The Keys to the Kingdom (46 page)

But Eisner groused about Katzenberg's efforts to mend fences with Ovitz and others in the film community. “My note to Jeffrey Katzenberg would have been to ignore all these people,” he said. “As we become more user-friendly, I feel we've become less effective. I would encourage Jeffrey Katzenberg to be more detail-oriented…. When he was involved in the details and not caring what CAA, ICM or the
L.A. Times
thought, he did it great.”

Waxing nostalgic, Eisner recalled the good old days at Paramount, when Katzenberg's role had been so clearly defined. “He is clearly the best golden retriever I ever met,” he said. “He's the best person to follow through on a project, an idea or slate of ideas…that is his main attribute.” (By 1997,
Eisner had apparently forgotten about this comment; he told interviewer Charlie Rose, “I never called [him] ever my ‘golden retriever.'”)

Early in the relationship, Eisner continued, “I did 100 percent of the thinking and he was the one to get something done.” That had changed over the years, Eisner said. Katzenberg and his allies, reading these comments, found them unbearably patronizing.

Eisner said he granted the
Times
interview reluctantly and turned to his corporate PR man, John Dreyer, no fewer than six times as he talked to the reporters, saying, “I know I'm going to regret having done this.” He said his decision to keep Katzenberg in place as studio chief was in Katzenberg's best interest. “I don't want Jeffrey at the moment to worry about corporate insurance and that's what Frank Wells did…. He kept the machine running,” Eisner said. “I want to keep my stars in star roles.” The
Times
concluded that, clearly, “Eisner viewed himself as the sole king of the Disney jungle.”

Before the story appeared in print,
Times
reporters Claudia Eller and Alan Citron had gone back to Disney to check whether Eisner's position had changed, now that his emergency surgery appeared to increase pressure to appoint a second-in-command. Eisner's illness didn't merely highlight his mortality—it raised questions about the burdens he was shouldering at the company. And these were stressful times for Eisner. Euro Disney was still an ongoing problem. Other plans for expansion were snarled. Disney's America was falling off the drawing board fast.

But Katzenberg was riding high.
The Lion King
had cruised to $175 million in just five weeks and looked like it might become the top-grossing movie of all time (it went to number two;
Jurassic Park
stayed in first place).
Beauty and the Beast
was the number-one show on Broadway. The Miramax deal was paying off. Even so, Eller and Citron were told that Eisner's views on Katzenberg were unchanged.

 

EISNER WENT HOME
on Thursday, July 22—less than a week after his surgery. Within a week, an item ran in Army Archerd's column in
Variety
expressing his frustration at being unable to return to the office. Archerd reported that Eisner sounded “strong.” He had watched a lot of television. He had made an excursion to Chasen's, the old-guard Hollywood eatery, and was reported to have eaten a salt-free fish dinner. Eisner said
he had learned something during his convalescence: “They don't need me” at the company. Archerd asked if Eisner was going to appoint a successor, but the question was cheerfully deflected. “I haven't thought about business,” said the man who supposedly had been issuing directions to key executives from his hospital bed. “I'm not allowed to do anything like making decisions right now.”

Eisner's first visit to the office went unheralded in the press, but a former studio executive remembers that Eisner attended a meeting that day—and brought Jane with him. The purpose was to review ads designed to rebut the negative press about Disney's America. After Eisner looked at a couple of spots, he said he wanted others that showed Abraham Lincoln to give a flavor of America's past as it would be represented at the park. Executives protested that such an approach would play into the hands of critics who complained that Disney would distort history.

“They're wrong,” Eisner said. But otherwise, says that executive, it was Jane who spoke up. “She would give her opinion but she wasn't speaking for him,” he remembers. “He was so ashen and pale—but he wouldn't stop. He was actually quite frail but she was there to protect him.”

