The ABC/Disney Scam: Follow the Money, but to Where?

In the spring of 2004, Michael Eisner, then the Emperor of the Magic Kingdom, decided that Michael Moore's "Fahrenheight 911" was too political and had too much of a point of view to allow Disney to distribute a film that a Disney unit had made. After protracted and rather public disagreements, Mr. Eisner agreed to let another company (Lions Gate) distribute the picture, which became the biggest grossing documentary in history. On about $119 million of gross revenue, I'm guessing Lion's Gate made a pile, money that Disney should have made.

Keep in mind that Disney balked at a purely commercial transaction -- distributing a film to theaters -- albeit for purely political reasons. The unintended consequence of Mr. Eisner's action was to help promote the film and cheat his own shareholders out of the profits from that film, but doing the latter seemed all in day's business for Mr. Eisner. That's why Cinderella finally snatched back his glass slipper and sent him to never never land.

This weekend, we face the supposed non-Eisner, his successor Robert Iger, who seems perfectly content to air a miniseries that purports to dramatize the 911 Commission report in five or so uninterrupted hours. I'm not an analyst of Disney stock, but I just don't get it. Even if Mr. Iger learned from his mentor's mistake and decided to use ju jitsu to draw huge fire so that more people will watch the miniseries, how does this whole Disneydrama make any money for the shareholders?

Think about it. Disney commissions a $40 million miniseries that is written by folks who definitely have a point of view. Copies of the show somehow end up in the hands of Rush Limbaugh and other of his colleagues who definitely have a point of view. Some of those depicted in the film cadge a look, but are not given copies by Disney/ABC. Those some ones include former President Clinton and former Secretary Albright. They let ABC know that what they have seen is not only inaccurate, but quite irresponsible. The blogs go wild. The DNC and MoveOn and my own Courage Campaign all step in to send petitions and protest in person (as we did today).

But what does Mr. Iger do? So far, he keeps mum. Maybe he's fixing some of the scenes. My guess is that if it airs, it will be widely watched. That's what controversy does. But Disney is not selling advertising. And lots of people are mad at Disney and ABC so there could be collateral economic damage from people who decide not to support Disney or ABC. Regulators and courts may get involved again to look at the rights Disney has to use the public airwaves to make blatantly political statements in the heat of one of the most important mid-term elections in modern history. (Okay, I admit the last part is more like a fairy tale so long as the right wing retains power, but even dreams come true. Just ask Walt.)

What am I missing here? How does this ham-handed move serve the shareholders? Over at Fox, even though ratings are dropping, Mr. Murdoch openly takes a point of view and makes money at it. Fox has a built-in audience on which advertisers can rely. It's a virtuous circle: the newscasters lie; the commentators are sly; and the audience delights. It's clear. It's simple. And it works. But that's not what ABC is all about, is it?

I own Disney stock. I guess that makes me a schnook. I kept thinking that things could not get worse under the Eisner reign. They did. Then finally he left and in came his former deputy, allegedly determined to make Disney an open, streamlined company focused on making money for shareholders. And now this. At least with the removal of Michael Moore's feature from Disney's line up, the company made no long term enemies.

But just what the hell is Robert Iger doing? How is it possible to make money on a $40 million show with no advertising? Can he really expect to make it all up on DVD sales? If he cancels the show, how will he justify having spent $40 million for nothing? Didn't he just do this with Mel Gibson, another man with a point of view? How much did Disney lose by canceling his holocaust deal? Is it really worth putting the Disney/ABC franchise in question, especially if Congress changes hands and subpoenas are issued to determine the motivations for this show? And think of the management distraction and the headline risk. No matter how you slice it, this fantastic voyage is not good for the ordinary stockholders.

(Mr. Iger himself has little about which to worry from the controversy he has created. By my quick calculations, Mr. Iger has sold at least $40 million of Disney stock this year, which would just about finance this disaster movie. I sort of doubt he plans to give any of that money back.)

While it's possible that Mr. Iger thought it would be good marketing to anger the left, I wonder just what he's marketing. Is he really trying to help keep the right wing in office? What other explanation is there if it's not about money?

Disney's shareholders have a right to know. It's time for an explanation.

All of a sudden the two most opinionated animals in Los Angeles are the Fox and the Mouse. That Fox is sly; the Mouse seems quite demented.