• U.S.

Do You Believe In Magic?

26 minute read
Stephen Koepp

Once upon a time, in a popular tourist destination called the Magic Kingdom, there lived some very prosperous characters. They were happy all the time (except for Grumpy, but it was his job to be that way). They produced souvenirs, cartoons and movies that were the delight of families around the world. But one day a great disenchantment fell over the kingdom, for the magic no longer worked. Tinker Bell’s pixie dust had lost its twinkle. A teenage boy was even heard to say, “I wouldn’t be caught dead going to one of their movies.” The whole kingdom fell into such deep gloom that ruthless Corporate Raiders attacked the magic realm, aiming to sell off its treasures and keep Cinderella’s Castle as their trophy. But a man named Roy, noble nephew of the late Uncle Walt, sought help from the one person in whom everyone could believe: Prince Michael the Creative. When Michael arrived, there was rejoicing along Mickey Avenue and Dopey Drive. The happy sounds even attracted a wealthy white knight named Sid the Bold. “Michael puts a smile on my face,” proclaimed the once somber Sid. The kingdom’s citizens, singing “Hi ho, hi ho,” went back to work, making more magic than ever before. From somewhere far beyond the kingdom, Uncle Walt could be heard whistling his happiest tune, Zip-A-Dee Doo-Dah.

Not long ago, America’s beloved Disney empire seemed destined for an unhappy ending. After an uninspired decade or more, Disney had fallen prey to takeover artists who wanted to break up the company like a rusty old carnival ride and sell its pieces to the highest bidders. But someone at Disney must have wished upon a star — maybe all 30,000 employees did. After sliding within a cricket’s whisker of defeat in 1984, Disney has come chirping back. Cheerleading a staff of go-team-go executives, Chairman Michael Eisner, 46, and President Frank Wells, 56, have pulled off one of the most dazzling corporate turnarounds since Lee Iacocca steered Chrysler back from the brink. Says Sid Bass, the Texas billionaire whose family has earned a paper profit of more than $800 million as the largest investors in Disney: “This is an incredible group of leaders. The hours they work are extraordinary, but they’re having a ball.”

Rather than merely preserving Disney as a dusty institution, though, Eisner and company have reanimated its fantasy factory with their own ideas. Such characters as Mickey, Donald and Pluto are now being joined by the likes of Roger Rabbit, Webbigail VanderQuack and Georgette the poodle. From movies to theme parks to television to retail products, Disney is the hottest all-around entertainment maker in America. And maybe beyond: the most popular children’s TV program in China, seen by nearly 200 million viewers each Sunday evening, is the 1 1/2-year-old Mickey and Donald Show.

Disney’s financial performance is a wonder as well. From fiscal 1983 through 1987, annual revenues more than doubled, to $2.9 billion, while profits nearly quintupled, to $444.7 million. During that time the value of the company’s stock has zoomed from $2 billion to nearly $10 billion. Says David Matalon, president of rival Tri-Star Pictures: “When it comes to Disney, there are two camps in this industry: extreme jealousy and admiration. I fall into the latter one.”

Signs of Disney’s triumphs are suddenly as conspicuous as Mickey Mouse ears. During the first three months of this year, Disney’s movie studio ranked No. 1 in Hollywood, reaping an astounding 30% share of all U.S. box-office revenues, vs. 4% just four years ago. For most of the first quarter, three of the country’s top five movies were Disney’s: Three Men and a Baby, which has grossed $160 million so far, Good Morning, Vietnam ($110 million) and Shoot to Kill ($30 million). On TV, Disney has a hit sitcom, The Golden Girls; two popular new cartoon shows, The Adventures of the Gummi Bears and DuckTales; the third-ranked game show, Win, Lose or Draw; and a reborn flagship program, The Disney Sunday Movie. At the three thriving Disney theme parks — in California, Florida and Japan — total attendance ballooned past 50 million during 1987, up 22% from 1984.

