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Post-Ovitz Disney strong
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December 13, 1996: 11:16 a.m. ET
Lesson from departing president: If it ain't broke, don't fix it
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NEW YORK (CNNfn) - The Walt Disney Co.'s management team is among the strongest in the entertainment industry and should not suffer from a power vacuum now that Michael Ovitz has resigned as president, a leading media analyst said Friday.
PaineWebber analyst Chris Dixon said that Ovitz, the former head of Creative Artists Agency, was unable to find a purpose inside Disney. He came on board one year ago with plans to overhaul a company that needed little fixing.
"There's no question that Michael Ovitz is an extraordinarily talented person in Hollywood," Dixon told CNN's "Business Day" on Friday. "But Disney is much more than Hollywood. We have the theme park operations. We have global consumer products. There is going to be a Dalmatian under every Christmas tree this year."
Once considered the most powerful talent agent in Hollywood, Ovitz was recruited in August 1995 by Disney Chairman Michael Eisner. Expectations were he would build ties between Disney and top talent and eventually succeed Eisner.
But trouble quickly brewed. Ovitz found himself struggling within a corporate environment that shared little in common with the entrepreneurial personality of CAA, the talent agency he co-founded in 1975. After months of speculation, he resigned from Disney on Thursday in what was termed as a mutual agreement.
According to Dixon, Ovitz never had a chance at Disney. He was out of his element.
"There were no problems to solve," Dixon said. "Mr. Ovitz had a hard time trying to find a place to fit." (312K WAV) or (312K AIFF)
The result for Disney is that Eisner, who has had trouble keeping key executives at the company, will have to find a new president who is more of an administrator than an entrepreneur. Such a person would not only help the company manage its vast holdings, but could send its stock price soaring, Dixon said.
Disney shares closed at $70.25 Thursday after falling $1.875. Dixon, who said the stock is clearly undervalued compared to rival entertainment companies, anticipated the stock could rise into the $85 to $95 per share range.
Ovtiz's departure ultimately proved that Disney is a full-fledged and diverse corporate empire with potential for taking a huge share of the global entertainment market. It is no longer just a Mickey Mouse operation.
"The point is, you have to look at Disney in the context of these other major consumer companies," Dixon said. "We have a global oligopoly today. You've got Viacom, News Corp., Time Warner and Disney. And these are large companies in perfect position to take advantage of the globalization of American entertainment."
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