“You can’t help me,” Litvack replied. He walked to the chair across the desk from Ovitz and sat down. “I’m here to tell you that Michael doesn’t want you in the company. You’re being terminated.”
Ovitz was dumbfounded. He looked away, refusing to meet Litvack’s gaze. He couldn’t believe what he’d just heard. There was an awkward silence. Then Ovitz said, “Is this you, Sandy, speaking or is Michael aware of this?” Ovitz couldn’t believe that Eisner, who even at this juncture Ovitz considered his closest friend, wouldn’t face him himself, and instead had sent the one man in the company Ovitz most detested.
“Michael is the one who sent me here to do this,” Litvack responded. Ovitz was churning with emotion: hurt, anger, and a sense of betrayal by Eisner, contempt for Litvack, who, he later testified, “took great joy in telling me to leave…. I was sure that he was enjoying every second of it.”
Ovitz asked again if Eisner knew what Litvack was doing, and Litvack assured him that it was all Eisner’s idea. He’s “serious,” Litvack added.
“If Michael wants to fire me and end my contract with the company, he’d better come in and tell me himself, because I’m not going to accept your word or your position,” Ovitz said, becoming angry.
“Well, you are not to be here. And we are…”
Ovitz cut him off. “Sandy, you are going to have to pull me out of here. I’m not leaving.”
Litvack sat there in silence. Ovitz avoided looking at him. Litvack kept staring at him, and finally Ovitz returned his gaze with a withering look. Litvack got up and left.
Ovitz was stunned by the encounter. He didn’t know whom to turn to. He didn’t even call his wife, afraid that he’d just upset her. He left the office and walked alone around the Disney campus, his mind racing. On some level he still couldn’t believe that Eisner was behind it all. He knew Litvack had detested him from his first day at the company; perhaps he was trying to precipitate something on his own. If Eisner was behind it, he wondered who else knew. If Eisner hadn’t told anyone else, perhaps Ovitz could still change his mind. As he later testified, “I wasn’t going to let them beat me. I was going to make it work.”
Whether Eisner was behind it or not, Ovitz realized he’d have to confront him. He couldn’t bear the uncertainty.
Later that afternoon, he went into Eisner’s office and closed the door. He asked if Eisner had sent Litvack to fire him, and Eisner admitted he had. “How could you?” Ovitz asked. “After thirty years of friendship, how could you?”
Eisner was silent. Finally he said, “We need to resolve this. We need to put a good face on this.”
“Well, I’m not going anywhere,” Ovitz replied. “You made a lot of promises to me before I came here. I’m still learning. You can’t cut this off right now. You can’t fire me. You’ve got to give me more time to integrate. I’m not giving up on this.” With a tinge of bitterness, he added, “I’m just finally understanding how this place runs.”
When Eisner didn’t reply, Ovitz walked out of the office.
After mulling over the situation, Ovitz wrote Eisner a letter dated October 8. “Michael, I have been reflecting on our situation,” he began. “Needless to say, I am as shell-shocked today as I was then. However, after my conversation with Sandy and the many subsequent discussions with you, it seems to me that you would be much happier if I were not with the company. To that end, I guess I should try to explore other possibilities.” While hardly enthusiastic at the prospect, Ovitz was now at least willing to explore the Sony possibility that Eisner had been pushing ever since the dinner with Idei and Ohga. Still, he worried that he was being set up for a breach of contract suit if he looked for another job while still employed by Disney. So he added “P.S.: Since Sandy raised his point of view on the company and me, I think I need you to acknowledge this note by signing it so that I do not end up in a problem which I do not want with the company or my best friend.”
Ovitz later explained that he added the postscript “because I didn’t trust my best friend or Sandy Litvack, period.” Asked if he was being sarcastic when describing Eisner as his “best friend,” Ovitz replied, “Absolutely not…. I had a relationship. Our families had a relationship. And I tried really hard to separate the confused feelings that I had about this…but in my body I felt this terrible sense of betrayal by him. And it just festered with me. But I still wrote that. Unfortunately, there is a part of me that is very vulnerable to the people that I allow to get close to me. And it’s one of the reasons I don’t allow a lot of people to get close to me. And he was one of those few people.”
