The Keys to the Kingdom (45 page)

Though Eisner later said that the others seemed to share “an easy connection,” the tensions that hummed among those gathered were too myriad to be counted. In comparison, the strain between Eisner and Katzenberg was rather pale. The guests included tycoon Rupert Murdoch, TCI magnate John Malone, legendary investor Warren Buffett, and thirty-eight-year-old Bill Gates of Microsoft.

Viacom chief Sumner Redstone, who had recently prevailed over Barry Diller in a fight to buy Paramount Pictures, was there, as was Diller, who had also lost out on a subsequent bid for CBS and was left to run the QVC home-shopping network. Diller surely must have been asking himself how his former employee, Eisner, had managed to get so wealthy and powerful at Disney while he was running an outfit that sold cubic zirconium to the masses. Diller could also contemplate the success of another old friend and adversary in attendance: music mogul David Geffen was now a billionaire pondering his next move as his contract with MCA neared expiration. Also present was foundering Time Warner chairman Gerald Levin and the Warner studio cochairmen, Bob Daly and Terry Semel. Young Seagram's scion Edgar Bronfman Jr. was now part of the group, holding 15 percent of Warner stock and getting a none-too-friendly reception from Levin.

Michael Ovitz was in attendance, having effectively transcended the agent's role by helping broker Sony's 1989 purchase of Columbia Pictures and Matsushita's acquisition of MCA the following year. Neither deal had worked out well for the buyer, but billions had changed hands. Ovitz was perceived as a man who could make a very powerful phone call. And Ovitz had flown there with Eisner in his jet. According to Eisner, the purpose was to discuss a plan for Ovitz to join Disney. On the ride, however, Ovitz had sounded a sour note. “We should be co-CEOs,” he'd said. In Ovitz's mind, an alliance would work only if he reported directly to the board, as Wells had done. There were models for such arrangements—Daly and Semel had made it work at Warner for years. But such a partnership was hardly what Eisner had in mind and the trip became awkward. As they parted, Eisner's wife—unaware of the turn the talks had taken—said something about how helpful it would be if Ovitz were to join the company. “Yeah,” Ovitz replied. “I'm the one guy who can save [him] from having a heart attack.” To Eisner, it didn't feel like a joke.

 

AS HE MINGLED
at Sun Valley, Eisner inadvertently amused some of the other studio chiefs by openly questioning the wisdom of Disney's high-volume film strategy. That year, Disney would release thirty pictures—twice the number in 1990 when the studio started to step up the pace of production. Disney was now distributing a third of all major studio films for the year even though it was only one of six players. Why, Eisner asked, was Katzenberg making so many movies? Some thought Eisner's complaining
seemed disingenuous because they all knew that he himself had embraced the volume strategy. Some contended that Katzenberg still couldn't even green-light a big-budget film without Eisner's consent.

“Jeffrey works for you,” one of the studio chairmen told Eisner. “Why don't you tell him what to do?” Eisner said he intended to do just that.

According to Katzenberg, the two talked privately that Thursday night. But instead of reproaching him for making too many movies, Eisner seemed to send an entirely different message. From about nine-thirty to eleven, Katzenberg says, the two men conferred in the presence of Jane Eisner beside a huge oblong ice rink that the lodge kept frozen even in the summer months. In the quiet darkness, they engaged in a broad-ranging talk about the future of Disney—including areas such as Euro Disney that were outside the scope of Katzenberg's authority. Katzenberg felt included at last. He rejoiced inwardly: it seemed to him that Eisner had decided to make him the number-two man after all.

Eisner did not mention to Katzenberg that he wasn't feeling well. But by two in the morning, Eisner was in pain. He went to a local clinic for an electrocardiogram—paying in cash to avoid setting off a round of anxious press reports about his health. The test showed no immediate cause for alarm.

