The Keys to the Kingdom (56 page)

Meanwhile, Katzenberg became convinced that Eisner was trying to thwart
Prince of Egypt
any way he knew how. Originally, the film was to be released in November 1998, but Disney scheduled its
A Bug's Life
against it.
A Bug's Life
was the second effort from Disney's co-venture with Pixar, which had created
Toy Story
.

Disney had completely underestimated what a hit it would have in
Toy Story
. At one point animation chief Peter Schneider was said to have asked Katzenberg to pull the plug on the movie. But Disney was $7 million into the film at the time, and Katzenberg declined. (It ultimately cost $22 million.) Schneider appealed to Roy Disney, who asked Eisner to look into the matter. Eisner bounced the issue back to Katzenberg, suggesting again that he cancel the film. But
Toy Story
turned into a $192 million hit. Disney reaped huge profits, though the company was caught off guard without toys and other merchandise to sell. Now Disney was expecting great things from
A Bug's Life
and its merchandising deals and McDonald's meals were all in place. Apparently, Katzenberg was nervous about the competition. He moved
Prince of Egypt
into December 1998.

Disney promptly moved
Mighty Joe Young,
the story of a giant ape on the loose in New York, from summer of 1998 to December—putting the big beast head-to-head with Moses. While the studio insisted that the move
had been contemplated well before DreamWorks changed the date for
Prince of Egypt,
Katzenberg didn't buy it.

Katzenberg had another card to play. Steve Jobs, who headed Pixar, had accused him of stealing the idea for
Antz
—a DreamWorks film scheduled for release after
Prince of Egypt,
in March 1999. Like Disney's
A Bug's Life,
set for release months earlier in November 1998,
Antz
was the computer-animated story of life in an ant colony. The film featured the voices of Woody Allen and Sharon Stone. Pixar had presented the idea for
A Bug's Life
to Disney just as Katzenberg was leaving the studio. But Katzenberg insisted that he hadn't heard of it then and that the idea for
Antz
came later from Nina Jacobson, a DreamWorks executive, who said she was inspired by watching a documentary about ants. (Jacobs, who had left DreamWorks for Disney by the time
Antz
was completed, confirmed Katzenberg's account.)

Katzenberg made a schedule change.
Prince of Egypt
was to have been DreamWorks' first animated release. But he decided to leapfrog
Antz
over
A Bug's Life
. Instead of opening in March 1999,
Antz
now debuted in October 1998—just a few weeks before Disney's similarly themed film. It required some sacrifice: DreamWorks lost out on the chance to have a Burger King tie-in by moving up the film, because such efforts must be planned many months in advance.

Katzenberg denied that he moved up
Antz
to take business away from
A Bug's Life
. Publicly at least, Disney said it was unfazed by the DreamWorks change in scheduling. Both statements were equally credible.

The tough question for Katzenberg was how to sell
Antz
. The film—with its Woody Allen brand of humor—seemed more likely to appeal to adults than to children. But few adults were likely to go to a cartoon. If DreamWorks could pull off the opening of
Antz,
Katzenberg hoped, it might pave the way for
Prince of Egypt,
which was also not exactly kiddie fare.

On its first weekend,
Antz
was number one at the box office with an $18 million gross—the highest-ever opening number for the first weekend in October. The following weekend,
Antz
held on to the top spot, decimating Disney's new comedy,
Holy Man
, starring Eddie Murphy. Debuting in fifth place at $5.3 million,
Holy Man
was one of the worst openings of Murphy's career. DreamWorks basked in the number-one spot with its first animated film—a movie that would briefly break the record for an ani
mation effort from any studio other than Disney. Taking in $91 million, the film even passed the grosses of
The Little Mermaid
.

