Head Case In The Magic Kingdom

[Achtung Dr. Freud Calling]

Machiavelli in the Magic Kingdom

Reviewed by Bob Woodward

Sunday, February 27, 2005; Page BW03

DISNEYWAR

By James B. Stewart. Simon & Schuster. 572 pp. $29.95

To understand the universe of DisneyWar, James B. Stewart's exhaustive study of corporate and personal neurosis during Michael D. Eisner's 21-year tenure as head of the Disney empire, consider this: In 1995, Michael Ovitz -- once the most powerful person in Hollywood, then the president of Disney -- was trying to persuade Disney CEO Eisner that they should give a gift to Robert Iger, then the head of ABC television, to acknowledge his hard work. "Why?" Eisner asked. "He's got a contract. He's not going anywhere."

"Don't you want him to be comfortable, happy in his job?" Ovitz asked.

Eisner seemed to think about that. "Not really," he replied. Thus does Stewart reveal Eisner's management DNA: keep everyone deep in self-doubt, mired in uncertainty, off-balance, their heads swirling with contradictory information. At Eisner's Disney, inducing paranoia was a leadership strategy. As Eisner offhandedly remarks, "I sort of liked stress." Readers of DisneyWar will doubt only the "sort of," and they'll probably laugh out loud.

I did. DisneyWar is a compelling and often brilliant tale of how Eisner kept his own -- and everyone else's -- stress levels churning. To give Eisner the benefit of the doubt, his intent seems to have been to maintain an atmosphere of creativity while containing the roaring, toxic egos of the numerous barons of the magic kingdom. But in the end, it was Eisner's own ego that swamped and infected Disney.

In the interest of full disclosure, Stewart and I have the same publisher, Simon & Schuster, and editor. That said, I believe by any fair measure, DisneyWar is a monumental achievement of in-depth reporting -- tough and scrupulous. It is so comprehensive that I suspect no one will ever have to -- or even try to -- write this story again.

Yet for many readers, the book's clear strength -- its more than 500 pages of detail -- will also be its weakness. Stewart brings a high-resolution microscope to the task -- perhaps too high. He focuses on nearly a hundred characters, and relentlessly examines each major Disney movie, ABC television series and countless Internet and cable deals.

But all this may be needed to underscore two of Stewart's key points. First, notwithstanding all of Disney's vaunted "family values" rhetoric, money drives the train: percentages of profits, payouts and simple greed. Box-office revenue and TV ratings become the ultimate measure of success. Second, Stewart shows that the human toll is significant, dissecting the treatment of everyone from the long-suffering animators (who provide a nice Greek chorus, as if Walt Disney himself were chiming in) to the jousting top executives. The Disney empire was rife with pain, confusion, lying and wasted opportunities. Indeed, DisneyWar shows us corporate leadership so dysfunctional that the book might have been entitled "Playpen" instead.

Still, Stewart has a cool eye and provides careful balance. Disney, he notes, has long been at the forefront of American entertainment and myth-making, from Mickey Mouse and Snow White to a striking recent run of popular animated movies such as "The Little Mermaid," "Aladdin" and "Beauty and the Beast." Stewart carefully charts the company's creative successes, especially in Eisner's first decade at the helm, from 1984 to 1995, which brought a tenfold return for stockholders.

Eisner fell as dramatically as he rose. Much publicity has attended the astonishing spats -- recorded in lawsuits -- Eisner has had with Ovitz (his former best friend, who received a pay-out of $140 million for about a year's work), Jeffrey Katzenberg (the head of Disney's movie studios, who pocketed a settlement of $280 million) and Roy E. Disney, Walt's nephew. These served as a wake-up call. Roy Disney was the board member who helped to recruit Eisner in 1984 then led the revolt against him. Eisner was stripped of the board's chairmanship in 2004, and he has said that he will retire as CEO next year. Stewart treats these sections -- the juiciest parts of the Eisner tragedy -- expansively, and on most pages a reader will wonder why someone at Disney didn't call for straitjackets from a psychiatric version of 911.

But the larger thrust of this book -- and the one that makes it such an important work -- is to call into the question the system of corporate governance, and the legal and moral responsibility of a board of directors to provide adult supervision of the firm it supposedly oversees. Disney was hardly alone; as even a casual newspaper reader knows, the financial pages are filled with tales of runaway CEOs and docile boards. One of Stewart's most memorable "characters" is Stanley Gold, a longtime Disney hand and board member who emerges as one of the book's few heroes. A wealthy lawyer and businessman, Gold finally woke up after years of deceit and bullying by Eisner and provided an unusual degree of introspection. After another director publicly defended Eisner in 2002, calling him "the best CEO in the business," Gold fired back. "We, the Directors, are guilty of not discussing the real issues affecting the Company," he wrote Eisner and his fellow directors. "We have not fully and critically addressed the failed plans of our executives or the broken promises that management has made to the Board and the shareholders over the last five years. We are too polite, too concerned with hurting each other's feelings. . . . we, the Disney Directors, have long been too compliant and uncritical of management's failures."

As with Machiavelli, the real Eisner story is in his technique -- the way the corporate Prince devises a staggering number of gambits to rattle subordinates and competitors, all in order to dilute their authority and enhance his own.

Eisner used several tactics. First was promising promotions (or hinting strongly about them) when he had no intention of following through, something he did to so many people on so many occasions that it seems impossible to count them. Disney's presidency, the number-two position under Eisner, is dangled, promised and withheld, floating throughout the narrative like Cinderella's glass slipper. For example, Eisner told Katzenberg, who had been among his closest colleagues and friends for nearly two decades, "I might consider [promoting you to president] down the road, if you earn it."

