Mousetalgia link


Thursday, May 5, 2011

Mickey Mouse under attack. A corporate raid is afoot

When last we left, Walt Disney Productions and Mickey Mouse were under attack from investor and corporate raider Saul Steinberg.  Disney was an attractive target for a hostile takeover because it was really worth more in pieces then as a whole operation, and it appeared to be Mr. Steinberg’s intention to reap his profit by breaking up this operation and sell off the pieces.  Actually, it is more complex than stated above:

In March of 1984 Disney blipped on Steinberg’s radar as a company with significant cash potential and a reduced stock value, and he began buying Disney shares at $50.  In April he filed with the FTC and DOJ his intentions to buy as much as 25% of Disney’s shares.  Within a week of that filing he owned 12.2% of Disney.  Disney COB, Ray Watson, and CEO Ron Miller began to implement a first line of defense in this attack, by begin the acquisition of other companies in an effort to lessen Steinberg’s shares.  In May, Disney agreed to buy a Florida based land-development firm, Arvida for 3.3 million shares, almost 10% of its stock.  Steinberg sued to block the deal and lost in U.S district court.  Disney then moved to acquire Gibson Greetings, as Cincinnati based producer of cards and wrapping paper, for about 6.2 million shares of Disney stock.

With these moves threatening to reduce Steinberg’s Disney holdings to under 10%, and the appearance that he was losing his bid to take Disney over, he launched into phase II of his attack, and this is where the idea that he was going to sell of pieces of the company for a profit.  He formed MM Acquisitions (you’ve probably guessed it, but the MM stood for Disney’s own Mickey Mouse), and partnered with Kirk Kerkorian, the majority stockholder in MGM/UA, additionally enlisting investments from Fisher Financial and Development.  These investment deals included options, for Kerkorian’s investment of $75 million, to buy the Disney Studios and film library for $448 million, and Fisher’s similar investment gave it exclusive rights to buy undeveloped land in Florida near Walt Disneyworld and Epcot, and the Disneyland Park in California.  MM Acquisitions then offered to buy 37.9% of Disney’s stock for deal valued at about $970 million at the time.   The offering price, per share, was a third higher than the stock price paid few months earlier.  It was looking like this new offer had a good chance of succeeding, so in a series of meetings held in New York City, a deal was struck for Disney to buy back Steinberg’s approximately 4.2 million shares at a price of $70.83 a share or about $297.5 million,  a 32 million dollar profit.  Additionally, Disney agreed to pay another $28 million to cover Steinberg’s costs associated with the attempted hostile takeover.  For this, Steinberg agreed not to acquire any Disney stock for at least 10 years.

With the immediate crisis averted, Disney’s other stockholders and institutional investors were up in arms at Disney’s management acquiescence to this successful greenmail effort and the cost to their investments.  While Saul Steinberg reaped a healthy profit of nearly 10% for his “investment”, within days of the deal being struck, Disney stock drop $16 to $49.50, and almost 5% loss for all other investors.  An almost 32% loss if you gauge it from the price that Steinberg was offer for his shares.  Disney’s management had escaped to hostile takeover attempt with their jobs, for the time being, but, a new hazard loomed on the horizon for management.   While Disney management was fending off this hostile takeover, another was in the works from within the walls of Disney.  Roy E. Disney, son of founder Roy O. Disney, had left the day-to-day management of the company years earlier over concerns for the company’s direction, resigned the position he still held on the Disney Board, after bringing arranging for the Bass family to come as White Knight investors during the Steinberg bid to take over the company.  As still a significant minority interest stockholder, Roy launched his first Save Disney campaign after resigning.  Recognizing that Disney management had been seriously weaken by the Steinberg assault, the resulting deal, and stockholder anger, Roy E. enlisted the help of the Bass family, now the largest holder of Disney stock, and board member Stanley Gold to usher in new management for the company.  At Roy’s urging, COB Raymond Watson and President and CEO Ron Miller were replaced with the team of Michael Eisner as COB and CEO, and Frank Wells as President and COO.  While I can’t find support for a claim that it was a quid-pro-quo arrangement, but, for his efforts, Roy E. Disney was reinstated as a board member and made Vice Chairman of the Board.

