DisneyWar

by James B. Stewart

  A few days later, both Ovitz and Eisner were attending investment banker Herbert Allen’s annual media and entertainment conference in Sun Valley, Idaho, an event that had quickly become the epicenter of corporate power, influence, and deal-making, attracting everyone from Katharine Graham to Warren Buffett to Bill Gates, memorialized in lavish Annie Leibovitz photo spreads in Vanity Fair. Barry Diller was there; he and Eisner had resumed speaking after Eisner sent him some apples from the Eisner farm in Vermont along with a conciliatory note. David Geffen was there, of course, as was Katzenberg, who was scheduled to speak on a panel chaired by Jack Valenti, chief executive and chairman of the Motion Picture Association of America. Eisner invited Ovitz and his wife, Judy, to accompany him and Jane on the Disney jet.

  Eisner used the time on the plane to press on Ovitz the advantages of joining Disney as president, and this time Ovitz responded positively. “I’m ready for a change,” he acknowledged. “I think the idea of working together is great. We would make an unbeatable team.” But in just what capacity Ovitz would come to Disney remained vague. Eisner liked to use the word partner, but in Hollywood generally, and especially with Eisner, “partner” is a loose, ill-defined term, often a euphemism for someone who is in fact subordinate. Coming from the world of agencies, Ovitz was unfamiliar with corporate hierarchies. During his time at William Morris, the agency had no formal titles, nor did CAA during its early years. Ovitz asked at one point if being partners meant they’d be co-chief executives. Eisner recalls that Ovitz said he wanted to be co-chief executive.

  However “partners” was defined, any notion of equality was a raw nerve for Eisner, touching on the anxieties he’d already expressed to Jane about Ovitz “competing” with him. It contrasted with Wells’s willingness to cede the CEO title, which was so important to Eisner. Nonetheless, Eisner kept selling Ovitz on the idea of coming to Disney, stressing how many opportunities the company faced, and what a great challenge running it would be. He tantalized Ovitz in confidence by mentioning that Disney had commenced talking with GE about acquiring the NBC network—a perfect opportunity, given the early experience of both men with networks. At one point Ovitz asked about the Disney board: “What if they don’t approve me?” Eisner laughed at the suggestion. He went down the list of board members, ticking off the various ways they were beholden to him, assuring Ovitz that the board would do what he wanted. Still, by the time the plane landed, Eisner felt he and Ovitz were at an “impasse” over the issue of sharing top billing. Eisner later wrote that he’d been “upset” by the conversation.

  Later that evening, walking to dinner, Eisner felt pain in both his arms. He thought it might have been stress brought on by the Ovitz discussion, worrying about replacing Wells, and Euro Disney. He hadn’t been sleeping well. He stopped to rest. Of course, the pain might be a symptom of something more serious, though he preferred not to think about it. His father had had heart problems, and had undergone open-heart surgery when he was sixty-five. Eisner had begun taking cholesterol-lowering medication, and he took regular stress tests, though the last one had been two years ago. He alternated between thinking the pain was in his head and that he was about to have a heart attack. But he and Jane pressed on.

  Afterward, he, Jane, and Katzenberg, who had joined them at dinner, wandered into the indoor ice rink. Eisner mentioned the reorganization he and Wells had been planning and the stress of Euro Disney, confiding in Katzenberg in a way he hadn’t since long before Wells’s death. After the Eisners returned to their room, he felt pain and shortness of breath, and insisted on going to the local hospital. By then the pain was gone. He had an electrocardiogram, which was normal. He decided it was all in his head.

  The next morning, Eisner went to a presentation by Tom Murphy, chairman of Capital Cities/ABC. Eisner’s talks with Dan Burke the previous year about ABC hadn’t gone anywhere, but he remained interested in a network, especially since the FCC was dropping a long-standing rule that barred networks from owning the programming they aired. Murphy stressed ABC’s intention to develop its own programming, which caused Eisner considerable anxiety about the Disney television studio’s ability to develop and sell programming to the networks. Afterward he called his secretary Lucille Martin, told her he wanted to return to Los Angeles the next day, a day early, and asked her to schedule a stress test for him with his doctor.