Later, Eisner acknowledged that the cardiac episode changed him. It was more than a newfound obsession with diet and exercise. (Eisner transformed a conference room next to his office into a private gym, though there were already two workout facilities on the Disney campus. More than a dozen workers toiled overnight—at considerable extra expense—so that they wouldn't disrupt business during the day.) “The truth is, I went from being young to being old,” he mused. “All of a sudden, I even looked my age. When you go through a period of screwing around with your heart, you realize that you not only aren't immortal, you could have been one of those people who drop dead on the tennis court or in the office at fifty-two. That realization has an impact on you.”

 

AS EISNER RECUPERATED
, Katzenberg retreated to his new, multimillion-dollar Charles Gwathmey–designed beach house in Malibu to brood and strategize. Finally, on a weekend afternoon in August, he headed over to the Eisners' house for a meeting. The two sat in the library, Eisner wearing his bathrobe. Katzenberg says he realized that Eisner was never going to make good on what Katzenberg regarded as his earlier promise, so he had decided once and for all to resign. Eisner started off by saying that
he was upset with the numerous press reports that Katzenberg was lobbying for the job—and especially that he had threatened to quit. Katzenberg remembers interrupting to say, “I never told Frank Wells how much I liked working with him and how much I loved him. I realize I've never told you how much you've meant to me.” He thanked Eisner for their years together and all he had learned. Then he said he planned to leave.

“Have you taken a job?” Eisner asked.

“No.”

“Is it something we can discuss?”

“We can talk about it, Michael, but I suspect the decision has been carved in stone by other people,” Katzenberg persisted. He pointed out that Roy Disney and the board were hostile, and said he didn't want to deal with that animosity. According to Katzenberg, Eisner said, “I can fix it…. I'm going to Ireland over Labor Day weekend and spend time with Roy and I'm going to make it work.”

“I don't have a good feeling about it,” Katzenberg replied.

Eisner asked for a few days to work things out. Katzenberg said whatever happened, he would stay until his contract was up in October. Before he left, Eisner asked if Katzenberg had thoughts on how the company might be reorganized.

Katzenberg spent most of the next ten days drafting a four-page plan for the company. Several days later, on August 23, he had dinner with Joe Roth. Roth had every reason to know how dire Katzenberg's situation was, but he didn't let on. He told Katzenberg that he had been too public in his quest for advancement and that pushing Eisner while he was still recuperating was a bad strategy. “The guy is [recovering],” Roth said. “You should go in and offer to take out the garbage.”

“I've drawn a line in the sand,” Katzenberg said that night. “It's either this way or nothing at all.” Roth could see that Katzenberg had passed a point of no return. To Roth he didn't seem to care that Eisner was recovering from a traumatic episode.

“If it doesn't go down, they're going to come to me,” Roth said. Katzenberg didn't seem to believe that would happen.

But in fact, they already had gone to Roth, who had spent that afternoon negotiating an extraordinarily rich deal to take over as chairman of the studio.

The next day was Eisner's first full day back at the office. Eisner called Katzenberg in. On his way to the meeting, Katzenberg ran into Bob Levin,
the marketing chief. Levin was thinking about restructuring his department and said he needed answers on certain issues. “I'm going to see Michael, and I hope I can start finalizing some of the details,” Katzenberg said.

But there was only one detail that mattered. When Katzenberg walked into the office, Eisner told him there was no way for the two to come to terms. “This is a day I've dreaded for a long time,” Eisner said. “I wish it hadn't come to this and that we could have made it work.” He handed Katzenberg a four-page press release and said it was going out to the media later that day. It announced a reorganization of the company, with Joe Roth as chairman of the film studio. Rich Frank, the television chief who had previously reported to Katzenberg, would run an expanded television and telecommunications division and report to Eisner. Animation would report to Eisner and Roy Disney. Almost as an afterthought, the release briefly mentioned the departure of Jeffrey Katzenberg as chairman of the studio.

Katzenberg, who had brought his plan to reshape Disney to the meeting, never got a chance to present it.

