The Keys to the Kingdom

THE RISE OF
MICHEAL EISNER AND THE
FALL OF EVERYBODY ELSE

With a New Epilogue

Prologue

1  :  POOR LITTLE RICH BOY

2  :  ENTER THE DRAGON

3  :  HAPPY DAYS

4  :  REVERSAL OF FORTUNE

5  :  SQUIRT

6  :  THE GOLDEN RETRIEVER

7  :  THE KILLER DILLERS

8  :  HIGH CONCEPT

9  :  DEATH OF A MOGUL

10  :  RISKY BUSINESS

11  :  THE EIGHTH SUMMIT

12  :  A RAVENOUS RAT?

13  :  HITS AND MISSES

14  :  “A WHIFF OF THE MOUSE”

15  :  WINNING UGLY

16  :  TOONTOWN

17  :  STAR WARS

18  :  ONE FALSE MOVE

19  :  MOUSCHWITZ

20  :  BEAUTY AND THE DEBACLE

21  :  THE CRASH

22  :  CHEST PAINS

23  :  A BITTER DIVORCE

24  :  BIG DREAMS

25  :  THE DOMINOES FALL

26  :  SUPERMAN STUMBLES

27  :  A PLATINUM PARACHUTE

28  :  SQUARING OFF

29  :  
KATZ V.
MOUSE

30  :  “THAT DARK PERSON”

Epilogue to the Paperback Edition

Source Notes

Acknowledgments

Searchable Terms

About the Author

Other Books by Kim Masters

Copyright

About the Publisher

O
N A
S
UNNY
April afternoon, Michael Eisner emerged from the Team Disney building, passing beneath monumental statues of the seven dwarfs who appeared to be holding up the roof. He crossed the green, manicured studio campus. The Burbank lot where the Walt Disney Company had its headquarters often seemed to be an idyllic place, with a Mickey Mouse topiary and signs outside the soundstages playfully admonishing, “No lookie-loos!” But today there was turmoil in the Magic Kingdom. Eisner—Disney's tall, boyish-looking chairman and chief executive—was on his way to the equivalent of a state funeral. Nearly five thousand people had gathered to memorialize Frank Wells, the company's dashing president and chief operating officer. It seemed impossible to believe that Wells—so charming and full of life—was suddenly gone. But Eisner had gotten the shocking news on Easter Sunday: Wells had been killed in a helicopter crash while on a ski trip in the mountains of Nevada.

The overflow crowd packed a cavernous soundstage and a separate room where television monitors draped with black bunting were lined up to show the services. Joining Eisner on this solemn occasion was all the Disney brass. Roy Disney, Walt's nephew and the vice-chairman of the company, had flown in from his home in Ireland. The diminutive Jeffrey Katzenberg, Disney's studio chairman and Eisner's colleague for the better part of twenty years, was there, as were all the other division heads and general counsel Sanford Litvack.

Hollywood stardom was out in force. Warren Beatty, who had quarreled with Wells many years earlier over the making of
Heaven Can Wait,
arrived with his wife, Annette Bening. Gregory Peck, Steven Spielberg, and Quincy Jones were in the crowd. So was the suited power structure of the town: Michael Ovitz, the head of the formidable Creative Artists Agency, and his
rival, Jeff Berg, the chilly top man at International Creative Management. The studio gentry was there in the form of MCA chairman Lew Wasserman, Hollywood's aging “godfather,” and his number-two man, Sid Sheinberg. Music mogul David Geffen came, as did Warner cochairmen Bob Daly and Terry Semel. Dozens of people from the other parts of Wells's life were present, too—politicians, environmentalists, adventurers.

Eisner still had not fully absorbed the horrifying news. When he rose to speak, he suddenly felt the despair that had not hit him in the flurry of activity following the news of the accident. His voice breaking with emotion, Eisner addressed the crowd. “I spoke more often with Frank than with any other single person over the last ten years,” he said. “Over those ten years we never had a fight, never had a misunderstanding, never had as much as a disagreement. I was never angry with him—until last Sunday. And I was angry at Frank because he was not around to help me deal with this difficult situation…. I miss him terribly.”