Despite his brief victory, Katzenberg would have to settle for half a loaf.
The Prince of Egypt
simply failed to catch fire the way he had hoped it would. (Not that Disney's
Mighty Joe Young
turned out to be much of a threat; the ape didn't perform at the box office.)
Prince of Egypt
wasn't a failure: it finally crawled to a domestic gross of $101 million, edging out Paramount's
Rugrats
to become the top non-Disney animated feature of all time. (Internationally,
Prince of Egypt
grossed another $125 million.) But it was hardly the blockbuster event Katzenberg had hoped it would be. The movie lacked sparkle and the heartland filmgoers whom he had hoped to capture didn't show up.

Despite
Prince of Egypt
's respectable gross,
Rugrats
was far more profitable. No one, with the exception of a handful of insiders, knew what
Prince of Egypt
had really cost. But certainly no one believed the $75 million figure that the company floated.

Even so, DreamWorks had managed to make a mark.
Private Ryan
was the top film of the year;
Antz
and
Deep Impact
were hits. But no studio could survive on the profits from live-action features. The company's television division wasn't performing especially well. And the company's animation-dependent business plan seemed to be in trouble. An insider predicted with confidence in early 1999 that the company would have to make drastic changes to stay alive.

 

CONTRARY TO EXPECTATIONS
,
A Bug's Life
did not suffer because of the earlier release of
Antz
. The picture soared to an international gross of more than $300 million. Disney scored more hits at the end of 1998 with Will Smith in
Enemy of the State
and Adam Sandler's
The Waterboy
. But these successes came too late to save the company's performance for the fiscal year. In his annual letter to shareholders, Eisner took the unusual step of singling out the live-action unit for criticism. “We're glad fiscal '98 is over in this area,” he said.

The end of the year was indeed a sobering time for Disney and its leader. While the market was down overall, Disney's stock continued to slump and many analysts didn't see a quick turnaround. Not since the Euro Disney debacle had the company faced such a difficult time. The options held by top executives had literally lost tens of millions of dollars in value. Michael
Ovitz's famous settlement, once valued at about $200 million, had dropped in value to about $50 million.

In November, the
New York Times
reported that because of internal concerns and worries about the global economy, “disillusionment” with Disney was such that the longtime favorite had actually been supplanted by Time Warner as the darling of Wall Street. At the time, perhaps, Eisner could not have imagined any more painful comparison. Only a few years earlier, Time Warner had been perceived as debt-laden, ungainly, and deeply committed to a bad bet in cable. Its ugly-duckling chairman, Gerald Levin, seemed doomed. Now the world had turned in such a way that Levin looked prescient while the once-formidable Eisner was mired in difficulty and sinking deeper.

 

AS THE YEAR
was ending, Eisner made another personnel move. In mid-December, he promoted veteran Judson Green, the forty-six-year-old president of the theme parks, to chairman of Walt Disney Attractions. He became the first executive to run all aspects of Disney's recreation and travel businesses: parks, resorts, Imagineering, and regional entertainment. The promotion came at a time when some workers at theme parks were complaining that the company had cut back dangerously on maintenance.

Soon after Green's appointment, on Christmas Eve, a Disneyland worker made a fatal error while trying to lash the sailing ship
Columbia
to a dock. The boat, which had just completed a slow circuit of the Rivers of America attraction, had overshot its mark. Rather than let it pass, the worker tried to dock the ship. A rope crushed the worker's foot and an eight-pound metal cleat came loose. Swinging fifteen feet into the waiting crowd, it struck thirty-three-year-old tourist Luan Phi Dawson in the face, ripping off his jaw and killing him. His wife was seriously injured.

Despite the gravity of the accident, the police were slow to respond. Disney was an important player in Anaheim. Authorities waited in a conference room while Disney workers cleaned up the scene. When the police arrived, they did not interview witnesses or collect evidence. Subsequently, there were reports that the injured dockworker, Christine Carpenter, was a manager filling in for another employee so that the ride could open on time. She had never been trained to operate it. Workers at the park said managers were filling in for ride operators far more frequently than they had in the past.

