DisneyWar

by James B. Stewart

“Give me a week to rearrange the company,” Vogel said. He’d been running Touchstone and Disney as a single entity.

  “That’s not fast enough,” Schneider replied.

  Vogel had always maintained a respectful distance from Eisner; he’d promised Roth he wouldn’t go behind his back, and he honored the promise. Still, Eisner had often complimented him at meetings, and once sent him a note that no one understood the Disney label as well as Vogel. But now Eisner ignored him. Roth invited Schneider to all studio meetings, even Touchstone ones where Vogel was in charge. Schneider said, “I like this” or “I don’t like this,” effectively controlling the entire development slate.

  At one meeting he interrupted Vogel in front of the entire staff, and said that he had little respect for anything Vogel had produced. “Well, I can see that all of our movies aren’t perfect, but what about 101 Dalmatians? It did well.”

  “No,” Schneider said sharply, and proceeded to criticize one Vogel project after another. Everyone present fell into shocked silence.

  Schneider told Vogel he no longer had the authority to buy anything on his own. Then he began emailing orders to Vogel’s staff, copying Vogel. “I realize you want things done, but there’s a chain of command and I’d appreciate it if you’d stop emailing my staff and then cc’ing me later,” Vogel wrote back.

  When Schneider returned from a trip, he summoned Vogel to his office. “I’d appreciate it if you’d give up the title of president of Walt Disney Pictures,” Schneider said. “I can’t get anything done.”

  “Peter, you do realize you’re voiding my contract?” Vogel asked.

  “Yes, I know, but I hope you’ll stay on at Touchstone.”

  “Thanks, but no,” Vogel replied.

  He left and called Roth, who was out of the office. He reached him on his cell phone. Vogel told him what had just happened. “Noooo…” Roth said, drawing out the vowel.

  “Yeeeees…” Vogel replied, mimicking him.

  Roth said he’d call Schneider and call him back.

  “Peter would like you to stay,” Roth reported when he called Vogel back.

  Vogel cut him off. “Joe, I’m gone.” Two weeks later, Vogel left.

  A few days later he was at home when Eisner called. He was chuckling when Vogel got on the line. “So, I just want you to know that you’re a great executive. I mean, this happened to me at Paramount and look how I ended up. So you’ll be fine.”

  “Well, okay.” Vogel couldn’t resist adding, “I’ve left you with two of Disney’s biggest pictures: Inspector Gadget and The Sixth Sense.” Then he hung up.

  Sacrificing Vogel was evidently the price Eisner had to pay to install Schneider as a watchdog on Roth. Two of Roth’s movie projects, in particular, had aroused Eisner’s suspicions. The first was a thriller about a whistle-blower in the tobacco industry, The Insider, based on a story in Vanity Fair by journalist Marie Brenner. The second was the latest “event” movie from Jerry Bruckheimer, Pearl Harbor, an epic being directed by Michael Bay.

  Eisner had been hostile toward The Insider from its inception. One of the main characters in the true story, Lowell Bergman, was an investigative reporter and producer for CBS’s long-running news magazine, “60 Minutes,” and a central thrust of the article was that CBS had suppressed Bergman’s work out of fear of offending the powerful tobacco industry. Eisner was appalled at the idea of a film that portrayed a rival news organization in a negative light. “ ‘Sixty Minutes’ will track us down forever,” he warned Joe Roth. Roth thought that was ridiculous—the last thing CBS wanted was more publicity on the matter.

  And there were other reasons for The Insider that Roth found compelling. The project had attracted acclaimed director Michael Mann (Heat, The Last of the Mohicans) and screenwriter Eric Roth, who had written the successful, award-winning Forrest Gump. Mann was a personal friend of Bergman’s and was passionate about the project. It was an opportunity to get both highly sought-after talents into further projects for Disney. Roth also thought the subject of big tobacco and the plight of a whistle-blower was dramatic, urgent, and important. It was the kind of story that would help earn the kind of prestige that, apart from Miramax, had been conspicuously lacking at Disney.

