A corporate reality check

Two men renowned for their sound decision-making both conceded Dec. 12 that they made a mistake. Michael Ovitz thought he could be Michael Eisner’s partner at Disney. And Michael Eisner believed that as a result of his medical problems, he needed a sidekick.

Now Ovitz has left Disney, concluding there was really no job for him there. And Eisner has let it be known that he neither needs nor wants a “No. 2” executive — at least for the foreseeable future. Despite his history of heart problems, Eisner prefers to emulate Rupert Murdoch and Sumner Redstone, and to be sole master of his vast empire.

All of which raises several interesting questions:

How did these two men get it so wrong?

In accepting the job at Disney, Ovitz came to the reasonable conclusion that his friend of 25 years was sincere when he said he needed help. Eisner’s three senior executives at Disney had either died (Frank Wells) or resigned (Jeffrey Katzenberg, Rich Frank). The ABC/Cap Cities acquisition only underscored the need for leadership.

Eisner, meanwhile, misread his own instincts. He thought he was ready to delegate authority. He was not. Further, he believed that Ovitz would make an effortless transition to corporate life. He did not.

Finally, neither understood the fierce autonomy that Disney’s four principal division heads were exercising and their adamant refusal to surrender any of it to a newcomer.

“What seemed like a job was really a trap,” said one investment banker with close ties to Disney.

What motivated the cacophony of anti-Ovitz stories in the press?

In part, they reflected the normal tendency of the press to turn on past heroes. Ovitz had sat atop too many “power lists.” He posed a tempting target, especially given the energetic cooperation of Hollywood’s professional Ovitz-haters. Add to that the considerable list of press-savvy “sources” who were also eager to target Eisner. All this added up to a reporter’s dream: juicy , pre-researched, prepackaged exposes.

Icon-bashing makes for spicy journalism. It also represents pack journalism at its worst.

Where do we go from here?

Those close to Eisner insist he wants to run the company on his own and groom several younger executives to be his successor. Seasoned players like Joe Roth or Robert Iger are not going to get the No. 2 job, insiders say. This will make Wall Street uneasy, but Eisner is a stubborn man.

As for Ovitz, friends say he plans to take a month or so off, then regroup. Some guess he’ll resurface as an important player in the entertainment industry, but will never again agree to be anyone’s No. 2 — a role for which he is uniquely unsuited. Ovitz feels he has made some important contributions to Disney, especially in TV and in its foreign operations, insiders say. He also feels he has learned a lot about corporate life and about himself. And Disney paid him between $ 140 million and $ 160 million for his yearlong postgraduate education in corporate reality.

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