Last week Disney’s fanfare machine worked overtime to observe two special occasions. Tokyo Disneyland marked its fifth anniversary with a song-and-dance wingding featuring 800 performers and a nighttime parade of 44 twinkly floats. In Los Angeles the animated personalities of Mickey, Minnie and Donald frolicked on the Academy Awards show to celebrate the mouse’s 60th birthday this year, an event Disney will observe with all the frills this fall.

It may be that Disney’s Golden Age is only beginning. The company will break ground this summer for a $2 billion Euro Disneyland near Paris, which is expected to open in 1992. At the Florida park, Disney is building $1.4 billion worth of new attractions. In animation, the company aims to release one new feature-length fantasy every year, an ambition Walt never achieved. Two are due in 1988: Who Framed Roger Rabbit? in June and Oliver and Company at Thanksgiving time. And coming to a mall near you is a Disney Store in which the company will sell thousands of licensed products, ranging from Rock Around the Mouse records to software for drawing Mickey and his friends on a computer screen.

Eisner’s revival of Disney has made him the current king of Hollywood and the darling of Wall Street. More important, though, is that Disney fans have begun to recognize him as a corporate hero of sorts, a long-awaited, trustworthy heir to Walt. Eisner has established himself as a charismatic, young-dad figure by appearing each week as the host of the Disney Sunday Movie, where the husky-voiced executive clowns with Mickey, Minnie and other colleagues. “This job is so perfect for him,” says Dawn Steel, president of Columbia Pictures and a former co-worker at Paramount. “He’s childlike in terms of his enthusiasm and how he sees the world. He’s eternally young.” Nowadays when the 6-ft. 3-in. chairman strolls through Disney’s theme parks with his family, fans scurry up for autographs and snapshots. “I’m not exactly a movie star,” Eisner says, “but I’m very popular with under-ten- year-olds.”

Yet the new Disney is not just kid stuff. Under its Touchstone label, Disney is making movies that often contain more than a sprinkling of sex and mayhem. “Disney is still Disney, the one ingrained in the American memory,” says Robin Williams, who stars in Good Morning, Vietnam. “But it’s a different Disney, doing different things. Touchstone is from the same family, but it’s a new child in town. This Minnie has nipples.”

And Mickey has teeth. When it comes to dealmaking, Disney is aggressive and stingy almost to a fault. Its executives control budgets fiercely, skimp on employee salaries, comb Hollywood for actors who are down on their luck, and drive mean bargains with everyone from talent agents to foreign governments. Disney can be “terrible to negotiate with,” says Tom Selleck, who co-starred in Three Men and a Baby. “But I applaud the fact that they’re tough. I think they’ve brought some sanity back to this business.”

Like so many companies started by a brilliant, autocratic entrepreneur, Disney almost did not recover from the loss of its original leader. Even though Walt, who formed the company with his brother Roy in 1923, was never talented enough as a drafter to draw most of the characters he invented, or even to duplicate his trademark signature for autograph seekers, he was a one- man show. As corporate legend has it, Disney dictated the entire narrative of Snow White and the Seven Dwarfs (1937) from memory as his animators scribbled the tale onto storyboards. When Disney died in 1966, the company went into virtual suspended animation. Disney’s last big hit of that era was 1969’s The Love Bug, about a Volkswagen named Herbie.

Walt Disney’s successors were terrified of tampering with what had been a winning formula. When contemplating new ideas, they constantly wondered aloud, “What would Walt have done?” During the 1970s, Disney’s top executives allowed the creative side of the company to wither while they focused their attention on real estate development, which seemed a surer bet. This outraged the largest individual stockholder, the late Roy Disney’s son, also named Roy, who owned 3% of the company. “I remember thinking that if that pattern went on much longer, the company would become a museum in honor of Walt,” says Roy, now 58. “Movies were the fountainhead of ideas, the impetus for all the rest. Without Fantasia and Snow White, Disneyland couldn’t have been built.” Yet Disney’s management rejected Roy’s advice and privately disparaged him as Walt’s “idiot nephew.”