Eisner replied by handwritten note the same day. He was pleased that Ovitz was finally facing up to the reality of the situation and that he might even get another job, which could relieve Disney of an enormous financial obligation.
Michael,
I read your note and I really appreciate the spirit in which it is written—in light of all our conversations, I am sure you realize that I do not object to your trying to work out a deal for yourself with Sony. And if Sony replaces Disney’s financial obligations to you so you come out the same or better, and if Sony handles the “Disney and MDE embarrassment equation” by making some strategic deal with us, then we certainly would not stand in the way of you closing your deal…. I am committed to making this a win-win situation, to keep our friendship intact, to be positive, and to say and write only glowing things—all this will be assured for both of us if we remain honest and reasonable and direct. Nobody ever needs to know anything other than positive things from either of us. This all can work out! You still are the only one who came to my hospital bed—and I do remember.
Michael
Despite Eisner’s plea to be “honest and reasonable,” Ovitz doubted his sincerity. All the talk about it being a win-win situation seemed a not-so-subtle warning that if Ovitz didn’t leave and find another job, it could be ugly. Eisner himself later described the letter as “This is all just a lot of talk to get him comfortable that I’m going to say good things about him and he could leave and go to Sony and be a winner.” And he acknowledged that, even in the letter, he was less than candid, an odd admission given the premium Eisner placed on truth telling, at least in others. “He wasn’t the only one who came to my hospital bed, so that wasn’t true…sincere and insincere is really not the applicable question. The question is could it work, was it possible…. I was bending over backwards to make it good for him, because this would have been great for him, and also solve my problem.”
Over the next several weeks, Eisner embarked on a campaign to get Sony to take Ovitz off his hands. He seemed to have given no thought to being “honest and reasonable” with the Japanese, and instead embraced a strategy that was flagrantly at odds with reality. “I was actually talking to Sony myself,” Eisner later explained, “telling them that I would be very reluctant to lose Michael Ovitz to Sony, that they would have to pay one hundred percent of the compensation that Disney owed him. And that I was only doing it because Michael Ovitz—you can’t really keep a number two man from being number one. And that they would have to give us some deal, record deal or something. I was trying to make Sony believe that this was the last thing in the world that I wanted to do.”
Eisner characterized his conversation with Idei in comments to Tony Schwartz: “Really did not want this to happen. Never hold back a friend. But if they’re going to do it [hire Ovitz], have to do it with my complete knowledge (thinking of Pearl Harbor). I cannot be embarrassed, has to be a big strategic deal that Disney fits into. Conversation about trading my center fielder; he responds thank you very much, yes, interested, I understand.”
Schwartz’s notes from this period indicate something of a stream-of-consciousness preoccupation with Ovitz: “Iger…hates him, doesn’t know anything about business, pontificates, devious…horrible New York Observer article…soon New York Times story coming…Jerry Frabrikant [actually Geraldine Fabrikant, a New York Times media reporter] says he calls these people
all the time.”
Ovitz wasn’t at all sure that he wanted to work for Sony, but feeling he had little alternative, he called Idei to postpone discussions of the joint venture and instead suggested that they discuss his personal situation. To maintain secrecy, Ovitz flew first to San Francisco, rather than flying from Los Angeles to Tokyo, but even so, several Disney employees were on the same flight, and quickly deduced that something was afoot. The next day, Ovitz had lunch with Idei and Ohga at an elegant Sony residence in the heart of Tokyo, where they served him a rare Bordeaux wine. In typical Japanese fashion, the Sony executives had a wide-ranging conversation about broad problems Sony faced, what Ovitz might or might not do there, and a vague sense of possible compensation and benefits, further refined in a call to Ovitz’s lawyer. The lunch resulted in what Ovitz later described as a “nonoffer offer,” more of an expression of continued interest. But at this point Ovitz wasn’t paying that much attention, because while reflecting on the plane and as the discussions unfolded, he’d already decided that he didn’t want to work for Sony. He was still determined to stay and succeed at Disney. He left Tokyo at 5:30 P.M. and was in his office at Disney the next morning, less than thirty-six hours after leaving.
