DisneyWar

by James B. Stewart

  Katzenberg waited anxiously. Surely Eisner knew he was there; he had to have seen his car. Each time the phone rang, he thought it must be the summons from Eisner. As time passed, other studio executives dropped by, shocked and apprehensive and, at the same time, intensely curious about Katzenberg’s future. Katzenberg did his best to reassure them, urging them not to let Frank’s death distract them from work. Finally he couldn’t take the suspense any longer, and dialed Eisner’s office. Martin answered.

  “Do you need anything?” Katzenberg asked. “Is there anything I can do to help?”

  “He’s in a telephonic board meeting,” she answered. The directors had convened by telephone to discuss the Wells succession issue, and were at that moment making Eisner chairman and president.

  Katzenberg was stunned by the news. He was the number three executive in the company; Eisner hadn’t spoken to him, and yet he had already convened a board meeting.

  Katzenberg tried to turn his attention to his work. As always, there was plenty to do. Beauty and the Beast was about to open on Broadway; Lion King was in the final edit; Lasseter and the Pixar people were trying to schedule a screening of Toy Story.

  Finally, at about 11:30, Martin called, and Katzenberg’s expectations rose again. But it was just to say that Eisner would be going ahead with his regularly scheduled Monday staff lunch.

  Eisner’s decision to assume the title of president himself was meant to reassure Wall Street, but also to send a firm message to Katzenberg. That morning, Eisner had again discussed the matter with his usual circle of close advisers: Bass, Gold, Russell—and Litvack. They agreed that, at least as a temporary measure, Eisner should assume Wells’s titles. The subject of Katzenberg did come up. Eisner told Roy that “Jeffrey wants to be president,” and Roy responded that “I don’t think that’s a good idea.” Although Roy felt Katzenberg’s behavior had been improving, he still thought he spent too much time talking about “I” rather than “we,” and that he was rude to subordinates. But Roy insists that “Eisner never asked me to make Jeffrey president. Never.”

  Indeed, Eisner had already complained about Katzenberg on so many occasions—including the letters to Russell—that no one on the board considered Katzenberg even a remotely serious candidate. When he mentioned Katzenberg to Gold, Gold didn’t take the suggestion seriously, and rejected it out of hand (though both Gold and Roy maintain that Roy never threatened to quit the board if Katzenberg were made president, as Eisner later said).

  As soon as he was off the phone, Eisner went into Wells’s office, closed and locked the door, and searched Wells’s desk and files.

  A little before noon, Katzenberg dropped by Eisner’s office, and the two walked to the elevators and then to the executive dining room in the building’s rotunda. Katzenberg said nothing about how Eisner had ignored him and Eisner avoided the succession issue. Katzenberg used the opportunity to urge Eisner to continue speaking to the press about Wells, saying his comments in that day’s papers were “great” but that Eisner “had to do more” since others would be talking. Given his feelings about Katzenberg, Eisner was alarmed that this was a veiled threat that Katzenberg would start talking to the press, trying to position himself as Wells’s successor. Katzenberg’s remarks agitated and upset Eisner; he later said he felt “cornered.”

  As they walked into the dining room, Jody Dreyer (John Dreyer’s wife), Eisner’s assistant who had replaced Art Levitt, was already there with copies of the freshly drafted press release in hand, announcing that Eisner would assume the title of president. She handed a copy to Katzenberg. Eisner hadn’t planned for Katzenberg to learn the news from a press release, or in so public a setting. Katzenberg read the release and said nothing. Roy was also on hand; Eisner had asked him to be there.

  The lunch, as Eisner later described it, was “awkward and sad.” There are people who instinctively rise to such occasions, but by his own admission, Eisner isn’t among them. He felt uncomfortable talking about someone so recently deceased, and his discomfort spread to other participants. Toward the end of the lunch, Eisner confirmed what they’d already read in the press release, which was that he would be assuming Wells’s titles and duties as president and chief operating officer. They discussed the release and the likely press reaction, and Eisner stressed that only he and Roy would speak to the press. Much to his relief, Katzenberg agreed to this restriction.

