Fall of a movie mogul: Disney and the beast

Michael Eisner's long reign at Disney is entering its final days. Unfortunately, he seems set to leave under a cloud of recrimination and score-settling. Katherine Griffiths reports on a bitter end

At the centre of the affectionate celebrations was Michael Eisner, Disney's chairman and chief executive for the past 21 years, who took a faltering company in 1984 and restored its image as one of the most recognised and well-loved brands in the world.

But, as he delivered his final set of financial results yesterday, before finally stepping down on 30 September, Mr Eisner, must have been wondering where all the enchantment had gone.

His departure from the Magic Kingdom is marred by a backdrop of rising criticism of the 63-year-old media mogul, damaging lawsuits and high-profile rows with some of Hollywood's most powerful insiders, including the Weinstein brothers, who founded Miramax film studio, and Jeffrey Katzenberg, who set up DreamWorks.

Indeed, such was Mr Katzenberg's animosity towards the man he worked with for almost two decades that he is widely rumoured to have modelled the evil Lord Farquaard in Shrek on his former boss. This year, a book called Disney War, by Pulitzer prize-winning writer Jim Stewart, added to Mr Eisner's woes with a colourful insider's account of the his eccentricities and volatility, which left people wondering whether the Disney boss was living in an unreal world.

Mr Stewart, who spent many hours with Mr Eisner, shadowing him as he went about the business of running Disney, said: "He was enormously creative, enormously successful, highly intelligent, witty, charming, and wickedly funny. But there were bad qualities as well. Impulsiveness, hastiness, a paranoia about people around him, an inability to choose a successor."

It would seem Mr Eisner's less good qualities which have come to dominate his reputation. Even his long-standing friend, Barry Diller, another powerful businessman whose empire includes the travel website Expedia and the search engine Ask Jeeves, said recently: "His is a truly great career. The downslopes, the ends of careers, are usually never pretty for anybody."

Such has become Mr Eisner's lack of popularity that corporate America last year did an almost unprecedented thing. Some 45 per cent of Disney's shareholders at the company's 2004 annual meeting did not back his re-election as chief executive. So he was pressured into promising to hand over to his deputy, Bob Iger, on 1 October.

Yesterday, a jury was to vote on whether Mr Eisner and the rest of Disney's board was lax in handing $140m to Michael Ovitz, who was president of the company for just 14 months before he was summarily fired in 1996.

Mr Eisner has even managed to fall out with the only person bearing the Disney name on his board. Roy Disney, a nephew of Walt, led the campaign last year to oust Mr Eisner, saying he had mismanaged the company and has been too autocratic a manager. For some, such an account of Mr Eisner seems overly harsh. Friends and foe say he has built the company from being an old-fashioned owner of theme parks and a movie studio into an international conglomerate, which ranges from the TV networks ABC and the sports-focused channel ESPN to EuroDisney.

In addition, they say, Mr Eisner has been dedicated to the iconic company. A famous story about the company's larger-than-life boss goes that just as he was about to undergo quadruple bypass surgery in July 1994, Mr Eisner used time talking to his wife and sons to discuss who would be CEO if something went wrong. He later mused in a memo that it was a "sad truth" that no one from Disney was on the list, (though Mr Diller and Mr Ovitz were).

On Wall Street at least, Mr Eisner has enjoyed considerable popularity. When he joined from Paramount Pictures in 1984, Mr Eisner rescued Disney from near-collapse, saving it from corporate raiders who were circling the financially weakened company and wanted to break it up.

He made bold decisions, including taking Disney into television with the acquisition of ABC in 1995. He paid $19bn for the network, at the time the largest in the US. Weeks later the surprises continued when Mr Eisner announced that Michael Ovitz, head of the Creative Artists Agency and often called the most powerful man in Hollywood, was joining as Disney's president. The pairing did not last long. Just 14 months later, Mr Eisner told his old friend he had to go, leading to the controversial $140m pay-off which shareholders are now suing Disney over.

Mr Eisner, who was forced to testify in a shareholder class-action lawsuit this year, tried to distance himself from Mr Ovitz, whom he had once portrayed as one of his closest friends and had shared holidays with. On the stand, Mr Eisner said Mr Ovitz had visited him once during his heart surgery, and he was only one of many visitors. "I was a good friend. I was a reasonable friend. I liked his wife. I was amused by him. He was one of my friends."

