posted 09-11-2004 01:32 PM                    

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BY GARY GENTILE

Associated Press

LOS ANGELES - Michael Eisner, who helped transform The Walt Disney Co. into a media powerhouse but has recently come under pressure to improve the company's lagging performance, will retire after more than two decades as CEO.

In a letter to Disney's board, Eisner said he will step down in September 2006, when his contract expires.

Eisner -- known as a workaholic who reads scripts at night, watches every television pilot and even helps in the design of theme parks -- is credited with revitalizing Disney's animation efforts and expanding the theme parks. His most dramatic move was the 1985 purchase of Capital Cities/ABC, which added ABC, ESPN and other TV networks to the mix.

But Disney has fallen on hard times in recent years amid sinking ratings at ABC Networks and some questionable acquisitions. Disney stock has stumbled, and investors began to question Eisner's control over his board of directors.

Last year, Roy Disney and ally Stanley Gold, once Eisner's strongest backers, resigned from the board and championed an effort to oust him.

That effort is joined by several large and influential shareholders, some of whom on Friday called for Eisner to step down sooner and resign his seat on the board as well.

''It is not clear to us how a two-year lame duck CEO will benefit shareowners, and his continued presence on the board would prevent the company from the clean break that is needed to restore investor confidence,'' said Sean Hannigan of the California Public Employees Retirement System, the nation's largest pension fund and a major Disney investor.

The timing of the announcement set off a guessing game about possible successors and raised questions about whether the move will silence his most vocal critics.

Roy Disney and Gold have sustained their ouster efforts and said they would run a challenge slate of directors at next year's shareholder meeting. Eisner's announced retirement may undermine those efforts.

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