T
HERE ARE TWO
kinds of divorces,” Katzenberg told Eisner on the day of their ill-fated meeting. “There's one in which you're best friends and one in which you're enemies.” Eisner quickly said he wanted to be friends. Katzenberg asked for a few concessions. He still had a few weeks on his contract, and in that period, he wanted to see through some events that were on his calendar: the release of
Pulp Fiction,
the upcoming Miramax sleeper hit, and the Robert Redford–directed
Quiz Show
. He wanted to attend the London premiere of
The Lion King;
composer Elton John was throwing a party in his honor.

And he wanted the money issues to be resolved quickly and fairly. He reminded Eisner of their last days at Paramount, when they had walked to the bank after Eisner demanded his cashier's check. “It's not that you weren't going to get your money—you just wanted your business cleared up,” Katzenberg said. “I would like the same.” Katzenberg said he was entitled to his lump-sum payment of 2 percent of future profits from projects he had put into development—and that would be a rather large check. Katzenberg wasn't sure exactly how big it would be, but he was convinced that he was owed at least an eight-figure sum.

According to Katzenberg, Eisner agreed to resolve things quickly but immediately started to break his promises. In fact, Katzenberg didn't even get a chance to review Eisner's press release; it had been sent to the media before he went into the meeting. As soon as he returned to his office from his meeting with Eisner, his secretary told him Steven Spielberg was on the line from Jamaica. Spielberg, who had worked with Katzenberg on
Roger Rabbit
and was now his partner in Dive!, was visiting at the vacation home of Bob Zemeckis, the director of
Roger Rabbit
, who was no particular fan of Eisner. Both men said they had already heard the news of Katzenberg's
demise. As Spielberg offered his condolences to Katzenberg, Zemeckis yelled, “Why don't you guys do something together?”

Meanwhile, Spielberg quoted a line from
Back to the Future
—offering Christopher Lloyd's final remark: “Where you're going, you don't need roads.”

“What do you mean, ‘you'?” Katzenberg answered. “I'm thinking ‘we.'”

 

TOUCHSTONE PRODUCTION CHIEF
Donald De Line was returning from a forty-eight-hour trip to Italy to recruit Bruce Beresford to direct a film. When his flight landed in Los Angeles, he was surprised to find a colleague waiting for him at the gate. “What are you doing here?” he asked. “Did someone die?”

“I have disturbing news,” his coworker replied. “Jeffrey is gone.” It almost was like a death. Separating Katzenberg from Disney was like ripping flesh from bone.

“This is not true,” De Line protested. Before he would believe the news, he insisted on calling Hoberman. “I'm sorry to tell you it is true,” Hoberman said.

The marketing staff heard the news from chief Bob Levin. “I have an announcement to make,” he said. “At two o'clock today, Jeffrey was let go. He resigned or was let go but he's left the studio.” His staff gasped—not surprised, perhaps, but stunned that it could come to this seemingly impossible conclusion.

On the Disney board, however, there apparently were few pangs of regret. While the directors had previously been convinced that keeping Katzenberg was important, Eisner had apparently rooted out that perception. Convincing board members to accept his view of the world “is Michael's particular corporate genius,” says a high-level Disney executive. On the other hand, no one was likely to put up a fight as long as Roy Disney and Stanley Gold were on board. (“The board doesn't control Disney, and the investors don't control it,” Barry Diller said in an interview a few months later. “Michael controls it.”)

The day before Eisner handed Katzenberg his walking papers, he conducted a secret negotiation through general counsel Sandy Litvack and Irwin Russell, Eisner's own lawyer and a Disney board member, to sign up Joe Roth as head of the studio's live-action division. The negotiation had been awkward because Helene Hahn, the studio's business-affairs chief, was
the person most familiar with Roth's deal as a producer—a deal that had to be eliminated so he could become chairman. But Hahn was deeply loyal to Katzenberg, so she was carefully excluded from the loop. Eisner must have been convinced that she would warn Katzenberg if she knew what was brewing.

Roth benefited from such a hastily conducted discussion. In fact, a former Disney lawyer says the company paid Roth about twice as much as he should have gotten. “They justify it to this day,” this executive says, “because the stock didn't go down because they had a guy in the wings. Michael ordered Sandy and Irwin Russell to get Joe on board—committed that night before Michael spoke to Jeffrey the next day.”

