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‘Katzenberg issue’ chills Disney’s hot times

IF THERE’S ONE STUDIO that should have a happy aura this week, it is Disney. First, its latest animated megapic, “The Lion King,” opened to felicitous reviews and SRO business. The first 16 shows at the El Capitan in Hollywood were sold out before the film even opened.

Meanwhile, the televised Tony Awards sent ticket sales soaring for “Beauty and the Beast,” Disney’s Broadway show that was snubbed by the theater establishment and, ironically, largely ignored by the Tony voters (it received one token Tony award for costumes). While other shows are wilting, “Beauty” is establishing itself as one of Broadway’s all-time success stories.

Despite these and other good omens, the mood at Disney these days is edgy and tentative. The reason relates to leadership — orwhat some people refer to as “the Katzenberg issue.”

The death of Frank Wells in a helicopter crash April 3 created a giant question mark that continues to cast a shadow over Disney’s Burbank lot. The 62 -year-old Wells was more than the president and chief operating officer of the Walt Disney Co. It was Wells whom the money men originally picked to become CEO at Disney 10 years ago, and he, in turn, urged them to select Michael Eisner instead. Frank Wells in effect invented Team Disney.

IN THE SPACE OF A DECADE, the new management transformed Disney from an ailing, geriatric studio that had run out of money and ideas into one of the era’s great corporate monoliths. Disney’s explosive growth has not come without problems and setbacks, but it has been remarkable nonetheless.

Hence, “the Katzenberg issue”: Once put down as Eisner’s “golden retriever,” Jeffrey Katzenberg has matured into a forceful and sophisticated studio chief who, friends suggest, yearns for a loftier corporate role in the industry. The death of Wells would appear to have created just such a perch.

Disneyites realize, to be sure, that Eisner, out of respect for Wells’ memory and his family, did not feel it appropriate to announce an immediate successor. But now, almost four months after Wells’ death, the natives are growing restless.

The question, therefore, is whether Eisner will choose to elevate his longtime associate to fill that position. And, if he doesn’t, will Katzenberg decide to move on?

Brilliant, gangly, habitually unkempt, Eisner is a man who keeps his own counsel. Hence, no one has a clue as to his final decision. Indeed, Eisner has told some associates that he simply has not made up his mind, and there are those who think he never will. “Michael doesn’t want another Frank Wells,” says one top Disneyite. “He will redeploy his senior executives to fill portions of the job, but he wants to sit alone atop the pyramid.”

SOME POWER PLAYERS would find this decision discomfiting. Though Eisner is one of the industry’s most widely admired executives, his policies have been criticized on several fronts. Some argue that he is “too glued to the traditional boundaries of showbiz,” as one top rival puts it. At a time when Michael Ovitz is hiring an executive vice president of AT&T to spearhead CAA’s plunge onto the information superhighway and when Rupert Murdoch is initiating bold new media adventures here and abroad, Eisner seems determined to keep Disney’s focus on “software.” As Eisner once told me, “I realize some of the deep thinkers believe they should both pump the oil and own the pipeline, but I just want to pump the oil.”

Other Disney insiders believe Eisner is overwhelmed by the myriad tasks of running a vast corporation, and that he needs another body at the top.

Friends of Katzenberg assert that he would be reluctant to leave Disney for several reasons. His entire career has been spent at Eisner’s side. Moreover, Katzenberg is fascinated with animation, and many at the studio single him out as the key force in building that arm into Disney’s top profit center, as it had been under old Walt.

On the other hand, Jeffrey Katzenberg at 43 has become quite a different individual than the driven, monomaniacal young man he was in his early days at Paramount. The “early” Katzenberg by 9 a.m. had already completed his first hundred phone calls.

Katzenberg is still a man who parcels out his time in bits and pieces, like old J.P. Morgan dispensing nickels and dimes to the poor. He is compulsive, outlandishly competitive and uniquely anal. He also has learned to take himself less seriously. He has acquired a superb sense of humor. “The weird thing about Jeffrey Katzenberg is that, with wealth and power, he is actually turning into a very nice guy,” says one of the town’s major agents.

But ambition still rules him. Though Katzenberg gets a lot of press and is better known than anyone else in the company, other than Eisner, one would have to turn to page 27 of the latest annual report to find his picture — that’s 26 pages behind Eisner. In his heart, Katzenberg knows that he is no longer merely a studio boss, that he has the vision and discipline to run a vast corporation. The conventional wisdom is that if he does not get a big boost at Disney, he will find a perch of similar prestige elsewhere.

Executive intrigues at Disney always transcend mere corporate game-playing. Since the studio has a mythic, larger-than-life quality, its internal politics take on operatic proportions. Hence, Disney denizens are watching, waiting and hoping that their own careers don’t get swept away in the process.

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