02 December 2003

Something More About the Mouse
Disney has been in the news of late for its problems with corporate governance. The really sad thing is that the corporate culture is such that there is no real solution for Disney. Bluntly, Disney is founded upon turning public domain and other peoples' intellectual property into its own. Although Peter Pan is perhaps the most obvious example (and, unusually, a not unsympathetic one, as the UK government's action in assigning all benefits to Peter Pan to the Greater Ormond Street Children's Hospital forever violates about six principles of international copyright law), there are many others. The long-running lawsuits over Winnie-the-Pooh merchandising rights; the Mickey Mouse Sonny Bono Copyright Term Extension Act of 1998, which prevents "Steamboat Willie" from entering the public domain on 01 January 2004, as it was scheduled to do; the gross distortions of "fairy tales" from legend in the name of "family-friendly cartoons"; ABC News, with its (far from unique) history of misusing visual images; I won't go on.

   The problem is not corporate governance. The problem is a corporation that cannot be governed under traditional concepts of corporate governance by its very nature. Some of this could have been prevented had any of several acquisitions been subjected to realistic antitrust scrutiny by people who understand both (a) entertainment law and culture, and (b) entertainment industry accounting. Unfortunately, I don't know of any, so perhaps that's a forlorn hope. And it's not unique to Disney; IMNSHO, Viacom, Vivendi Universal, Bertelsman, and several others have similar problems.

   Not suggesting that there is a single right answer, but does perhaps the nature of a corporation's product properly have something to do with the right way to govern it? The principles applicable to GM certainly don't apply to Disney or Viacom, and in turn don't apply to Pfizer. If nothing else, the incompatible objectives and timeframes must influence not just the substance, but the very structure, of governing those corporations. Otherwise, we end up treating cartoonists like assembly-line workers in Detroit. Then, when foreign labor becomes cheaper, cartoons won't be made in the US anymore; instead, they'll move first to Japan, then to Korea, and probably then to China and India. Come to think of it, that's exactly what has happened…

   <SARCASM> Thus, I make the radical suggestion that the purpose of a business enterprise must influence its governance far more than its formal composition. Any military officer could have told you that, though. </SARCASM>