Maybe it wouldn’t matter so much if Roy Disney did not look so eerily like a mirror image of his late uncle. Because he does, this week it seemed Walt Disney himself came back from the grave (not that cryonics chamber) to diss Michael Eisner. But Walt was a first-generation genius, and Roy is only a Paris Hilton–type scion, more likely found at his Irish castle or on his 70-foot sailboat than pretending to ply the rat race in his Disney office while still making time to return home every day to have lunch with wife Patty. So when he went public this week with his boardroom brawl with Eisner, the reaction was surprise, followed by headlines, followed by “What took so long?”
It’s yet another example of the men behaving badly in Burbank, where Disney headquarters has seen so much bad blood over the years that this Roy vs. Michael feuding, which began with a letter delivered to Eisner on Saturday, barely deserves billing as a title bout. And 48 hours later, the fight card came to include Stanley Gold, Roy’s financial guru, who also fled the board and flayed Eisner. The fact that few leaped to defend Eisner shows just how widely he is loathed. But at the same time, Roy Disney is far from a populist hero looking out for the little people, which in this case are Disney’s beaten-down shareholders, interested only in a high sticker price so little Austins and little Heathers can afford to go to college. (Full disclosure: I am in a legal dispute with Disney over the news media’s right to truthfully report on the entertainment giant’s business activities.)
Instead, the great irony here is that Roy Disney beginning in 1984 — when he waged war against Walt’s son-in-law Ron Miller, left the board claiming the company had grown creatively stagnant (sound familiar?) and found the billionaire Bass Brothers of Ft. Worth to help bankroll his battle — did everything in his power to maneuver Eisner into an Industry giant from then on. The two men had met back in 1980 when Eisner joined Roy on the board of the California Institute of Arts, which was founded by Walt as a training ground for animators and such. Roy made the first approach to Eisner in a phone call in the spring of 1984. It was Gold who pinched Frank Wells.
It was a weird working situation from the start: Technically, Roy worked under Eisner, but realistically, Roy was Eisner’s boss. That was clearly defined when, in his autobiography, Eisner recalls sitting drenched in flop sweat next to Roy and Patty during that first public screening of the expletive-laced Down and Out in Beverly Hills, which cemented Disney’s new image as a studio for all ages. “We’d explained in advance why we’d made the film and won their support,” Eisner exulted.
But it’s ludicrous, really, for Roy Disney to stand up now and try to take Eisner down now as opposed to even a year ago, when the stock price was still bottom-feeding. Because even before the Magic Kingdom fell on hard times in recent years, mogul Eisner had mutated into a monster, and Roy Disney was his Dr. Frankenstein.
For instance, Roy helped solidify Eisner’s dominance by being the first at the company to want to show Jeffrey Katzenberg the door. Roy was titularly the head of Disney animation, but everyone knew it was Katzenberg who did all the work. At the same time, Eisner heaped fuel onto the fire by constantly flattering Roy that he, Walt’s nephew, more than Jeffrey, “had a keener sense of what a Disney movie ought to be than any of the rest of us,” as Eisner postured in his autobiography. It was bullshit, of course.
Beginning with The Black Cauldron, and culminating with The Lion King, Katzenberg grabbed more and more credit inside the company and out, and Roy in turn felt more and more ignored by Katzenberg. Roy’s complaints to Eisner reached a crescendo after Frank Wells’ accidental death in 1994: Not only would Katzenberg not be promoted into Wells’ job, but for all Roy cared, Jeffrey could exit the company now that Joe Roth was on the lot. To this day, conventional wisdom has it that Eisner might never have had the guts to dare get rid of Katzenberg, and all that implied, if Roy had not been behind the plot. (Even after Katzenberg resigned, Roy was petty enough to re-cut a “making of” documentary on The Lion King, removing all but a few frames of Katzenberg’s fingerprints on the hit project.)