  Despite Eisner’s concerns, Roth green-lit the project. Eisner saw a rough cut and praised it, though he again stressed that any facts about CBS had to be accurate. The Insider opened in November 1999 and garnered lavish critical praise, especially for Russell Crowe’s portrayal of whistle-blower Dr. Jeffrey Wigand. But just as Eisner had feared, there was a storm of controversy. CBS didn’t let the film pass without comment, and veteran “60 Minutes” correspondent Mike Wallace was vehement in his denunciations of his portrayal. Even worse, from Eisner’s perspective, was the fact that the film earned less than $7 million in its opening week. He was so dismayed that he called “60 Minutes” producer Don Hewitt to complain that it was bad enough Disney had ever agreed to make the film, but to make matters worse it was a box-office flop.

  This, in any event, was the account of the conversation that infuriated just about everyone who had worked so hard on the film, especially Michael Mann, who was convinced that Eisner and Disney were deliberately under-selling the movie, in the same way they had made sure that Kundun was a flop. Neither Eisner nor Hewitt would reveal just what Eisner said in the call to Hewitt (while acknowledging that such a call was made), and Disney denied that it wasn’t promoting the film. Still, suspicions were fanned again after The Insider garnered seven Academy Award nominations, and Disney mounted what Mann considered a tepid campaign with members of the Academy. The Insider was shut out at the awards ceremony.

  More important, the whole controversy vindicated Eisner’s original instinct that The Insider was a mistake, even as he was growing more worried about Pearl Harbor. After the success of Armageddon, Roth had moved swiftly to sign director Michael Bay to another project with Jerry Bruckheimer. But nothing Roth offered Bay captured his interest, a task made more difficult by the fact that Bay didn’t read scripts, or, so far as Roth could tell, much of anything else. Bay had come from the world of fast-paced television commercials, which didn’t put much premium on the written word. Still, after the success of The Rock and Armageddon, Bay was being avidly courted by other studios, so Roth convened weekly meetings with Bay, his agent, his lawyer, Bruckheimer, and Disney executives to hammer out an idea for Bay’s next film at Disney. Ten ideas were presented and rejected. The effort seemed to be getting nowhere, and Bay had stood up to leave when Todd Garner, the studio’s cohead of production, tossed out two words: Pearl Harbor.

  Garner was a frustrated screenwriter, and he’d been dreaming of a Pearl Harbor epic for fourteen years. His idea was to use the devastating Japanese attack on Pearl Harbor as a background for a story that would reunite two brothers and the Hawaiian woman they both loved. Bay nodded. “Yeah, I like it,” he said.

  The next day Garner pitched the idea to screenwriter Randall Wallace, one of Hollywood’s star writers in the wake of his script for Braveheart, which won the Academy Award for Best Picture and was nominated for Best Original Screenplay. Wallace was a military enthusiast and liked the idea. The story had all the elements of the sensationally successful Titanic—a love affair set against a historical tragedy—and the wartime verisimilitude of Saving Private Ryan. Joe Roth assigned the project to Bruckheimer to produce.

  It went without saying that the combination of Bruckheimer, Bay, and Wallace meant that Pearl Harbor would be expensive. Ben Affleck, still popular from the success of Miramax’s Good Will Hunting and Touchstone’s Armageddon, was signed to play one of the brothers, with Kate Beckinsale as his love interest, at which point the heroine became a British nurse rather than Hawaiian. Preliminary budget figures for Pearl Harbor came in at $200 million, a number that left Eisner aghast. “Why are we using Michael Bay? I could give this to my son and make it for $70 [million],” he told Roth. He railed at Roth for letting costs burgeon out of control. Roth let him con
tinue until he seemed to calm down, then asked, “Tell me what you’ll make it for.”

  “Get rid of Bruckheimer and Bay. Make it for $70 million,” Eisner said.

  Roth was appalled. “You can’t do this on the cheap. You have to go all out, or it won’t work.” They argued until Roth volunteered to go back to Bruckheimer and Bay, looking for some cost savings. The producer and director were skeptical, but finally came back with a lower number: $140 million, the same as the budget for Armageddon. Garner wanted to cut the ending of the film, the Doolittle raid on Japan that ended the war, which wasn’t part of his original idea and would have saved millions. “It’s called Pearl Harbor, not Hiroshima,” Garner argued. “This isn’t about Japan.”

  Eisner vehemently disagreed. “That’s the American victory, the Americans have to win at the end. That’s why we’re making the movie.”

  “Everybody already knows the Americans won World War II,” Garner countered, but Eisner wouldn’t back down.