The next day, Eisner attended a morning panel at the Allen & Co. conference as scheduled. Despite his conversation with Katzenberg the night before, he would later say that he thought Katzenberg told bad jokes and presented himself poorly. Afterward, he and Katzenberg went to lunch with Allen. Meanwhile, Eisner's secretary had called Michael Engelberg, his internist, to ask when Eisner had taken his last stress test and to schedule another. Engelberg, who also happened to be producing
The Puppet Masters
—a troubled science-fiction project—for Disney, told Eisner to return to Los Angeles at once and go directly to the hospital. Eisner took that advice. He flew home and went to Cedars-Sinai Medical Center, where he registered under an assumed name. After just minutes on a treadmill, he was scheduled for emergency quadruple-bypass surgery.

As he was about to be wheeled into the operating room, Eisner—drugged and, by his own later account, thinking that he might be “playing out a death scene”—had a conversation with his wife and two of his sons. As he later recounted the discussion, he made three requests.

“I want to be buried aboveground.”

It was an odd wish, though perhaps understandable for a man with a strong dislike of dirt.

He also had a brief negotiation with his wife. He and Jane had bought a parcel of land and designed a house that Eisner had concluded would be “too big and…a pain in the neck.” So just before surgery, Eisner made his move.

“Jane, if I get through this, let's sell it,” he said. “I don't want to build a house.” Naturally, she gave in. It meant that Eisner, the patron of architects, would not design and build his own home despite his enormous wealth.

Finally Eisner told Jane that if anything should happen to him, she should get herself a seat on the board and tell the directors to hire Barry Diller to succeed him. Having addressed the future of the company, Eisner was ready to go under the knife.

 

THAT SATURDAY MORNING
, Jeffrey Katzenberg—who had returned from Sun Valley separately—called Eisner's house as usual to brief him on the previous night's box-office report. The company had just opened
Angels in the Outfield,
the Joe Roth–produced kids' baseball film, and the $9.2 million in sales was better than expected. It was nice, for once, to have good news to deliver about a live-action film.
The Lion King
had also pulled in another $17 million. To Katzenberg's surprise Jane Eisner answered the phone, and it was obvious that she had been asleep. Normally the Eisners were awake by now. Something was wrong.

“Did I wake you?” Katzenberg asked.

“I—I meant to call you,” Jane replied.

“About what?”

Jane told Katzenberg what had happened the previous day. “He came through the surgery,” she said. Everything, she assured Katzenberg, was fine. The incident had not been made public—yet.

By his account, Katzenberg warned Jane that the secret of Eisner's hospitalization could not be kept for long. Better to be aggressive, he said, than have something leak that might make the situation sound more dire than it was. Take the initiative, he urged. Stress the positive. Then he asked, “Who knows about it?”

She rattled off a list that included Roy and Patty Disney; Stanley Gold;
Sid Bass; the general counsel, Sandy Litvack; Eisner's public relations man, John Dreyer, and his wife, who worked for Eisner as an assistant; and Eisner's secretary, Lucille. And there was one more: Katzenberg's old enemy Michael Ovitz.

Katzenberg was shocked that the list was so long yet didn't include him. He offered to help in any way he could and hung up. Then he turned to his wife, Marilyn.

“Wives don't lie,” he said.

“What are you talking about?”

“Wives don't lie,” he repeated.

“So what does that mean?”

“In a moment of Michael's greatest vulnerability and her greatest need, she has enlisted those whom he trusts,” Katzenberg said, somewhere between anger and sorrow. “She's told us everything we need to know. It's over.”

 

BUT IT WASN'T
. Even though Katzenberg later said that he knew beyond a doubt that matters between him and Eisner were resolved, some part of him didn't believe it yet. Disney was soon putting out the word that Eisner was walking around and asking about box-office receipts by Sunday, not even two full days after his surgery. (In fact, Katzenberg says he was amazed when Eisner called to ask about grosses.)

Eisner was also receiving visitors. Ovitz, who had rushed to the hospital on Saturday afternoon, was back on Sunday. And Roy Disney—who was in Ireland but quickly returned to California—also stopped by. A Disney spokesman said Roy would “mind the store” during Eisner's absence, which was projected to last as long as four weeks.

On Tuesday afternoon, Katzenberg arrived, having been told by Jane to confine himself to “happy news.” Nonetheless, Eisner at this time had the impression that Katzenberg was primarily interested in his own advancement even while Eisner still lay in bed with a tube in his arm.