By the time Disney bought ABC in August of 1995, though, Roy was being treated almost as an afterthought by Eisner. Same thing, again, when Eisner brought in Michael Ovitz as president. But Roy clearly delineated from the outset that Disney animation would never, and he meant never, be part of Ovitz’s purview. Roy by all accounts was by then withdrawing deeper and deeper into isolation at the company, in part by throwing himself into only that turf he felt was particularly his because of Walt’s legacy. Roy had helped produce the True Life Adventures nature film series, and so helped push through the idea for the new Animal Kingdom theme park because Walt had had a lifelong love of animals. For the same reasons, Roy also threw himself into the supervision of Fantasia 2000 — so much so that Eisner even had difficulty convincing Roy to use certain music in the movie (like, bizarrely, Pomp and Circumstance, which Eisner had heard at his son’s college graduation).
Years from now, business schools will still be arguing if Roy and Stanley did the right thing leaving Disney’s boardroom this time to air their grievances. Stanley says they had no choice since Eisner had made sure to zip up all the directors’ mouths. Nevertheless, we may learn some very, very interesting things if Stanley successfully pressures Disney to release the lot of letters, memos, and the like from himself and Roy over the years. There’s something else: November 30 was the cutoff date for depositions to be taken in that Delaware-based shareholder lawsuit against Disney, Eisner, Ovitz and the various members of the board of directors over that ridiculously oversized severance payout to the onetime most powerful man in Hollywood. Sources close to the case say it’s possible that the shareholder lawyers may ask to re-depose Roy and Stanley to see if the two insiders who are now outsiders have anything to add.
On the other hand, don’t for a moment think, as the news stories contend, that Roy’s and Stanley’s pledges to continue opposing Eisner are a mere distraction for him. Otherwise, why would Eisner be on the phone at 8 a.m. New York time with Harvey Weinstein “ripping him a new one” — in the words of one insider — because the Miramax chief had dared to criticize the boss in a New York Times article about the Roy and Stanley resignations. And why would Eisner be furiously phoning Wall Street when Disney’s stock price fell 2.6% Tuesday from the fallout of the high-profile board furor.
Years from now business schools may also be arguing whether Eisner should have been so intent on filling his board with yes men that he helped usher Roy out by maneuvering to have his name left off the slate of directors that were to be elected in the coming year. Given all this, it’s hard not to recall those famous words from LBJ, who, when asked why he chose to reappoint J. Edgar Hoover as FBI director, said, “It’s probably better to have him inside the tent pissing out, than outside the tent pissing in.”
For instance, Stanley in a parting gesture managed a near knockout blow when he told the Los Angeles Times (which did not print the revelation, claiming they couldn’t confirm it as true, and had to let the Drudge Report do it for them) that Eisner had scorned Roy, Stanley, and Pixar’s Steve Jobs as “Shiite Muslims.” A Disney spokesperson denies this. If it did happen, it was a poor choice of words, especially considering that Eisner’s relationship with Jobs is so rotten that Disney No. 2 Bob Iger has been playing point man in the long-lagging but all-important Pixar negotiations.
Though the myriad personal animosities are intriguing, what’s really wrong with Disney is its Mickey Mouse corporate board. We all buy into this paradisiacal idea of an independent board of directors when in Disney’s case, it’s a myth. Institutional Shareholder Services, a nationally known proxy adviser, constantly urges companies to have at least one director with a large financial stake in the company and one willing to be a shareholder activist. Roy Disney fits both bills, but Eisner was “aging” him off.
Talk to any corporate heavyweight and the first thing you’ll hear is how very hard it is to eject a sitting chairman and CEO unless you are right there in the boardroom. For one thing, proxy fights are outrageously expensive. Even if Roy and Stanley come up with a rival slate of directors to challenge the Disney board, the earliest shareholders could vote on it would be winter 2005. Reminder: When Walter Hewlett, a musician and academician, led other family members to publicly fight HP’s $20 billion acquisition of Compaq last year, he too claimed the support of employees, investors and others with a stake in HP’s leadership. He even received public hosannas from advocates for shareholder rights as well as large institutional investors. And still he lost.
Right now there’s a whole lot of pissing going on in this contest, only time will tell if Roy Disney and Stanley Gold are aiming into the wind.
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