The longtime heir apparent at Disney was Ron Miller, Walt’s shy but well- meaning son-in-law, who was made chief executive in 1983. Miller gamely tried to push the company out of Walt’s shadow, primarily by starting Touchstone Pictures to enable Disney to produce adult fare without compromising the company’s image. In 1984 the Touchstone label produced Disney’s first hit in more than a decade, Splash, in which Daryl Hannah played a frisky mermaid. But by then the company’s profits and stock price were already plunging. The same day that Disney released the film, Roy Disney made a splash of his own by resigning from the board to launch an effort to oust the top management. He sensed an outside takeover looming, which he aimed to fend off. Meanwhile, Manhattan Raider Saul Steinberg, hearing a tip about Disney’s turmoil, began to buy a huge chunk of its stock. Contending that Disney was worth more money in pieces than as a whole, Steinberg proposed to sell off everything but the theme parks.

Flustered and unfamiliar with the ways of Wall Street, Miller’s regime wound up paying Steinberg $52 million in greenmail to sell back his Disney stock and let them alone. But the company’s weakened condition gave Roy Disney the leverage he needed to push for a new slate of leaders. One of his informal advisers had been Frank Wells, a former vice chairman of Warner Bros., who had taken time out from show business to climb the highest mountain on each of the seven continents (he had to turn back 3,000 ft. below the summit of Mount Everest, the only one to frustrate his ambition). Wells clearly had the right stuff, especially as a financial man, but his most emphatic advice to Roy Disney was to hire Michael Eisner, president of Paramount Pictures. In eight years as the No. 2 man at Paramount, Eisner had been the wunderkind behind a string of hits, ranging from Saturday Night Fever to Terms of Endearment.

Yet when Roy Disney proposed a new management with Eisner as chairman and Wells as president, some company directors objected. According to Journalist John Taylor in his 1987 book, Storming the Magic Kingdom, they saw Eisner as an idea man who would be too inexperienced as an administrator and financier to handle a large corporation. The directors came close to rejecting Eisner in favor of an older, more buttoned-down candidate. But then Roy Disney’s attorney, Stanley Gold, made an impassioned speech to the directors: “You see guys like Eisner as a little crazy . . . but every great studio in this business has been run by crazies. What do you think Walt Disney was? The guy was off the goddamned wall. This is a creative institution. It needs to be run by crazies again.”

This time creativity carried the day, and the Eisner-Wells team took charge in September 1984. The Disney board ousted Miller, while voting Roy to the post of vice chairman. The Eisner-Wells duo flew immediately to Fort Worth to enlist support from Sid Bass, whose family was amassing a stake in the company (currently 17%). Bass was so impressed with Eisner and Wells that he promised to hold the stock for five years, an unusual commitment that would make Disney far less vulnerable to further takeover troubles.

Eisner had been a latecomer as a Disney fan. Growing up on Manhattan’s Park Avenue, he seldom watched TV or went to the movies. Eisner’s parents — his father a lawyer-entrepreneur and his mother the president of a medical- research institute — strictly rationed his pop-culture consumption. Recalls Eisner: “For every hour of television I watched, I had to read for two hours.” Eisner dabbled in premed studies as a freshman at Ohio’s Denison University, but eventually found better chemistry in the literature and theater departments. The first time he saw a Disney film was several years after college, when he went with his wife Jane to a Bronx drive-in to see the richly hued Pinocchio. “I just couldn’t believe the difference between that film and all the other animation I’d watched,” he recalls. Starting his career as a page at NBC in 1963, he eventually became a top executive at ABC, before moving to Paramount. Still, when he arrived for his first day on the job at Disney, he felt nervous. “I knew nothing and asked people to explain things to me,” he admits.

