Disney Pays High Price for ABC's L.A. Move.

On paper, the Walt Disncy Co.'s decision to move some 200 ABC staffers from New York to its Burbank headquarters looks efficient and synergistic, putting the network and studio on the same campus.

But experts say the transfer, which has already started and is expected to extend into the fourth quarter, could turn into a logistical nightmare that will disrupt lives and productivity for many years after the move. It is also likely to prove highly expensive for the Mouse House.

"The major impact is going to be a huge talent drain at Disney/ABC," said Brad Marks, who operates Brad Marks International, an executive recruiting agency. "The comfort level of Disney Chairman Michael Eisner having everybody at his side is coming at great expense -- the loss of talented people, which is good news for people like me."

Already, some of ABC's top New York executives, including network President Patricia Fili-Krushel, one of the few women ever to run a broadcasting division, have quit and found other jobs because they don't want to relocate to the West Coast. Such defections have prompted Eisner, a former ABC executive himself, to e-mail employees a message imploring them not to leave.

But leaving they are, in droves. Among the other senior staffers who have quit are Alan Wurtzel, senior vice president for research at ABC who left to become president of research at NBC; Valerie Schaler, head of ABC's daytime programming division who jumped to Studios USA; and Robert Fitzpatrick, a vice president for business affairs who is also joining Studios USA.

In all, as many as 50 of the 100 high-level executives being asked by Disney to move to Burbank have opted to quit instead, according to a report in Forbes. Replacing those executives will come at high cost.

"You don't realize the cost until you do it, and the cost of losing someone is very high, particularly at the upper end," said Ed Lawler, director of Center for Effective Organization at USC's Marshall School of Business. "It is probably one to one-and-a-half times their salary to replace and recruit someone else."

Disney's relocation package

The defections come despite the fact that Disney is bending over backward to ease the pain of moving, spending heavily on relocation consultants and other programs. Though Disney officials declined to provide figures, Marks estimated the company is spending between $50,000 and $75,000 per employee on the move.

Because the 100 executives are being accompanied by another 100 support staffers, that means Disney might be laying out anywhere between $10 million and $15 million on moving expenses. And that doesn't count the price of the new building the studio has built on its Burbank campus to accommodate the relocating executives.

ABC officials declined to give specifics but said the relocation package for those moving is "extremely generous." Disney also liked a relocation company to make the process easier for employees.

"How tough is this going to be?" said an ABC official familiar with the move. "The company is going to give a great deal of support and guidance to its people. We have hired relocation experts and real estate people to facilitate this move."

ABC officials declined to identify the relocation or real estate firms it has hired.

Disney is also encouraging newly moved employees to meet with people planning the move to share their experiences with L.A.

"Some will be single, some will be single with children, and some will be married with or without children," the source said. "The company is making an effort to meet a variety of needs."

Lawler said a company like Disney should and in all likelihood is developing programs for the purchase and sale of homes for relocating employees. "They will buy the house and help to find a new place out here," Lawler said.

Schooling advice would also be a major part of the move, especially in a city like Los Angeles where admittance into private schools is extremely difficult, and the public school system is inferior to those on the East Coast.

Another part of the job assistance program is likely helping uprooted spouses to get new jobs.

"This is going to disrupt the personal and professional lives of many top executives I have talked to," headhunter Marks said. "In many cases, you will have a spouse who is gainfully employed at the same or even at a higher level, and that is going to make any move difficult or impossible."

Loss at productivity

Experts cite another painful cost attached to the move: a loss of East Coast relationships and other factors likely to make the local executives less effective than they had been.

"What the company faces is a lot of lost productivity during the move," Lawler said. "Even when they get here, their productivity is destroyed because relationships have been destroyed or disrupted. They have to build relationships and learn the new system. It could take several years to be back to the same performance levels."

Last February, Bob Iger, who is now president and chief operating officer of Disney, wrote ABC employees that the move would give senior management at the network greater access to their colleagues at Disney and the Hollywood entertainment community.

But synergy and efficiency aside, ABC insiders say one of the key reasons for the move is Eisner's desire to deal with his executives "face to face" even in an age of teleconferencing and the Internet. Such personal meetings have kept ABC executives shuttling back and forth to Los Angeles from New York.

"It today's world there is usually flexibility in the corporate hierarchy. Accommodations are made. In this case, it is by edict -- move or leave," Marks said.

ABC will keep 5,000 employees in New York to man its news, sports and sales divisions -- which are traditionally based in the East -- as well as its radio and local TV operations.

A spokeswoman for ABC said there are no plans to move these operations to the West Coast, especially the sales department. All the networks -- including locally based weblets UPN and The WB -- keep their sales divisions in New York to be closer to Madison Avenue.

The new ABC building, according to real estate sources, is about 300,000 square feet and divided into three areas. Designed by the late Aldo Rossi, the building could house around 1,200 employees and should be completed by September. Besides the 200 New York executives, it will house staffers moving from ABC's current programming offices in Century City.

It will link to the main Disney campus by a bridge over Riverside Drive. One real estate source estimated the cost of the new facility, which will have six parking levels below the ground, at between $75 million and $90 million.

While some ABC staffers have already moved to Los Angeles, most of the move is expected to get underway during the summer, when families can begin finding new schools for their children. Staffers with families are expected to move first because finding schools is a high priority.

"We are trying to deal with this sensitively," the ABC spokeswoman said, "and not like a George Patton type."