Just weeks later, Disney was fined $7,050 for stonewalling the efforts to obtain documents in a case filed by a woman who claimed she had suffered a brain hemorrhage while riding the park's Indiana Jones Adventure. Still, such serious accidents at the park were a rarity. “We had the first death in fifteen years,” Eisner said later when asked about the death. “It was a freak accident. We can't do anything without getting a lot of publicity.” Meanwhile, the state legislature passed a vaguely worded law requiring theme-park inspections. Disney had battled the bill unsuccessfully, and then belatedly embraced it.

 

IN JANUARY
1999, Disney stock got a brief but sharp bump up with the launch of the Go Network, a new portal to cyberspace. The new site was operated by Infoseek, an Internet firm based in Sunnyvale, California. (Disney had bought 43 percent of Infoseek in June 1998 as it launched its Internet exploration.) Disney was making a substantial investment in the Internet. With Wall Street in a fever over anything net related, Eisner didn't want to miss the boom. He still remembered telling his unforgiving father not to invest in cable (“Dad, I know cable is not going to work”) and he didn't want to repeat that mistake himself. He was hoping to make money from advertisers or site users or both. The Web could also be a way for consumers to click their way to buying more Disney products.

But Eisner conceded that he couldn't say when or how the company's thrust into cyberspace would turn a profit. “I really don't know,” he said when asked where the new technologies would lead Disney. “And I think that's really an asset. Because if I knew and I demanded we go in a certain direction and was wrong, it would be pretty arrogant and stupid. I think we have to be open to change.”

Change was in fact the order of the day. On the feature-film side, Eisner installed animation chief Schneider as president of the Walt Disney Studios—a move that some considered a promotion for chairman Joe Roth, because it enlarged his empire by adding animation. But Eisner's moves were fraught with ambiguity. He had been complaining about the studio's performance for months and some saw Schneider's arrival in live action as a slap at Roth, who was not known to be particularly fond of the sometimes abrasive Schneider. (Several months after his promotion, Schneider was asked to take an anger-management course.) Was Schneider in the on-deck
circle to replace Roth? Certainly Schneider seemed to consolidate power quickly. By April, he had bumped off ten-year veteran David Vogel, who ran the Disney family label and had received a well-publicized promotion to chief of the Touchstone and Hollywood Pictures divisions not even a year earlier.

Eisner and Roth also announced that the studio would increase the percentage of family movies in its mix—hoping for more cash machines like
101 Dalmatians
(ironically, a project that Vogel had shepherded through the system). Roth's mission was to slash the company's overall investment in film by about $600 million. Roth was inclined to be more extravagant than Katzenberg, particularly when it came to marketing. But now Eisner decreed, “We're going to be more cautious and conservative.” In short order, Disney slashed eighteen production deals, cutting such famous players as Spike Lee, Tim Allen, Whitney Houston, Michelle Pfeiffer, and Robert Redford.

The year ahead included less expensive films like
Ten Things I Hate About You
and the quirky
Rushmore,
each of which cost less than $15 million. There were more child-friendly movies, including
My Favorite Martian
and
Inspector Gadget
. Even though such movies could be expensive (
Mighty Joe Young
didn't begin to recoup its nearly $90 million cost at the box office), Disney had many ways to exploit them through videos, merchandise, and theme parks.

Roth said the average cost of a Disney film would be $32 million, far lower than the industry average of $52 million. And following a growing trend among studios, Disney would look for financial partners to share the risk (and potential profit) on many of its films. It was a strategy that could prevent or inflict pain. Certainly Disney was glad to lay off some of the movie
Instinct,
a nonperformer starring Anthony Hopkins and Cuba Gooding Jr. But the studio was sorry it had decided to share the wealth of
The Sixth Sense,
its summer-of-'99 sleeper blockbuster.

 

ON FEBRUARY
23, 1999, Disney held another peaceful annual meeting—this time at a restored vaudeville house in Seattle. Eisner demonstrated the Go Network. As he clicked from Web site to Web site, he wasn't risking any technological glitches: the computer wasn't actually hooked to the Internet in real time.