Mouse House Contributes Much to Its Hometown
Disney Ties to Community Could Be Cut by Comcast
By RiSHAWN BIDDLE
Staff Reporter
While others see Comcast Corp.’s bid for Walt Disney Co. as the latest example of mega-media consolidation, Bruce Ackerman views it another way: as a possible economic loss.
As president of the Economic Alliance of the San Fernando Valley, he counts the Burbank entertainment giant as one of his group’s biggest backers. He even persuaded Disney Chairman Michael Eisner to put up $1 million of his own money to launch one of the organization’s projects.
So Ackerman is wary of what might happen if Disney ends up getting swallowed up.
“I have no idea of who Comcast is outside of the Wall Street version and its corporate culture is alien to me,” he said. “Under a new owner, I wonder whether Disney would retain its role as a corporate support mechanism.”
It’s far too early to call for the moving vans or shutter any offices. As expected, Disney’s board rejected Comcast’s bid last week and while the cable giant indicated that the offer wouldn’t be raised, the expectation was for an extended takeover effort especially with Disney’s March 2 annual meeting looming and an ongoing campaign by former director Roy E. Disney to oust Eisner.
Even if Disney were taken over by Comcast, or anyone else, it’s unlikely there would be wholesale dislocations. Disneyland won’t go anywhere, of course, and neither would the studio or ABC’s network entertainment operations. While some consolidation could result in the name of cost efficiencies, Disney is hardly known for its profligate spending and besides, the core business of a potential acquirer like Comcast is substantially different than that of a content business like Disney. That, actually, is what some view as a plus about Comcast’s interest.
Whatever change would take place is likely to be gradual as has been true in past media mergers involving the likes of MCA, Warner Bros. and Paramount. For example, General Electric Co., which is in the process of completing its purchase of Vivendi Universal’s U.S. entertainment assets, has shown little interest, so far anyway, of making big changes at Universal Studios.
L.A. institution
The corporate drama at Disney underscores the significant role the company plays in Southern California’s overall economy and what potentially could be lost if even a portion of the mammoth operations are shifted elsewhere.
In Los Angeles County alone, Disney employs 12000, compared with Time Warner Inc.’s 6,700. In Anaheim, home of Disneyland, the company owns 450 acres and has a long-term lease on another 56. In Burbank, it owns 2.3 million square feet of office, studio and warehouse space.
Beyond numbers, Disney is far more identifiable as a Southern California institution than any locally based company certainly more so than the locally based banks and aerospace companies that packed up more than a decade ago.
“The fact that they make their corporate headquarters here is something of great pride,” said Burbank Development Director Sue Georgino. “Their existence is a reason why we have a media district.”
Since its founding in 1923 by Walt Disney and his brother Roy in the back of a real estate office, Disney has been one of the few major entertainment firms based in Southern California. As an economic generator, the company is also a magnet for everything from postproduction houses to catering companies.
Disney itself has had some experience with consolidation. After acquiring Capital Cities/ABC in 1996, layoffs were kept to a bare minimum. The company handed over its quarters at Century City’s ABC Entertainment Center in 2000, some four years after it got the space as part of its 1996 acquisition of Capital Cities/ABC. (It continued to pay rent on the space for another year.)
For the most part, Disney has expanded, not contracted, casting a long shadow over Burbank and Glendale as the biggest corporate employer and taxpayer.
With real estate sprawl that includes the ABC studios along Prospect Avenue in Hollywood and the main Burbank lot one of the highest-assessed properties in L.A. County the company will contribute at least $7 million in property taxes this year. It is also one of the biggest tenants in the Mid-Cities area, leasing 1.6 million square feet of office space.
Disney’s presence in Anaheim is even greater; its 21,000 employees there are second only to its 55,000 workers in Orlando. Besides attracting some 12.7 million visitors a year to the area, its Disneyland complex serves as the cornerstone of that city’s efforts to maintain its convention center’s profile as the most-booked in the state.
“You really can’t get away from them. One of the Disney vice presidents is a member of my parish,” said Georgino.
Financial incentives
That heft has extracted some sweet deals. In Florida, Disney got the state to create the Reedy Creek Improvement District, a government agency controlled by the company that exempts it from local land use laws and environmental impact fees.
Disney built its California Adventure theme park in Anaheim only after pitting that city against Long Beach. Anaheim threw in such enticements as spending on new roadways and the creation of a tax district to finance construction of some of Disney’s other projects. And then there’s the 125-acre Grand Central development in Glendale, already home to its Imagineering division, which will be financed with the help of the city’s redevelopment agency.
What if Comcast manages to acquire Disney? Because there is little overlap between the two operations, the cable company would likely lop off only the most senior executives and move administrative functions such as human resources and information technology from Burbank to its headquarters in Philadelphia.
Aside from that, the effects are likely to be limited. Disney has already been moving many of its offices onto its own properties.
The greatest impact could be in its role in local lobbying and charitable affairs.
Time Warner cut back its contributions to the Economic Alliance by 50 percent after the AOL-Time Warner merger. After its acquisition by French water giant Vivendi, Universal Studios bowed out of hosting and sponsoring a $15,000 run for the San Fernando Valley Charitable Foundation.