Next we’ll start exploring the Eisner/Wells era at Disney, but first I’m going to catch up on some of the happenings at the Museum.

Your comments or questions are always welcome.  If you have a correction or something you think I should look at in my research, please feel free to contact me at

The Next Chapter and Ron Miller Revisited

Having just recently finished Jack Lindquist’s memoir, “In Service to the Mouse, I felt it necessary to come back to my last two posts as I have found things I hadn’t heard or seen before.  As I had indicated in “The Next Chapter,” there is not a lot published on the management period between Roy O’s death and Michael Eisner arrival.  Jack Lindquist’s memoirs begin to address that void, and as a highly placed executive in the organization, instrumental in understand the period.

Probably one of the most significant points in Jack’s book relates to an observation of Ron Miller’s nature.  Jack’s assessment was that Ron was a very shy man, and probably didn’t really have the type of ego necessary to run and company like Disney.  Having had the opportunity to meet Ron, I can say that I can see that shyness in his demeanor.  At a height of about 6’4”, probably closer to 6’6” if I had to guess, and built – still – like the football tight-end he once was, he has what could be called an intimidating presence. I have known a few individuals like Ron, and have found it not uncommon for them to possess a real shyness as a result.  A little side note, give people a chance, you’ll often be surprised how wrong you can be in your expectations, and as said, having met Ron, you won’t find a nicer person, in my opinion.

Another side note:  It occurs to me that some may be questioning my use of first names being a little disrespectful or inconsiderate.  It is not intended to be either.  Walt, himself, set the standard by insisting that people call in Walt, and it has been my experience that this holds true even to this day within The Walt Disney Company and organizations associated with Walt Disney.  I use first name out of the uttermost of respect for the individuals I tell you about in these journals.

So, to get back to Ron Miller…  It is much easier to understand how Ron’s shyness might have been interpreted, viewed, and expressed by some, as detrimental to the company.  As has been expressed by many, successful leaders in most arenas but most especially the entertainment industry tend to be outgoing and with egos larger than most.  I still hold that, had Ron not loaded the bases for Eisner and Wells, they would not have been near as successful in the near term.

As I was reading Jack’s memoirs, I was a reminded of some passages from Bob Thomas book, “Building a Company.”  This book stated that even before Walt’s death in 1966, there was somewhat a division in management, and there were Walt’s boys and Roy’s boys.  The two camps, when encountering an issue with the other, would go to their leader with problems, and then let the brothers work it out.  When Roy passed away, I seem to remember that Donn Tatum as one of Roy’s guys, took over as CEO, with Card Walker (one of Walt’s boy) taking on the role of Executive VP and COO.  However, without the brothers’ dynamic relationship to work through issues and not Walt to advance the creative element, I think management did kind of devolve into a contest between the two camps to advance the philosophies of their respective departed leader.  There was a bit of “What would Walt do” going on, and this seems to be confirmed by Jack’s accounts.  Best I can tell Card Walker was very much Walt’s boy, and this too may have made it difficult for Ron, with his shyness, to exert his presences.  Even when Card retired, he still held a position on the Board, which probably still hampered Ron’s authority.  Jack relates a couple of stories where Card challenged him about raise the admission prices and Disneyland.   Jack also confirmed how much Card was against the creation of Touchstone, and adamant that the Studio remain true to the Disney fair of the past.  So, it is likely in my mind that Disney was struggle as Ron took over CEO position in 1983, and was given very little time to make any course correction before his ouster in 1984.  Shyness aside, Ron served up a company in position for Michael
Eisner to create his quick turnaround.

If Card Walker and Donn Tatum can be inducted into the Disney Legends, then as I have recently heard, Ron Miller should inducted for his contributions, his filmography as a producer alone should assure his induction.  For that matter, Diane should join her Mother Lillian and Aunt Edna in Legends Plaza.  Come on TWDC, isn’t it about time to correct this oversight?

Your comments or questions are always welcome.  If you have a correction or something you think I should look at in my research, please feel free to contact me at