Disney's Fiscal Q4 Revenues Up 8% to $7.54bn
Walt Disney Company ceo Michael Eisner last week admitted to a Delaware court that he had been economical with the truth during a 1996 TV interview with CNN chat show inquisitor Larry King.
Responding to a question from King after reports of friction between Eisner and recently appointed president Michael Ovitz, the ceo replied that he would hire Ovitz all over again. His statement belied the fact their relationship had by then broken down irretrievably.
Shareholders claim Disney's directors were negligent in failing to properly scrutinize Ovitz' contract and likewise their failure to fire him for 'cause' fourteen months later. Instead he left with a $140 (€107.2m; £75.27m) million payoff.
The plaintiffs also aver that Ovitz' poor performance and lavish spending during his troublesome tenure, 1995 through 1996, was 'cause' enough. They want the money back, plus compensation.
Eisner was asked by a lawyer representing shareholders if his response to King's question was false? Eisner replied that with the best interests of shareholders in mind, his answer was the better of the two options available.
"No" would have obliged him to fire the company president immediately and kill any chance of getting rid of him without a massive severance payment, said the Disney ceo. This positive but "less than candid" response, he believed, might have helped persuade Sony to take Ovitz off Disney's hands.
This seeming non sequitor referred to a Disney stratagem to "trade" Ovitz to Sony on condition the Japanese group assumed all Disney's financial obligations to its forsaken president.
As a diversionary negotiating ploy, Disney also planned to demand broadcast rights to several Sony TV series, thereby creating the impression it was reluctant to let Ovitz go.
The gambit was later consigned to the department of lost scenarios.
The dearth of blockbusters such as last year's Finding Nemo and Pirates of the Caribbean all but eradicated earnings at Disney's studio division in its fourth fiscal quarter ended September 30.
But the company predicted earnings growth of 10% or better for the fiscal year ahead, boosted by a rebound in its ABC television network.
Operating earnings at the studio division fell to $23m in the last quarter, down from $205m a year before, as revenues dropped 14% per cent to $1.88bn.
But the group's largest unit, the media networks division, reported a 50% rise in operating income to $448m, as revenues climbed 10% to $2.89bn.
Parks and resorts reported a 31% leap in revenues to $2.2bn, with operating income up 25% to $282m, largely due to the consolidation of theme parks in Europe and Hong Kong.
Overall, corporate revenues rose nearly 8% to $7.54bn, slightly lower than estimates of $7.57bn. Net income increased 24% to $516m.
Data sourced from Financial Times Online; additional content by WARC staff