibility of my client, ruin my credibility with that reporter—and with everyone else in contact with him at his news organization—and poison my reputation for every other client I represent. Also, it might prompt the reporter to punish my client.
Keep that in mind: if you lie to reporters, all bets are off. And they could crucify you.
So at Sitrick And Company we never lie. We may not answer all questions. Occasionally, actually rarely, when the case requires it we may not answer any questions. We may not volunteer information, but the fact is, we win by searching for facts to illuminate the truth—a truth that otherwise might go untold.
The day after we issued Roy Disney’s dramatic resignation letter, we dropped the other shoe. Stanley Gold’s letter of resignation was unveiled, and this one had a lot more sting. In 1,554 words of unflinching criticism of Eisner and unstinting praise of Roy Disney, the letter bashed the board’s move to oust Roy as “clearly disingenuous” and “yet another attempt by this Board to squelch dissent by hiding behind the veil of ‘good governance.’ What a curious result.” Gold cited a new rule barring board members from talking to the media or shareholders and said he could have greater success “from outside the Boardroom.”
Cue the second day of worldwide coverage as reporters sensed a big conflict ahead.
For the usual proxy-fight audience of sophisticated, institutional investors and Wall Street stock analysts, Stanley Gold and Roy Disney would barnstorm the country in Roy’s private jet, a Boeing 737 (a BBJ, among aircraft owners), to meet with institutional investors and pension fund officials to make their case. They also took part in conference calls set up by shareholder advisory services, and they did multiple media interviews and urged investors to show their disapproval of Eisner’s reign in the shareholder vote.
Technically, this didn’t mean voting “no,” for there was no possibility of a “no” vote—Eisner and the directors proposed were the only choice shareholders had. But they could withhold their shares from being voted in favor of Eisner’s reappointment, and this would, at least, show how widespread the disapproval was. With the highest protest votes in any previous cases hitting 20 percent, we decided that if we could muster anywhere near that amount, given our late start and the huge Disney investor base, it would be a clear victory.
For two other audiences, the fervent fan base and reporters, we set up a new website, SaveDisney.com, and made it pulsate with breaking news, constant updates, direct appeals, and counter-commentary to whatever Disney did or said. To run the intensive effort, I brought in the seasoned web warrior Brian Glicklich. In his mid-forties at the time and a bit pale for a denizen of sunny Los Angeles, thanks to his spending way too many hours in cyberspace, Glicklich had worked with me in the previous year on another major issue that had attracted worldwide news.
Glicklich, who later joined my firm to head our digital and social media practice, designed SaveDisney.com to look as if it had been crafted by a Disney mom on her laptop at the kitchen table. It was bursting with bright colors and featured a font that seemed to have been typed on an old Smith Corona. (For you millennials, that’s a brand of typewriter.) The organization was simple and clear, with separate, clickable tabs labeled for Disney fans, shareholders, institutional investors, and even Disney employees.
SaveDisney.com—so perfectly named for the band of ousted outsiders hurling spears at Cinderella’s castle—became the go-to destination for many people watching the Disney-on-Disney fight. More than twenty-five thousand Disney devotees signed up at the site, gathering there to read the latest criticisms of their beloved company and commiserate over how much Disney had strayed from Walt’s vision.
Several thousand fans also signed up online to receive “Save Disney” pins, bumper stickers, and t-shirts. They could read detailed instructions on how to vote their shares in opposition to Michael Eisner and consider invitations to join Roy Disney for the anti-shareholder rally right before the Disney shareholder meeting.
Starting with the full text of Disney’s and Gold’s resignation letters, the site gave reporters easy access to documents: the latest in letters to the Disney board, letters to Michael Eisner, press releases, slide shows, news articles, and more. At one point, Terry Fahn distributed a digital press kit comprising sixteen documents. It is a Sitrickian method, if you will allow me the indulgence: make it as easy as possible for reporters to get your information.
People in my profession often take the opposite approach, trying to keep information from reporters—even in proxy and corporate governance contests, believe it or not. Our approach in the Disney case was whatever you need, we will help you get it. Some of the information we provided reflected our perspective, of course, but we were up front about that and above all wanted the information we disseminated to be accurate. We have learned, moreover, that providing the skinny to the reporters is a two-way street—often reporters will tell us what the other side is saying and doing, so long as they aren’t violating off-the-record protection they have promised to someone else.
Three days after Roy’s resignation, we released to the media his open letter bidding a fond and affectionate farewell to Disney “cast members,” publishing it at the same moment on SaveDisney.com. The Walt Disney Company initially responded with a terse release asserting that Disney’s and Gold’s complaints were old hat and had been rejected by the board.
After the resignation letters and his farewell to employees, Roy Disney wrote an open letter to shareholders in late January, criticizing Eisner again. When the company’s talks to renew a distribution deal with Pixar broke down, the SaveDisney team blamed Eisner for blowing it. According to the L.A. Times, “sources close to Eisner and Apple Computer Inc. founder Jobs said the stunning split was less about the math of the deal than the equation of the personalities. . . . ‘The relationship went sour when Michael didn’t treat Jobs and the Pixar machine as a giant creative engine, he treated them as second-class citizens,’ said former Disney board member Stanley Gold, who resigned last year with fellow director Roy E. Disney in a dispute with Eisner.” On February fifth, we released another letter from Roy to Disney shareholders, this time inviting them to the big rally connected to the annual meeting in Philadelphia a few weeks later.
