Company Name: Walt Disney
Public Availability Date: October 15, 2004
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, N.Y. 10019-6150
TELEPHONE: (212) 403-1000
FACSIMILE: (212) 403-2000
October 15, 2004
DELIVERED BY HAND
U.S. Securities and Exchange Commission
Division of Corporation Finance
Office of Chief Counsel
450 Fifth Street, N.W.
Washington, D.C. 20549 .
Re: Shareholder Proposal Submitted by Matthew S. Perlman for Inclusion in the
2005 Proxy Statement of The Walt Disney Company
Ladies and Gentlemen:
This letter is submitted on behalf of our client, The Walt Disney Company (the
"Company"), which has received a shareholder proposal and supporting statement (the
"Proposal") from Matthew S. Perlman, which Proposal was submitted for inclusion in the
proxy statement and form of proxy to be distributed to the Company's shareholders in
connection with its 2005 annual meeting of shareholders (the "2005 Proxy Materials").
The Company hereby notifies the Securities and Exchange Commission (the
"Commission") and Mr. Perlman of the Company's intention to exclude the Proposal
from its 2005 Proxy Materials for the reasons set forth below. The Company respectfully
requests that the staff of the Division of Corporation Finance of the Commission (the
"Staff") confirm that it will not recommend any enforcement action to the Commission if
the Company excludes the Proposal from its 2005 Proxy Materials.
WACHTELL, LIPTON, ROSEN & KATZ
U.S. Securities and Exchange Commission
October 15, 2004
Page 2
Pursuant to Rule 14a-8(j) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), enclosed for filing with the Commission are six copies of (i) this
letter, which includes an explanation of why the Company believes that it may exclude
the Proposal and (ii) the Proposal. I. The Proposal Presented by Mr. Perlman
A copy of the Proposal is attached as Annex A hereto. For your convenience, the
text of the resolution contained in the Proposal is set forth below:
Now therefore be it resolved that the shareholders request the Board of
Directors to end liberal bias in its news telecasts and political-content films
by undertaking the following: 1. Establishing a policy of eliminating liberal bias in its television news
programming and its political-content films. 2. Establishing an Affirmation Action Program (no less vigorous than
programs undertaken to eliminate racial bias) to hire conservatives in
positions involving the content of television news programs and political-
content films including executives, producers, writers, reporters,
commentators, and anchors until full balance in the make up of the
Company staff is achieved. 3. Establishing personnel policies requiring adverse actions against any
employee who fails to comply with the policy for eliminating liberal bias,
and requiring that contracts with employees make failure to comply with
such policy grounds for termination for cause. 4. Hiring a recognized principled conservative to act as a ombudsman to
review compliance with the policy of eliminating liberal bias in television
news programs and political-content films. The ombudsman should be
given responsibility to deal with such bias and, if not corrected, to report it
to Board of Directors and the shareholders. II. The Proposal May Be Excluded Because It Relates to the Conduct of the Ordinary
Business Operations of the Company
Rule 14a-8(i)(7) permits the Company to exclude a proposal from its proxy
materials on the ground that it deals with matters relating to the conduct of the ordinary
business operations of the Company ordinarily and properly carried out by the
Company's management and staff. By calling on the Company to establish a policy of
"eliminating liberal bias" in the Company's television news programming and its
WACHTELL, LIPTON, ROSEN & KATZ
U.S. Securities and Exchange Commission
October 15, 2004
Page 3
"political-content films" and to appoint an ombudsman to oversee the same, Items 1 and
4 of the Proposal relate directly to the day-to-day conduct of the ordinary business
operations of two of the Company's core businesses, news programming and filmmaking.
