Feeling he couldn’t take any more pressure, Eisner finally called and asked Katzenberg to meet him at his house on Sunday, August 7. They sat in the den, Eisner still in his bathrobe. Eisner began complaining about the press, about how stressful it was for him, especially reports that Katzenberg was threatening to quit. Katzenberg interrupted him, and adopted a different tone. “I never told Frank Wells how much I liked working with him and how much I loved him,” the normally unemotional Katzenberg said. “I realize I’ve never told you how much you’ve meant to me.” Eisner seemed taken aback by the sudden shift. Katzenberg continued, thanking Eisner for the experience of working together. It had the feeling of a valedictory. “Now I guess it’s time for me to move on.”
Confronted with the prospect of the very thing he seems most to have wanted—Katzenberg’s departure—Eisner tried to change Katzenberg’s mind.
“Have you taken another job?” Eisner asked.
“No, not yet.”
“Is it something we can discuss?”
Katzenberg said he’d come to realize that Roy and Stanley Gold were implacably opposed to him, even if Eisner could be persuaded to promote him.
“I can fix it,” Eisner insisted, according to Katzenberg. He even volunteered to speak to Gold and the rest of the board on Katzenberg’s behalf. In the meantime, he asked Katzenberg to pull together his thoughts on reorganizing the company.
Katzenberg wasn’t optimistic, and felt confused. Reorganizing the company seemed like a presidential-level task. Had his decision to leave finally brought Eisner around to his view? He didn’t know, but he started work on a memo.
For someone who was ostensibly trying to “make it work,” Eisner soon sabotaged the effort. A few days later, on Wednesday, Eisner called Katzenberg to discuss Pocahontas, specifically whether he’d dealt with the issues Eisner had raised before his surgery. “They’re insignificant,” Katzenberg replied, which angered Eisner and gave him the distinct impression that they’d been ignored. Katzenberg argued that given his past success in animation, Eisner should trust his instincts. “Jeffrey,” Eisner retorted, “we’ve had this problem on each of ‘your’ successes, and my notes have been taken. I want this work done.” Katzenberg grudgingly said he’d make sure his concerns were addressed.
Eisner then called Peter Schneider, peppering him with questions about what had or had not been done to address his concerns about Pocahontas. After brooding further on the subject, he called Schneider again the next day. The conversations confirmed his suspicious that Katzenberg was deliberately trying to keep him in the dark. He was especially angry when Schneider told him that Katzenberg had scheduled a screening for 7:00 A.M. that Friday without telling Eisner. Even if he had invited Eisner, he must have known that he couldn’t be there that early. Caught between the two, Schneider reported Eisner’s call to Katzenberg, who was furious that Eisner had gone around him. He dashed off a handwritten note:
“Your feeling the need to be calling Peter Schneider and checking up on me and inquiring whether or not your notes are being addressed on ‘Pocahontas’ does not work for me at all…. Your calling Peter again today to ask what has been done, asking had it been discussed with Menken-Schwartz, are we doing a big production number, etc., instructing you to call him tomorrow immediately after my screening to report to you the status, is at best amazing…. but what may be even worse is what this says about your lack of confidence and trust in me to do what I said I would do. If this is how you see us dealing with one another in the future, it’s not for me.”
Furious, Eisner phoned Sid Bass and read him the letter. “It’s Friday, a good time to leave a company. Call up Jeffrey and tell him to get out,” Bass said.
Next Eisner sent a copy of the letter to Litvack, and told him that Sid Bass had said to fire him. This time, Litvack counseled restraint. “Do it on your schedule. Get stronger. Do it when you have a substitute organization,” he said. Eisner called Bass back. He agreed they should wait.
Jane said he shouldn’t have any more dealings with Katzenberg while he was trying to recuperate; it was too upsetting.
Finally Eisner called Katzenberg, and said, “Your letter was wrong, out of place, silly, and more importantly, I am not going to deal with you for weeks. It’s upsetting me and retarding my recovery. If that’s a problem, too bad.” He hung up, highly agitated, and called Litvack.
