Michael Eisner

October 2008

Michael Eisner has indisputably been one of the dominant figures in the entertainment industry. He began as a page at the NBC studios in New York and was later hired by the programming department at CBS, where he slotted commercials into children’s programs. Not satisfied with the limited challenges his job presented, he sent out hundreds of résumés but got only one response. It was from ABC, where Eisner was hired to work in the programming department with Barry Diller. The rest, as they say, is history.

Eisner left his mark on such varied series as Happy Days; Welcome Back, Kotter; Starsky and Hutch and Roots. He then followed Diller to Paramount Pictures and oversaw Raiders of the Lost Ark, Saturday Night Fever, Flashdance, Beverly Hills Cop and many more. But Eisner’s biggest coup was his turnaround of The Walt Disney Company. In his 21 years as chairman and CEO of Disney, he transformed a film and theme-park company with $1.8 billion in revenues into an international multimedia colossus generating $80 billion. The studio fostered a new generation of animated feature films, including The Little Mermaid, Beauty and the Beast and The Lion King, all three of which later found new life as musicals on Broadway. Under Eisner’s leadership, Disney acquired Capital Cities/ABC, giving the studio guaranteed outlets for its programming on ABC and several cable channels.

In 2005, Eisner left Disney and founded The Tornante Company—“tornante” is the Italian word for hairpin turn, a metaphor for Eisner as he begins the “next act” of his career. Tornante is a privately held company that makes investments in media and entertainment ventures. Among its holdings are Vuguru, a new-media studio that produces content for the Internet and emerging digital platforms; Veoh Networks, an independent Internet television broadcasting system; Team Baby Entertainment, a producer of a series of officially licensed sports-themed children’s DVDs; and The Topps Company, a creator and marketer of sports and related cards, entertainment products and confectionery items.

Vuguru’s first production, Prom Queen, got 15 million views over the course of its initial run and was followed by Prom Queen: Summer Heat as well as by The All-For-Nots, a comedy that follows a documentary crew filming a fictional indie rock band on a road trip through the U.S., and Foreign Body, a 50-episode online prequel series to the bestselling author Robin Cook’s latest medical thriller.

Eisner is also producing for television, with the series Glenn Martin DDS being made for Nick at Nite, Nickelodeon’s nighttime programming block, which has ordered 20 episodes of this stop-motion animated comedy from Tornante Animation. And once a month he hosts Conversations with Michael Eisner, a talk show featuring media-industry leaders and Hollywood celebrities, on CNBC. Eisner talks with World Screen about the many opportunities ahead at this point in his career.

WS: You built a phenomenal career in the traditional media world. And yet, in contrast with many others who have worked in traditional media and are struggling with business models in the new-media world, you immediately embraced the potential of this emerging space. What appealed to you about new media, and what potential do you see there for content and storytelling?

EISNER: I have to say that the idea that in the last 40 years there was no “new media” is not correct. When there were three networks, the new media was the fourth network. When there was only broadcasting, the new media was cable. There was broadcast and cable and then satellite came. I remember when Paramount created Entertainment Tonight and we actually put dishes on all the television stations [so they could receive the show]. And the stations paid us back for the dish out of the profits from Entertainment Tonight. That was new media. HBO was the first [pay-TV] service. That was new media. The whole revolution of home video started off as simply a distribution platform for movies, and we decided to use home video at Disney for original animated sequels. I can remember making a deal in the early days at Paramount when RCA was creating SelectaVision, which was the beginning of a home-video project.

So the idea that traditional media has been set for 40 years is completely erroneous. [Some people] lump together what we think of as non-Internet media as all having started on the same day. If you were running a company and you wanted to move forward, as I did in the ’60s and ’70s at ABC, Paramount and later at Disney, there was always a new platform that we were trying to figure out how to use to take content further into the marketplace.

Today we just happen to have this newest “new” media, which is much more ubiquitous and can take content to every corner of the earth, and I’m just trying to figure out how to create content that uses this distribution platform.

WS: Is managing the creative process and spotting talent for what you are doing today different than when you were doing it at Paramount and Disney?

