Trouble in the 'Magic Kingdom': Governance Problems at Disney
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Case Details:
Case Code : BECG038
Case Length : 12 Pages
Period : 1995 - 2004
Pub. Date : 2004
Teaching Note : Available
Organization : Walt Disney Co.
Industry : Media & Entertainment
Countries : USA
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Disney Directors Resign Contd...
Criticizing the board, Gold wrote, "It is clear to me that this board is unwilling to tackle the difficult issues I believe this company continues to face - management failures and accountability for those failures, operational deficiencies, imprudent capital allocations, the cannibalization of certain company icons for short-term gain, the enormous loss of creative talent over the last years, the absence of succession planning and the lack of strategic focus".6
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After leaving the company, both men launched a public campaign to oust Eisner (who they had helped appoint in 1984). They said that he held sway over the board and ran the company like a 'personal fiefdom'. Both were considering meeting with the company's major shareholders to muster support in their campaign.
Well known for its animated films and theme parks, Disney was popularly known as the 'Magic Kingdom', because of the entertainment and pleasure it provided to children and adults alike. However, the resignation of two of the company's directors and their bid to oust the CEO made analysts wonder if the Magic Kingdom was losing its magic.
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Background Note
Disney was first set up by Walt and his brother Roy. O. Disney (the father of the present Roy Disney) in 1923, as a small studio. The studio was moderately successful, making and selling short animated films and commercials. In 1927, during a train journey from New York to Los Angeles (where the studio was based), Walt created the character of Mickey Mouse.
In November 1927, the Disney studio made "Steamboat Willie", the first Mickey
Mouse animated film.
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It was also the first animated film synchronized to sound. The movie was very successful and Mickey Mouse soon became the world's most loved cartoon character. Over the years, the Disney studio grew and started making several other animated films apart from Mickey Mouse cartoons. In the late-1920s, Disney animators started working on an animation series called "Silly Symphonies". This series featured animation pieces that were set to classical music. One of this series, "Flowers and Trees", won Disney its first Academy Award. In the late-1930s, Disney studio made "Snow White", which was the first ever full length animation film. "Snow White" was extremely successful, receiving critical acclaim as well as commercial success... |
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