  As they left the room, Katzenberg came up to Eisner. “That’s entirely appropriate,” he said. Eisner was pleasantly surprised that Katzenberg was being so mature about it. As he later put it, he thought he’d “dodged a bullet.”

  In fact, Katzenberg was devastated, so upset that he hadn’t brought himself to look directly at Eisner during the lunch and barely ate. The minute he saw the press release, drafted without his knowledge and without a single consultation, he knew that his nineteen-year relationship with Eisner—one in which he’d invested so much of his energy, his loyalties, his hopes, and his dreams—was dead.

  By the time he got back to his office, Eisner’s feelings of relief were giving way to guilt about the way he’d treated Katzenberg. He realized he’d snubbed him, that he’d not had the courage to explain his decision to him face-to-face. He called Katzenberg and suggested they have their usual Monday evening dinner at Locanda Veneta, just the two of them. Katzenberg readily accepted, noting that he’d cleared his schedule that day and wanted to help in any way he could. The hopes that had been dashed at lunch stirred again. Perhaps Eisner’s decision to assume Wells’s titles was temporary.

  Eisner was feeling drained by the day’s events by the time he met Katzenberg at the restaurant. He brought along the two memos that Wells had been working on—one describing Katzenberg’s new responsibilities, and one discussing giving him 1.4 million stock options. Eisner started talking about dividing Wells’s responsibilities. Katzenberg could take the record division, the venture with the telephone companies, interactive video. Katzenberg said nothing. As he sat and listened, his expression hardened. He realized that Eisner was dumping what he considered “every money-losing, pain-in-the-ass” business on him. Anything that really mattered—strategic planning, finance, legal—would now be reporting to Eisner. Katzenberg let him go on. “And Jeffrey,” Eisner finally said, “we’ve got to close your deal.”

  “Why don’t we let the dust settle?” Katzenberg suggested, fighting to control his anger and disappointment. Eisner seemed relieved to do just that, and put the folder away.

  Katzenberg was now in such a state of disbelief that the rest of the evening passed in a blur as he and Eisner carried on as though it were just another one of their Monday dinners. The promise at Aspen was never mentioned, nor was the presidency of Disney. As Katzenberg later put it, it was as though an elephant were sitting in a third chair at the table, and neither of them said anything about it.

  Katzenberg didn’t sleep that night. At times he was so angry he felt short of breath. It wasn’t just that he had been denied the presidency he felt he’d been promised. It was that Eisner had ignored him. He wouldn’t face up to him. He wasn’t being honest. That was something Katzenberg couldn’t accept.

  The next morning, Eisner called Katzenberg to discuss a contract with David Hoberman, the head of Touchstone. Katzenberg couldn’t believe Eisner was just going on with business as usual. He said he had to speak to him, and it was “urgent.” It was the first time in their nineteen years of working together that Katzenberg had ever made such a demand.

  The two met for lunch in a private dining room off the Rotunda. “What’s going on?” Eisner asked.

  “I don’t get it,” Katzenberg said, barely able to contain himself. He reminded Eisner of his promise at Aspen that if anything ever happened to Wells, he would be number two. “Tell me that you meant it,” he said, “or tell me that you’ve changed your mind. Just be honest.”

  “What’s the alternative?” Eisner asked, which infuriated Katzenberg.

  “If you can’t
tell me after nineteen years, if you can’t tell me, then you’ve told me everything I need to know about my future. I’ve hit the ceiling. I have to move on.”

  “Are you putting a gun to my head?” Eisner’s voice rose.

  “Just be honest with me,” Katzenberg pleaded. He said he couldn’t believe that Eisner had come to the previous night’s dinner as though nothing had changed, Wells were still alive, and they were discussing some new responsibilities and a contract for Katzenberg. He was “hurt,” he said, that Eisner hadn’t offered him the presidency Saturday night or Sunday, but that he assumed Eisner’s taking the job was a short-term “corporate thing.” “I was amazed that you didn’t bring it up at dinner last night,” he said. “After nineteen years together, I’ve earned the right to be your partner.”

  “I’d rather not discuss this now,” Eisner said. “Let’s concentrate on Frank.”