On Wednesday, July 20—the day after Katzenberg's visit—the
Wall Street Journal
and the
New York Times
published major stories suggesting that Katzenberg was unhappy with his prospects for promotion and might leave the company. Neither article included a comment from Katzenberg. But Eisner thought it was hardly a coincidence that the two newspapers that wielded the most influence on Wall Street—and accordingly on Dis
ney's stock, which was always Eisner's primary focus—reported such similar stories on the same day. The
New York Times
reported that Katzenberg's friends had disclosed his chagrin that he had been excluded from the loop immediately after Eisner fell ill. And Eisner homed in on a quote from an unnamed source in the
Times:
“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.” Once again, Eisner felt that he was being handed an ultimatum—at an appalling time.

Katzenberg, who says he spoke to neither paper, contends that the stories appeared merely because his contract was up in less than ten weeks and Eisner was in the hospital, raising obvious questions about the future. But even if Katzenberg did not speak to the papers himself, there can be little doubt that when Eisner saw a quote from one of Katzenberg's closest friends, he immediately thought of David Geffen and resented, not for the first time, what he perceived as Geffen's bad influence on Katzenberg.

The outlook for Eisner's health was so positive that the stock remained unmoved during the episode (which conveniently happened on a weekend when the markets were closed) and even ticked up by twenty-five cents the next Monday, when Eisner was said to be dictating instructions to top executives from his bed.

Still, the press was awash with speculation about whether Eisner would be forced to name a number-two man who could be a successor. The
Los Angeles Times
observed that other entertainment-company chiefs, including News Corp.'s Rupert Murdoch and Time Warner's Gerald Levin, worked “without a net.” The
Wall Street Journal
pointed out that the phenomenon was hardly confined to the entertainment industry. But
Newsweek
described Katzenberg as a contender for promotion, describing him as “widely considered to be Disney's most valuable human resource” and quoting financial analyst Larry Haverty as saying, “Katzenberg is probably 80 percent responsible” for the increased value of Disney's stock.
Newsweek
even had an anonymous Disney board member suggesting that Katzenberg might be a candidate for the number-two job. (“Obviously Jeffrey doesn't have the same background as Frank. But that doesn't mean you can't make adjustments if you want to,” read the quote.)
Time
reported that Katzenberg's friends “were busy making Katzenberg's case [for promotion] to anyone who would listen.” All these reports—coming while Eisner was still recuperating—undoubtedly pressed every button on Eisner's keypad.

As it happened, Eisner had already articulated his thoughts before his
unplanned trip to the hospital. At the end of July, the
Los Angeles Times
published an article based on an interview Eisner had given before he made his ill-fated trip to Sun Valley. No matter what he might have said to Katzenberg at the skating rink in Sun Valley, Eisner had signaled strongly to the newspaper that Katzenberg was not going to advance. An associate of both men described their relationship as “a withholding father and a son looking for love and recognition from that father.”

Eisner, at age fifty-two, started off with plenty of complimentary words for Katzenberg, now forty-three years old. He told the newspaper that there was no one in the industry whom he trusted more than Katzenberg. He talked about Katzenberg's loyalty and devotion. “He…is very supportive of the whole company,” Eisner said. “He is very much a team player.” It would turn out to be a confusing statement considering that just a few weeks later, Stanley Gold would say that soon after Wells's death, the board had rejected Katzenberg's bid for advancement because he was “not collegial” and “not a guy who can foster the teamwork we need.”

In the interview, Eisner told the reporters that he and Katzenberg had disagreed on occasion but added, “We've never had a fight!” Given their long history together, that statement was difficult to believe on its face. The
Times
reporters didn't know at the time that Eisner had walked out on a lunch with Katzenberg just a few weeks earlier, so they couldn't ask him whether that qualified as a fight.

Eisner also defended the very strategy that he would question, just days later, at Sun Valley—releasing lots of movies. “Our leverage is volume,” he said. “As the industry becomes content-starved, our strength became being a volume company.”