Mouse, Trapped: Michael Eisner's greatest talent is for self-preservation

Three years ago, when it appeared that nothing could get worse at Disney -- fleeing executives, share-price collapse (and this was during the boom), dismal results at ABC, and a CEO involved in a bitter, costly, and very public lawsuit with a former subordinate -- I wrote that "Michael Eisner's extraordinary reign" at Disney was "coming to an end."

Two weeks ago, some media bigs I know were out for a little retreat at Herb Allen's place in Sun Valley and, over drinks, put together a friendly pool about whether Michael would last the year.

When I dismissed Eisner, I not only got it wrong but missed the story; likewise, the media bigs in Sun Valley betting against Michael were falling into the same trap.

The point is that Michael Eisner has perfected the art of survival -- nobody's going to make him go anywhere.

It may just be a matter of management priorities: Do you focus on share price, market reach, product quality, kicking ass, or, just as strategically, your own entrenchment? The challenge is to create a company that can't get rid of you, in which you can survive any mistake you make (and if what you care about first and foremost is your own continued existence, you're going to make a lot of mistakes), in which you are guaranteed to be the last living cockroach.

Of course, this is not so easy to do. We live in a highly disposable corporate culture (even in the age of the exalted CEO). When the tide turns against you, you're usually finished. Shareholders, like team owners, are very fickle.

There is, however, the mogul exception. It's similar to the French "cultural exception." Market forces alone are not allowed to rule. By general consensus, we have agreed to subsidize the unique institution of the media mogul. By which I mean not mere manager-moguls (like Jean-Marie Messier at Vivendi, who played at being a mogul well before he was one, or Thomas Middelhoff at Bertelsmann, or the AOL Time Warner brass) but a true creator-of-worlds mogul, with vast control of his (theoretically) public company.

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The Eisner accomplishment, and the perhaps insuperable bulwark his disgruntled shareholders are now up against, is that he transformed himself from mere manager into being virtually synonymous with the company he runs (you could almost change the name of Disney to Eisner).

He may be the only mere manager ever to have successfully crossed that Rubicon from hireling to fully vested mogul (Mel Karmazin at Viacom has over the past year been on the losing side of such a crossover effort). What's more, with some screwball irony, Michael Eisner was hired at Disney in 1984 precisely because he was a non-mogul, a non-voting-class owner-operator, an outsider who would do the bidding of shareholders against entrenched interests.

But what happened is that he consumed the company from within. He ingested it -- and it became him.

To understand the extent of his grasp, you have to look beyond the present mess to the larger mess. That is, since the acquisition of ABC seven years ago, or since the death of Frank Wells in 1994, or since the departure of Jeffrey Katzenberg six months later -- everybody has a favorite precipitating event -- Disney has been a weirder and weirder, more and more dysfunctional, bizarrely isolated place.

Even during the good years -- when Eisner, Wells, and Katzenberg remarketed the Disney assets (helpfully, the video revolution was at hand) and relaunched the animation studios (coincident with a boom in family entertainment) -- there was the dark Michael. Michael the control freak. Michael the micromanager. Michael who, former friends and former colleagues insisted, simply could not tell the truth.

Eisner, once something of the good-guy, straight-arrow, Jolly White Giant of the movie business, has morphed into a person everybody thinks there's something wrong with. He went from Thriller-era Michael Jackson to the current Michael Jackson.

Indeed, all conversations about Disney, and, for that matter, many other merely idle conversations in Hollywood, end up being about the psychopathology of Michael Eisner. He's the opposite of the powerful emperor whose nakedness nobody wants to acknowledge -- rather, he's constantly, and savagely, picked apart.

It's near impossible to convey the way people talk about Michael (almost everybody in Hollywood calls him Michael, oddly, with a deep intimacy) -- the quality of the invective, the depth of the bitterness. For one thing, after more than 30 years of working at high levels of the business, he knows everyone -- and, as many people will tell you, has betrayed nearly everyone he knows. For another, he's stayed in power so long, and against so many unlikely odds, that nobody can imagine a world without him -- it's this frustration of being stuck with him that's so infuriating to so many people. He's ingrained, omnipresent. Like Castro or Saddam. He's just a standard of evil (and when you're the standard of evil in Hollywood, that is really something). The discussion is so extreme that it may suggest part of the reason he stays. There is no place for him to go: Without his position and power, he would be ripped apart by the crowd (like Michael Ovitz).

But as it turns out, if your goal is just staying in power (many moguls have, foolishly, seen being loved and admired as an equal priority), this -- the paranoia, the isolation, the denial, the fact that you've worked yourself into a corner that you won't and can't come out of -- may be a good management strategy.

Here's the insurmountable hurdle he had to surmount: He did not own, nor could he have afforded to buy, voting control of Disney -- as Murdoch has at News Corp., or Redstone has at Viacom.

There is, I should mention, a corollary to the mogul exception -- if you haven't gained such voting-class control of your stock, you will surely be overthrown. Everybody has been except for Michael.

But Michael created a third way: He couldn't control the voting shares, but he could obsessively control every other detail and every other person in the company. He could turn Disney into a closed kingdom.

The elements of this entrenchment strategy involve, for one thing, longevity itself. Indeed, he has been there so long, and has been so amply rewarded (his package of cash and options in 1998, for instance, was worth $600 million), that he has become Disney's third largest shareholder (no small feat for somebody who joined the company owning no part of it at all).

