CNBC Exclusive: CNBC Transcript: Former Walt Disney Company Chairman & CEO Michael Eisner Speaks on CNBC's "Closing Bell with Maria Bartiromo" Today



Following is the unofficial transcript of a CNBC EXCLUSIVE interview with former Walt Disney Company Chairman & CEO Michael Eisner. All references must be sourced to CNBC.

MARIA BARTIROMO: Thanks so much. And I'm here right now with Michael Eisner, former chairman and CEO of the Walt Disney Company, as well as the founder of the Tornante Company. Good to see ya, Michael.

MICHAEL EISNER: Good to see ya, Maria.

MARIA BARTIROMO: Thank you so much for joining us. So tell us about the Tornante Company.

MICHAEL EISNER: Well, really it's the company that I put together to do all the things I'm doing post-Disney.So it owns-- Topps, for instance-- you know, the baseball card company, and then a lot of digital companies, television shows, movies. It just is-- a catch-all.

I was actually on-- a bike trip in-- in Italy and-- going down a steep mountain, and every curve it said,"Tornante." And as I got to the bottom, my lawyer called up and said,"Hey, I'm filing your-- you know, your company. I need a name." I looked up and said, "Tornante." So there's not an enormous amount of thought in it, except for it means hairpin turn. Seemed appropriate; that's the name of my company.

MARIA BARTIROMO: But does the company really, in terms of what it owns-- you were one of the early seers in--in the digital world and how things were about to change. Tell me how the media landscape looks today and what you've overseen over your long tenure-- in this business?

MICHAEL EISNER: Well, one of the good things about a small private company, and I worked for 40 years in a public company-- so a private company has a bunch of advantages, some disadvantages-- capital markets and so forth. But you can do things that is almost impossible in a big company.

For instance, we decided early on, way before anybody thought it was a good idea, that story-driven content, not just news-driven content (you know, the cat on the skateboard) but real story-driven content would at some point create new platforms. So we started making story-driven content very inexpensively. The first one was Prom Queen, and it went on MySpace as the first-- distribution channel.

And that has grown. Everybody tried to follow us but they couldn't do it at our budgets, 'cause they were big companies. And it's moved along and moved along; we've made 30 or 40 different movies that are sold all over the world. They play first in the United States on Yahoo or on AOL or now it'll be on Xbox or Redbox or, you know, Intel or,you know, all these things that are-- that are-- Netflix, Hulu and so forth.

And it has evolved to finally House of Cards, which was on Netflix, which may win even the Emmy, which has now defined a new platform. And what's happened is there's always been this conflict, you know-- who is the king and who is the-- queen? Is it distribution or is it content? I've always said it's content--

MARIA BARTIROMO: Content is king--

MICHAEL EISNER: --that was my--

MARIA BARTIROMO: --you said.

MICHAEL EISNER: That was my theory through my whole career. And interestingly now, it's been proven unequivocally. Content made AMC. Before Mad Men, Breaking Bad, Walking Dead,AMC was a tiny little channel. PBS, which has always been extremely important,they do Downton Abbey and they have nine million homes.

Obviously HBO was defined, in a way, by Sopranos and other shows. You know, Nurse Jackie, et cetera, etcetera, The Veep; they all are defining their channels. And one of the problems with the broadcast networks is there is no definition with them anymore, 'cause broadcasting is challenged for a lot of reasons we can discuss. But this idea of content really being more important than the distribution is, to me, more true than ever. Although they do need each other, obviously.

MARIA BARTIROMO: Yeah. And this-- really interesting. So is this the future? I mean, is it going to be where you can produce programming at a lower cost than you had to do it a decade ago? And it's going to start online?

MICHAEL EISNER: I don't know if the lower cost thing ever works. When we turned Disney into-- digital animation from analog animation, the justification to me by everybody was,"This is gonna be cheaper." In fact, it w-- wasn't cheaper because our artists found a way to use this great digital world to just do m-- greater things. And Pixar's a good example of that.

So will it, in the end of the day be cheaper, or will it just be that there are many more opportunities for programmers, and they'll be still very high end; there'll be medium end, and then there'll be the disgusting lower end, and I won't describe what I think that is. But, you know, a lot of it is reality programming and stuff like that,which is not my thing necessarily.

But I do think it is adifferent world. When I was working at ABC, there were three outlets, and thenthere were the movie companies. Now we just made two animated pilots, which Imade myself with Tornante. There are 18 or 20 different places that you couldsell them to.

So if you get a "no" at ABC, that was an end-- end-of-the-game "no" because CBS and then Fox or ABC-- or NBC would never buy a "no" from one network. Now, a "no" is an opportunity to pick up your phone and call somebody else. And then, if you hit, whether it's a-- you know, a Mad Men or any of these shows, and it so makes that platform that AMC now is a big deal whereas, you know-- it was reruns and movies before. It wasn't such a big deal.