  Eisner finally agreed to $140 million, but then told Roth he wanted no producer or director guarantees, insisting that they not be paid until Disney itself had turned a profit.

  Though not unprecedented, such deals were rare in Hollywood, and hardly ever used with top-level producers like Bruckheimer. Major talent on a film—producers, directors, writers, and stars—typically earned a percentage of a film’s revenue, usually expressed as either a percentage of the “gross” or, more often, a percentage of “net profits.” At the same time, they were guaranteed a minimum fee. Since most films never earned any “net profits,” these guarantees were their de facto salaries. Though he had been operating within this system for much of his career, Eisner had long chafed at the notion that the studio put its money at risk, but that talent earned a guaranteed sum no matter how poorly the film performed at the box office. While this wasn’t an indefensible position, it ignored decades of economic history. Just as autoworkers don’t bear the risk of failure of a new car model, talent in the movie industry had used its leverage to insulate itself from the commercial failure of a film. Eisner may have thought this was unfair, but management controlled the making, distribution, and marketing of films.

  Bruckheimer and Bay were predictably insulted. Bay said he was quitting. But Bruckheimer countered with a compromise: Disney could earn back its investment before any guarantees, but then the producers, director, and actors should get a percentage of the gross above the cost of the film. Eisner couldn’t fault the logic, and somewhat to Bruckheimer’s surprise, he agreed, though it meant Disney would be giving up some of its profits if the film was a big hit. Bruckheimer patiently lured Bay back, arguing that Pearl Harbor was such a sure thing that they’d more than make up the money by sharing in the proceeds on the back end. Reluctantly, Bay agreed. Bruckheimer stressed to Affleck that this was his opportunity to break through as a romantic action hero. Everyone finally got on board. At times Bruckheimer felt more like a diplomat than a movie producer.

  Shooting began, and then there was another snag. After the first dailies were screened, Peter Schneider stood up, said, “I don’t understand this movie,” and walked out. Then he convened a meeting and announced that he was shutting down production unless the actors in the thirteen major roles gave Disney options on their next films. Everyone there was stunned. “You can’t ask them for options after they’ve just given up their guarantees,” Garner argued. He was increasingly convinced that Schneider was trying to kill the movie. “I don’t care,” Schneider said. “Either we get the options or we shut it down.” He and Garner got into a shouting match before Schneider finally walked out. Garner had never trusted Schneider, especially after he savaged David Vogel at a staff meeting. (Schneider said he didn’t recall such an incident, and maintained that cost overruns, not options, were the reason for shutting down production.)

  Garner met with business affairs people and tried to negotiate the options. It was impossible. Actors Affleck, Josh Hartnett, Cuba Gooding Jr. all had deals for other projects they couldn’t just cancel. Finally Garner went to Eisner. “This is impossible,” he argued. “I can’t work for Peter. He’s a horrible person. I can’t stay if this continues.”

  “Go back to your office,” Eisner replied, “because Peter isn’t leaving.”

  Still, Eisner gave up the options demand, and production continued. Garner managed to spend as much time as possible on location in Hawaii, away from Schneider and the studio.

  The Insider may have flopped in its early November 1999 release, but just two weeks later, Toy Story 2 opened to lavish praise and grossed more than $80 million over the Thanksgiving weekend, a record for the period. “The first question about ‘Toy Story 2’ is whether it’s as wonderful as the original,” Joe Morgenstern wrote in The Wall Street Journal. “The answer is absolutely, improbably yes; Pixar, which releases its films through Disney, has done it again.”

  The sequel’s enormous success vindicated Roth’s decision to rescue the film from direct-to-video and have John Lasseter rework it as a theatrical release. Now Lasseter was eager to embark on what would be the crowning achievement of a trilogy: Toy Story 3. Lasseter had the story already blocked out. The creative team from Toy Story 2 was ready to go.

  Eisner had reluctantly agreed that Toy Story 2, even though it was a sequel, would count as one of the pictures in the new Disney-Pixar deal. But now he dug in. Eisner stubbornly insisted that a third Toy Story would not count, and would not displace the already-agreed-upon Cars as the last of the Pixar films under the current agreement. “I want Cars,” Eisner insisted at meeting after meeting called to discuss the issue.