The pattern was similar to other long-standing professional relationships, which Mr Eisner abruptly ended. Despite having a successful 19-year working relationship with Mr Katzenberg at Paramount and at Disney, Mr Eisner sacked him in 1994.

Observers have said the unexpected move was partly because he was irritated that his protégé had done too good a job bringing back Disney's animation studio from near death with the hits The Little Mermaid and The Lion King, and was attracting too much publicity for himself.

Allegedly out of pique, Mr Eisner reportedly refused to negotiate a settlement with Mr Katzenberg, whose payoff ballooned from $60m to $280m. He left to found DreamWorks, a rival studio, with the director Steven Spielberg and music supremo David Geffen. DreamWorks' animation arm has long since overtaken that of Disney. While his colourful behaviour has added to Hollywood lore, Mr Eisner's high-handed and sometimes bizarre way of treating senior executives has won him no favours in the company. One such example came when he rounded on Andrea Van de Kamp, a board member who was critical of Mr Eisner's management and supported the campaign to oust him led by Mr Disney and another director, Stanley Gold.

In a meeting in his office, Mr Eisner scolded Ms Van de Kamp, who was the head of Sotheby's on west coast of the US, saying: "You are a terrible director. You're so loyal to Stanley. It's like you've carried his babies."

Mr Eisner's business decisions have also not been foolproof. Some on Wall Street believe he overpaid for ABC, whose long-established brand rivalled Disney's, but whose network was being encroached on by competitors. ABC has had mixed success in the Disney stable, though it did score a big hit with Desperate Housewives last year.

Mr Eisner's hankering to expand into Europe has also not impressed investors. He reportedly wanted to set up EuroDisney just outside Paris because he had fallen in love with it when he was at college. Unfortunately, the French did not feel the same way. Public resistance and lagging attendance drove EuroDisney almost to the point of bankruptcy.

Mr Eisner, who has described wanting to have a "third act" in his life, is rumoured to be keen to try another profession when he leaves: acting. It might be a precious chance to put the pizzazz back into his Hollywood legacy, if he can get a studio to take him on.

Famous feuds in the Disney land

1994

Having worked with Michael Eisner at Paramount Pictures and then at Disney, Jeffrey Katzenberg's relationship with him turned sour in 1994. Observers said Mr Eisner was irritated with the avalanche of good publicity given to Mr Katzenberg, who revived Disney's animation business with hits such as the Little Mermaid and The Lion King. Mr Katzenberg, was sacked. Insiders have said Mr Eisner refused to negotiate his exit package, and as a consequence his employee walked away with $280m in bonuses. Mr Katzenberg has subsequently set up the DreamWorks studio with Steven Spielberg and David Geffen.

1996

Michael Eisner surprised Hollywood and Wall Street when he announced in 1996 he had successfully wooed his old friend Michael Ovitz to leave his company, the Creative Artists Agency, to join Disney as president. Mr Ovitz was mistrusted by other directors and also quickly fell foul of Mr Eisner. He was sacked in 1996 after just 14 months in the job, taking with him a $140m settlement. Shareholders have since launched a class action lawsuit over the pay-out, which was due to be decided yesterday.

2004

Another bust-up came when Mr Eisner fell out with Steve Jobs, the founder of Apple Computer who also set up the animation studio, Pixar, whose hits include Toy Story and A Bug's Life. Disney and Pixar's joint distribution deal fell apart last year. Pixar broke off talks to extend its film deal beyond 2005 after Mr Eisner and Mr Jobs failed to agree on the terms. Disney's incoming boss, Bob Iger, is reported to be busy wooing Mr Jobs to try to get him back to the negotiating table.

2004

Mr Eisner has even had a head-on clash with the Disney family. The only descendant of Walt Disney currently on the board, Roy Disney, led a charge to have Mr Eisner ousted last year. The move came after Mr Eisner announced without warning that he wanted Mr Disney off the board. Shareholders backed Mr Disney, forcing Mr Eisner to agree to step down as chief executive at the end of next month. Mr Disney also launched a lawsuit when the company said Mr Eisner's chosen successor, Mr Iger, would get the top job, though the two sides have now patched things up.

2005

After a troubled relationship with Harvey and Bob Weinstein dating back a decade, the cineaste brothers who founded Miramax finally broke free of Disney earlier this year. Mr Eisner clashed with the two over issues such their desire to distribute Fahrenheit 9/11, the film made by Michael Moore which was highly critical of President George Bush. Their close ties to Quentin Tarantino, the director of violent films such as Pulp Fiction, also sat uneasily within the Disney stable.