“Two dollars and fifty cents for a Coke? Are you kidding me? I could get at least 4 liters at Wal-Mart for the price of a half-liter bottle here!” Ahh, the sweet sound of a satisfied guest of the Walt Disney World Resort. Do I resent them for charging that much for a bottle of Coke? Not at all. They fill a demand (thirst) with supply (Coke), and it just so happens that that next stand down the way in the Magic Kingdom, yeah they charge $2.50 as well. In fact, every stand here charges the same $2.50, so don’t think about trying to find a cheaper supply source. That’s the beauty of a theme park and an all-inclusive resort; one owner can control all pricing. Some may not think that’s fair, but keep in mind a part of that $2.50 is also going toward keeping AstroOrbitor spinning and Small World singing. More importantly, some of that money will be spent locally in the Central Florida economy by Disney, and that’s the main reason I don’t mind paying $2.50.

But, you say, “Don’t tell me that money goes to fixing up Walt Disney World. That place looked dirtier with fewer offerings than I’ve ever seen it.” What, you didn’t say that? Oh, well maybe you would have if you’ve been to WDW in the past (pre-1994) and recently.

The reason I picked out 1994 as the pivotal year was that that was the year that then Disney President, Frank Wells, died in a helicopter crash. Up until that point, Michael Eisner and Frank Wells had been a great team that had literally saved the company from a hostile takeover. Kind of eerie how history can repeat itself isn’t it?

To understand how great their teamwork and friendship was, consider some of the projects at Walt Disney World done during what I consider the “Golden Age.” Back in the eighties, Disney Imagineers (the engineers and designers of the Walt Disney Company) came up with an idea for a pavilion in the Future World section of EPCOT Center based around movies and movie production. Through the insistence of Eisner and Wells, the project turned into something much bigger and eventually became the Disney-MGM Studios theme park. The idea, fostered in the right way, turned into the park we know and love. In addition, the idea for a nighttime entertainment area was put forth, and fostered with the right support, became Pleasure Island. How about a distinctively different park, say a water park? Sure, we have River Country, but that’s built on a lake like the “old swimming holes.” What if we could create a completely controlled themed water park? Again, with their assistance, Typhoon Lagoon was born and its popularity later inspired the creation of Blizzard Beach (and probably another water park down the road). Their teamwork was magical, but it was hardly unprecedented.

The very first team, albeit a (unfortunately) unknown team, was that of Walt Disney and his brother, Roy O. Disney. While history gives almost exclusive credit to Walt for every attribute of the Walt Disney Company, Roy O. Disney (whose son is Roy E. Disney, the former board member and leader of the current SaveDisney.com movement) was the financial genius behind everything Walt ever dreamed up. If Roy hadn’t been there, neither would anything we know and love of the Walt Disney Company. This is true of Walt Disney World as well…LITERALLY. I say that because as Walt Disney World was in its latter stages of development, Walt suddenly passed away from lung complications (cancer from smoking if I recall…he loved cigars). Roy took it upon himself to finish the job as Walt would have wanted Disney World to turn out. In honor of his brother’s dream and work, he officially re-named the place from “Disney World” to “Walt Disney World” so that everyone would remember whose dream this really was. Sadly (and almost poetically), Roy died a year or two after Walt Disney World had officially opened. Almost as if he had just enough time to see this job done.

My point being, every time great strides occur at Disney, it’s because there was a team in place. Two people who could keep each other in check. Normally, one is creative and other analytical. Walt was a dreamer, Roy was a doer. Michael is a dreamer turned financial genius, and Frank was a financier turned dreamer. Either way, it produced great results when both kept each other in line and allowed ideas to be bounced off of each other for feedback.

Then on April 2, 1994 the last (true) team for the Walt Disney Company ended with the death of Frank Wells. From the time of Frank Wells’ death, Michael Eisner has (for all practical purposes) been the only one in control. I would argue that the company has been slowly going downhill since that point in time. Obsessed with the company stock price, Eisner has done everything he could to keep it growing. Without Wells as his “check,” Eisner has been pretty free to do as he pleases. As much as I want to, I can’t blame him exclusively for what has happened. It’s too bad Frank Wells had to leave us so soon.

Eisner is a financial genius, plain and simple. But the problem is he’s turned into a person who only looks at the financial side. Attendance at Walt Disney World fading? Well only two things we can do: cut costs or earn more money. We could cut costs by making cheaper rides or paying employees less (or firing them), and we could earn more money by charging more or getting more people to come visit. Any guess as to which course Eisner took? Raise prices and cut costs. Sure it’s very effective on raising the stock price, but it can only go so far. Especially when you’re focused on growth of stock price rather than volume of business: “You made 2 Billion dollars for the company last year? Great, but you made 3 Billion dollars the year before. You’ve failed! We need more growth!”

What you end up with is dirtier parks, cheaper rides, disgruntled employees, local resentment, and a tarnished image. Keep it going long enough and you end up with a coup d’état from the founder’s uncle and a takeover bid from another company.

Which ties us back in with Capital Cities/ABC. Like I said last week, the acquisition of Capital Cities/ABC compounded an already troubling situation. Eisner, desperate to increase the bottom line in order to do better than last year, arranges for the Walt Disney Company to buy Capital Cities/ABC. Bigger is better, right? We found out last week that that isn’t always the case. In other words, I see the Capital Cities/ABC acquisition as the crowning point in this Eisner Era, fundamentally changing the makeup of the Walt Disney Company for the worse. It was a result of Eisner’s lack of control, based on the unavailability of an effective partner who could keep him in check. What’s worse, is that the media outlets purchased by the Walt Disney Company required a lot of capital to operate, so the traditional business units had resources pulled away to focus on the new money-makers.

Think about it: no matter how few advertisements are paid for on a network like ABC, they still have to stay on the air nonstop. That means fixed production costs. Compare that to a theme park, and you may be able to convince yourself as an executive that you could get by with replacing Audio-Animatronic figures with flat plywood panels in a new ride, and maybe forcing some full time employees to become part time employees.

So where do we go from here? Well, for starters we’ll find out what Eisner’s approval rating is when the Annual Stockholders Meeting for the Walt Disney Company is held this coming Wednesday, March 3rd, 2004 in Philadelphia, Pennsylvania. It’s then that we may find out what percentage of votes were withheld (voted “no”) to Eisner’s re-election. However not all of the problems end at that point, if in fact he is removed from the Board of Directors and his post as Chief Executive Officer. There is more to “fixing” the Walt Disney Company than getting rid of Michael Eisner.

Next week in part three of “What in the ‘World’ is Going On?”, I’ll show you my ideas for restoring Disney and sending it into another “Golden Age.” From organizational makeup to acquisitions that should have made in the past (and can still be made), we’ll go through some major changes that I’ve outlined to fundamentally change the Walt Disney Company and restore the historical teamwork between dreamers and doers.