Besides taking on a huge responsibility, Eisner was breaking cultural ground too as the Jewish, city-reared leader of a company that had been an island of Protestantism and small-town ideals. But Eisner fits the family-man role as well as Fred MacMurray played it. Eisner admits that he bought his million- dollar home in Bel Air, Calif., without even seeing the interior, because its main appeal to him was a large yard where his three sons (Breck, now 17, Eric, 14, and Anders, 9) could play sports. At Disney, the staff welcomed Eisner as though he had been born for the job. “Michael really has a feel for Disney,” says Valerie Oberle, director of Orlando’s Disney University, where new staffers are trained. “He is able to move the company forward while still protecting important values.”

To speed the process, Eisner immediately began recruiting fresh talent. “I put together people from all different areas, from politics to journalism,” he says. Even so, Eisner tried to avoid pitting the hotshot newcomers against the old Disney hands. “I’m a child of the corporate struggle. I spent many years dealing with people trying to do me in,” he says. “I determined that any operation I ran would be as nonpolitical as I could make it.”

Since the Disney department in particular need of help was its movie and TV studios, Eisner’s most important recruit was his protege Jeffrey Katzenberg, head of production at Paramount. Maniacally driven, Katzenberg, now 37, was the ideal candidate to jump-start the studio by sheer hustle and the hundreds of two-minute phone calls he makes every week to producers, performers and Hollywood insiders. (His half-serious advice to underlings at Paramount had been “If you don’t come in on Saturday, don’t bother coming in on Sunday.”) Katzenberg’s zeal for efficiency is the stuff of Hollywood legend; wags say he and his wife deliberately had twins in order to save time. Says he: “I am very focused about setting goals and achieving them. From absolute minutiae to moving mountains.”

The new Disnoids, as Katzenberg dubbed his crew, developed a distinct operating philosophy: no big budgets, no prima donnas. Says Katzenberg: “We watch every single solitary nickel.” For Touchstone’s first project under the new team, Down and Out in Beverly Hills, Katzenberg rounded up an ensemble of actors who were struggling far below the superstar pay scale at the time: Bette Midler, Richard Dreyfuss and Nick Nolte. The film, made for only $13 million, took in $62 million at U.S. box offices.

In a return to the old studio system, Disney essentially formed an in-house troupe of actors and directors by signing them up for multipicture deals. Midler went on to star in Ruthless People (revenues: $72 million) and Outrageous Fortune ($53 million). Dreyfuss appeared again in Stakeout ($66 million) and Tin Men ($26 million). Robin Williams, who had made two bombs at other studios, hit big with Good Morning, Vietnam. Says he: “Jeffrey ((Katzenberg)) picks people in neutral, stalled between phases, and tries to find the right vehicle for them. There’s a joke going around that he hangs out outside the Betty Ford Center.” But besides recruiting the down-and-out, Katzenberg lures established stars by offering them Hollywood’s big opportunity: to direct or help produce their own pictures. Earlier this month, Disney signed TV Funnyman David Letterman to a multipicture contract as both an actor and producer.

Disney prefers to put together its own film projects, rather than buying packaged deals from agents at high markups. After picking a story, the Disnoids go bargain hunting for the rest of the pieces. Suddenly chic, Disney now uses its prestige instead of its poverty as an excuse for eliciting better deals. Says Richard Frank, Katzenberg’s No. 2 man: “We have the money, but we won’t pay retail.” The average Disney film during 1987 cost about $12 million to make, in contrast to Hollywood’s $16.5 million average. Fully 22 of the 23 films made and released by the new Disney management have turned a profit, far better than the industry ratio of about 3 in 10.

Thanks to its recent blockbusters, the company has for the moment surpassed archrival Paramount as the No. 1 grossing studio in Hollywood. Only three years ago, Disney ranked ninth. Even though the studio could easily slip from its dizzying new position, Disney’s hot streak has made it Hollywood’s most closely watched force. The company plans to release 15 features this year, up from ten in 1986. Among them: Big Business, a comedy pairing Bette Midler and Lily Tomlin, and Cocktail, in which Tom Cruise plays a cocky young bartender.