“Call Jeffrey and put a lid on the whole thing,” Eisner ordered. Litvack promised that he’d make Katzenberg “feel guilty” about Eisner’s health and would “buy time.”
“Jeffrey is without guilt and his adviser David Geffen is worse,” Eisner replied.
Litvack did speak to Katzenberg, and then relayed the conversation to Eisner. These remarks, it seems, were the last straw. Eisner described the meeting, as relayed to him by Litvack in another letter to Irwin Russell:
Dear Irwin:
In that I wrote the last letter to you about Jeffrey Katzenberg and his strange, ego-provoked, awkward positions, I thought I would write to you chapter 2. Actually, putting bewildering personal behavior on paper is therapeutic for me, instructive for Roy and Stanley, eventually for the entire board; and maybe some day even for arbitration. And if for no other reason, Breck feels we are living out a Shakespearean play and it is worth remembering.
Let’s call this saga, the post–Michael Eisner quadruple bypass saga, or how I, Jeffrey Katzenberg, planned to increase Michael’s stress, selfishly think only of me, Jeffrey, and how I, Jeffrey, can act even worse than I did after Frank’s death, a feat everybody would have thought impossible.
After describing the events leading up to the meeting between Litvack and Katzenberg, Eisner wrote:
Jeffrey went on to tell Sandy that he must run the company, totally and completely; and if I did not have more faith in him than I showed in Pocahontas, then it wouldn’t work….
Jeffrey told Sandy many more things that I cannot remember, but the total of this conversation and the previous three are enough proof that Roy’s feelings are and have been totally correct. Jeffrey’s hard work is not enough to overcome his poor judgment….
After continuing in this vein, Eisner summed up:
The conversations Sandy has had with Jeffrey both before and after Frank died and since my operation demonstrate a man of pathological blind ambition, and one with no judgment. Roy is right. He would, left up to his own, destroy the company. When the Wall Street Journal said in an early profile that as a kid “he pushed his little friends faces in the ‘dog shit’ on the street,” they did not know they were talking about Frank and me. Jeffrey is dangerous and being advised by a dangerous man. If there ever was a question about his corporate leadership, which of course there wasn’t, there is no question now.
My plan as of tonight is to deal on the Studio level for the time being, corporate governance can wait. I will try to figure out the studio organization without Jeffrey and let him go just before Labor Day. There is obviously no alternative…. I will not tell him any of the above, nor acknowledge how outrageous I think he is…. Hopefully that will end the Jeff Katzenberg saga, and I and the company can move on to more productive work. Unfortunately he will work the press but that too will pass.
I hope this memo helps to clear some things up; exactly what is the real question!
At the bottom was scrawled, “Michael,” and the date, August 14.
Eisner didn’t wait until Labor Day. Five days later, he called Joe Roth and asked if he’d run the movie studios. Roth agreed. That evening, he met with Rich Frank and offered him television, home video, and the Disney cable channel. As head of animation, Roy would now report directly to Eisner, not Katzenberg; Peter Schneider would run animation day-to-day. Essentially, Eisner himself would replace Katzenberg at the head of the three units. He was now assuming the duties of three people: himself; Wells, the president; and Katzenberg, the head of the studio. The more Eisner thought about the plan, the better the idea seemed. This was exactly the sort of ren
ewal that he and Wells had been talking about.
Eisner asked Katzenberg to meet with him that Wednesday at 11:00 A.M., ostensibly to discuss the memo about reorganizing the company that Katzenberg had been working on. Katzenberg brought a copy of the memo with him, but Eisner didn’t give him a chance to discuss it.
“This is a day I’ve dreaded for a long time,” Eisner began. “I wish it hadn’t come to this and that we could have made it work. But I’m not going to be able to give you the job you want and you’re not satisfied with the one you have.” Eisner handed Katzenberg a press release that Dreyer and Litvack had already drafted announcing his “resignation” and the appointments of Roth, Frank, and Schneider.
Katzenberg read it, then put it down. He didn’t seem surprised or upset. “There are two kinds of divorces,” he said. “One in which you’re best friends, and one in which you’re enemies.” Eisner said he wanted to be friends. In that case, in the few weeks remaining under his contract, Katzenberg said he’d like to oversee the upcoming releases of Pulp Fiction, the first release under the Miramax deal he’d negotiated, and Touchstone’s Quiz Show, and he’d like to attend the London premiere of Lion King, where Elton John was hosting a party in his honor.