Mixing New and Old Media
Our strategy of mixing new and old media methods—disseminating information through traditional press releases and posting it on the SaveDisney.com—was working. Numerous articles in traditional media—local, national, and international—ran both in print and online throughout the campaign. The SaveDisney site got so much traffic among employees at Disney’s headquarters in Burbank, California, that we had heard Michael Eisner had ordered the company’s techies to shut down access to SaveDisney.com. In Stan Gold’s view, this added to the new website’s allure, increasing the desire of Disney staff to check out the latest at SaveDisney.com when they got home.
When Comcast made a surprise $54 billion bid for Disney on February 11, it gave Roy Disney another reason to be commenting on Eisner’s failures. Even when Disney and Gold agreed with the board’s rejection of the Comcast bid, their statement included criticism of Eisner (professionally, not personally). As they declared in the second paragraph of their press release, “However, the Board . . . is just plain wrong in continuing its lock-step support for Michael Eisner and his senior management team.”
Eisner publicly remained in denial, however, with only a week and a half to go before the shareholder meeting. On the night of February 20, the Disney CEO appeared on CNN’s Larry King Live and said, “Sometimes people disagree with you. . . . This will go away, I believe.” Later in February, the shareholder advisory services ISS and Glass Lewis & Co. and the California pension fund CalPERS sided with Roy Disney and advised institutional investors to withhold their votes from Michael Eisner. CalPERS announced, “We have lost complete confidence in Mr. Eisner’s strategic vision and leadership in creating shareholder value in the company.” Similar conclusions were reached by the New Jersey State Investment Council (“Eisner has created no value for shareholders for the past seven years”) and the New York State Comptroller (“I call on Disney directors . . . to replace Mr. Eisner as soon as possible”).
All of this spawned more press releases and hundreds of news stories, as well as rounds of comment from Roy and Stan, all of it posted on SaveDisney.com.
Brian Glicklich was seeing good traffic numbers, in the thousands and climbing. Another clue that we were succeeding came when Roy’s army began to hear of fans’ reserving rental busses for the drive up to Philadelphia for Roy’s rally on Tuesday, March 2, 2004. That event, the pinnacle of Roy’s campaign, proved to be fabulously successful, generating hundreds of stories, live television coverage, and waves of excitement among the Disney faithful. More than a thousand Disney fans and shareholders showed up at the Loews Hotel for the Roy rally, which started at four in the afternoon and ended at the very Disney decent hour of six.
It was a lavish, positively giddy affair, with balloons and buttons and plush toys and speeches from Roy and Stan, with a pack of reporters and cameras tracking every moment. My thinking at the time was that this would make a great contrast against the Disney event setting up for the next day.
It seemed everyone wanted to be at Roy’s rally, where the attendees were dining on sandwiches and wine. The people spilled out of the Loews ballroom and into the lobby and out onto the street. Stanley Gold had his wife and his daughter, Jennifer, an event marketer who previously had worked for the Walt Disney Company, at the Roy festival. Jennifer spotted a few of her former colleagues, PR people from Disney and ABC, who showed up with their business cards and asked to be allowed in. Gold wasn’t all that surprised when I politely refused.
While Roy Disney was triumphant, Michael Eisner was somber. He was, understandably, taking all of this personally. The CEO, as James Stewart pointed out in his book DisneyWar, had “claimed the mantle of Walt himself,” by hosting the Sunday night Disney series on ABC. He is said to have once told Michael Ovitz, before their epic falling out, that he wanted his wife on the board and hoped to set up his son, Breck Eisner, to be chairman one day. Ovitz retorted, “Michael, this isn’t your family company.”
For Roy E. Disney, of course, it was a family company. By the time of the official shareholder meeting the next day, Roy Disney was a new folk hero. Entering the meeting room at the Marriott, Roy and Stanley Gold were greeted with thunderous applause from the crowd of three thousand, some of them clad in Disney character costumes and carrying anti-Eisner pamphlets. People lined up to get Roy’s autograph and pose for a photo with him.
Roy and Stanley were allotted twenty minutes to address the Disney shareholders at the annual meeting. Stanley went first and took most of the time. When Roy approached the mike, he was met with a standing ovation that seemed to go on forever. After two or three minutes, he thanked the crowd and asked everyone to please sit down. When they did, he began his speech with a request to “Mr. Eisner” not to punish him for his partner Stanley Gold’s exuberance. “I hope you will allow me the full ten minutes I was promised to address my fellow shareholders,” he said. Michael Eisner rose and began to demur, but given the audience reaction, decided to retreat to his seat onstage. Roy got his full ten minutes.