The Staff has repeatedly affirmed that shareholder proposals concerning the
nature, content and presentation of products and programming by media companies are
excludable under Rule 14a-8(i)(7) as matters relating to the conduct of the ordinary
business operations of such companies. See, e.g., General Electric Company (January 10,
2002; reconsideration denied March 11, 2002) (concurring that a proposal requesting that
the board develop, implement and audit a process by which news programs broadcasted
by General Electric will be "fair and balanced to both conservatives and liberals" was
excludable under Rule 14a-8(i)(7)); General Electric Company (February 4, 1992)
(stating that a proposal requesting that the board take affirmative steps to eliminate the
"liberal bias that pervades the news programming at NBC" is "directed to the contents of-
news broadcasts, a matter relating to the conduct of the company's ordinary business
operations"); American Broadcasting Companies, Inc. (February 28, 1984) (same); CBS,
Inc. (January 27, 1984) (same); see also General Electric Company (January 27, 2000)
(concurring that a proposal requesting more "family-friendly" programming was
excludable under Rule 14a-8(i)(7)); General Electric Company (February 1, 1999)
(concurring that a proposal to prohibit "unbiblical" programming on NBC was
excludable as a matter relating to ordinary business operations).
The Staff has also recognized that editorial decisions regarding what programs to
produce, air or distribute are routine matters in the ordinary course of a media company's
business and part of the day to day operations of a media and news organization. See,
e.g., Gannett Co. Inc. (January 21, 1997) (concurring with the omission of a proposal
requesting Gannett to establish a policy prohibiting its newspapers from publishing anti-
Catholic and anti-Semitic material and appoint an ecumenical group to oversee the same);
CBS, Inc. (March 16, 1993) (concurring with the exclusion of a proposal requesting that
"management review the serious criticisms" of CBS's news reporting); Time Warner Inc.
(March 1, 1993) (affirming that "the nature, content, and distribution" of the registrant's
music recordings relate to its ordinary business operations).
In addition, by calling on the Company to adopt specific hiring criteria and
personnel policies and to include specific provisions in its contracts with employees (and
in calling for the appointment of an ombudsman to oversee the same), Items 2, 3 and 4 of
the Proposal also directly interfere with the day-to-day conduct of the ordinary business
operations of the Company that fall squarely within the functions of its management and
staff. As the Commission made clear in its Release No. 34-40018 (May 21, 1998),
decisions regarding hiring and terms of employment are "fundamental to management's
ability to run a company on a day-to-day basis." The Proposal is excludable since it
attempts to "micro-manage" the Company by specifying not only particular hiring criteria
WACHTELL, LIPTON, ROSEN & KATZ
U.S. Securities and Exchange Commission
October 15, 2004
Page 4
and personnel policies (including the hiring of a "recognized principled conservative to
act as ombudsman"), but even the types of termination provisions that should be included
in employment contracts.1/ In fact, the Staff has consistently sanctioned the exclusion of proposals dealing
with workplace management, employee supervision, employee hiring and firing,
personnel policies and conditions of employment, regardless of the industry of the
registrant making the no-action request. As the Staff put it in United Technologies
(February 19, 993), "[a]s a general rule, the Staff views proposals directed at the
company's employment policies and practices with respect to its non-executive work
force to be uniquely matters relating to the conduct of the company's ordinary business
operations. Examples of the categories that have been deemed to be excludable on this
basis are ... employee hiring and firing.. ." See also Exxon Corp. (December 31, 1996)
(employment-related matters, in particular, proposal recommending amendment of the
company's non-discrimination policy to include sexual orientation, relate to the conduct
of ordinary business operations); AT&T Corporation (December 20, 1995) (proposal
called for the company to rescind affirmative action programs for minority and female
contractors); Health Management Assoc., Inc. (November 2, 1999) (selection of