Eisner had indeed suffered a serious loss. At a striking six feet four inches, the sixty-year-old Wells was an icon in the entertainment industry—an attractive, craggy, educated, and wealthy man. He and Eisner had engineered one of the most dazzling corporate turnarounds in history. “We're going to ride that mouse into the ground,” Wells had told his friend documentary filmmaker Mike Hoover when he had taken the job at Disney in 1984—and he had been as good as his word. Disney had awakened from its slumbers and smashed its own earnings records quarter after quarter.

At the memorial service, Clint Eastwood—who had been on the ill-fated ski trip—spoke about his long friendship with Wells. They had known each other since the days when Wells was a young lawyer and remained close when he became a top executive at Warner. Eastwood recalled settling the terms of the deal to make
Dirty Harry
with a tennis match. Warner chief Bob Daly compared Wells with Clark Kent, “a tall unassuming man with glasses, but Superman underneath.” Robert Redford, who shared with Wells a passionate interest in protecting the environment, also spoke. Carrying skis onstage, Wells's twenty-eight-year-old son Briant asked the crowd to sing a rendition of “Hey, Jude”—a song that his father had been singing on the slopes on the day of the accident that claimed his life.

Many were brought to tears by a short video celebrating Wells's adventurous life. There was Wells skiing and taking a spill. Wells in full scuba gear, floating in a tank at Disney World, with Eisner calling through the glass, “Frank, you know there are sharks in there!” (In a cloud of bubbles,
Wells replied through his mask, “That's not part of my deal!”) There was a gag reel, made for a corporate event, showing Eisner shoving a cream pie in Wells's face. Next came a moving photo montage of Wells as a boy, Wells with his own children, and Wells during a daring 1981 attempt to become the first man to climb the tallest mountain on each continent. (Despite a lack of experience or skill, he nearly succeeded.)

In 1984, Wells had teamed up with Eisner to run the then-flagging Disney. Most entertainment types who knew Wells thought his modesty was illuminated when he relinquished the chance to be chairman so that Eisner could take the role. Few understood that Wells, the businessman, knew he couldn't save Disney without a creative partner. And his first choice, the ambitious and talented Michael Eisner, had refused to share the number-one spot.

But some who worked with Wells thought he believed, with some justification, that he was the one who kept Disney aloft, in part by keeping Eisner—frequently impulsive, often duplicitous—in check. “Frank was actually the moral compass,” says Pete Clark, a veteran Disney executive in charge of partnerships with outside companies. “He was the Jiminy Cricket.”

Certainly Wells kept things on a more even keel than Eisner could have. Hadn't he played a key role in getting financing for Disney's movies? And wasn't Wells the one who soothed the Imagineers—the high-strung designers who created the theme park attractions—many of whom lacked confidence in Eisner? These were only some of the internal relationships that Wells had to smooth over, and he had done it brilliantly. Most important, Wells had just finished bailing Eisner out of the gravest crisis of all—a disaster that Eisner had walked into with considerable arrogance and now feared could cost him his job—the sinkhole known as Euro Disney.

The Disney Orchestra played “Climb Every Mountain.” The choir from the First African Methodist Episcopal Church sang. Yet even as Wells was being laid to rest, the entertainment industry was asking questions about Disney's future. There were ripples of fear throughout the company. In the quirky Imagineering division, some employees who were leery of Eisner believed they had lost their godfather. Outsiders, too, who had turned to Wells to mediate their disputes with Eisner worried about what would come next. Those closest to the company were not nearly as sanguine as the Wall Street analysts who contended that Eisner had become a seasoned leader and that Disney would not suffer for the loss of Wells.

How would Eisner replace the man who had helped him build Disney from a foundering $2 billion company to a $23 billion juggernaut over the previous decade? Eisner had moved quickly to stop speculation. The Monday after Wells's death, he had decided to hold the regular staff meeting. There, he announced that he was taking over the title of president. The message was intended to soothe anxious shareholders. But to one man, there was nothing soothing about it.

