CNBC’S David Faber is reporting that the fundraising effort by 70-year-old Michael Eisner, the former chairman/CEO of Walt Disney, kicked off last week and is being led by JP Morgan. He wants to raise $800 million for a new film and television production company, says Faber quoting people who have been approached about investing. What’s sought is $400 million in equity in a private placement and place $400 million in debt financing. The Eisner led production company hopes to make four to five films a year and produce two to three scripted television shows, CNBC says according to people approached to invest. Faber says Eisner is expected to invest $20 million of his own funds in the new production company. Presently dabbling in Internet content through Tornante and the occasional television program, Eisner is unquestionably a shrewd and successful businessman. But, Faber, analyzes:
Despite that track record, JP Morgan could have a tough time raising $400 million in cash for the effort, while also syndicating a revolving line of credit for a like amount. First off, it’s a very big amount of money for a start-up production company even with Michael Eisner at its helm. It’s also not clear whether Eisner has signed a distribution deal with any of the major film studios or whether Eisner will receive producing fees on the films and movies separately from the company, a potential non-starter for investors.
Then there’s the fact that ‘FrankenEisner’ isn’t popular in Hollywood or on Wall Street anymore. When he finally left Disney in 2005 after a 21-year stint, it was with his tail between his legs after receiving a resounding 43% no confidence vote from shareholders a year earlier and losing the chairman title. Eisner also has a history of not telling the truth to his investors: many examples of this came out during the shareholders lawsuit against Disney because of Eisner’s hiring and firing of Michael Ovitz when attorneys compared his public statements about the company to his private memos detailing what was really happening. He also became infamous for putting together one of the most “insider” boards in corporate history while at Disney.