Pivotal directors meeting may shape Disney future. (Media & Technology).

September can be an eventful month for Walt Disney Co.'s Michael Eisner. He was named chairman and chief executive on a September Saturday in 1984, and a key supporter, Texan investor Sid Bass, sold much of his Disney stake a year ago.

Now Eisner is preparing for a suspenseful board meeting on Tuesday, Sept. 24. Eisner said last month that he intended to reduce the board's size and make other changes to improve corporate governance "in the weeks and months ahead." Will he eliminate the directors who have become critics, or surprise everyone with a succession plan?

His actions, and timing, are crucial because Eisner's own fate appears linked to the fall schedule of Disney's beleaguered ABC television network. It's still very early, but last Tuesday night ABC was the most-watched network with its three new shows premiering (although Fox won the evening among the coveted young-adult group). It will be several more weeks before a fuller audience verdict becomes clear.

Old-time Disney employees and shareholders shake their heads in disbelief. Can the fortunes of the company--built on classic cartoon animation and wholesome theme parks-really hinge on Nielsen ratings?

Evidently so. Theme-park attendance has been depressed by terrorism and economic conditions beyond Disney's control. Investors say that ABC is something that Eisner could and should fix.

Last season, the audience for ABC's regularly scheduled prime-time programs declined 20 percent. ABC had no regularly scheduled series in Nielsen's top 20 programs, "somewhat shockingly, for a network that once prided itself on its top-rated sitcoms targeting young adults," Merrill Lynch analyst Jessica Reif Cohen wrote in a May report.

"From an advertising perspective, this lack of top 20 hits means that advertisers can buy around ABC, which has no top-tier inventory to package with its less desirable properties," Reif Cohen said.

Some restless investors want to give Eisner a nudge. Providence Capital, which describes itself as "a share-activist investment firm," organized a forum last Tuesday to discuss Disney's corporate governance, operational improvement and a succession plan. The idea, Providence President Bert Denton said, is to provide some input to the Disney board before it meets later this month. New York-based Providence owns a "small amount" of Disney shares, Denton said.

After the meeting, which Providence said attracted 36 institutional shareholders, Denton said much of the discussion focused on unspecified matters related to whether Disney has any succession plan for Eisner. Before the meeting, Daniel Pens, a senior analyst at Federated Investors Inc., which owned 2.1 million Disney shares as of June 30, said the gathering is "more indication that there's trouble at Disney."

Disney says it has "processes in place, which have been reviewed by the board, regarding long-term and short-term succession," spokesman John Spelich said without elaborating.

The board was swayed by outside investors once before, when the wealthy Bass family of Ft. Worth, Texas, threw its weight behind Eisner and the late Frank Wells as candidates to run Disney in 1984. But the Bass stake--which climbed as high as 25 percent that year--fell to 2.9 percent last September, after Sid Bass sold most of his to meet a liquidity need.

Disney has no current holders with stakes larger than 5 percent. Disney buffs recall that Roy E. Disney, whose late father, Roy O. Disney, co-founded the company with brother Walt, set events in motion in March 1984 when he resigned from the board and began accumulating more shares.

Eisner has devoted two days to meetings with investors and analysts in New York, to try to allay concerns about Disney stock, which is trading below the post-Sept. 11 prices of a year ago.

Disney paid $18.9 billion for Capital Cities/ABC Inc. in early 1996. Then Disney bought Fox Family Worldwide Inc., owner of the cable-television Family Channel, for $5.2 billion in October.

Some analysts criticized the Fox Family deal for its price, but Disney justified the acquisition by saying it expected to double the business's estimated annual earnings before interest, taxes, depreciation and amortization to $300 million in 2003.

It's difficult to know whether the network, renamed ABC Family, is going to meet that goal. Asked about its outlook for 2003, Disney's chief financial officer, Thomas Staggs, told analysts on a conference call last month that it would be hard to project numbers because of mixed signals about the economy.