Eisner's advice to striking writers: Blame Steve Jobs, not the studios

NEW YORK--In his keynote speech on Wednesday morning at the Media and Money conference hosted by Dow Jones and Nielsen, former Disney CEO Michael Eisner talked about writers as though they were a minority group that he didn't particularly understand well. "I like writers. Some of my best friends are writers," he said as though attempting to save face. But nevertheless, his foremost epithet for the ongoing Writer's Guild of America strike was "stupid."

"I see stupid strikes, and I see less stupid strikes. I see smart strikes," Eisner said in the keynote, which was structured as a conversation with Neil P. Cavuto, senior vice president and managing editor of Fox Business News. "This is a stupid strike."

The problem, Eisner said, is that the Writer's Guild is lobbying for a bigger cut of the profits from digital distribution--and according to the former Disney chief, those profits simply aren't there. Eisner, now the head of a private investment firm called The Tornante Company, has launched an online video studio called Vuguru, and said that it's still more or less a fruitless labor. Vuguru's debut series, a serial mystery called Prom Queen, "didn't make money," he said.

Cavuto, naturally, played devil's advocate and asked Eisner why he's sticking with it. "First of all, I'm doing it because I think it's fun, I think it's the future, and I think it's interesting," Eisner replied, "(but) I'm begging advertisers to give me enough money to break even."

At the moment, Eisner said, digital media is too new to be profitable. "The studios are there because they don't want to be in the transportation business and telling everybody that they're in the train business," he said. "They want to be in the entertainment business, and God forbid they should forget yet another distribution track." In other words, they don't want to get left behind.

He said it would take about three years for Web video and other forms of digital distribution to gain enough of a foothold to be profitable--and that's when the Writer's Guild would have a case to make. "What I'm saying is for a current writer, for six thousand people to give up today's money for a nonexistent piece today is stupid," Eisner asserted. "They can do it in three years. They shouldn't be doing it now." Right now, the profit from digital content is "a piece of a nonexistent flow, which won't be nonexistent, but it will be nonexistent for the next three years."

One thing Cavuto failed to ask Eisner, who estimated that the Writer's Guild strike would dissipate by the end of next week, was exactly how Web video would start to be profitable. Presumably, advertisers will warm up to the opportunity.

But Eisner acknowledged that the studios and networks aren't entirely faultless. Their problem, he said, is hyping up digital platforms as being more profitable than they actually are. "It's a double-edged sword. The studios deserve what they're getting, because they've been announcing how great (the Internet) is. But then they open their books."

Eisner, a well-known critic of Apple (whose CEO, Steve Jobs, is a powerful member of Disney's board of directors), suggested that the profits may be getting sucked up elsewhere. The studios "make deals with Steve Jobs, who takes them to the cleaners. They make all these kinds of things, and who's making money? Apple! They should get a piece of Apple. If I was a union, I'd be striking up wherever he is."

"Cupertino?" Cavuto offered.