employees is a matter relating to the conduct of ordinary business operations); Atlantic
Energy, Inc. (February 17, 1989) (same). Even if, arguendo, only certain Items of the
Proposal related to the ordinary business operations of the Company, the entire Proposal
should still be properly excluded pursuant to Rule 14a-8(i)(7). See, e.g., Associated
Estates Realty Corporation (March 23, 2000) (proposal regarding both executive
compensation and corporate dispositions); Wal-Mart Stores, Inc. (March 15, 1999)
(proposal simultaneously seeking a report on labor practices and calling for wage
adjustments). Accordingly, based upon Rule 14a-8(i)(7), the Company intends to exclude the
Proposal from the 2005 Proxy Materials. The Company respectfully requests the Staff to
1/ Exclusion of the Proposal on this basis is consistent with the Staffs repeated concurrence with media
companies' exclusion of proposals that deal "with questions concerning the gathering and dissemination of
news, as well as the assignment of personnel, which involve decisions relating to the conduct of [such
companiese] day-to-day business operations." Turner Broadcasting System, Inc., April 17, 1991. The Staff
has issued numerous other no-action letters stating that proposals regarding personnel decisions as a way of
addressing the nature or content of media products and programming are excludable under Rule 14a-8(i)(7)
(or former Rule 14a-8(c)(7)). See, e.g., Turner Broadcasting System, Inc. (April 17, 1991) (proposal
dealing with questions regarding gathering and dissemination of news, as well as assignment of personnel)
and RCA Corp. (January 21, 1980) (proposal requesting the hiring and training of specialists with specific
qualifications to improve quality of broadcasting).
WACHTELL, LIPTON, ROSEN & KATZ
U.S. Securities and Exchange Commission
October 15, 2004
Page 5
confirm that it will not recommend enforcement action if the Company omits the
Proposal from the 2005 Proxy Materials pursuant to Rule 14a-8(i)(7). 2/
III. Conclusion For the foregoing reasons, the Company respectfully requests that the Staff
confirm that it would not recommend enforcement action if the Company omits the
Proposal from its 2005 Proxy Materials. If you have any questions, or if the Staff is
unable to concur with the Company's conclusions without additional information or
discussions, the Company respectfully requests the opportunity to confer with members
of the Staff prior to the issuance of any written response to this letter. Please do not
hesitate to contact the undersigned, Pamela S. Seymon, at (212) 403-1205.
2/ Although the Company believes that Rule 14a-8(i)(7) offers a clear basis for exclusion, we briefly note
that the Proposal is also impermissibly vague, as neither the shareholders nor the Company can determine,
with any reasonable certainty, what actions or measures have to be taken in order to implement the
Proposal (What constitutes a "policy of eliminating liberal bias"? Who qualifies as a "recognized
principled conservative"?), and is therefore excludable under Rule
14a-8(i)(3). See, e.g., The Boeing
Corporation (February 10, 2004); The Procter & Gamble Company (October 25, 2002); Puget Energy, Inc.
(March 7, 2002); Alcoa Inc. (December 24, 2002); Ann Taylor Stores Corp. (March 13, 2001) (same); and
Bristol-Myers Squibb Co. (February 1, 1999). In addition, Rule 14a-8(i)(6) is also a basis for exclusion
both with respect to Item 3 of the Proposal, given that the Company would be required to breach certain of
its existing contracts with employees to make failure to comply with a policy of "eliminating media bias" a
ground for termination for cause, see, , Selective Insurance Group, Inc. (March 24, 2003); Gillette Co.
(March 10, 2003); The Goldfield Corporation (March 28, 2001 ); AT&T Corp, (April 10, 2002), as well as
with respect to Item 4 of the Proposal, given that it is not within the Company's power to ensure that one or
more individuals meeting the Proposal's specifications of being a "recognized principled conservative"
would be both qualified and willing to serve as an ombudsman.
WACHTELL, LIPTON, ROSEN & KATZ
U.S. Securities and Exchange Commission
October 15, 2004
Page 6
Please acknowledge receipt of this letter and its attachments by stamping the
enclosed copy of the first page of this letter and returning it in the self-addressed stamped
envelope provided for your convenience. Very truly yours,
Pamela S. Seymon
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