“Warner became more of the multinational it is after its merger, and Universal became less of a presence in the community after Vivendi acquired it,” said Ackerman. “Disney won’t disappear off the map. But what else will happen isn’t clear.”
Star Turn: Even in an area as vast as Southern California, Walt Disney Co.’s impact is significant
– Disney owns 450 acres and has a long-term lease on 56 acres in Anaheim, for a total of nearly 2 percent of the city’s total area. In Burbank, the company and its subsidiaries own 51 acres and 2.3 million square feet of office, studio and warehouse space and lease another 1.1 million square feet of office and warehouse space. It has another 2.5 million square feet of office and warehouse space on 115 acres in Glendale, plus leases for 316,000 square feet of office and warehouse space. Its L.A. holdings include 22 acres and the long-term lease on El Capitan Theatre.
– Its flagship theme park, Disneyland, with Disney’s California Adventure, saw 17.4 million visitors in 2002. Disneyland generates 12 million pounds of trash annually, in large part from the 1.2 million gallons of soft drinks, 4 million hamburgers and 2.8 million churros consumed there every year.
– Disney employs 112,000, 19 percent of whom work at Disneyland and another 11,000 in L.A. County.
– Since opening in 1955, 450 million people have visited Disneyland. Over the same period, the surrounding area has exploded. In the last 50 years, the number of hotel rooms has grown from 87 to 18,000. Anaheim’s population, 30,000 in 1955, was 337,400 as of Jan. 1, 2003.
Nicole Taylor
Cast of Characters
Key players in Disney’s latest drama.
Michael Eisner
Age: 61
Title: Chairman and Chief
Executive, Walt Disney Co.
Role: Has helmed the company for 20 years, presiding over massive expansion as well as management turmoil. Known for blunt talk, his initial response to the Comcast offer has been measured. As chairman, he holds sway over the board, which has led to criticism from the outside but may serve him well if the merger discussions turn hostile.
Traits: Outwardly friendly, he has alienated many associates with combativeness and engaged in embarrassing public infighting. Likes to put his individual stamp on projects.
Robert Iger
Age: 52
Title: President and Chief
Operating Officer, Walt Disney Co.
Role: Eisner’s No. 2 and presumptive successor. Rising through the ranks of ABC, which Disney bought for $19 billion in 1995, he proved his political savvy by surviving the transition to oversee the broadcast group.
Traits: Married to newscaster and former model Willow Bay. Known for programming prowess; fought to air David Lynch’s “Twin Peaks” over the objections of other ABC executives.
George J. Mitchell
Age: 70
Title: Presiding Director,
Walt Disney Co.
Role: The former Maine senator has been on the board since 1995, and he and Eisner enjoy mutual respect. Led the team that brokered the peace agreement in Northern Ireland and tried to mend Eisner’s split with Roy E. Disney and Stanley Gold. Once Disney and Gold resigned, he, along with the board, strongly defended the company.
Traits: Political and diplomatic skills well respected. Having served as Senator Majority Leader and played a role in international affairs, he is suited to high-stakes brinksmanship.
Roy E. Disney
Age: 73
Tile: Former Vice Chairman,
Walt Disney Co.
Role: Nephew of Walt Disney, Roy Disney ran the vaunted animation division from 1984 until last year. Helped bring Eisner to the company in 1984, though he is now his most visible and vocal critic. Rules changes forced him from the board last year, though he argues Eisner ousted him because he was critical of the company’s performance.
Traits: Passionate advocate for traditional Disney family entertainment. Made his way into the animation business by shooting nature movies. Critics say he spent long stretches away from the company.
Stanley P. Gold
Age: 61
Position: President and Chief Executive, Shamrock Holdings of California Inc.; Former Board Member, Walt Disney Co.
Role: Runs Roy Disney’s investment company and has joined the effort to oust Eisner and other key board members. Former partner at an L.A. entertainment law firm, he can be counted on to back Roy Disney’s efforts.
Traits: A master strategist in corporate battles, he will sometimes use the press to gain an advantage.
Brian Roberts
Age: 44
Title: President and Chief Executive,
Comcast Corp.
Role: Has played a variety of roles at the business started by his father in the 1960s. Named president at 30, he is seen as Comcast’s visionary, overseeing its growth through the acquisition of other cable operations, TV properties, sports teams and the takeover of AT & T; Corp.’s broadband division.
Traits: Considered ambitious “rising star,” well liked and respected by his peers. Where Eisner is volatile, Roberts is calm and collected and has smoothly dealt with other corporate titans such as Microsoft Corp.’s Bill Gates.
Stephen Burke
Age: 45
Title: Executive Vice President, Comcast Corp.;
President, Comcast Cable
Communications Inc.
Role: Disney veteran and former president of both its EuroDisney and ABC Broadcasting units, Burke was hired by Brian Roberts in 1998 and has overseen the rapid expansion of Comcast’s cable operations. Likely to oversee bid and play a large role in running Disney if the deal goes through, perhaps as a replacement for Eisner.
Traits: Regarded as a steady, well-liked leader, who “doesn’t panic.”
Nicole Taylor