EISNER: Yes and no. The strategy at Paramount, and then the strategy again at Disney, were the opposite of the strategy at Warner Bros., and both strategies worked. We were either number one or number two all those years. And our strategy was about new talent, unknown talent, movies made at less cost than the average cost, and that resulted in everything from Saturday Night Fever to Foul Play or Terms of Endearment. Warner Bros.’ strategy was about established giant stars, whether it was Barbra Streisand or Clint Eastwood, and very expensive movies. Both strategies worked. I think our strategy was economically very successful. Theirs was too, but our investment was low. Ours was a strategy of finding new talent. We found John Travolta. He was an unknown talent.

With the Internet you have no choice, because there is no economic model that allows you to go out and pay for top talent. Those who have tried it may have had some successful creative ventures, but they wouldn’t be successful financially.

So for my career I was bred on ABC, and ABC was last among three, and we couldn’t get any of the so-called A-list talent. We created all of the shows with people who were yet to become A-list and later became A-list, so ABC became number one by new talent. Paramount became number one by new talent. Disney, too, became mostly number one by new talent. I’ve been trained in that way, so it’s pretty convenient for me and exciting for me to deal with the Internet.

WS: Some media companies are struggling to get advertisers to move over to the web, and yet Prom Queen and The All-For-Nots have quite a number of sponsors. Is it their concept, your relationships, or something else that allowed your shows to have so many sponsors?

EISNER: In any new venture, advertisers have to be convinced. Everybody is sharing the same problem. I’m pretty knowledgeable about video-distribution sites like YouTube and Veoh. I’m on the board of Veoh. I do these programs you referred to. Getting sponsors and convincing them that is the way to go in a safe environment is evolutionary—it’s going to take time. So everybody is struggling with how to finance [programming for the Internet]. The key is to make the content inexpensively enough and professionally enough that you can survive without a line of sponsors driving rate cards up.

Yes, I’ve had sponsors, my relationships have not hurt, but I think the most important thing is that our shows have been very professional and well received. This is the challenge in a new marketplace, particularly in an economy that is not as robust as you’d like. But within five years… the Internet, in my opinion, will be one of the principal places where an audience will watch content, and then advertisers will be there.

WS: Are you offering advertisers new ways of getting their messages out?

EISNER: We’re working with them. We’re looking at product placement; we’re also looking at prerolls and mid-rolls and all sorts of different ways of doing it. I don’t believe advertising should be intrusive and I don’t believe, for instance, in 30-second prerolls before a three-minute piece of news or programming. Maybe it’s because I am impatient myself, but to sit there and watch a 30-second commercial before I look at a clip, I think that’s counterproductive.

But we’ve played with “Brought to You By.” We’ve played with ten-second prerolls. Some people must think 30-second prerolls are working because I see them all over the place, so maybe I’m wrong. I just judge everything by my own skin reaction, and if I just sit there for 30 seconds before I want to see any [short] piece of content, it’s a disappointment.

WS: Prom Queen has been sold to France, Japan and the U.K. What makes this series so appealing to international platforms?

EISNER: I think it’s because it is done well and people are surprised. My son is a director and it took me a month to get him to look at it! But then he said, This is really pretty good! You’ve got to convince people that at the price we are paying and with new talent, the content is really good and entertaining, and that’s the key. It’s worked everywhere in the world. In Japan we have sold the American version and we’ve sold the format. And we’re doing Prom Queen 3. We have other ideas to take it to other platforms. We were lucky we found four people who just did it really well.

WS: Tell us about the new sitcom, Glenn Martin DDS, for Nick at Nite.

EISNER: It’s pretty exciting. We had this idea—what job allows you to [pick up] and take your family on a cross-country trip? If I were a dentist I think I’d like to get away! So we have a dentist’s family traveling around America. It’s comedy. Nick at Nite’s prime-time schedule is for all of the family and not just for kids. They read the script, liked our idea. Then we shot the first act in stop-motion puppet animation. They said it was great, and we are doing 20 episodes.

We’re starting to show it internationally—Canada loved it. Hopefully we’ll deliver on the promise. The key is execution, always. You start with a very good idea, which I think it is. You put good people on it and then you have to hope that it gets executed up to the idea or better than the idea that you started with. Beating audience expectation—something I learned at Disney—is always a good idea.

WS: What other projects are in the pipeline at Vuguru?