So it's pretty interesting. And if you look at HBO or Showtime, when I was-- at Disney or Paramount, our movies were their-- were backbone. It was still content. But now their backbone is more this great original programming that you find on cable.

MARIA BARTIROMO: And initially,you know, Netflix was the distribution, but now Netflix is doing original content as well. You were an early seer and a believer, investor, in Netflix as well.

MICHAEL EISNER: I think they're-- you know, I don't wanna sell too much a company that I'm an investor in. That feels bad form. But when Netflix had this little problem, the stock went from $300 to $50; I thought, "Gees, I'm jumping in." I think--Reed Hastings is brilliant and Ted Soran-- Sarandos is brilliant in buying programming.

And what they did was they recognized the efficiency of digital distribution. And I think something like one third of all internet use is being used by Netflix subscribers. They --just made this giant deal with Dream Works, I think $700 million, and what isit? It's for new content. So-- nobody else is doing that. Negative. I mean,Hulu is for sale. They may end up doing that; it's a little more difficult. So that world is the exciting new world.

MARIA BARTIROMO: So this is a big threat to the broadcasters, the typical-- broadcasters?

MICHAEL EISNER: Well,everything is a threat as you get more and more competitors. The broadcasters are gonna have to realize that it's not only live sports and live news and reality shows, 'cause they're-- it-- there are just not enough of them, of that,and it's just too limiting. They're gonna have to compete eventually in the cable-quality entertainment. I mean, it's amazing that everybody now thinks of quality as cable. When you talk to-- an agent--

MARIA BARTIROMO: Yeah, you're right. Good point.

MICHAEL EISNER: --or you talk to an actor, five years ago they-- the last thing they wanna do would do a cable show. Now that's the first thing they wanna do. It's-- the whole world is turned upside down. Now-- you go in to a television network, many of the shows are all-- are similar. You don't have-- you know, miniser-- we started at ABC with miniseries. We put on, you know-- Rich Man, Poor Man. We put on Roots.These--


MICHAEL EISNER: --were big events. The old big events have moved to cable companies you may have never heard of.

MARIA BARTIROMO: And these cable companies, and even the cable channels that-- an ABC owns-- I mean,obviously ESPN-- has been the fuel for so long. But they are really the rock solid part of the business. That's where the jewel is.

MICHAEL EISNER: When we bought Capital Cities ABC in Sun Valley-- although it really was-- only the final piece of it was in Sun Valley, I had Larry Tisch, who ran CBS, Scott May,in the parking lot offering me to sell CBS. I walked down the street; I ran into Tom Murphy and Warren Buffett and they-- I mean, they're making it very simple, talked about Capital Cities ABC.

CBS was half the price. ABC was $19 billion, it was the highest ever paid at that time for any company. But it had the future, and the future was, at that point, cable-- networks, of which the leading cable network on the com ('cause it was on the com) was ESPN.But who knew that-- that-- that the Disney Company would be getting from 80 million or 90 million homes $5 a month-- per month, (every month, for ESPN subscribers everybody else. So itI don't know, it--

MICHAEL EISNER: --ESPN is probably half of the Walt Disney Company now.

MARIA BARTIROMO: Right. Are you happy with what's gone on at the Walt Disney Company? As an investor, as the former leader?

MICHAEL EISNER: Yeah. I think-- you know, I worked with Bob for a decade-- after we acquired-- Bob Iger, that is. The management, the top four people are still the top four people when I left. Bob was clearly the right choice-- to succeed me. He's done an excellent job. And what he's done is he has-- drunk the Kool-Aid, if you will, on content and what Marvel and Pixar and-- Lucas film.

MARIA BARTIROMO: That changed the company too.

MICHAEL EISNER: Well, what it did was it said, "We're not relying only on our own production. And we understand that content is king. We have our distribution channels in ABC and ESPN and, you know, Family Channel," and so forth. And-- let's leave that aside. Let's not go by cable, 'cause we don't know where cable's gonna go.

But content will last forever. I mean, take the movie companies. You can't kill 'em with a stick. They've been ar-- you know, they don't go away. Eighty years, they're still there. Just when you think one of 'em's gonna go, some big hit movie comes and they get saved for another ten years.

The content that we make that is distributed exclusively, that you can only get at whatever the channel is or whatever the network is or whatever the movie theatre is, is invaluable. And that is something that I think everybody is-- now agrees with.

MARIA BARTIROMO: Yeah. So fast-forward and tell me about Tornante with investing in two online Web video companies. You mentioned earlier VUGURU, a sort of Web studio, and-- Veoh, arival--



MICHAEL EISNER: Yeah. We invested early in Veoh. It was behind YouTube. And we couldn't quite-- at least I couldn't-- we were a minority investor. But to me, it was all in that era--that era being like four years ago or five years ago. Talking about, like, 100 years ago.

