You have to wonder if the audience at the recent Smith Barney conference kept a straight face when Disney CEO Michael Eisner's proclaimed, "Across the company, we are pushing creativity."

Or what they thought when he declared, "We have an organization whose people are committed and energized."


Or when Eisner concluded, "We are growing the Walt Disney Company by growing the value of our brands and in so doing growing performance that can drive long-term growth in shareholder value."

Do you think anyone bought it? More importantly, do you think anyone cared about "creativity," "energized" employees or "long-term growth"—at a company now becoming famous for its dearth of imagination, demoralized workforce, brand deterioration and short-sightedness?

Perhaps the analysts are content that Disney's stock price should be OK over the next six to 18 months. Maybe they're smart enough to realize that Disney is speeding along the road to absolute disaster, but are willing to stay aboard a while longer, now that the ride is a little smoother.

Yet, anyone who cares about the company's employees, reputation, product quality, heritage, long-term worth and, indeed, its very survival, should be terrified.

If Roy Disney's campaign to unseat Eisner and change the company's direction fails, what kind of company do you envision a decade from now? Here's the Disney I see in 10 years:

The banks and mutual fund managers who ignored Roy's pleas have long since sold off their shares, cashing out at the stock's 2005 peak of $29 a share. Soon, after the stock price began an unprecedented freefall that bottomed out at $3 and has hovered around $4 a share ever since.

The good news: Although the company is dead creatively, shares likely won't sink to penny-stock status as long as Disney owns its once-valuable film library, real estate and characters that were created or acquired decades before.

After auctioning off all its production equipment on eBay, the Disney Studios no longer produces it own movies, neither animated nor live-action. Too big a risk. It does distribute several films a year from independent producers desperate enough to sign long-term, low-ball deals.

Although sales of individual direct-to-video titles are way down by 2014, Disney tries to make it up in quantity. A recent month's output included Teamo Supremo's First Movie, Snow White & the Nine Dwarfs, a shot-for-shot 3-D remake of The Lion King, and The Land Before Time XIX (Eisner practically stole the rights to this durable franchise for just $6 billion!).

Of course, to reduce production costs, all animation for direct-to-video movies and TV series is outsourced to the lowest-bidding Fourth World country. The quality, unfortunately, has deteriorated to the point that it is now referred to as "1-D animation."

In broadcasting, ABC, like the other networks, is bankrupt. The ABC Family Channel has been relaunched as ABC Young Adult 18-25. The Disney Channel and ESPN, dumped by cable operators tired of being gouged, are now pay-per-view.

Feature Animation and Imagineering have been reorganized as divisions of the Disney Archives. The sole remaining employees—106-year-olds Joe Grant and John Hench—work for a per-appearance fee giving lectures and drawing caricatures at children's birthday parties.

Nonetheless, the Theme Park Division has experienced explosive growth. There are now mini-Magic Kingdoms in 77 countries and 49 states (sorry, Nebraska). Disney has made the design and construction process so standardized and streamlined that each park now comes in a kit that can be assembled in five weeks. The Main Entrance has been renamed "Main Street" and each of the three lands inside offers one attraction—that you can ride over and over again for a single price of admission!

At older parks in Anaheim and Orlando attendance has held steady at about half of 1994 levels, although on an average day 90 percent of attendees are $99-a-year annual passholders. Surveyed guests attribute their waning interest in Disney parks to:

  • rising prices for single-day admissions
  • unbearable crowding due to the increasing number of shuttered attractions
  • the absence of new attractions
  • the elimination of the maintenance, custodial and security departments
  • the fact that all attractions are now self-propelled
  • OSHA-mandated accident insurance that all visitors must acquire before entering

To artificially inflate revenue during one particularly abysmal quarter, the Disney Magic cruise ship was sold off to Carnival Cruise Line. The Disney Wonder now offers "Caribbean-style cruises" through the harbor.

Stand-alone Disney Stores have long been shuttered. The name "Disney Store" is being licensed to Wal-Mart to identify their plush section.

Resourceful septuagenarian Eisner is still in control of the company. With all creative decisions now outsourced and the corporation "rightsized" to Ethiopian proportions, Eisner is free to devote his every waking moment to plotting how he can remain in power.

Eisner's support by his board has never been stronger—despite corporate governance reforms that have reduced the responsibilities of several directors, including Eisner's two sons and his gardener.

Perhaps most telling, there are no more Disneyana conventions or heavily trafficked Disney fan sites on the Internet. To Disney management's delight, the cyber critics who used to harp on the company's every misstep have moved on to new causes.

Disney has always seen fan sites as an irritant. In truth, the popularity of sites such as MousePlanet and SaveDisney.com mirrors the level of emotional attachment held by Disney's customers. The disappearance of the Al Lutzes and Jim Hills of the world means people have just stopped caring about Disney.

Roy Disney's fight could determine the fate of the Disney Company and the legacy of the Disney name. It's a battle all odds say he can't win. But, as you see, it's one that we can't afford to let him lose.

Roy will be speaking Saturday, Jan. 17 at 9 a.m. at the NFFC convention at the Crowne Plaza Resort, 12021 Harbor Blvd., Garden Grove, Calif. It you want to register as a walk-up (on a space-available basis) email SEC@nffc.org. Please show your support.

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(Send an email to David Koenig)

David Koenig is the senior editor of the 80-year-old business journal, The Merchant Magazine.

After receiving his degree in journalism from California State University, Fullerton (aka Cal State Disneyland), he began years of research for his first book, Mouse Tales: A Behind-the-Ears Look at Disneyland (1994), which he followed with Mouse Under Glass: Secrets of Disney Animation & Theme Parks (1997, revised 2001) and More Mouse Tales: A Closer Peek Backstage at Disneyland (1999) (All titles published by Bonaventure Press).

He lives in Aliso Viejo, California, with his lovely wife, Laura, their wonderful son, Zachary, and their adorable daughter, Rebecca.