While Touchstone’s success boosts the company’s profits and morale, just as valuable for Disney in the long run are new animated features whose characters can inspire fresh theme-park attractions and licensed products. Disney has high hopes for this summer’s combination live-action and animated feature, Who Framed Roger Rabbit?, the story of Roger’s search for the culprit who set him up for a murder rap. Even with Steven Spielberg producing it, the film is a major gamble. Its cost is rumored to be $38 million or more, which has inspired ominous comparisons with Howard the Duck, a notorious $35 million quacker made by Universal. Says a Hollywood insider: “I’ve seen a few minutes of Roger Rabbit and can tell you for sure that it’s no Howard the Duck. It’s unique and should be very successful. But when you’re out that kind of money, it’s hard to sleep at night.”

November brings Oliver and Company, a dog-and-cat, Oliver Twist-inspired musical set in New York City. The animals speak with the voices of such stars as Billy Joel, who plays a jivy artful dodger (sample line: “Consider it a free lesson in street savoir faire from New York’s coolest quadruped”), and Cheech Marin, who plays a Chihuahua named Tito. Says George Scribner, the film’s director: “We don’t write down to children. They’re generally way ahead of you.”

Only a few years ago, Disney’s animation department had been almost totally neglected. But now the upbeat morale in the section is as palpable as the aroma of popcorn coming from the popper in the lobby. Disney employs an animation staff of 261, up from 184 four years ago. Says Roy Disney, who serves as chief of animation: “We hired a lot of young, inexperienced people in the early 1980s and did a lot of on-the-job training. I’d say that two- thirds of all the really talented people in the field are here.” Despite the help of computers, animation is still a highly labor-intensive job; Oliver and Company will be composed of 2 million individual drawings.

The animators have plenty on their drawing boards besides feature films. Disney’s DuckTales, the daily adventures of Scrooge McDuck and his grandnephews Huey, Dewey and Louie, is TV’s No. 1 syndicated cartoon show. Gummi Bears, a Saturday-morning program on NBC, was largely Eisner’s idea, based on a son’s fondness for the rubbery candy animals.

Yet Disney has been unable to match that success during network prime time. Though the Emmy-winning comedy The Golden Girls ranks No. 6, Disney has flubbed such efforts as The Ellen Burstyn Show and Side Kicks. But Disney is nothing if not persistent: its next offering, to start on CBS in the fall, is The Dictator, a sitcom about a deposed political strongman who sets up shop in a New York Laundromat.

Disney is becoming a video powerhouse, thanks to almost six decades of material in its library, its increasing production and an expanding number of outlets. The Disney Channel is the fastest-growing pay-television service in the U.S., going from 720,000 subscribers to 4 million in just four years. Besides traditional fare like Sleeping Beauty, the channel has offered programs ranging from the fitness session Mousercise to the College Bowl quiz show. Disney’s archives have helped its home-video division increase sales from $55 million in 1983 to $175 million last year. Lady and the Tramp, released last Christmas, quickly became the best-selling videocassette of all time, passing the 3 million mark.

Despite the studio’s roaring return, Disney’s theme parks still constitute the bulk of the company’s business: 62% of sales and 70% of operating earnings during fiscal 1987. One reason is that the company has raised ticket fees dramatically over the past four years, sending the cost of one-day passes for adults from $18 to $28 at Florida’s Disney World and from $14 to $21.50 at California’s Disneyland. Attendance boomed anyway, pushing revenues to the sky.

While traffic at the parks was robust, new attractions were needed to lure repeat customers. When Eisner and company took over, some rides were growing corny with age, especially in the Tomorrowland section of the parks, as real- life events were surpassing Disney’s futurism. Says Eisner: “The park has to be extremely contemporary. If it’s not, the kids won’t think it’s a rad place to be. If it’s not innovative, then intelligent people will be bored or go somewhere else.”