Katzenberg also mentioned the bonus that would now be due him, and reminded Eisner of his last days at Paramount, when Eisner had insisted on getting his check from Marty Davis and had walked to the bank to cash it. “It’s not that you weren’t going to get your money,” Katzenberg said. “You just wanted your business cleared up. I’d like the same.”
Eisner seemed agreeable. He was feeling almost euphoric now that the long-anticipated deed was done. “The tension seemed to seep out of the room,” he later wrote. “Our conversation turned to earlier years and better times together…. Jeffrey later described it as the most relaxed talk we’d had in a year.”
By the time Katzenberg got back to his office, Steven Spielberg was on the phone from Jamaica, where he was visiting Roger Rabbit director Robert Zemeckis. Though the Disney press release supposedly wouldn’t be available until 2:00 P.M., it had gone out while Katzenberg was still in Eisner’s office. As Spielberg commiserated, Zemeckis called out, “You guys should do something together.” Next on the phone was Geffen. “Should I do something with Spielberg?” Katzenberg asked.
“Are you kidding?” Geffen replied. “If I were you, I’d do it in a second.” At the Disney studio, Rob Moore, the studio’s chief financial officer, raced through the corridor handing out copies of the press release. David Vogel was on the phone, and Moore pressed the release against his internal office window, gesturing frantically for Vogel to read it. Vogel immediately hung up and, on impulse, headed upstairs to Katzenberg’s office. In place of the throngs who usually lined up for Katzenberg’s attention, no one was there.
Katzenberg was sitting at his desk alone. He had a manila folder in front of him labeled “Michael.” Vogel sat down across from him. Katzenberg seemed oblivious to his presence. He pulled out a document from the file and glanced at it. “I guess I won’t be dealing with that anymore,” he said as he ripped the memo first into halves, and then quarters. He hurled the scraps into his wastebasket. He continued until he’d ripped up every document in the folder. Vogel saw a nineteen-year relationship being reduced to torn scraps of paper.
That evening, Eisner and Jane joined songwriter Carol Bayer Sager and Warner Bros. chairman Bob Daly for a long-scheduled dinner and a meditation session with celebrity guru Deepak Chopra, another of Eisner’s experiments in stress reduction. Sager had been emailing Eisner for months, urging him to try meditation, and Chopra had flown in from North Carolina for the occasion.
Daly was already in Sager’s living room chanting when Eisner arrived, but paused to commiserate over the hard day he assumed Eisner had had. Eisner found Chopra “smooth, articulate and charming,” but before they could even get to the mind-body connection, the New Age physician launched into a rapid-fire discussion of marketing his books and tapes, his publishing deals, and whom he knew in Hollywood. By the time they got around to meditating, Eisner felt overstimulated. As in his brief attempt at yoga, the attempt to clear his mind was in itself stressful. Still, “settling Jeffrey Katzenberg’s future provided enough stress reduction for the next several months,” he said.
Perhaps inevitably, this peace of mind was short-lived. Katzenberg did his best to deter his friends and allies from commenting to the press, including, especially, David Geffen, who did remain uncharacteristically silent. Katzenberg was hoping to maintain the aura of goodwill of their last meeting, finish out his tenure with dignity, and, most important, do nothing to jeopardize the lump-sum payment due him when he left the company. As long as that payment was unresolved, Eisner retained enormous leverage over Katzenberg.
Even so, Katzenberg’s departure from Disney was a seismic event, not just in Hollywood. Given his prominence and the success of the animated films he produced at Disney, his leaving was front-page news in the major papers. Newsweek made the split its cover story. In the Los Angeles Times, Spielberg compared Eisner to Machiavelli, which made Eisner furious. Eisner angrily accused Katzenberg of fomenting harmful publicity.