This put Roth in the catbird seat except for one problem. Three of his first four movies under his Caravan deal had been bombs—
Three Musketeers, Angie
with Geena Davis, and the biggest flop,
I Love Trouble
with Julia Roberts and Nick Nolte. (Only the fourth,
Angels in the Outfield,
performed at all.) And Roth owed $15 million on
I Love Trouble,
having agreed to pay budget overages out of his pocket if the picture didn't make money. Eisner's first bit of generosity was to forgive the debt.

As head of Caravan, Roth was to receive a producer's fee and percentage of gross for each of his movies. The agreement called for five pictures a year over five years, which meant he still had twenty-one pictures left in the deal. In the negotiation, Roth contended that he would have received at least $42 million—or $2 million for each of those twenty-one pictures. But according to his deal, Roth was to receive only $1 million per picture; he only collected another million dollars if the picture earned its money back. Certainly, that hadn't happened on three of the first four movies he had made. But either Litvack wasn't familiar enough with the deal to make that argument or Roth simply had Disney over a barrel. Either way, in addition to forgiving the $15 million overage, Disney wrote Roth a check for about $40 million to take the studio job. It was a nice payday for Roth, who otherwise might have had to produce as many as fifteen movies over three years for free to make up the money he owed to Disney. Instead, he got a deal worth some $55 million—and that was before he negotiated the millions he would earn as studio chief. (Based on stock prices and an estimate of the number of options awarded to Roth, that package would be worth tens of millions of dollars more.)

 

SEVERAL HOURS AFTER
Eisner had told Katzenberg that their sixteen-year relationship was over, he was on his way to spend the evening at Warner cochairman Bob Daly's house. Daly's future wife, songwriter Carole Bayer Sager, thought it would do Eisner good to explore the mind-body connection with one of Hollywood's favorite spiritual leaders, Deepak Chopra. Despite his fascination with health issues, Eisner was far too skeptical to be attracted by Chopra and came away unimpressed. Besides, as he observed later, he didn't need any help from Chopra. “Settling Jeffrey Katzenberg's future,” he explained, “had provided enough stress reduction for the next several months.”

 

AS THE NEWS
of Katzenberg's imminent departure spread throughout the entertainment community, there was a sense of utter shock. Of course some people inside and outside Disney thought Katzenberg deserved a comeuppance. “No one could do cold and callous better than Jeffrey,” said one longtime Disney executive. “He was as tough and mean as anyone in the business.” But others at the studio literally wept. Certainly Katzenberg had his flaws, but his zest for his job and his love of Disney could not be questioned. Over the Labor Day holiday, Katzenberg went, as he always did, to Disney World. It must have been a painful visit. The animation department in Florida surprised him with a keg of his favorite drink, diet Coke, and a picture of himself surrounded by Disney characters. As some 250 members of the department stood by, Katzenberg signed their
Lion King
books or drawings, while Marilyn Katzenberg watched and wiped away tears.

Back in Los Angeles, Don Hahn, who had produced
Roger Rabbit, Beauty and the Beast,
and
The Lion King,
likened Katzenberg's departure to the champion Dallas Cowboys losing their coach. “Jeffrey has seen animation as his passion, his baby, his life, and his breath. That's what's so sad,” Hahn said. “I feel like I lost a friend just when I was having fun.”

On the other hand, Peter Schneider ultimately grew tired of hearing the paeans to Katzenberg. “The story that's been written for the last ten years, which is that Jeffrey did everything, is a myth,” he complained to
Premiere
magazine. “Time will show that this place will stand up very well for the next five, six, ten years without his ruling hand.”

In fact, Disney's next three animated features—
Pocahontas, The Hunchback of Notre Dame,
and
Hercules
—all failed to meet the standard set by their predecessors. Katzenberg played a role in developing them but was
gone for nearly a year when
Pocahontas
opened in June 1995. It grossed $141.6 million domestically. (Disney would start to hit the target again in 1998 and 1999 with
Mulan
and
Tarzan,
which grossed $121 million and $170 million, respectively. Some said Disney films simply weren't as good as they had been. Others thought the broad audience had wearied of the formula, leaving only the youngest children as Disney's market.)

