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Mistrial of the Century 

Free legal advice to the $700-an-hour schmucks screwing up the Disney courtroom drama

Thursday, Dec 16 2004
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With Hollywood becoming the electoral-season punching bag, how comforting to see that the entertainment biz is a boffo hit in Delaware Chancery Court. It’s got big domestic: The New York Times dubs the Eisner-Ovitz-Disney shareholders’ trial "grimly entertaining sport." It’s got huge foreign: The Times of London calls it "perhaps the most entertaining corporate trial in American history." Even the judge, William B. Chandler III, praised Disney board member Sidney Poitier’s testimony as "marvelously entertaining.’’

Since the show is almost over — the witness parade will end by Christmas, closing arguments will take place in January, and a court decision will come sometime after that — it’s time for our review. But we’ll be magnanimous and not factor in the ugly ticket price — spending $600 a week for the online video access to the court proceedings, or staying in Georgetown, Delaware, where the town square is straight out of Back to the Future, and the lone place to stay, the Comfort Inn, doesn’t offer room service or Pratesi sheets (instead, there are mean little mattresses and donuts in the morning), and the only place to eat, Smith’s Family Restaurant, isn’t low-fat-friendly (diners can’t even sub out the fries for veggies).

First, the good news. The performance of the stars didn’t disappoint. Up close and personal with the crazed Michael Ovitz and a cowed Michael Eisner — can it get better than this, folks? Two Blind Mikes were even better than we’d hoped and breathtaking in their capacity for conceit and deceit. And the character actors — Disney board members and ex-Disney executives — gave us priceless moments of hilarity, like when retired chairman and CEO of Capital Cities/ABC Inc. Tom Murphy last week claimed Ovitz, while Disney president, "was like a cancer in the organization." His words brought tears to our eyes (because we couldn’t stop laughing). And there’s been a wonderful cameo by the hapless AIG insurance agent, who’s been sitting through the whole trial and who’s going to have to pay the bill if the Disney shareholders prevail against Ovitz, Eisner and the Disney board.

Now the bad news. Like most major productions, this one had serious third-act problems. We can’t blame the director because the court chancellor has done everything humanly possibly to keep the trial moving along sprightly without sacrificing quality. Instead, the failure must be laid at the feet of the screenwriters, who in this case are the well-heeled lawyers from New York and Los Angeles. Everyone knows that "schmucks with Underwoods" was how legendary studio boss Jack Warner once described screenwriters, but in this case we’re watching schmucks with fancy law degrees. Heck, Vincent Gambini could do a better job (even without Mona Lisa Vito by his side).

Exactly how these shysters on both sides of the lawsuit should have won this case isn’t brain surgery, but simply a matter of Hollywood intelligence. Sheesh, even the lowliest mailroom clerk at Warner Bros. or the maitre d’ at the Palm know more about the entertainment industry than these $700-an-hour know-nuttin’s. As Ovitz admonished in testimony, "I don’t set the rules in the entertainment business. It’s been this way forever. It’s an insane business." For the lawyers to understand what’s sane from insane, they should have spent a few months studying how the Industry operates. But nooooooooooooo. As an exasperated Sandy Litvak, Eisner’s ex-right-hand man, said to shareholder lawyer Steve Schulman, "If you think that’s cause to terminate, we’re on different planets." Exactly: One is Planet Hollywood and the other is Planet Earth.

For weeks now, the shareholders’ lawyers have focused their argument on the money, from Ovitz’s outlandish severance pay to his outrageous expense reports, but anyone who knows anything about Hollywood knows that these are symptoms, not the disease. What they should have focused on was why Eisner was so feverish to award Ovitz that outsized employment contract in the first place at a time when Ovitz’s value was akin to the $1 bin at Blockbuster. Because when Ovitz was hired in August 1995, the CAA chieftain was in such a difficult and delicate position it just didn’t make sense. But in light of Ovitz’s lucrative relationship with Eisner through the years, it certainly made dollars and cents.

In turn, Eisner's lawyers should be arguing that, by hiring Ovitz, Eisner single-handedly saved show biz. That, at the time, if Ovitz had continued as CAA's chairman with something to prove after losing the MCA CEO job, an Ovitzian reign of terror costing Disney and other infotainment companies billions of dollars might have been unleashed on Hollywood. So Ovitz's contract, when viewed with the benefit of 20/20 hindsight, was a bargain.

First, let's all go back to the summer of 1995. What goes up must come down, and a lot of balls were suddenly dropping for Ovitz after years of successful juggling. His role behind the scenes in Edgar Bronfman Jr.’s secret buying of Time Warner stock had created a great deal of mistrust among people he did business with in Hollywood. His consulting work for companies like Coke, Nike and Crédit Lyonnais was riddled with conflicts of interest. The government was investigating complaints about his agency’s pension-fund schemes. His hoped-for deal with Microsoft had gone south while his just-started Tele-TV venture was going nowhere. The anti-Ovitz forces were gathering in numbers, and his rivals were growing in strength.

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