  “You can trust me to be as good as Frank,” Katzenberg insisted.

  The reference to “trust” unleashed Eisner. “I trust you,” he said, “but not the way I trusted Frank. Read the newspapers for my view of partnership as I described Frank. We’ve had terrible problems in this area of trust. I do not want to have to tiptoe around WDI [Imagineering] the way I have to tiptoe around Animation. I can’t be shut out in the Parks the way I am shut out in live-action features.” Eisner paused to collect himself. “I might consider it down the road, if you earn it. Let’s see how it goes.”

  “I’m not going to audition for you,” Katzenberg countered. “Not after nineteen years. You should know me by now.”

  It wasn’t just Eisner who had problems with Katzenberg becoming president, Eisner added, but Roy and other members of the board. “You have a serious problem with Roy,” he reminded him. “Why, for someone who wines and dines the press, the Spielbergs, the agents, can’t you perform talent relations with Roy?”

  “Give me sixty to ninety days,” Katzenberg replied. “It’s done.”

  “It will take years.”

  “Give me the job of president for two years, and if it doesn’t work out fire me,” Katzenberg suggested.

  “No.”

  They were at an impasse.

  Finally Eisner spoke. “Are you saying to me that if I do not commit to you now that within sixty to ninety days you will be president of the Walt Disney Company, you will leave?”

  “Correct,” Katzenberg answered.

  Eisner rose from his seat and walked out, followed closely by Katzenberg. They turned and headed in opposite directions.*

  As soon as he got back to his office, Eisner called Sandy Litvack, his latest confidant. He told him what happened, and told him to go see Katzenberg and calm him down. He didn’t want a crisis with Katzenberg so soon after Wells’s death. Then he called Stanley Gold and told him that Katzenberg was threatening to quit, was “holding a gun to his head.” He called Irwin Russell. He was still on the phone when Litvack returned, “shaken,” in Eisner’s view, by his encounter with Katzenberg. Litvack reported that Katzenberg had flown into a rage, ranting that “I am Michael Eisner! I am better than Michael Eisner was ten years ago! I will be Michael Eisner, if not here, somewhere.”

  Litvack urged Eisner to fire him that very day.

  Instead, Eisner took the opposite tack. He didn’t want Katzenberg to control the sequence of events. He’d flatter him, calm him down, defuse the situation. He asked Katzenberg to come to his office. “I’m sorry the conversation was so difficult,” he said, referring to their lunch. “You are a fantastic executive,” and “you have an outstanding future. Now is not the time to discuss all these things.” Eisner said it was all he could do to deal with the funeral, memorial service, and business over the short term. They again discussed Katzenberg’s strained relations with Roy and ways he might improve them.

  But Eisner’s feelings toward Katzenberg were still close to the surface. That evening Eisner called Ovitz. “Drop whatever you’re doing and come over,” he said. When Ovitz arrived, he, Eisner, and Jane sat in the study, where Eisner’s cook served them dinner. Without any preliminaries, Eisner said, “I can’t take any more.” After summarizing the day’s events, he launched into a long tirade against Katzenberg: He lied. He had no character, no integrity, no education. Roy hated him. Frank had hated him. Sandy hated him, and thought he should be fired at once. Jane said nothing. Ovitz was used to Eisner’s complaints about Katzenberg, but he was taken aback by the vehemence of Eisner’s feelings on this occasion.

  As he had in the past, Ovitz argued against it. Whatever Eisner’s feelings about Katzenberg, it made no sense to remove him so soon after Frank’s death. There was already enough turmoil and uncertainty at Disney. But Ovitz left feeling he’d failed to persuade him.

  By the next morning, Eisner had reconsidered yet again. He called Katzenberg into his office, and was conciliatory. He said he was sorry the subject of naming him president had come up. “I’m not going to address it again for weeks,” he said.

  “Address it whenever you like,” Katzenberg replied. “Weeks, months…”

  Eisner concluded that Katzenberg was in a “good mood,” and called Ovitz to report that a crisis had been averted.