Yet the famed Walt Disney Imagineering group, a department of artists and engineers that Walt first assembled in 1952 to build Disneyland, had been sharply cut back before Eisner came aboard. He promptly revived the Imagineers, but with a difference. The group began to collaborate with the hottest show-business talent available, a strategy that enabled Disney to give its theme parks an immediate injection of Hollywood hipness. Enter Michael Jackson, who was recruited by Eisner to help write and star in Captain Eo, a 17-minute, $17 million movie musical in 3-D. Even more spectacular is Star Tours, a $32 million thrill ride that opened in January 1987 at Disneyland. The ride employs the technology of flight simulators, the devices used for training pilots and astronauts. Hydraulically powered, the StarSpeeder 3000 cabin shakes, rattles and rolls its 40 passengers at angles up to 35 degrees as they watch a 4 1/2-minute spaceflight film by Star Wars Creator George Lucas.

More pixilation is on the way. At Disneyland, stonemasons are now building the facade for the $35 million Splash Mountain, in which passengers will ride replicas of hollowed-out logs down huge slides and through tableaus populated by 101 robotic characters like Br’er Rabbit from Disney’s 1946 film Song of the South. “We can control how much the passengers get wet, depending on the time of year,” Eisner points out mischievously.

The plans are even grander at Disney World, where the company owns 47 sq. mi. of land. Earthmovers are clearing the way for Typhoon Lagoon, a 50-acre water park where visitors will be able to slide down a 95-ft. mountain, surf on 6-ft. waves and snorkel in pools filled with tropical fish. Opening this fall is the Pleasure Island night-life park, complete with rollerdrome, comedy warehouse, teen video club and jazz saloon. Eisner hopes customers will not remember too well the Pinocchio story, in which visitors to a place called Pleasure Island were turned into donkeys.

Since 80% of the Florida park’s 26 million annual visitors live outside the state (in contrast to 50% of Disneyland’s 12 million), the company is aggressively building hotels to capture the business of guests who previously lodged outside the park. In January, Disney announced plans for a $375 million twin-hotel complex designed by Architect Michael Graves, a postmodernist who has playfully topped one building with two five-story-tall dolphin sculptures and another with two four-story swans. Eisner, who wants Disney to become known for its architecture, says grandly, “They’re going to be important monuments in this country.”

The expansive Disney is inevitably starting to step on the toes of other companies. In a joint venture with MGM, Disney is building a $400 million television-and-film studio in Orlando that will start offering tours in 1989. This brings Disney into sharp confrontation with archrival MCA, which operates Universal Studios Tour in suburban Los Angeles and is building a similar park in Florida. At one point, the growing corporate rivalry prompted MCA President Sidney Sheinberg to deride Disney’s boss publicly as a “ravenous rat.”

In fact, the whole U.S. is not big enough for the hungry Mickey. Tokyo Disneyland, which attracted 12 million visitors last year, has taken Japan by storm. But Disney’s previous management was so cautious about the park’s success that it allowed Asian investors to build and own the $750 million park, while Disney asked only for royalties of 10% on admissions and 5% on food and souvenirs.

Disney will probably reap far greater profits from the $2 billion Euro Disneyland near Paris, scheduled to open in 1992, in which the company will hold at least a 16.7% stake. The park will take shape on the largest undeveloped tract of land in Western Europe, a 4,800-acre stretch of beet and corn fields 20 miles east of Paris. Though French artists and intellectuals bemoaned the park as a polluter of their culture, the prospect of more than 30,000 new jobs and a huge splash of tourist spending enabled Disney not only to win the government’s approval but extract lucrative concessions as well. Example: a commuter rail line will be extended an extra seven miles from Paris to Euro Disneyland’s front gate.