Then there's the isolation. The flight of several generations of Disney's senior executives (Paul Pressler, who ran the company's parks-and-resorts division, just resigned to run the Gap), which is reasonably thought to be a downside of Eisner's management, has also had a positive effect -- it's dug him deeper in. Nobody can really challenge him. Nobody has the standing to reason with him. (If the people you trust tell you you have to go, then you have to go -- but if you trust no one, you can stay.) And, most clearly, nobody is there to replace him. (Few people see his current would-be heir, Bob Iger, who was promoted from ABC after failing to fix the network, as a true alternative.)

There are, too, the yes legions. Over time, Eisner managed to pack the Disney board with his personal retinue (his lawyer, his architect, and the principal of his children's elementary school).

There's the vastness of the operation itself -- not just the vastness but the dysfunctional vastness. The problems at a failing network (and now at the former Fox Family Channel, which Eisner bought from Rupert Murdoch for $5.2 billion, to rerun ABC shows), at a declining animation studio (by firing his would-be heir apparent, Jeffrey Katzenberg, Eisner created an animation competitor -- DreamWorks -- that destroyed the profitability of Disney's most profitable division), and with exhausted product lines (every time Disney needed a bump in earnings, it flooded the market with backlist releases) are so deep and intractable that nobody wants to fight you for your job.

Then, not least of all, there is the absolute knowledge, on everybody's part, that there are only two ways that Michael Eisner is leaving Disney: if he's escorted out or carried out. And nobody is brave enough or big enough to pull that trigger.

There is, finally, the length of the Disney slump itself as an odd, almost sobering virtue -- everybody is used to it. After all, Disney isn't, as Eisner righteously maintains, in anywhere near the final-days shape of AOL Time Warner or Vivendi. What's more, it is certainly true, as Eisner constantly repeats, that ABC is -- as is always the case with network television -- just one hit away from a turnaround. (Several weeks ago, the Wall Street Journal had a most remarkable account of the Eisner-led can-do campaign to micromanage the John Ritter ABC series Eight Simple Rules for Dating My Teenage Daughter.) There might always be another Who Wants to Be a Millionaire? (which made ABC and Disney look good before the network's slavish, and amateurish, four-nights-a-week dependence on the show made all concerned look very bad).

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Board member Stanley Gold, who represents Roy Disney and his Shamrock Holdings (one of the company's biggest shareholders) and who led the overthrow of the former Disney Establishment and helped install Eisner in its place, is after him. Then there's a rebel group of shareholders that met in New York a few weeks ago to prepare its list of demands. And at the recent Merrill Lynch Media Conference at the Ritz-Carlton Huntington in Pasadena, a lively topic among the media-business analysts was the idea of Mel Karmazin as Michael's replacement.

At the hush-hush showdown board meeting last week, there were reports of various ultimatums. Among them, the board had to be more independent (although, in something of an Eisner victory, Stanley Gold lost his job as sole chairman of the important governance committee -- he now shares the spot with former senator George Mitchell). There were rumors, too, that the board had drawn a line in the sand: Eisner had to name his successor (not Iger) and specify a date for the succession.

And everywhere, there was the rising dust that precedes other moves. The sports teams were on the block. ABC was suddenly serious about merging, or at least about talking about merging, its news division with CNN. There were even rumblings of a Disney sale (rumblings that met with the perplexed question "To whom?") if the current ABC season does not go well (which it won't).

It does seem like it could, really, truly, and finally, be the autumn of the 60-year-old quadruple-bypass chief executive.

Can’t speak for any of the other stuff he may have done, but honestly, even Michael Eisner’s a laid back person compared to Jeffrey Katzenberg, now THAT guy was a MASSIVE control freak. How massive, you might ask? Well, he did the following during his Tenure at Disney:

*Cut a huge amount of footage from Black Cauldron, all because they didn’t cut out his requested 10 minutes of footage (and he himself proceeded to cut out even more than that amount), meaning he was the reason why Black Cauldron ended up being a box office bomb (while it was no guarantee it would have been anything more than a moderate success if Katzenberg didn’t do that, it at least would have been spared from being a disaster in the box office), oh, and later bragged about it;

*Based on Waking Sleeping Beauty, he also was a large part of the reason why the films they did make until The Little Mermaid, while moderately successful, were not smash hits due to constantly criticizing them and demanding pointless changes.

*Came close to ruining Ariel and her movie The Little Mermaid by cutting Part of Your World because it was “boring”, and even using as a petty excuse a kid picking up popcorn off the floor (fortunately saner heads prevailed, which is probably the main reason it was a smash box office hit);

*Sabotaged any chance of Rescuers Down Under being a box office success, all because it didn’t rank high in advertisement revenue;

*Demanded for pointless rewrites for both Beauty and the Beast and Aladdin, the former being turned into a feminist screed that bore very little resemblance to the actual fairy tale (not to mention its heroine ultimately conflicted with the inner beauty moral from her actions in Act 1), and the latter he didn’t even bother to extend the deadline;

*Nearly ruined Toy Story and caused Pixar to be shut down by shredding various potential script treatments for the film and demanding repeatedly that Toy Story have a more adult, cynical edge to the storyline, which culminated in Woody being turned into a massive jerk who clearly let the position of Andy’s favorite toy get to his head and even attempted to outright murder Buzz Lightyear in the scene where the latter fell out of the window, and then had the gall to ask why it was so terrible.

In fact, I’d argue that Eisner firing him was probably one of the few good things he ever did for Disney even if it was selfish in nature. If anything, I’m more angered that he didn’t do it sooner.

And for the record, Katzenberg was control freakish when running DreamWorks into the ground since day one.

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