EISNER: We have five or six different shows. We haven’t announced the names of them. Each one of them in its own right is unique, not like the one before. The advantage the Internet gives you is the ability to experiment as long as you do it in an entertaining way. We’re producing Back on Topps. It stars Randy and Jason Sklar. They are comedians, really funny. It’s 25 episodes, five minutes each. It feels like a cross between The Office and those great SportsCenter commercials. That’s finished and shot; we’re just finding distribution.

There are four or five more of those. We’re going to do maybe five to ten a year, all relatively fiscally responsible. Each one is very different.

The key on this, because there is so much out there, is how do you market it, how do you distribute it and how do you make sure the audience knows about it? When you had three television networks, the way I was brought up, it was pretty easy to let the audience know what was going on. In this area, the real challenge after you make something is not so much getting your advertisers, it’s getting public awareness of it. Unless you are going to do a cat on a skateboard or a topless woman mowing her lawn, [in which case it’s] pretty sure that an adolescent group will find it—other than that, you have to go back to your professionalism of how to market these shows.

WS: And that’s the same problem that existed years ago.

EISNER: The idea of how do you make a show and who’s in it and what’s a good idea and what isn’t a good idea has been pretty much consistent through a couple thousand years. How you market a show, how you get a worldwide audience or even a domestic audience to even know that the show is out there without complete exploitation is the real challenge of content on the Internet. Until aggregators decide that [professional] content is as important as user-generated content, you need to be up to the challenge.

WS: How long do you think it will take before aggregators realize that?

EISNER: I can’t decide whether it’s going to be evolutionary and will happen over time, or someone will create something like The Sopranos or Sex and the City or Happy Days or Seinfeld, that everybody in America just has to see and then the aggregators will say, Hey, wait a minute, this is more important than search. This is more important than user-generated. And that is on the horizon. I don’t know if it will happen from our company, but the likelihood is it will happen from somebody we never heard of.

WS: What motivated the acquisition of the stake in Veoh?

EISNER: I liked the technology, although I’m not a technologist. The founder, Dmitry Shapiro, is brilliant. The idea of a site that organizes video intrigued me. We didn’t know when we invested in it two or three years ago where it was headed, so it’s been a great educational experience. I’m a content guy, and investment groups and technology people [have invested in Veoh]. It’s almost as much educational as hopefully some day it will be financially successful.

WS: Are you looking to make other acquisitions?

EISNER: Well, we bought Team Baby Entertainment and Topps. We’re looking at acquisitions all the time. I’m a believer in value acquisition; not in buying something just to get a good article out of you, and then [finding] out that you overpaid for it. So it’s all about the ideas, the people involved and, of course, what is the cost. Whether you are spending $19 billion, which was the highest price spent for an acquisition, by Capital Cities/ABC, or you are spending $19,000, it’s still the same equation. Does the company justify the investment?

WS: Why did you choose the Italian word “tornante” for the name of your company?

EISNER: I’d like to say that I thought this through in incredible depth! I was on a bike trip in Italy and I was biking down a mountain and on every curve there was this word, “tornante.” I got to the bottom and I got a call from my lawyer in Los Angeles who said, I need a name for your LLC because if we are going to make these investments I have to put them somewhere. So I said, Call it Tornante.

I could sense it meant coming around the turn. I could sense it meant hairpin turn. I liked the word, it sounded strong. Of course I asked all my Italian friends, and as in English, most words have secondary meanings, and the secondary meaning of the word “tornante” appealed to me. It’s a strong word and it was available on the Internet. It implies a certain amount of danger, but it’s controlled, a certain amount of risk, but reward if you do it with sensibility. It means everything I think about.

WS: Do you enjoy your show Conversations with Michael Eisner on CNBC?

EISNER: I like the research. I like reading about people. And I like the actual sitting down with them and having a conversation. I’m only on once a month, so that makes arranging schedules difficult because I want people who are productive [and interesting], but they’re not always available. So the logistics are a nightmare, but the research and the show are fun.

WS: Tell me about The Eisner Foundation. That’s important to you.

EISNER: It is. It’s the first time anybody has ever asked me about it, ever. We’re in our tenth year.

I put a lot of the rewards I got from Disney into the foundation. My wife and I, my three sons and my three daughters-in-law are all involved. We are able to do things. If it weren’t for the foundation, the work would be less organized. Trent Stamp created Charity Navigator, a startup on the Internet that vetted thousands of charities. He has come on as the head of our foundation. I spend a lot of time on it.