MARIA BARTIROMO: So five minutes ago.

MICHAEL EISNER: Five minutes ago. And this whole long tail theory that people are gonna be interested in fly fishing and chess and all that stuff. And my view has always been more the House of Cards thing: Try to get a big audience. And what happened is Hulu came in and Netflix came in and YouTube was dominant, and Veoh could not make it on just, you know, short little pieces. And so Veoh was not successful. VUGURU on the other hand, which did make long-form, story-driven content, is really successful.

MARIA BARTIROMO: Tell me about-- the long form. Do you prefer doing long form in this content-- world,or short form? I mean, what works best? Because s-- some of the movies, they were doing these big expensive movies, and then that changed and they wanted to just do quick, simple, because that's what was gonna sell with the people. But I guess-- a large, big event still works.

MICHAEL EISNER: I think I'm eclectic. And to me, the grass is always greener on the other side of the fence. If I see a great comedy, you know, in the movie theatre, I'm going to see-- you know, Star Trek the next week. If I see, you know, Modern Family on ABC, I'll willing to see CSI on CBS. I like a lotta stuff, but I get very bored very quickly. So I-- I am happy to make a couple of animated shows that are gonna go on. I'm doing motion pictures--

MARIA BARTIROMO: With Universal.

MICHAEL EISNER: Yes. And I like motion pictures; I don't have a formula. If somebody walks in and says Saturday Night Fever or Ordinary People or-- Raiders of the Lost Ark, then they're not related. You know, Grease or whatever it is. I like that. I don't think every movie has to be Batman or Superman or these event movies.

So I'm interested in--totally eclectic type of stuff, and I think the audience is too. They're gonna get tired eventually of one-- maybe at the end of the summer one big event blowing up the White House a week. I mean, it's just too much.

MARIA BARTIROMO: Right,right. Let me ask you-- there was a lotta talk recently-- an article in the Journal today about, you know, John Malone might be now thinkin' about the--new moves over at Time Warner Cable. Do you think we're gonna see more consolidation in the business?

MICHAEL EISNER: I don't know.I mean, there's already been a tremendous amount of consolidation. I-- you may see the opposite. You may see some of these big companies--

MARIA BARTIROMO: Getting bigger.

MICHAEL EISNER: G-- no,getting smaller. That's not the worst thing in the world. I mean, ABC, we sold our radio company, luckily before we looked at the future. We saw what was happening in the digital world and we decided radio was something that we didn't have to have. I think companies may be shrinking; it doesn't mean they won't change their assets. But they may be shrinking assets.

MARIA BARTIROMO: So-- so you think more specialized, focusing on whether it be content-- and you don't need to have big supermarket companies anymore?

MICHAEL EISNER: Well, I like supermarket companies because I-- helped build a big supermarket company. We did very well doing that. But you-- but there is no rule. You've gotta go with the flow. You've gotta sense whether an era is coming to an end. What never comes to an end, in my opinion, as we've said before, is story-driven content.

But how that gets to a consumer, it changes. And whether it's cable, you know, where you dig the streets up, or whether it's satellite where you don't, or whether it's-- has more and more-- fibers into the home? I mean, that's where I think it is going,worldwide.

MARIA BARTIROMO: How did you see this so early on? I mean-- where are you getting your ideas at this point?Then-- give us some advice for the current media landscape executives there who are watching this business change very fast.

MICHAEL EISNER: Well, I'm watching your show, so that's


MICHAEL EISNER: I mean, I don't know. I'm just inquisitive. I went this weekend to a big electro, you know, dance music festival in Las Vegas. I was twice as old as the nearest person to me; they had 350,000 people in Vegas. There's a whole new world out there-- what disco was in the '60s is, you know, EDM today. So who knows? Yo ujust have to-- be alive. And sense what's going on and--

MARIA BARTIROMO: Watch what's going on.

MICHAEL EISNER: And, you know, I get real excited about going in and buying-- a new phone and a new iPad. And then you see-- I have-- a bunch of grandchildren all under five. They can work the iPad. They get to Netflix; they push a button (I don't know what button they're pushing) and they get to the children's section.

MARIA BARTIROMO: It-- it's amazing, yeah.

MICHAEL EISNER: And if you see that, you realize-- 20 years ago, Barry Lenardsen, who's a director, said to me, "I don't understand my four year old. He's watching Saturday morning television and-- the cartoon, and he goes up to it and keeps tryin' to push--"

MARIA BARTIROMO: Oh, as if it's an iPad.

MICHAEL EISNER:--"replay." But before iPad, it was-- it was VCR. So-- watch the children. They know how to do it. They know where the action is. We just--


MICHAEL EISNER: --follow them.

MARIA BARTIROMO: Michael,it's great to get your perspective on the business. Thanks so much.

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