  That evening, Eisner got a call from his regular doctor saying that Martin had mentioned he was having chest pains. He suggested Eisner have the stress test as soon as he returned the next day, and made an appointment for him at Cedars-Sinai Medical Center. Somehow it made Eisner feel better just to have an appointment. Things were under control.

  The next morning, he went to Katzenberg’s presentation, which left him agitated, given that at this juncture, almost anything could set him off on the subject of Katzenberg. “As always, he was aggressive and outspoken, but he also interrupted the other speakers and cracked bad jokes,” Eisner later wrote of the panel. He complained to Jane and Ovitz, who attended the panel with him, that Katzenberg was an embarrassment and shouldn’t be representing Disney. They said he was overreacting. “Jeffrey is Jeffrey,” Ovitz shrugged. “He’s not doing anything new or different.”

  At lunch, their wives urged Eisner and Ovitz to talk again, and after that year’s Vanity Fair photo sitting, Ovitz suggested they take a walk. Ten minutes into it, Eisner paused to rest, and said he’d rather sit down in Ovitz’s condominium. They still seemed to be talking at cross-purposes, Ovitz assuming that “partners” meant some kind of equality, while Eisner kept waiting for a Wells-like concession that Eisner would be in charge. They hadn’t resolved anything when Eisner and Jane left for the airport. On the plane, Eisner watched tapes of the pilot for a new NBC show “ER,” written by Ovitz client Michael Crichton and produced by Spielberg. Under the circumstances, a television show about a hospital emergency room was unnerving.

  When they landed in Los Angeles, Eisner went straight to the hospital; Jane met him there after dropping off their luggage. In short order, he failed the stress test, and an angiogram showed that 95 percent of a major artery was blocked. The head of cardiac surgery recommended an immediate open-heart bypass operation. As he was about to be wheeled into surgery, he made some “last requests” of his wife and sons. “I want to be buried above ground, not below” was first. “Also, I really don’t want you to build the new house we’ve been considering because ours is fine, and we don’t need a bigger one.” Finally, “If it becomes an issue, I think that either Ovitz or Diller would be good choices to succeed me.” He also suggested that if anything happened to him, Jane should be named to the Disney board.

  “Fine, fine,” Jane replied.

  Early the next morning, at 4:00, Ovitz’s phone rang at the Sun Valley condominium. It was Jane. “Michael has had open-heart surgery,” she said. She sounded calm. “He’s in intensive care. Can you come down?”

  Ovitz and his wife were leaving the next morning to celebrate their twenty-fifth wedding anniversary on Martha’s Vineyard, but he immediately scrapped their plans and took an 8:00 A.M. flight to Los Angeles, where Ovitz was on the board of governors of Cedars-Sinai. When he got to the hospital, he met Jane and went straight to the intensive care unit. Like all postoperative heart patients, Eisner looked terrible, pale, motionless, with a tube in his throat. Ovitz immediately took charge, which seemed to come as a relief to Jane. They set up a schedule so that someone—either Jane, one of Eisner’s sons, Ovitz, or Judy—would be at Eisner’s side at all times, able to monitor his condition. Jane went home to get some sleep. Ovitz ordered that no one else be admitted to his bedside, the only exceptions being Eisner’s regular psychotherapist and Irwin Russell. A security firm policed Eisner’s floor and Ovitz told them to make sure no unauthorized person got in, especially no one from the media.

  Eisner regained consciousness at about 6:30 A.M. A few hours later, Sandy Litvack showed up with a press release he’d drafted, and seemed furiou
s when Ovitz wouldn’t let him see Eisner. Ovitz himself approved the release. When Eisner finally had the tube in his throat removed, his first questions to Ovitz were about the press coverage. He was obsessed with the idea that Katzenberg might talk to the press.

  Katzenberg returned from Sun Valley that morning, and after he got the previous night’s box-office numbers, called Eisner at home to report to him on a successful opening for Angels in the Outfield. Jane answered. She sounded like she’d been asleep.

  “Did I wake you?” Katzenberg asked.

  “I meant to call you,” she said, and then told him about Eisner’s surgery. He was fine, she assured him.

  “Who else knows?” Katzenberg asked.

  Jane said nothing had been released to the press yet, but key people had been informed: Sid Bass, of course, Michael Ovitz, Stanley Gold, Roy and Patty—they were flying back from their castle in Ireland—Sandy Litvack, John and Jody Dreyer…

  The inner circle, Katzenberg realized.

