The Ride of a Lifetime Page 8
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A COUPLE OF weeks after we announced the deal, I flew to Aspen to spend a weekend with Michael and his wife, Jane, at their place in Snowmass. I was stunned by how beautiful it was, a giant log cabin designed by the architect Bob Stern, who was also a member of the Disney board, nestled in a valley surrounded by Aspen’s peaks. Everything about the place exuded great taste.
Disney had done due diligence about the assets they purchased, but there was no way they could understand all of the complexities of the company they were about to own. I arrived carrying numerous binders, each detailing the many businesses of Capital Cities, including ABC, its television stations, ESPN, a sprawling radio business, a big publishing business with newspapers and magazines, other cable channels, and a collection of other small businesses. “Your team did your assessment quickly,” I told him, “so there’s a lot you don’t know.”
For the next two days, I walked Michael through every aspect of our company. He may have been thinking he was buying a television company, but it was so much more complex than that. There was everything from ESPN’s rights deals to upcoming negotiations between ABC and the NFL. I gave him a breakdown of our radio business, which ranged from country to talk to WABC, and talked about dealing with a talk radio host who’d said something controversial and incendiary on the air. There were delicate issues around Barbara Walters’s contract, which was about to expire, and the intricacies of managing a network news business. The complexities went on and on. I wanted Michael to understand the reality, and I also wanted him to know that I had it covered.
Michael was clearly rattled. He was only fifty-two at the time, but he’d undergone a heart bypass operation a year earlier, and Jane kept a watchful eye on his diet and schedule and exercise routine. I wasn’t aware at the time of how much she had been urging him to change his lifestyle, and how much anxiety this acquisition was causing her. She wanted him to work less, and there I was sitting in their home telling him, “This is going to be a much bigger lift than you’re aware of, and there’s a much greater urgency to solve some of these problems than you know.”
At the end of the weekend, Michael drove me to the airport. Along the way, we stopped to meet Michael Ovitz and his family, who had a home nearby. Jane, Michael, and the Ovitz family had plans to go for a hike. I wasn’t aware that the two families were close, but I could see that afternoon that there was a chemistry between them. Ovitz had recently tried to leave CAA, the business he cofounded and turned into the world’s most powerful talent agency, to run Universal Studios. That hadn’t panned out, and he was looking to start a new chapter of his career in Hollywood. As I left for the airport and my flight back to New York, it dawned on me that Michael might be considering him for the number two position at Disney.
A week later that suspicion was confirmed. Michael called and said, “Your briefing was eye-opening. It certainly won’t be easy to manage this new company.” Jane was concerned, too, he said. Then he addressed the Ovitz question directly. “When we made the deal, I left open the possibility of bringing in someone else between us.” Yes, I said, I knew nothing was guaranteed. “Well, I wanted you to know that I’m hiring Michael Ovitz, and he’s going to be your boss.”
Ovitz was going to be president of the Walt Disney Company, not chief operating officer. As corporate hierarchies go, that meant that he was my boss, but he wasn’t necessarily Michael’s preordained successor. I felt a moment of disappointment, but I also appreciated that Michael had been straight with me during the negotiation and candid with me now. He didn’t try to sugarcoat it or pretend the arrangement was something it was not. I was forty-four at the time and I still had a lot to learn, and in any event, there was nothing to be gained by getting off to a bad start with either of them. I wanted to make things work. After the announcement about Michael Ovitz, I said to a reporter from The New York Times, “If Mike Eisner thinks this is the right thing for the company, then I trust his instincts.” The day the quote appeared in the Times, I was informed by an executive at Disney that Michael disliked being referred to as “Mike.” I hadn’t even started yet and I’d already committed my first faux pas.
I soon learned that others had much stronger feelings about the Ovitz hire than I did. I was told that Joe Roth, the chairman of the studio, was irate, and that Sandy Litvack and Steve Bollenbach, Disney’s chief financial officer, were unhappy with the new corporate structure and had refused to report to Ovitz. From three thousand miles away in New York, I could already feel the resentment building at “Disney Corporate.” Hiring Michael Ovitz had generated internal strife from the moment it was announced, but I had no idea how tense things were going to get.
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FOR THE NEXT several months, while we all waited for regulatory approval from the FCC, I commuted to Los Angeles on a weekly basis, getting to know the various Disney executives who would soon be my colleagues. Willow and I also knew we’d have no chance for a honeymoon once the deal closed, so we radically shortened our engagement and got married in early October 1995.
We spent our honeymoon in southern France, and were staying at the posh Grand-Hotel du Cap-Ferrat when a gigantic box arrived filled with Disney merchandise: matching Mickey Mouse pajamas, bride and groom Mickey hats, Donald Duck slippers. There was so much stuff, and it was so over the top, that we didn’t know what to do with it all. We decided to leave it there when we left, thinking maybe someone would get a kick out of it or have kids who might like it, but to this day a part of me is embarrassed at the thought of the staff there coming into our room after we checked out and seeing all of the Mickey Mouse paraphernalia. I remember looking at it all and saying to Willow, “I work for a very different company now.” (In fact, in all the years I worked for him, I rarely saw Michael Eisner wearing a tie that wasn’t a Mickey tie. All the senior leadership were encouraged to wear them, too, though I acted as if I’d never gotten that particular memo.)
