By Gary Gentile
The Associated Press

LOS ANGELES - The Walt Disney Co. has made substantial progress quieting the dissent that reached a climax last March with an unprecedented vote of no confidence against CEO Michael Eisner.

The company is delivering on its promise of 50 percent earnings growth this year while spiffing up its amusement parks and reaching out to disgruntled investors and Disney aficionados who formed the core of the dissident group seeking major management changes at the media giant.

But the fight isn't over.

Eisner is almost certain to face a renewed challenge from former directors Roy E. Disney and Stanley Gold, who will likely put together their own slate of nominees for the board by year's end.

Since the March shareholders meeting, the two dissidents have led a steady, albeit more low-profile campaign against Disney through their Web site, SaveDisney.com.

Run from the Burbank offices of Shamrock Holdings, a firm operated by Gold that handles Roy Disney's investments, the effort is becoming more aggressive as Disney reaches the end of its fiscal year and the deadline approaches to formally launch a proxy fight.

Michael J. McConnell, an officer of the company and spokesman for Disney and Gold, said they understand the challenge of mounting an opposition slate and are committed to see it through.

"We've been the underdog before," McConnell said in an interview. "We believe strongly in what we are doing, that it is right and it is best for the shareholders and the other constituencies of The Walt Disney Co. and we are willing to take the risk."

In a recent article posted on the Web site, McConnell criticized the Disney board and said the company's recent financial performance is "a recovery from years of underperformance" and not sustainable.

"We see little evidence that anything has changed," McConnell said. "Look at the price of the stock. It's down since the first of the year despite some headline numbers. That's because the markets look forward, not backward."

Disney's stock traded as high as $28 in February during what turned out to be a failed takeover bid by Comcast. It's now in the $22 range.

While the stock price has declined, analysts noted that it is still outperforming most of its media peers. Disney has also more than doubled its earnings in the first nine months of the year to 88 cents per share from 42 cents in the same period last year.

Disney's progress, combined with efforts by Eisner and other board members to court large investors, may have robbed the opposition of much of its momentum.

"Eisner played his hand really well," said Jim Hill, a longtime company observer and early supporter of the SaveDisney effort who has since criticized some of its tactics. "By moving as slowly as they did, (the dissidents) have allowed him to regroup, to address their concerns."

The corporate infighting began late last year when Roy Disney and Gold resigned from the board, citing the poor performance of the company's stock since 1996. Their effort gathered momentum and led in part to decisions by major investors, including pension funds, to withhold support from Eisner and other board members at March's annual meeting.

The effort culminated in Philadelphia in March, when shareholders withheld 45 percent of their votes for Eisner and delivered similar votes of no confidence in several board members.

While the dissidents failed to oust Eisner, they did succeed in persuading the Disney board to strip him of his chairmanship.

The dissidents have used their Internet-based campaign to keep their cause alive and collect complaints that have targeted issues ranging from Disney's financial performance to peeling paint at Disneyland.

The SaveDisney.com Web site also offers everything from copies of speeches by Roy Disney to passionate diatribes filed under such pseudonyms as "Merlin Jones" and "Jim Douglas" - characters from classic Disney movies.

"It's sort of amateur night stuff," Hill said.

McConnell declined to say when the group might name an alternate slate of board candidates. He also refused to say whether Roy Disney or Gold would try to reclaim their old board seats.