The Iger Counter

When Michael Ovitz stepped down as president of Walt Disney Co. early this year, one name that immediately surfaced as a possible replacement was Robert Iger, president of ABC Inc.

But with the network he presides over sagging badly, Iger is beginning to look like just another Disney executive in a precarious position. The network’s plunging ratings, weakening fortunes and management turmoil over the last year have cast doubts on Iger’s leadership.

Both he and Disney Chairman Michael Eisner will face the fire beginning today, as affiliates meet at Disney World in Orlando, Fla., to preview the new fall prime-time schedule. In his first presentation to affiliates shortly after Disney purchased New York-based ABC last year, Eisner pledged improvements by way of apologizing for the network’s ratings slide from first to second place. ABC then slipped to third in the number of households it reaches. (In key demographics watched by advertisers, it came in second, beating Fox by only a nose.)

Iger, who says a network turnaround is his top priority, could look like a hero if ratings reverse. The network business is cyclical as hits fade and lagging networks rise.

But television executives are not optimistic about a quick reversal at ABC. While Iger calls his new schedule opportunistic, many in Hollywood and on Madison Avenue see it as desperate, with more new shows to promote than its rivals and few hits to replace aging favorites such as “Home Improvement” and the just-retired “Roseanne” and “Coach.”

What’s more, ABC has given critics a reason for doubt by allowing rumors of impending management changes to linger. Since she became president of ABC Entertainment a year ago, under a cloud of controversy and corporate intrigue, Jamie Tarses has been hamstrung by speculation that she wouldn’t last.

The pressure on Iger to help Disney justify its $19-billion purchase of ABC could mount next year as special acquisition accounting that is propping up ABC’s financial performance begins to phase out. While other media stocks have stagnated under the weight of heavy debt, Disney remains a darling on Wall Street, soaring more than 50% since last summer on the strength of its theme parks and ABC’s ESPN sports cable powerhouse. Shares closed Monday at $80.875, down $1 on the New York Stock Exchange.

Disney has taken full advantage of accounting rules that allow acquiring companies to write down the value of assets in a purchase. ABC, which in addition to the broadcast network includes 10 TV and 20 radio stations, ESPN and the Disney Channel, accounted for about a quarter of Disney’s roughly $3 billion in operating profit last year. But more than half the $400 million in earnings from the ABC network derived from the special accounting. “I don’t know how Disney stock has reached the level it has, considering that purchase price accounting is going to run out over the next year,” said one Wall Street analyst.

People close to Iger, 46, say he also is still adjusting to the meddlesome culture of his new employer. A skilled political survivor who, as one former associate said, “manages upward better than anyone in the business,” Iger blossomed in a much different environment.

Former Capital Cities Chairman Thomas “Murphy set a climate that was absolutely straightforward and decentralized, where managers had a strong sense of proprietorship,” said one executive close to ABC. “He set out financial and operational goals, let managers carry them out, then fired or hugged them depending on how they did.”

Disney’s culture is quite different. “Eisner is a creative genius and micro-manager,” said the executive.

Executives at Disney and ABC say Eisner is moving his own executives into positions around Iger. “Michael trusts Bob, but it is the Disney style to create a competition between executives,” said one Disney executive.

Some analysts believe Eisner is grooming Steve Burke, the former head of Euro Disney and now president of the ABC broadcast group, for a top management slot, perhaps as Iger’s successor. Burke is the son of retired Capital Cities/ABC chief Daniel Burke.

Sources say Eisner recruited Preston Padden last month to become president of ABC Television Network, with responsibilities for affiliates, sales and research, but not entertainment, which reports directly to Iger.

Iger says both he and Eisner recruited the executives to ABC. “I created a job for Steve and he quickly became a great support to me,” said Iger. “Padden was a very obvious candidate to fill the network position, and Michael and I recruited him together.

Charming, ambitious and as handsome as any anchor on ABC, Iger found that his polished presentation, control under fire and thoughtful and quick command of details propelled him quickly through the ranks at ABC. He was the handpicked successor of Murphy (one of the most admired men in American business) and was due to step into his shoes as chairman until his boss sold the company to Disney.

During his 23 years at ABC, Iger held eight positions over nine years at ABC Sports and in 1989 became president of ABC Entertainment, having never read a television script. In Hollywood, he made a name as a risk taker, backing experimental shows such as David Lynch’s eerie drama, “Twin Peaks,” and Steven Bochco’s police musical, “Cop Rock.” Those shows may have failed, but Iger managed to close the ratings gap with the leading network while increasing the profitability of prime time.

He was promoted to president of the network in 1992 and two years later became president of Capital Cities/ABC.

Hollwood sources say the network is in trouble today because of the dearth of hits arising out of Iger’s eight-year tenure. And many say he is partly to blame for cost inflation that is crippling the television business.

As president of ABC Television, Iger structured two groundbreaking deals to jump-start the network’s entry into program production, forming joint production ventures with two newcomers, DreamWorks SKG and Brillstein-Grey Entertainment.

Though the deals grabbed headlines, they have cost ABC upward of $200 million combined, with little to show for the investment. The also set off bidding wars for talent and writers.

ABC has also been marked by management turmoil since Disney’s purchase. Iger’s choice as successor to the powerful head of news, Roone Arledge, was widely viewed as uninspired by many at ABC News, where morale has suffered because of falling ratings and recent legal setbacks. The new president of news, David Westin, a lawyer by training, most recently served as head of ABC Television. He had no experience in journalism, and many insiders wonder how long he will last under Arledge, now chairman, who has endured more than one successor.

At the same time, rumors about Tarses’ job security continued to circulate. Ovitz and Iger had made a run at Tarses while she was still NBC’s top development executive without telling ABC veteran Ted Harbert, who was alerted by a top executive at NBC that he was about to be replaced.

Iger admits he is partially to blame for bungling the handling of Harbert, who was bumped up to chairman before leaving ABC to join DreamWorks in February.

Harbert’s departure forced Iger to take a more active role in Hollywood, regularly attending development meetings, calling on agents, reading scripts and green-lighting pilots.

“Ted’s leaving was difficult,” said Iger. “It left us with something of a void. I decided to be as involved as I could, but that’s not an easy task since I’m 3,000 miles away.”

Some in Hollywood view Iger’s activism as a vote of no-confidence in Tarses, 33, a gifted script doctor with little experience in other aspects of her job, such as promotions, TV movies, and affiliate, advertiser, press and talent relations.

“Jamie is still new and inherited a division that is somewhat light in management and experience,” Iger said in a telephone interview. “I have direct experience in that area and have rolled up my sleeves with enthusiasm to support her.”

Iger declined to say whether Harbert’s position would be filled.

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The ABCs of Trouble

Iger Faces Challenges...

Robert Iger, 46, rose quickly through the ranks at ABC to become president in 1994 and part of Disney’s team after its 1996 acquisition. But now he faces tough challenges:

* Sagging ratings: See chart at right.

* ESPN / cable: ABC canceled plans for a news and a soap opera channel. But ESPN remains a ratings dynamo.

* Management turmoil: Rumors persist that Jamie Tarses will be replaced as the head of ABC Entertainment.

* Stock price worries: See chart at far right.

ABC, the Nielsen ratings leader when Disney announced the purchase, slid to third place in the season just ended:

(please see newspaper for chart)

Disney is a darling on Wall Street, but analysts worry that special acquisition accounting due to be phased out next year will dampen performance.

Monthly closes and latest:

(please see newspaper for full chart information)

MONDAY: $80.875, -$1

Researched by JENNIFER OLDHAM / Los Angeles Times