But long before
Pocahontas
was in theaters, a serious spin war was under way. Although Katzenberg said he wanted a minimum of acrimony in the hope that Eisner would settle his contract quickly, he couldn't resist trying to justify himself. The press swarmed over the story. Soon,
The New Yorker
and
Vanity Fair
were working on major articles about the split-up. The daily papers had already dived in. “This is not a Shakespearean tragedy,” Eisner told the
Los Angeles Times
. “This is people moving on with their lives and doing new and interesting things.” But Steven Spielberg told the newspaper that Katzenberg's departure was Eisner's “Machiavellian loss.” At the same time Disney board members portrayed Katzenberg as an egomaniac who wasn't up to getting Wells's job.

The day after the Spielberg quote appeared, Eisner called Katzenberg in a fury. He complained that Katzenberg was whipping up a maelstrom of bad press that exceeded whatever Eisner had expected. He was stunned to find that the story had merited the cover of
Newsweek
—and had portrayed Katzenberg's absence as a serious problem for Disney. The article even described Eisner as sobbing in the hospital after his surgery because he was so frightened about his condition. Eisner vehemently denied that this had ever happened.

Not all of the coverage had cut Katzenberg's way; the
Wall Street Journal
called him “creative but unpolished.” (In a sense, this was still something of a triumph for Katzenberg, because some years earlier the
Journal
had questioned whether he had any taste at all.) But Katzenberg was scoring enough points that Eisner demanded a cease-fire. Katzenberg confided to a friend that this conversation with Eisner was their angriest ever and he quickly asked his supporters to decline further interviews. In the superheated environment, however, it was not easy to cool the rhetoric.

He also consulted litigator Bert Fields, who had handled several cases against Disney, about his severance package. Katzenberg told Fields he was owed 2 percent of the profit from projects he had put into production—and he wanted to collect.

Katzenberg set a September 9 deadline for Eisner to come up with a
deal. If Eisner didn't resolve the matter, Geffen warned in an interview, “he's going to have to tell the truth under oath about everything…. Eisner's lack of kindness, lack of generosity, and inability to give credit were simply shameful.” On the day before the deadline, a company attorney asked Katzenberg how quickly he could vacate his offices. Katzenberg pointed out that he had planned to stay until his contract expired at the beginning of October. Disney backed off.

On Saturday, September 10, Eisner visited Katzenberg at home. Once again, Eisner complained about the bad press. “You know how to stop it,” Katzenberg said. “You have not fulfilled one single promise that you made to me in terms of how you were going to deal with this. You've done an assassination job on me. I've yet to be paid a nickel. Deal honestly with me.”

“I can't go to the board right now,” Eisner said. “They're too angry with you.”

Katzenberg pointed out that the board's anger had nothing to do with Disney's contractual obligations. The matter was in Eisner's hands. Katzenberg told him he would wait for a settlement proposal, and if he didn't like it, Disney would have to work things out with Bert Fields.

On Friday, September 16, Katzenberg paid one last visit to Eisner in his office. The issue of money was still unresolved. Katzenberg left him with a copy of the July 1, 1988, deal memo that had been written by Frank Wells. Katzenberg underlined the relevant language. “My eleven-year-old would read this and understand what it means,” he said. “It's that clear.”

The meeting became “very short very quickly,” Katzenberg said later. “He literally did not want to physically take the piece of paper. He stood up from his desk and literally backed away…. He took the piece of paper and said he would give it to Sandy Litvack.” With that, Eisner showed Katzenberg the door.

 

DESPITE THE ATTEMPT
by both sides to impose a cease-fire in the press, the war continued. The
New York Times
reported that Katzenberg had been told he was unwelcome at
The Lion King
's London premiere in September, which scotched the plans for the Elton John party. Katzenberg did get to attend the Washington premiere of
Quiz Show
. But the article said Disney animators had been prevented from throwing a party for Katzenberg on the lot.