“When I was in Japan and I was at Sony and I was with these guys I realized how much I wanted the Walt Disney thing to work for me and for Eisner and for everybody else,” he later explained. “The asset base of the Disney Company provided me a better platform than the asset base of the Sony Company. And I would rather deal with the devil I knew than the devil I didn’t know. I didn’t assume for a moment that the politics inside Sony would be any easier than the politics inside Disney. I figured that the only difference was that I didn’t speak Japanese.” On November 1, Ovitz sent Eisner another handwritten note. “I have decided to end the discussions and recommit myself to you and Disney.”
Eisner was beside himself. His money- and face-saving plan was in shambles. Ovitz seemed to be in some kind of denial; staying at Disney was not an option. Eisner had been eagerly keeping tabs on progress between Ovitz and Sony. He’d heard that Sony had offered Ovitz $5 million. Ovitz said they’d mentioned $3.5 million to his lawyer. Barry Diller reported a rumor that Ovitz wanted profit participation and guarantees of autonomy. Angry that the deal had fallen through, Eisner blamed Ovitz for overreaching, just as he assumed he’d done with Universal. He was even angrier when Ovitz insisted he hadn’t overreached and had only asked for the same $1 million base pay he received from Disney, and that “no other financial discussion took place.” Eisner didn’t believe him. But when Eisner said yet again that Ovitz was going to have to leave, Ovitz responded that he was going to “chain himself to the desk.”
No one was more surprised by Ovitz’s lengthening tenure than Iger, who’d been told in April by Eisner that he was going to “solve” the Ovitz problem. Iger felt he was in a difficult situation, nominally reporting to Ovitz, but knowing that Ovitz had no authority and was about to be fired. Ovitz asked Iger to have dinner with him at Hamburger Hamlet after he returned from Tokyo, hoping to mend their relationship. But Iger was finding it increasingly tiresome to maintain the charade that Ovitz had any real role at the company. At times the dinner became contentious, with Ovitz at one point warning Iger that he should stop acting like he was a lame duck. “You’d better show me some respect,” Ovitz warned, insisting that Eisner would never fire him. After dinner, as they waited for their cars, Ovitz said, “I have a feeling I have a problem with you.”
“The problem,” Iger replied, “is that I never know where the truth starts and stops with you.”
Ovitz looked startled, and said nothing.
In an effort to get Ovitz to face reality, Eisner wrote him a long letter dated November 10, cataloging his problems with him and insisting there was no way to repair the damage.
I am responding to your request that I let you know whether we can continue in this present management structure. The answer we really cannot. We have discussed the problems over and over again. And no matter what we do, the basic facts do not change. You do not provide what the company needs at this time, you do not like being number two in a company, and you don’t really understand or like or are capable of managing a public company such as Disney.
Eisner cited the Brad Grey negotiations, and the Tele-TV suggestion during Ovitz’s first two days.
I started to question my judgment in putting us together. By Labor Day I was wondering what it would cost in dollars and embarrassment to end our corporate partnership right away. Of course the Jamie Tarses incident only made me more concerned that I had brought in somebody with very questionable judgment.
Eisner reviewed his memo of October 10 the prior year, adding,
I also tried to talk to you but never could get connected. Even on the plane, I could not get your attention. Once I even told you that “There is no way to talk to you. You are too interested in talking to Laura Landro [who covered the entertainment industry] at the Wall Street Journal.” You were late for almost all meetings. And often you lost your temper, to pilots, drivers, little people.
I do not think there is any doubt but that you started off slowly and poorly. You were nervous and wanted to impress everybody. And you would agree that this was a mistake. No matter what I did to try to help and guide you those first few months, it was impossible. Things were getting worse. By January I was really concerned. I wrote to you that “your view that there is a conspiracy with the people around me toward you is ridiculous.” I told you that “I find this attitude stressful, disingenuous, and counter-productive.” I said that “it was not team playing,” and I warned that “the press is getting wind of these stupid issues. It could be ugly…. Many think now you come late to most meetings to show your independence. Everybody is looking at this situation, and it is silly. Why is this happening? Could any of it be your fault?” I hoped I could turn things around, but nothing happened.