  When he hung up, he turned to Marilyn. “Wives don’t lie,” he said.

  “What does that mean?”

  He explained that in her moment of greatest need, Jane turned to the people Michael trusted most. He wasn’t among them. “She’s told us everything we need to know,” he said.

  Katzenberg left early the next morning for Las Vegas, where he was giving a speech at a video industry conference. He used the occasion to argue against cheapening the videocassette market through steep discounting and giving copies away as premiums, as MCA/Universal was doing with its animated feature An American Tail, at McDonald’s. This was a “Faustian bargain that threatens the video business,” he told the conference, a comment that especially upset Universal chairman Lew Wasserman.

  Despite Ovitz’s efforts to contain them, rumors were flying around Hollywood, even that Eisner had died. At the risk of upsetting him, Ovitz told Eisner he had to prove to the outside world that he was alive and recovering. He and Eisner put together a list of people they considered key opinion makers, and then Ovitz placed the calls and held a cell phone to Eisner’s lips. They began with Diller. Eisner could only muster a few words at a time, and it was painful and exhausting. After each call he rested for nearly an hour.

  Eisner improved steadily, though his medications had to be adjusted several times, and he was suffering from stress. Visitors began trickling in—Litvack was finally admitted, as was Katzenberg on Tuesday afternoon, though only after Jane insisted he talk only about “happy news.” When Eisner’s former best friend Larry Gordon called from Hawaii, where he was on location, Ovitz answered the phone, but wouldn’t put the call through to Eisner.

  Ovitz was also trying to shield Eisner from the press, but he insisted on seeing the papers, and a New York Times article by Bernard Weinraub on Wednesday, July 20, just five days after his surgery, especially upset him. “Hollywood sees tension at Disney,” the headline read. “Mr. Eisner is secretive and has few close friends,” Weinraub wrote. That alone made Eisner apoplectic. By contrast, “Mr. Katzenberg is vocal, and has a range of acquaintances and relationships…. He was somewhat disturbed to be treated as less a friend than an employee even while Mr. Eisner was in the hospital recovering from heart surgery.” To Eisner, the passage had Katzenberg’s finger-prints all over it. Then the article quoted one of Katzenberg’s “closest friends”—Eisner knew who that had to be, David Geffen—as saying, “The question is, Does Michael want to share power with Jeffrey? If he doesn’t, Jeffrey will leave the company by the end of the year.”

  Eisner got so agitated that Ovitz called Katzenberg. “You’ve got to stop this,” he said. “You know how crazy Michael gets about this.”

  “It’s not me, it’s Geffen,” Katzenberg said.

  “Then call David off,” Ovitz said. “You’ve got to control him.”

  “I can’t stop him,” Katzenberg insisted. “I can’t control him.”

  (Geffen acknowledged that he was a source for the stories.)

  The next day, July 21, Eisner left the hospital and returned to his home in Bel Air. He’d been hoping to retreat to Aspen, but his doctors told him the high altitude might impede his recovery. Ovitz and Judy left for Martha’s Vineyard, and an abbreviated twenty-fifth wedding anniversary. In Ovitz’s absence, Litvack stepped into the breach, speaking to Eisner on the phone, visiting him at home, and generally acting as a go-between.

  Eisner, still seething over the press coverage, refused to see Katzenberg, spoke to him only briefly on the phone, relying on Litvack to communicate with his studio chief. Nevertheless, when the Los Angeles Times reporters who’d interviewed Eisner before his surgery called Disney to check whether the quotes Eisner gave them before he had his surgery, in which, among other things, he’d praised Katzenberg as a “team player,” were accurate, he insisted they were.

  The L.A. Times story ran on July 24. Despite the praise, Katzenberg was rankled at once again being described as a “golden retriever,” and especially at the assertion that Eisner had done “100 percent” of the thinking during their years together.

  And even the praise was disingenuous. Eisner told Irwin Russell what he really thought about Katzenberg in the days following his surgery in another letter:

  “Where to start?