The second technique was bullying and accusation. In letters to Irwin Russell, Eisner's attorney (who functioned virtually as a psychiatrist), Eisner let loose a stream-of-consciousness barrage about almost everybody else's inadequacies. When another member of the board, Andrea Van de Kamp, joined forces with the rebellious Gold, Eisner summoned her to his office in 2003 and told her she was a dreadful director. "You are so loyal to Stanley [Gold] it's like you've carried his babies," Eisner said. At another point, Eisner called Steve Jobs, the chairman of Pixar, "impossible to negotiate with" and "a Shiite Muslim." It worked, too; Eisner publicly demeaned Katzenberg in the L.A. Times by calling him "the best golden retriever I ever met" because he had become so subservient.

Finally, Eisner seems to have deliberately created a world of denial, unimaginable contradiction, suspicion and even surveillance. People were praised, then knifed. Eisner said that Ovitz was great and then decided that Ovitz was a scoundrel so many times that the reader gets dizzy. At another point, Eisner "gestured toward several thick binders on his desk, and said that he had collected every e-mail Roy [Disney] had sent and received." Eisner did not just hold grudges; he nursed them.

Stewart's painstakingly amassed detail will make readers wonder how he got it all. The answer is hard work and a willingness to go through thousands of pages of original and publicly available documents, and to interview any available source.

Eisner was also interviewed for the book, but Stewart carefully notes that Eisner and Disney itself extended only "a degree of cooperation." But even that gave Stewart a telling glimpse of the full Eisner treatment. Once, while they were riding in Eisner's chauffeured SUV, Eisner told Stewart that Sandy Litvack, Disney's former general counsel, had "told me you can't be trusted." Eisner then added that he had decided to go ahead and grant Stewart interviews anyway. "Everybody has a dark side," the Disney chief said, demonstrating his uncanny knack for finding insecurities in others. "It's just a matter of finding out what it is." The remark sent Stewart into a spasm of unsettling self-examination. "The comment gives me pause," Stewart writes, "and I find myself still thinking about it days later." This was probably Eisner's precise intent. "I've heard others repeat similar comments from Eisner about a 'dark side,' " Stewart continues, "and it was something he mentioned several times during his testimony in the Katzenberg lawsuit. I wonder: Does everyone have a 'dark side'? Do I? Even if I'm not the best judge of my own character, I don't assume that everyone else has a 'dark side.' " Stewart also realizes "that by mentioning Litvack's remark -- assuming Litvack said it -- Eisner has simultaneously positioned Litvack as someone I can't trust, and has ingratiated himself with me. He has cleverly attempted to turn me against Litvack -- exactly what so many current and former Disney executives have told me happened to them."

All of this raises a question: Why didn't Eisner's kingdom collapse sooner? How did anyone tolerate the lack of charity, or the unending intrigue, ridicule and badmouthing? The answer, obviously, was the payoff, both creative and financial. It was the high-wire life: the amped-up universe of deals, tie-ins, "packages," "event movies," "talent relations," parties, private-plane flights, gifts and money.

As the lord of this environment, Eisner was an untethered ego. While the Disney board slept, he became the highest-paid CEO in America and wound up hijacking the corporation. The story of how he did so is essential reading for anyone who serves on the board of directors of any corporation or organization.

It's also a reminder of how Hollywood can corrupt and corrode. More than 22 years ago, I interviewed Eisner twice for Wired, my book on the comedian John Belushi's death from a drug overdose. Eisner, then president and creative head of Paramount, had been trying to work out a new movie deal with Belushi when he was in his final nosedive. For his previous movie for Paramount, the studio had given Belushi $2,500 a week in cash for expenses, no questions asked.

Eisner and his wife, Jane, told me a long story about spending an evening with Belushi at a club in Los Angeles called On the Rox. Belushi was watching reruns on a big screen of some of his best "Saturday Night Live" skits, including one in which he died. Returning to their car afterward, Jane Eisner said she found Belushi incredibly sad. "I feel as though I've just seen 'Sunset Boulevard,' " she said, referring to the 1950 classic in which Gloria Swanson plays Norma Desmond, an aging, failing silent-screen star who watches reruns of herself. Eisner disagreed, telling his wife that the film was about someone whose career was over, while Belushi's was still active. He saw no connection. " 'Sunset Boulevard,' " Jane Eisner replied. "I'm telling you. We just saw it." Three days later, Belushi was dead. Some of the drugs that caused his fatal overdose were paid for with Paramount cash.

Eisner said he felt no responsibility, calling it standard practice for studios not to nursemaid their stars' spending habits. This summons an uncomfortable echo; after all, Eisner no more took responsibility for Belushi than the Disney board did for Eisner. The Norma Desmond and John Belushi stories are warnings -- vivid, wrenching tales of the failure of success. And now, thanks to Stewart, we have the Michael Eisner story -- his very own "Sunset Boulevard." •

Bob Woodward is an assistant managing editor of The Washington Post and the coauthor or author of 12 books, including, most recently, "Plan of Attack."

[ghost of miles]

I read an excerpt from Stewart's book in the New Yorker a few weeks ago called "Partners," dealing exclusively with the Ovitz/Eisner relationship. One would think it nearly impossible to feel any modicum of sympathy for Michael Ovitz, but after reading that article, I did.

[Achtung Dr. Freud Calling]

One would think it nearly impossible to feel any modicum of sympathy for Michael Ovitz, but after reading that article, I did.

My sentiments exactly re: Katzenberg after seeing the 'golden retriever' comment, not to mention the bit about the 'I you' correspondence in a Motley Fool interview w/Stewart.

[RDK]

Yep, this one should be good. I'm still surprised that Stewart was able to dig up some of the dirt and get some of the interviews that he did...