There were more significant differences than the branded attire. The whole culture operated differently. Tom and Dan were warm, accessible bosses. If you had a problem, they opened their doors to you. If you needed advice, they offered it selflessly. As businessmen, they were intensely focused on managing expenses and increasing earnings, and they surrounded themselves with executives who could work for them forever as long as they adhered to the same principles. They also believed in a decentralized corporate structure. If you stuck to your budget and behaved ethically, Tom and Dan gave you room to operate with independence. Other than a CFO and a general counsel, there was no corporate staff, no centralized bureaucracy, and very little interference with the business units.
Disney was the opposite of all that. In their earliest days running the company, Michael and Frank Wells had formed a central corporate unit called Strategic Planning, populated by a group of aggressive, well-educated executives (they all had MBAs, many from Harvard and Stanford). They were steeped in analysis and adept at providing the data and “insight” Michael needed to feel secure in every business move the company made, while he made all of the creative decisions himself. They had significant power over the rest of the company, and they wielded it with impunity over all of the senior leaders who ran Disney’s various business units.
I arrived at Disney about halfway through Michael’s twenty-one-year tenure as CEO. He was one of the most celebrated and successful CEOs in corporate America, and his first decade had been extraordinary. He aggressively expanded Disney’s theme parks and resorts and introduced a far more profitable pricing strategy. He launched the cruise-ship business, which was relatively small compared to other businesses but also solidly profitable. Throughout the late ’80s and early ’90s, Disney Animation produced hit after hit: The Little Mermaid, Beauty and the Beast, Aladdin, and The Lion King. These led to an explosion in Disney’s consumer-products business, with revenue coming from Disney stores and licensing a
nd all forms of global merchandise distribution. The Disney Channel, which they launched in the United States, quickly became a success, and Walt Disney Studios, which was responsible for the live-action films, released a string of commercial hits.
As we joined the company, though, cracks were beginning to show. The void left by Frank Wells’s death led to intense acrimony between Michael and Jeffrey Katzenberg, who claimed much of the credit for the success of Animation during Michael’s first decade. Jeffrey resented that Michael didn’t promote him after Frank Wells’s death. Michael in turn resented that Jeffrey was pressuring him to do so. In 1994, not long after his open-heart bypass surgery, Michael forced Jeffrey to resign, which resulted in a very public, very acrimonious, and expensive legal battle. On top of those struggles, Disney’s Animation unit began to falter. The next several years would be punctuated by a slew of expensive failures: Hercules, Atlantis, Treasure Planet, Fantasia 2000, Brother Bear, Home on the Range, and Chicken Little. Others—The Hunchback of Notre Dame, Mulan, Tarzan, and Lilo and Stitch—were modest successes, but none came close to the creative or commercial successes of the prior decade. To his credit, Michael had the wisdom during this period to enter into a relationship with Pixar that resulted in some of the greatest animated films ever made.
From the beginning, the Disney team—mostly the guys from “Strat Planning,” as they were called—took advantage of us as the newcomers to the company. It wasn’t that everything they did was bad, it was just the opposite of what those of us who’d worked for Tom and Dan were used to. They were a completely centralized, process-oriented company, and we instinctively bristled at the way they operated. They had also never acquired a big company before, and they’d given very little thought as to how to do it with sensitivity and care. Disagreements that could have been handled with diplomacy were instead done with a tone that was often authoritative and demanding. They acted as if, because they’d bought us, we were expected always to bend to their will. It didn’t sit well with a lot of the former Cap Cities people. I was high enough up that I was protected, but a lot of people below me were worried about what was going to happen to them, and I spent a ton of time and energy soothing anxieties and intervening in struggles on their behalf.
I also had my own run-ins. Soon after the acquisition, Disney wisely divested our entire newspaper business, years before the bottom fell out of that industry. But we held on to some magazines, including the fashion magazine W. Shortly after the deal, the editor and publisher of W mentioned to me that Jane Pratt, the founder of Sassy magazine and an early contributor to VH-1 and MTV, had an idea for “a hip Cosmopolitan” called Jane.
Jane came in and pitched the idea, which I liked because it could connect us to a younger, less stodgy demographic. I reviewed a business plan that made sense to me and I gave the team the green light. I soon got a call from Tom Staggs, who would later be my CFO and worked then in Strat Planning. Tom was contacting me on behalf of his boss, Larry Murphy, who ran the entire Strategic Planning unit. He sheepishly told me that Larry didn’t allow any of Disney’s businesses to expand, invest, or attempt to start anything new without a thorough analysis by his group. Once they did the analysis, they’d bring their recommendation to Michael.
I could tell Tom wasn’t comfortable being the messenger, so I politely said that he should tell Larry that I was going forward with this and didn’t need his input.
That quickly led to a call from Larry, who wanted to know what the hell I was doing. “You’re creating this magazine?”
“Yes.”
“Do you know how much it’s going to cost?”
“Yes.”
“And you think it’s a good idea?”
“Yes.”
“We don’t work that way at Disney,” he said.