The tone of that phone call worried Katzenberg. He called a lawyer, Bert Fields, and filled him in on the termination bonus in his contract and the background. Fields suggested that Katzenberg give Disney a deadline to make the payment, which he did—September 9, which was two weeks away. In the meantime, Katzenberg learned that he wasn’t welcome at the Lion King premiere in London. Elton John canceled his party. A Disney lawyer asked Katzenberg how quickly he could vacate his office. Like Larry Gordon years before, he insisted he was staying put until the day his contract ended, on October 1.
Peter Schneider told the animators that they couldn’t throw a going-away party for Katzenberg at the studio. Senior live-action executives, also barred from holding an event on Disney property, chipped in $5,000 each to rent a hangar at the Santa Monica airport and throw a decent party. Everyone came, even people who had worked for Katzenberg but had since left Disney. Still, it was a restrained, sad affair. Katzenberg took his wife and twin sons to Disney World over the Labor Day weekend, as he had every year since coming to Disney. There, the Orlando-based animators managed to give him a party, with kegs of his beloved Diet Coke.
Katzenberg’s September 9 deadline passed with no word from Disney. The next day, a Saturday, Eisner came to Katzenberg’s house. The pretense of goodwill, of “staying friends,” had vanished. The conversation quickly deteriorated into mutual accusations. Eisner again blamed Katzenberg for the press coverage, and this time Katzenberg was combative.
“You know how to stop it,” Katzenberg countered. “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.”
Eisner argued that because of “ambiguities” in the contract, he was going to have to get board approval for any payment, and said, “I can’t go to the board right now. They’re too angry with you.” This infuriated Katzenberg, since he believed it was Eisner who had turned the board against him. And whether the board was angry or not, it still had to honor his contract.
That Friday, Katzenberg went into Eisner’s office and slammed the 1988 deal memo written by Frank Wells on his desk. He’d highlighted with a yellow marker the passage outlining his bonus. “My eleven-year-old would read this and understand what it means,” he said. Eisner seemed flustered, and said only that he was handing the matter over to Litvack.
Any possibility, however remote, of an amicable settlement between Eisner and Katzenberg were dashed the weekend of September 16, when The New Yorker magazine faxed Eisner and Katzenberg advance copies of an article by Ken Auletta, The Human Factor, which was an account of Katzenberg’s ouster. Someone in Katzenberg’s office faxed a copy of the article to his lawyer, Bert Fields, with a note from Katzenberg: “Thank
s for all your help.” But a copy of the fax was mistakenly sent to Eisner’s office. As Eisner told Tony Schwartz a few days later, “I can’t talk any more to Jeffrey Katzenberg; sending lawyer, everything I ever said to him, he tells Geffen, or media; now bringing up whole financial thing in media. When we got our New Yorker story faxed to us, [he] put on a Bert Fields cover page…So Jeffrey is caught in his tracks. I said to Jeffrey…‘I would suggest you don’t negotiate with me in the newspapers, like you did your last situation…finally [I] read this piece. [I] decided it is over forever. I don’t care what he thinks. [I’m] not going to pay him any of the money.”
Despite the near-total rupture with Eisner, Katzenberg was determined to leave on a semblance of his own terms. He attended the New York Film Festival for the opening of Tim Burton’s Ed Wood. And he went to Washington for the premiere of Robert Redford’s Quiz Show. Then, on October 1, 1994, he got into his car parked next to Eisner’s, and left the Disney lot for the last time.
*Eisner insisted that he never offered Ovitz the title of co-chairman.
Part Two
Disenchanted
Kingdom
Eight
With the vexing Katzenberg situation resolved and his stamina returning, Eisner was determined to reassert his own leadership and reverse the negative press that, he was convinced, was being orchestrated by Katzenberg and his allies. One way to do this in the deal-crazed mid-1990s was to do something big—like acquire a broadcast network. In the wake of the FCC’s decision to repeal the so-called fin-syn (financial syndication) rules, which had long prohibited the Hollywood studios from owning a network and vice versa, all three major networks were potentially on the block. Eisner had already talked with Dan Burke about acquiring ABC; Barry Diller had been negotiating with Larry Tisch to buy CBS; and Jack Welch, GE’s chairman, had been grumbling about NBC, then in third place among the major networks.
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