  The following Monday, April 4, nearly five thousand people gathered on the Disney lot for Wells’s memorial service. A choir from the First African American Methodist Church sang gospel hymns. Wells had become involved with the church while helping organize Disney’s relief efforts in the wake of the 1992 riots in south-central Los Angeles. Speakers included Clint Eastwood, who’d been on the ski trip with Wells when he was killed, actor Robert Redford, and Bob Daly, chairman of Warner Bros. and a close friend from their days together at Warner. Daly compared Wells to Clark Kent, “a tall, unassuming man with glasses but a Superman underneath.”

  Then Eisner came to the podium. “More than anyone I have ever met, Frank was willing to embrace the most creative and theatrical ideas,” he said. “Sleep was Frank’s enemy. Frank thought that it kept him from performing flat out one hundred percent of the time. There was always one more meeting he wanted to have. Sleep, he thought, kept him from getting things done. He fought it constantly, but sleep, Frank’s enemy, finally won.”

  Perhaps unwittingly, Eisner stressed in his remarks how important it was to him that Wells had never tried to steal the spotlight or challenge his primacy. “He was a man unfettered by jealousy, competition, or personal ambition. His personal agenda was the company’s agenda. Every minute of every business day Frank was out for the interests of the Walt Disney Company. He was a man who held a moral compass that was always true.”

  The last speaker was Wells’s son Briant, a handsome, aspiring actor. Briant was haunted by the fact that he and his father had an often stormy relationship, and had argued just before Wells left for the ski trip. “Dad,” he said. “I wish we had more time. You are my hero.”

  Wells’s funeral and memorial did nothing to dispel Eisner’s preoccupation, if not obsession, with Katzenberg. Less than two weeks later, on April 16, 1994, Eisner confided his feelings about Wells’s death and his dealings with Katzenberg in another lengthy letter to Irwin Russell.

  Dear Irwin:

  I wanted to memorialize my lunch with Jeffrey if for no other reason than to vent my anger and frustration. I am angry because one day after Frank’s death he had the bad taste and audacity to demand Frank’s responsibilities and title or else he, Jeffrey, would leave the company. I am frustrated because his stupidity and lack of insights further convinces me he is either stupid, badly advised with the likes of a David Geffen, or totally deluded about his talent and value.

  After a lengthy recitation of events leading up to their lunch, Eisner continued,

  That was some lunch, and the event I described at the top of this memo. He “was hurt.” He couldn’t believe “I hadn’t offered him the job as soon as I found out about Frank on Sunday.” He was “shocked” that at the dinner last night I only talked about the situation as though Frank were s
till in the equation. He assumed I only took Frank’s job as a very short term “corporate thing” and intended to reverse that very soon. He said I told him last summer if Frank were not around he’d have the job. And certainly Jeffrey did not cause or ask for Frank’s death. It was only my loyalty to Frank and Frank’s ability that precluded Jeffrey getting the job last summer, a job he now says he never asked for.

  I immediately said no. I told him to read the newspapers on my view of a partnership as I described Frank in the L.A. Times and the New York Times. I told him that although I trusted him, it wasn’t the same as the way I trusted Frank; and I would have to have that….

  On the subject of trust, Eisner reminded Katzenberg of a long-ago grudge.

  In those 19 years (more like 16) there had been three or four Jeffrey Katzenbergs. I reminded him that after he worked for me a couple of months at Paramount, he went to Barry Diller and told Barry I should be fired. Barry asked him why seeing that we were the top studio the last four years and had 5 of the top 10 television shows. I do not remember his answer. He left that room with his tail between his legs…. The lunch ended badly.

  Where do we now stand?

  I am not quite sure. After my lunch where Jeffrey gave me the take-it-or-leave-it, I asked Sandy [Litvack] to come into my office. I explained the whole thing to Sandy and of course he was so outraged as were you and Stanley Gold. Stanley Gold said, “everybody in the town knows he has failed. Who does he think he is? And fuck him.” And we all know how much Roy Disney hates Jeffrey and Stanley made it clear (mostly to Sandy later) that if we backed into giving Jeffrey Frank’s job, Roy would quit the board and “go public.” At any rate, Sandy went to speak to Jeffrey about his outrageous position.