By spring it was clear to me that you were out of step with our executives. I am convinced that the cadence problem basically was caused by a lack of trust in you. As we’ve discussed many times, no one knew when you were telling things the way they were. The truth was often hard to decipher.
Eisner ticked off a list of slights and missteps, from not returning phone calls to wanting to fire Litvack and others, of not following through, of being uninterested in details.
Image is always important to you. I had hoped that company operations someday would become as important to you as image…. Michael, a leader of a public company has to lead by example. It is in the little things…. Your number of secretaries, the out of control renovation of your office, your attitude to costs.
And he faulted him for hosting his daughter’s party at the House of Blues.
The problem I will never be able to solve is the endemic one. You have just been too successful in the past to be happy being a number two in any organization, whether small or very large…. You said “you really do not need me. You need someone like Frank, someone who can be happy running point but not looking to grow.” I don’t believe you ever really understood what Frank did or what it means to run a corporation….
Finally, we do not agree on the way to handle the media. I feel distance and honesty and non-manipulation is the way to go. You want to control or handle or humor the press…. That is not how we run the company. We are the media. I do not think your instincts in this company towards the media is the way to play it. And your bad press is not John Dreyer’s fault.
Where does that leave us? I think we should part ways professionally. I believe you should resign…and my concern now is that we end this as soon as possible and do it hopefully in a way which best protects you in the public eye. I had hoped Sony would have afforded you the opportunity, but it did not work out…. I do want what is best for you. You have to decide that, but I can assure you that I would like to remain friends, that I will be supportive and positive and I will work together with you to accomplish what has
to be done promptly.
Michael
Eisner sent the letter to Sid Bass, Irwin Russell, and Sandy Litvack—but not to Ovitz. “After conversations with the board members that I sent it to we felt that it was pushing it, it was overly histrionic, it was too mean,” Eisner later explained. It also meant that Ovitz had no chance to respond to any of the allegations.
The Ovitz situation was so distracting that Eisner had little time to savor Disney’s considerable successes. For all the distractions in the executive suite, it was testimony to the depth of talent at the company that movies got made, television shows produced, and new theme park rides conceived. The summer’s animated film, The Hunchback of Notre Dame, crawled across the $100 million mark by Thanksgiving 1996, just when the Disney studios kicked off the holiday season with 101 Dalmatians, which had been completed on a budget of $45 million, even with high-priced talent like Glenn Close and John Hughes involved. Though most critics savaged the effort as a pointless remake of the animated original, Close’s performance drew praise, as in the Los Angeles Times: “Played with great style and enthusiasm by Close, and costumed to perfection by Anthony Powell, Cruella vamps around in outlandish outfits that include the spikiest heels, a stretch limo version of a cigarette holder, and elaborate gloves with fingernail claws. But her zest for lines like ‘I live for fur, I worship fur’ can’t surmount the great wall of blandness that muffles this movie like a cocoon.”
More to the point, the film did $136 million in domestic box office, and unleashed an avalanche of plush dogs and other merchandise. Disney promptly began work on a sequel. In its first crucial test, Roth’s “event” strategy was vindicated.
Ovitz was nominally in charge of the studio, and though he got none of the credit, he thought the success of Dalmatians might buy him a little more time. His latest plan was to use the Christmas holiday, when their families would be together in Aspen, to spend time alone with Eisner and convince him to change his mind. He started work on an elaborate presentation that would highlight his achievements during the year he’d been there, the initiatives he had under way, and the ways he planned to address Eisner’s concerns in the future. His wife, in particular, had encouraged him not to give up: “Her advice was I should beat all these people and stay there and not lose my long-term point of view. She was dead set against me leaving. She was very upset with the way I was being treated,” Ovitz testified. Ovitz thought that if he could just hang on until December 14, he was convinced he could win Eisner over. That day was Ovitz’s fiftieth birthday, and Eisner and Jane were hosting a party for him, as Ovitz had done for Eisner when he turned fifty.
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