By Gary Gentile
The Associated Press

LOS ANGELES - Michael Eisner, who helped transform The Walt Disney Co. into a media powerhouse, but has come under increasing pressure recently to improve the company's lagging performance, will retire after more than two decades as CEO, the company said Friday.

Whether the move will silence his most vocal critics and who will succeed Eisner remained in doubt.

In a letter written to Disney's board, Eisner said he intends to step down when his current contract expires Sept. 30, 2006.

"Until then I shall continue to exert every effort to help the company achieve our goals, to assist the board in selecting the new chief executive officer, and to make the transition expeditious, efficient, and smooth and easy," Eisner wrote.

Eisner joined the company in 1984 and transformed it, revitalizing its dormant animation efforts, expanding the theme parks and by purchasing Capital Cities/ABC in 1995.

But since 1996, Disney has stumbled - its stock price fell as ratings slipped at ABC, the company made some questionable acquisitions, and investors began to question Eisner's control over his board of directors.

Roy Disney and ally Stanley Gold, once Eisner's strongest backers, resigned from the board in November and championed an effort to oust Eisner.

That campaign culminated in an unprecedented vote of no confidence at Disney's March shareholders meeting in Philadelphia. Investors withheld 45 percent of their votes to re-elect Eisner to the board. As a result, the board stripped Eisner of his chairmanship.

Roy Disney and Gold sustained have said they would run a challenge slate of directors at next year's shareholder meeting.

But Eisner's announced retirement may undermine those efforts.

"I think this will relieve some of the pressure on the Disney board, and will likely go a long way to appeasing the concerns of many institutional investors as to a succession plan and also the poor financial and stock price performance over the past few years," said Greg Taxin, chief executive of Glass, Lewis & Co., an institutional investment research firm that had recommended withholding support from Eisner.

Disney's stock rose slightly on the news Friday, closing up 30 cents, or 1.4 percent, to $23.16 on the New York Stock Exchange.

Eisner has strongly endorsed Disney President Robert Iger as a potential successor. But other likely candidates include Paul Pressler, CEO of Gap. Inc., or Meg Whitman, CEO of eBay Inc.