Terry Fahn and I, meanwhile, had set up a battery of press interviews with Roy Disney and Stanley Gold once they got to Philadelphia. It was speed dating, Sitrick-style: half a dozen one-on-one (actually two-on-one) interviews with television outlets, a dozen or so interviews with print reporters, staggered so as to do print, TV, print, TV. This would give each TV crew time to set up during the print interview. (It would have been easier to do this with a press conference, but I have already explained why we rarely do press conferences.)
This was a case where the story was so big that we could impose a condition for the interviews, albeit a modest one: the interviews had to be joint with Roy and Stan. With Gold’s crisp and biting prosecutorial style and Roy’s Disney name and personal popularity, these two formed the ideal yin and yang.
Surprisingly, we were able to impose this condition on one of the most powerful players in TV news: ABC’s Nightline. Ted Koppel’s producer had tried to insist that only Roy Disney appear opposite Eisner, but I pushed back, explaining this was not multiple choice. Both Disney and Gold would appear or neither would appear. Both appeared. At 11:35 p.m. Eastern Time on March 3, 2004, just hours after the Walt Disney Company’s raucous shareholder meeting had ended, the theme-song trumpets of Nightline blared their intro, and Koppel began the live interview of his boss’s boss’s boss.
“It has been a very long and trying day for Michael Eisner,” Koppel intoned at the show’s opening. “When this day began, he was chairman of the board and CEO of the Disney Company. By this evening, you’ve given up one of the titles, I gather. That happened when, Michael?”
Just before nine o’clock that evening, Disney had announced that the board, “mindful of the shareholder vote today,” had handed Eisner’s chairman’s title to director and former U.S. Senator George Mitchell, while Eisner was staying on as CEO. After a first answer, Koppel pressed: “My, I guess my question is, do you think this’ll be enough to keep your critics at bay? And judging by the number of shareholders who voted against you today, you got a few critics out there.”
Eisner responded that the Disney shareholders’ vote was a protest against all of corporate America, a push for separating the chairman and CEO titles at all companies. Eventually, he allowed, “and there are obviously certain people that, that are not happy with me personally, I guess.”
Koppel then asked Eisner to listen to his interview with Roy Disney and Stanley Gold, which he had taped earlier that afternoon after a stunning victory at the shareholders’ meeting. They had started out hoping that 10 percent of the shareholder votes would be withheld from an endorsement of Michael Eisner; later they raised their hopes to maybe 20 percent. Yet the anti-Eisner vote accounted for an astounding 45 percent of all Disney shares. If the votes were counted as they would have been in a proxy contest (different rules apply in a “withhold” vote), the no-confidence vote would have been 54 percent. Among Disney employees, moreover, the anti-Eisner vote was 72 percent.
“It Is Time for New Management”
During the Koppel interview, Roy and Stan got in some good, familiar licks and made it clear that Eisner’s simply handing off the chairman’s title wouldn’t be enough. He must step down as CEO. Stanley Gold told Koppel, “We think [the chairman and CEO titles] ought to be split, but we also think that Mr. Eisner oughta hold neither of those jobs. It is time for new management.”
That was classic Gold, as blunt and unflinching as always. After the interview with Disney and Gold, Koppel asked Eisner to react. He said, “You know, they’ve been on this kick saying these things, these conclusions, which are completely false and fabricated, and they bring up different arguments to try to draw to the same conclusion. I don’t really want to argue them point by point. Obviously, our board disagrees. We have great management. All of our operations are running well. The growth is there.”
A few weeks later, on March 15, BusinessWeek ran a commentary by the reporters Ron Grover and Tom Lowry headlined, “Now It’s Time to Say Goodbye,” an allusion to the closing song of the old Mickey Mouse Club television show. In March 2005, a year after the Roy Disney rally, Michael Eisner announced that he would resign as CEO that coming September, to be succeeded by his number two, Robert Iger. Two months later, Iger offered Roy Disney the honorary title of director emeritus, a consulting agreement, and an office on Disney’s Burbank lot. On July 8, Roy Disney accepted the offer.
Bob Iger asked for one concession: take down SaveDisney.com. Brian Glicklich stepped in to warn me and the team that this should be done gently and gradually, over a few weeks, to allow time to announce it and thank the followers and give them closure. Soon after, the website was history.
Eisner stepped down as CEO in September as planned, giving Iger an open field. In a series of stellar acquisitions, Iger talked Steve Jobs into selling Pixar to Disney and then acquired Marvel and the Star Wars franchise. Disney stock, in the twenty-dollar range when Iger became CEO, hit a high of $115 by 2015, an almost six-fold rise in ten years.
Today, Gold is happy to have been wrong about Robert Iger, as he has told the CEO a few times. The Disney family held on to most of its stake, selling some shares for tax purposes when Roy passed away on December 16, 2009. Still, Gold relishes the victory and our ability to punch so far above our real weight. He is especially proud to have landed a 45 percent “no” vote against Michael Eisner, which stands as one of the biggest shareholder protests in corporate history. Stanley Gold keeps a reminder of it on the vanity plates of his 2004 Porsche Cayenne SUV: 45PRCNT.