  Disney’s consumer products division was clamoring for another Toy Story. Schneider and Schumacher urged Eisner to reconsider, if for no other reason than to keep Lasseter happy. Steve Jobs himself weighed in. But Eisner was at his most implacable. What was the point of a deal if you just changed it every time something was successful? He invited Lasseter to visit at Aspen, and afterward assured Schneider and Schumacher that he’d defused the situation. But nothing had really been resolved.

  Joe Roth wasn’t the only division head with whom Eisner had become disillusioned. Apart from the ongoing woes of Euro Disney, the theme parks had been Disney’s most consistently profitable division under Judson Green. But it was obvious that Eisner accorded the division little respect, attributing the positive results far more to the creative efforts of the Imagineers than to the parks’ executives. At one point he referred to the executives working under Green as “monkeys.”

  “What do you mean by that?” Green asked.

  “They don’t have any brains; they’re not that smart. It’s a simple business.”*

  Green let the remark pass, but it didn’t occur to him that Eisner might think the same about him. But then, just before Thanksgiving, Eisner summoned Green to his office. Paul Pressler, the young, energetic executive who had succeeded Steve Burke at running the Disney stores, had just gotten a job offer from toy company Mattel. Pressler was handsome, charismatic, a personal favorite of Eisner. “Nothing personal; I don’t want to hurt you, but I’m promoting Paul to president” of parks and resorts, Eisner informed Green. “You can stay as long as you want, but you won’t have any responsibilities.”

  Green was stunned. He’d had no warning. He had delivered the results Eisner and the financial planners had asked for. Eisner had even praised him in his autobiography for the “special passion” he’d brought to building the Animal Kingdom, and for his creativity as a jazz pianist. Although Pressler was well liked within the company, and had brought some creative ideas to the Disney stores, his division had been faltering from a dearth of new products. Green agreed to remain in the largely titular position of chairman of parks and resorts until he had completed negotiations for a new theme park in Hong Kong. Then his long Disney career would be over. With his departure, the only executive left from the pre-Eisner era would be Dick Cook.

  Much as Joe Roth enjoyed his position at Disney, and
at times had enjoyed working with Eisner, Eisner was making his life increasingly miserable. Eisner confronted him with increasingly contradictory and therefore impossible demands: to slash production, reduce costs, and yet maintain market share and continue to be the number one or two studio at the box office. There was constant tension between Eisner’s belief in a low-budget “single and doubles” approach and the new pressures of costly “tent pole” or “event” movies with big stars and special effects. Roth concluded it made sense to stay only if he had a reasonable chance of moving up to president, or succeeding Eisner as chief executive. Given Eisner’s reaction to his earlier suggestion that he be named president, both possibilities seemed remote.

  Roth’s contract would expire on January 1, 2000, so toward the end of 1998, with little more than a year remaining, he gave Eisner notice that he planned to leave the company when his contract expired. Eisner invited him to lunch and said he didn’t believe him. “I’m not really unhappy,” Roth said, “but you don’t want me to do what I want to do. You don’t want to make me president.”

  This was true—Eisner was increasingly leaning toward Bob Iger, and had already broached the possibility to him. But Eisner didn’t say anything.

  A few months later, Roth reminded Eisner of his decision to leave. “I haven’t changed my mind,” he said.

  “You won’t really leave,” Eisner said again.

  “Why not?”

  “No one will answer your phone calls,” Eisner said.

  “Michael,” Roth answered, “that’s called projection.”

  Eisner thought for a moment. “Maybe that’s true, but you’ll see.”

  The dispute between Jeffrey Katzenberg and Michael Eisner over Katzenberg’s bonus finally went to trial on April 16, 1999. “I’ve been waiting five years for this,” Katzenberg told the press, his wife, Marilyn, at his side, as they gathered in a makeshift courtroom at his lawyers’ offices in Century City. Serving as an arbitrator in the case was distinguished former judge Paul Breckenridge. In the intervening years, Disney had conceded that it owed Katzenberg something. How much was the issue, and the subject of the trial. Under pressure from the judge originally assigned to the case, Sandy Litvack and Katzenberg’s attorney, Bert Fields, had negotiated a settlement in 1997 in which Disney agreed to pay Katzenberg $117 million, which Disney insisted was all that it owed. Katzenberg maintained that the company owed him more, plus interest. Disney and Katzenberg would have a trial before an arbitrator to determine the total.