  “I guess the Allen & Co. Sun Valley Conference would be as good a place as anywhere. Jeffrey was there, working the room and being Jeffrey. Of course when he went on the Entertainment Panel he was the ‘class clown.’ I was embarrassed, but Jane did not think he was so bad.” Eisner described feeling arm pain, the flight to Los Angeles, and checking into Cedars-Sinai. “I went from stress test to emergency room to angiogram to operating room to bypass, over the next six hours. Everybody was wonderful; everybody but Mr. Katzenberg.

  “I came out of the anesthesia about 6:30 a.m. As you know, all I cared about was the correct way of handling the press release. By 10:30 a.m. I guess it was done, and only Jeffrey had his own ideas. I think Sandy knows what they were.

  “But what Jeff really started to do was position the press. We know who he called. He prompted all the media right away to do articles about him, about succession. I think he must have thought my weakness gave him the excuse to press, just the way he pressed the day after Frank died.”

  Much of what Eisner described in the letter appeared to be hearsay from Litvack, which Eisner seems to have accepted uncritically, never considering, for example, that Litvack might have had his own aspirations to succeed Wells as president. “There were several conversations that Sandy had with Jeffrey that deserve to go into the Napoleonic Hall of Honors,” Eisner wrote. “In an early conversation with Sandy, he stated what he expected. He said he wanted it all. He no longer was going to be satisfied with Eisner and Son. From now on it was going to be Eisner and Eisner. He went on and on with Sandy. I do not know if Sandy kept notes, but what Sandy told me was amazing. No CEO could possibly accept anything close to what he was suggesting. Sandy’s analysis is that Jeff cannot get enough love or adulation. He is just insatiable.”

  Eisner also complained in the letter about Katzenberg’s speech in Las Vegas, especially that he hadn’t cleared it with Eisner. “When I asked Jeff why he did not check with me first, he said I was in the hospital. I told him the speech was on Sunday. I was operated on Saturday. He must have had it written earlier. He said it was a last thing!! And then he said, ‘Anyway, if I had to make a speech, I wanted to make headlines.’ He said, ‘I did not want to just give a speech and not get press.’ When Sandy questioned him about this speech, suggesting an industry boycott, after the fact, he had no response. And of course MCA is very upset as they should be. Here is another example of a guy that just ‘wants to be King’ but does not have the ability, judgment or emotional makeup to even be a Prince. Sandy’s view is that unless ‘Jeffrey is the bride at the wedding or the corpse at the funeral’ he is not happy.

  “I decided again to put him on hold, to keep everything status quo until I felt better. The doctors we
re really adamant that I should put stressful things to the side….”

  Among other things, Eisner’s doctors suggested he try yoga. He engaged a private instructor, who came regularly to the house. He began a low-fat vegetarian diet. He walked on a treadmill for forty-five minutes, three times a week. For someone like Eisner (“I sort of liked stress”), the effort to reduce stress became in itself highly stressful. Lying on his back on the floor, instructed to meditate, he instead thought about…Katzenberg. As Eisner later put it, “After several weeks I quit, rationalizing that my life would be far less stressful when I stopped trying so hard to relax.”

  Still, trying to continue as chairman, president, and CEO in the wake of his surgery was clearly too much. Jane insisted over and over that he had to find someone to take the burden off of him. He invited Ovitz over for a long lunch, where he again raised the possibility of Ovitz being his “partner.” This time he was more concrete: he said he’d give Ovitz the title of co-chairman, which sounded good to Ovitz, who said he’d think about it.*

  Ovitz thought Eisner seemed depressed. He looked terrible, and not just because of the physical effects of the surgery. Ovitz didn’t know how seriously to take Eisner’s offer, because he had made some other suggestions that struck Ovitz as bizarre. Among them, he said he wanted his wife, Jane, to be on the Disney board. “That’s ludicrous,” Ovitz replied. And he said he wanted to “position” his son Breck to succeed him as chairman. “Michael, this isn’t your family company,” Ovitz said.

  Eisner called Ovitz the next day, saying he’d had second thoughts, and making Ovitz co-chairman “wasn’t a good idea. It would never work in corporate America,” he said. After that, Eisner dropped the subject of bringing Ovitz to Disney. Instead, he spoke again to George Mitchell, put a feeler out to Bob Daly at Warner Brothers, and made an appointment to see Roger Enrico, chairman of PepsiCo.