Jeffrey Katzenberg, the aggressive forty-three-year-old chairman of the Disney studios, was in shock. He had been stunned at the Monday staff meeting when Eisner handed out copies of a press release announcing that Eisner would assume Wells's responsibilities. Not even a year earlier, as the two had strolled the streets of Aspen, Katzenberg had exacted what he took to be a promise that the job would be his if something were to happen to Wells. Now Wells was unexpectedly out of the way—not in the manner that Katzenberg would have wished, of course—and Eisner had announced this transition without even offering Katzenberg the courtesy of a discussion beforehand.

Later, the two men met for their usual Monday night dinner at Locanda Veneta, a dimly lit Italian trattoria on Third Street in a wedge of Los Angeles between West Hollywood and Beverly Hills. They talked business while Katzenberg waited for Eisner to address the elephant in the room. He never did. Whether through failure of nerve or some unaccustomed reticence, Katzenberg didn't broach the matter, either.

After an unusually restless night, Katzenberg went into the office the next morning and demanded a lunch with Eisner. In a private dining room, with portraits of Walt and the elder Roy bearing silent witness to the building storm, Katzenberg demanded an explanation. “You had promised it to me,” he said. “I don't understand what you're doing. I don't understand why you said nothing to me at dinner. I don't understand why, after eighteen years, you wouldn't first talk to me. If you don't want to do what was promised, I'm leaving.”

But rather than offering the apology Katzenberg was so anxious to hear, Eisner was livid. He regarded Katzenberg's decision to press for Wells's job as an ultimatum—and a poorly timed one at that. By the time they parted, they had agreed that Katzenberg should move on from the job he had held for the previous decade.

But both men realized this would be a wrenching divorce. They had worked together with great success for nearly a decade at Paramount Pic
tures before they turned Disney into the envy of the entertainment world. Katzenberg had been as single-mindedly devoted to his job as any boss could wish—at Disney, he had done everything short of growing round black ears. Most important, he had played an instrumental role in revitalizing the studio's breathtakingly profitable animation division—the engine that drove vast sales of video and merchandise and lured visitors to new attractions at the theme parks.

The day after their dinner, Eisner and Katzenberg agreed to step back from the precipice. There would be a moratorium on discussions about Katzenberg's future until emotion over Wells's death had subsided. When the two men reached that agreement, Wells had still not been buried. But his funeral would be long over—months would pass—and the tensions between Eisner and Katzenberg would continue to build. Before it was over, the battle would be costly in every sense of the word—far more so to Eisner, in the end, than to his seemingly weaker rival.

 

KATZENBERG WASN'T THE
only man whose ambitions were inflamed by the opportunities that arose in the wake of Wells's death. The tragic accident that claimed Wells's life set off a series of events that would sweep through the film industry like a scythe, cutting down the pillars of Hollywood's power structure as it went. The struggle between Eisner and Katzenberg would lead to the creation of DreamWorks, a bold attempt to launch Hollywood's first new studio in decades. The advent of DreamWorks would exacerbate a power struggle at Universal Studios, and within three years Lew Wasserman—the eighty-one-year-old industry godfather who had presided there for decades—would be ousted, along with his second-in-command, Sid Sheinberg.

And that in turn would open the door for Michael Ovitz to leave the mighty agency he had cofounded. Overnight, Creative Artists Agency was no longer a force that controlled much of Hollywood's day-to-day business and brokered the industry's biggest deals. And Ovitz, routinely called the most powerful man in Hollywood, would fall—unceremoniously fired after fourteen miserably unsuccessful months at Disney trying to fill the place once occupied by Frank Wells. It was one of the most stunning reversals of fortune anyone in the industry could remember.

The death of Wells had “a tremendous effect” on the entertainment industry, muses former Warner cochairman Bob Daly. If Wells had lived,
he speculates, Katzenberg would have stayed at Disney, Wasserman and Sheinberg might have kept control of Universal, and Ovitz might even still be at CAA. “And the irony, after all these things,” he says, “is that Frank Wells's job is still open.”

And Michael Eisner, brilliant and ruthless, rules Disney, and rules alone.