In the end, Larry allowed the venture to go forward. He was reluctant to pick a fight with me so soon after I’d joined the company, but the signal was clear that from then on there would be no freelancing at Disney.
In fairness, it was a small idea, and arguably not worth the time and investment (though we ended up selling W and Jane to Si Newhouse at Condé Nast and made a profit on the transaction). But there’s a way to convey that while also conveying that you trust the people who work for you, and preserving in them an entrepreneurial spirit. Dan Burke taught me that exact lesson early on in a way that couldn’t have been more opposite from the Strat Planning approach. I can’t recall exactly what it was in response to, but in one of our conversations about some initiative I was considering, Dan handed me a note that read: “Avoid getting into the business of manufacturing trombone oil. You may become the greatest trombone-oil manufacturer in the world, but in the end, the world only consumes a few quarts of trombone oil a year!” He was telling me not to invest in projects that would sap the resources of my company and me and not give much back. It was such a positive way to impart that wisdom, though, and I still have that piece of paper in my desk, occasionally pulling it out when I talk to Disney executives about what projects to pursue and where to put their energy.
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WHILE I WAS trying to adapt to the new culture at Disney, I was also watching the rapid disintegration of the relationship between my new boss, Michael Ovitz, and Michael Eisner. It was painful to witness, and it was taking place before the eyes of a lot of people at the company.
Michael Ovitz’s tenure officially began in October 1995, and from the beginning it was clear that he was the wrong guy in the wrong place at the wrong time. He had left CAA and had lost out on a bid to run Universal. You could sense how important it was to him to remain atop the Hollywood pyramid, and the offer to be Michael Eisner’s number two was the life preserver he thought he needed.
But the process of making decisions at an agency is nothing like the process at a large corporation, especially a highly structured place like Disney. Rather than helping Michael run a complicated collection of businesses, which is a big part of the role of a number two, Ovitz came with a thousand ideas, most involving the giant personalities that he had relationships with. As co-head of CAA, a privately held agency, he was used to showing up with a ton of ideas that could immediately be acted upon, and he assumed he could do the same here. He was the quintessential agent, and he was used to always being accessible for clients, often dropping everything he was doing in order to be available for them. Those habits did not work for Disney. He wanted to offer people like Tom Clancy, Magic Johnson, Martin Scorsese, and Janet Jackson (and many more) omnibus deals that would span Disney’s businesses. He was constantly pitching these people on what Disney could do for them. Deals like this might sound great in a press release, but they rarely turn out well. They need a senior executive to act as a sponsor, putting in the time and energy necessary to shepherd each aspect of the deal through every business and every initiative. They also send a signal to the talent that they have carte blanche, and at places like Disney, where every idea is carefully vetted, this can be a disaster.
I was working out of New York, but flew to L.A. every week for Michael Eisner’s Monday staff lunches, which gave me a front-row seat on the whole debacle. Ovitz would show up with his energy and ideas, and it was clear to everyone around the table that Michael Eisner, who knew better, had little interest in them. Michael would then dutifully run through our business updates and new strategies, and Ovitz, feeling disrespected, would aggressively tune out and broadcast his lack of interest. The whole team saw this happen, in meeting after meeting. The body language alone was painful to witness, and the discomfort started to affect the entire senior management team. When the two people at the top of a company have a dysfunctional relationship, there’s no way that the rest of the company beneath them can be functional. It’s like having two parents who fight all the time. The kids feel the strain, and they start to reflect the animosity back onto the parents and vent it at each other.
I tried to be polite with Ovitz through it all and respect that I had a direct reporting relationship to him. I made an attempt to educate him on the businesses that reported to me, often giving him briefing reports to help him better understand the particulars of network television ratings or ESPN distribution deals or talent contracts, but each time he was either dismissive of the information or distracted by phone calls. Once, he took a call, in my office, from President Clinton, talking with him for forty-five minutes while I sat outside. A call from Tom Cruise interrupted another meeting. Martin Scorsese ended a third, just minutes after it started. Meeting after meeting was either canceled, rescheduled, or abbreviated, and soon every top executive at Disney was whispering behind his back about what a disaster he was. Managing your own time and respecting others’ time is one of the most vital things to do as a manager, and he was horrendous at it.
With his ideas going nowhere and Michael Eisner essentially icing him out of any significant role at the company, Ovitz became angry and embarrassed. Even if he’d been given the authority to genuinely function in his role, though, I think he still would have failed at Disney, because he was just not wired for corporate culture. I would give him a stack of materials in advance of a meeting, and the next day he’d come in not having read any of them and say, “Give me the facts,” then render a fast opinion. There was no sense that he was acting fast because he’d processed all the information. The opposite was the case. He was covering up for not being prepared, and in a company like Disney, if you don’t do the work, the people around you detect that right away and their respect for you disappears. You have to be attentive. You often have to sit through meetings that, if given the choice, you might choose not to sit through. You have to learn and absorb. You have to hear out other people’s problems and help find solutions. It’s all part of being a great manager. The problem was, Michael Ovitz wasn’t a manager, he was still an agent. He knew that business better than anyone, but that’s not the business we were in.