Disney would like to see a mouse on every mantel and a duck in every drawer, and its consumer-products division is coming close. Some 3,000 companies now manufacture 14,000 Disney-licensed products, which sold at retail for more than $1 billion last year. The division earned profits of $97.3 million in 1987, up 34% from the previous year. Among the newest items: sound tracks for Fantasia and Snow White on compact discs, upscale children’s clothing, and Mickey Mouse Magazine, a quarterly. To move the goods, Disney is finding more outlets. Last year the company launched a catalog that will be mailed to 8 million households this year. The firm hopes to expand its Disney Store chain into a 100-shop operation within five years. At the three branches already operating, in California, customers are immersed in audio and visual Disneyana as they browse among Mickey neckties ($29) and diamond-studded Dumbo brooches ($3,200). They can take their change in Disney Dollars, a currency accepted at the theme parks.

Does the company risk overplaying its welcome? Can Americans get too much of Mickey? “I thought we’d get tired of this pretty fast, but we haven’t overdosed yet,” declares Douglas Rehnblom, an Orlando engineer who has taken his family to Disney World a dozen or so times. Says Disney’s Frank Wells: “We commission focus groups to determine demand. We want to stop well short of the saturation point with things Disney, not wait for the public to tell us that we’ve crossed the line.”

For Wells, that seems to be part of an unwritten job description: to act as the sensible alter ego to the irrepressible Eisner. At Disney, unlike most corporations, it is the chairman who comes up with some of the most outlandish schemes, which subordinates must either make happen or give the boss a good reason why not. “We all live in mortal terror that Michael will come up with ten new ideas a day,” says Robert Fitzpatrick, president of Euro Disneyland. Eisner once proposed building a skyscraper hotel in the shape of Mickey. But much of the time Eisner is only trying to provoke his subordinates into even better notions. “My primary interest is ideas,” says Eisner. “The rest is kind of housekeeping to me. I understand business, but it’s the product that has traditionally got me out of economic trouble.”

Yet with Eisner at the helm, Disney has not lost its obsessive attention to detail. Eisner aims to impress Parisians with a fluent opening-day speech at Euro Disneyland four years from now, so he has dusted off a college French textbook and hired a French-speaking limousine driver through a want ad. Walking through Disneyland one Sunday afternoon, he peered at the plastic | leaves on the Swiss Family Robinson tree house, noting that they periodically wear out and need to be replaced leaf by leaf at a cost of $500,000. As his family strolled the park, he and his eldest son Breck stooped to pick up the rare piece of litter that the cleanup crew had somehow missed.

Eisner is no doubt the best-paid grounds keeper in America. Last year he earned a bonus of nearly $6 million on top of his $750,000 salary, based on a formula that takes into account the company’s profits. Besides that, Eisner and Wells hold 3.84 million shares of stock and stock options that were given to them as an incentive when they came aboard the struggling company. If they exercised all their options and sold the shares at the current price of 56, they would net $160 million between them.

Will success spoil Disney? “I sense a little bit of arrogance because they are doing so well,” says a Wall Street analyst who follows the company. But Disney’s executives deny smugness as if they were warding off an evil spell. “You always have to believe you’re in last place,” said Eisner recently as he flew across the country in Disney’s leased Gulfstream III jet, looking a bit sheepish about the luxury. “Flying on this kind of plane is exactly what leads to your financial demise,” he observed.

The Disney team sees endless possibilities for its empire — a new Disneyland in South America or Asia; a new American theme park based on the workplace, where visitors would watch ice cream, baseball bats and computer chips being made. Muses Roy Disney: “I suspect my father and uncle would be pleased with the direction we’re going. The world has changed to the point where they’d probably be doing a lot of the same things.” That portends well for the Eisner regime. “I see myself here forever,” says Eisner. Inevitably, though, another new crew of Disnoids will be taking over one day, and then the question may be, “What would Michael have done?”


CREDIT: TIME Chart by Joe Lertola


DESCRIPTION: Disney stock price yearly closings, 1978-1987; Net income in millions of dollars, 1978-1984. Color illustration: two amusement park rides.

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