Eisner's Wild, Wild Ride

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Some analysts think Eisner has only strengthened his grip on the kingdom, since Gold and Disney may no longer sow internal dissent. Even though Disney is one of the largest single shareholders, with around 17 million shares in a company with 2 billion shares, his less-than-1% holding doesn't give him much leverage unless he can inspire a popular revolt. And firing Eisner before his contract expires in September 2006 could mean giving him a generous golden parachute. Moreover, investors who haven't already voted against Eisner by selling their shares seem to have surmised that the company may be mending. The firm enjoyed two blockbuster hits this year with Finding Nemo ($570 million in worldwide box office) and Pirates of the Caribbean ($647 million), theme-park attendance perked up last summer, ABC is starting to recover from its ratings free fall, and analyst David Joyce of Guzman & Co. forecasts that earnings will hit $1.7 billion (up 34.5%) in its next fiscal year.

To be sure, there's longer-term concern about Disney's profit machines, ESPN and the Pixar alliance that produced Nemo. ESPN growth may stall as cable operators balk at the 20% annual-fee increases that ESPN has charged over the past several years. Pixar, run by Apple's Steve Jobs, has little incentive to keep giving Disney a full 50% share of the profits from Pixar pictures, along with a distribution fee, in exchange for splitting the costs. Several entertainment companies are offering Pixar more favorable terms than Disney's old deal, and Jobs is said to be getting peeved by the protracted negotiations with Eisner. As much as ever, the head of the $27 billion empire is in the thick of things and sweating the details.