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Disney Goes to the Dark Side 

The Battle for the Mouse’s heart and soul reaches epic proportions

Thursday, Feb 26 2004
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Everything in life can be related to one of two Hollywood movies, The Godfather and Star Wars. So it is with the Battle for Disney, which is somewhat unique because it parallels both movies. Depending on who is good or evil in your point of view, Roy Disney is either Fredo or Luke Skywalker; Michael Eisner is either Sonny or Darth Vader. For that matter, Stanley Gold is either Tom Hagen or Yoda. One thing is clear, though, this fight for the votes of Disney stockholders on March 3 is anything but Mickey Mouse.

Reminder: Eisner is fighting to keep his job and fend off a hostile takeover by Comcast, while Roy and Stanley mount a campaign to convince at least 20 percent of Disney proxy holders to vote no on four of the 11 directors up for election to the Disney board, including Eisner, the chairman and CEO. (Full disclosure: I am in a legal dispute with Disney over the news media’s right to truthfully report on the entertainment giant’s business activities.) Instead of using machine guns and light sabers, all the combatants are duking it out with corporate weapons such as character assassination, voting irregularities and open appeals to the Securities and Exchange Commission. Even business journalists are caught in the crossfire. It’s all because of the Thrilla in Philadelphia — site of Disney’s upcoming annual shareholder’s meeting. Everyone expects a record crowd, certainly bigger than last year’s which drew only 100 people because Disney craftily held it in Denver in the dead of winter when a blizzard closed the airport.

Roy and Stanley have been crisscrossing the nation and wooing institutional investors to seduce their proxy votes. On the eve of the big conclave, the duo will host a soiree for Disney shareholders. Have you ever seen the vast majority of Magic Kingdom stockholders? Clearly, they’re not the brightest bulbs, since anyone with half a brain dumped their Disney stock long ago. Instead, they tend towards collectors of cutesy-poo, with Disneyana-filled homes whose doorbells ring, “It’s a Small World.” Which is why this particular reception may very well end up resembling the bar scene in Star Wars.

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Bang. Bang. It’s raining bullets on Burbank. The latest salvo in this confrontation, L.A. Weekly has learned, is that ex-Disney board members Roy Disney and Stanley Gold this week asked the SEC to overturn a New York Stock Exchange determination that their current proxy fight against Eisner does not constitute a contested election. The NYSE staff came to that conclusion because Roy and Stanley did not send out their own proxy card and instead are basing their battle on the corporation’s ballot. The pair’s lawyers argued in a letter that the rules adopted by the SEC in 1993 expressly permit this sort of contested campaign but do not allow the dissidents to use their own proxy card.

Before your eyes glaze over, consider this: If this Disney battle is determined to be a contested election, brokers who routinely hold shares of stock on behalf of clients would have to go back to Disney shareholders for specific voting instructions. Last year, for instance, more than 400 million shares — about 20 percent of all Disney outstanding stock — were voted by brokers rather than Disney investors, and the brokers automatically sided with management. Roy and Stanley are hoping that a contested election could generate huge numbers of “no” votes and make trouble for Eisner.

Whip. Whip. It’s scorched-earth time on Dopey Drive. To circumvent the dissident incursion, Eisner has plotted various counter-measures. It doesn’t appear to be mere coincidence that Disney’s proxy ballots are arriving very late or not at all for many investors. For a company known for clockwork precision on investor matters, sending ballots two weeks late and by third-class mail (the slowest possible) leads many to question, to quote one shareholder, whether something fishy is going on, and it’s not Finding Nemo.

As if that weren’t enough, Eisner sent his own letter last week to shareholders attacking Roy’s and Stanley’s “propaganda” campaign and accusing the pair of approving many of the decisions they now sharply criticize. Then Eisner went on Larry King, faced the usual softball questioning from the sycophantic talk show host, and tried to make a joke that the shareholders meeting was in Baltimore, not Philadelphia.

The appearance presented the Mouse House Louse at his most psychotic. It wasn’t just his insane prediction that the dissent “will go away, I believe.” It wasn’t just his outright lie that “I have decided to not get in the fray.” It was more that Eisner was once again unable to distinguish between himself and the company.

Asked by King, “How rough has this been for you?”, Eisner’s reply was, “Well, actually, it’s a very good period for us.” When questioned why he wants to stay on, his answer was a testament to ego. “Where else can you get to the head of the line for Mission Space at Epcot Center . . . Where else can you actually be invited to the Super Bowl with ESPN? You think I’m crazy?” Well, actually, yes. Because Eisner in the interview also said Jimmy Kimmel, whose late night talk show has an audience equivalent of dead air, is “going to be the next big star on ABC.”

Finally, if looks could kill, King would be dead and cremated already judging by the angry stare Eisner gave him after King signed off saying, “Michael Eisner, chairman and CEO of the Walt Disney Co.” — one-second pause — “today.”

Slash. Slash. To win the hearts and minds of the media, Roy and Stanley have hired Mike Sitrick of crisis specialists Sitrick & Associates to represent them. Infamously known as a highly paid assassin, Sitrick calls the pair “two of the my oldest clients.” The reason is that he’s a Jedi master of attack-and-parry PR, which is why the Catholic Church hired him to spin its sex-abuse scandal. Facing off for Disney is corporate communications vice president Zenia Mucha, one of the crudest and cruelest mouthpieces to ever work for a media company (and that’s really saying something). Mucha (pronounced MOO-ka) was trained for combat by no less than the Republican Party (before the Disney gig, she repped New York Governor George Pataki and NYC Mayor Rudy Guiliani). She makes the Mafia look like Milquetoasts.

Want proof? Just read last Sunday’s profile of Roy Disney in The New York Times Magazine (the article where Roy, in contrast to egotistical Eisner, is a model of self-deprecation and admits being derided as “Walt’s idiot nephew” and claims being the model for Goofy). The article tells how Mucha, after pledging that, “We don’t think we should shit on Roy in public” (the expletive was deleted by the newspaper), nevertheless e-mailed the reporter that same day some 20-odd articles chronicling the shortfalls of Roy Disney, his associates and his children.

But Mucha really stepped in muck with the media last Friday when she floated to CBS MarketWatch, Business Week and others the half-truth that Roy received the most “no” votes in recent company history — 15 percent in 1997. The journalists were furious when they found out what really happened: that Roy was among five directors up for re-election that year, and that all five ended up with roughly 15 percent “no” votes because of a shareholders’ protest over Eisner’s multimillion-dollar severance package for ousted president Michael Ovitz. Of the five directors, Roy received the most “yes” votes and the fewest “no” votes. “I was pissed,” one of the journalists who had to issue a clarification told L.A. Weekly.

“Disney is supposed to be the definitive source on something like that so they should be beyond reproach. It’s something they should have mentioned, but failed to do. You always think you could have asked more questions to get the information they withheld from you. But, technically, they did give us bad information.”

Talk about the smell of napalm in the morning. For this type of open guerrilla warfare, maybe Apocalypse Now is the most apt movie comparison.

E-mail at deadlinehollywood@gmail.com.

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