Walt Disney CEO Michael Eisner insisted Tuesday that his memos blasting Michael Ovitz were gross hyperbole, not to be taken at face value — including a letter from the summer of 1996 in which he wrote that personal and professional pressures to name a deputy “all clouded my basic instinct that I was making a mistake” in hiring Ovitz.
“I think I was just venting, taking the blame. It’s like people who have been married for 30 years (saying) ‘I knew it, even before I walked down the aisle’… I was guilty and I was upset. I was putting 50 exclamation points after the fact that not only didn’t I want him to succeed me, I didn’t want him to stay on as president if I weren’t there,” Eisner told a Delaware court.
Eisner’s own words are key evidence in the lawsuit by shareholders who claim that Eisner and the Disney board acted irresponsibly both in the hiring of Ovitz and the former uber-agent’s costly firing shortly after. “I am one that believes, sometimes to my detriment, that a good idea is best expressed in writing,” he acknowledged ruefully.
In his first full day of testimony, an increasingly hoarse Eisner described Ovitz in frenetic pursuit of self-aggrandizing deals to prove he was still a Hollywood kingpin.
Eisner also said that as ill-suited as Ovitz may have been to his job, there was never any grounds to fire him for cause and deny his generous severance, worth about $140 million. He defended Ovitz point by point, from lavish spending on a new office and expensive dinner parties to bringing Martin Scorsese to Disney to make the disastrous “Kundun.”
“There was no cause we could cite. (Chief counsel) Sandy Litvack was very clear about it. If there was anyone who would have wanted to cite cause, it was him. There was just no way. It was just a total dead end from day one … I didn’t like it. I didn’t think he had done the job that warranted our (financial) commitment. It was aggravating and annoying and upsetting and all of those words.”
“It’s one of those things in business that you hate and that seems completely unfair. And, on the other hand, that’s why people make contracts.”
However, Eisner also described an increasing array of alienating and often bizarre behavior on the part of Ovitz.
Eisner depicted an arrogant, surreptitious exec infuriated at any slight and driven to hysterics at being excluded from a ribbon-cutting at the new Disney store on Fifth Avenue.
As things deteriorated, Ovitz grew depressed, Eisner said, and was morbidly obsessed with Admiral Jeremy Boorda, a decorated Navy commander who committed suicide in May of 1996 when widely publicized press reports questioned the authenticity of his medals.
At one dinner “he mentioned twice the tremendous career of this man that had ended in shame. I didn’t say anything to him, but I became worried,” Eisner said.
Under friendly questioning by his lawyer Gary Naftalis, Eisner outlined his own voyage of elation, surprise, dismay, fury and, finally, relief — in that order — from the day Ovitz was hired in the fall of 1995 to the formal press release announcing his departure in December of the following year.
Eisner said the letter cited above was written around June after an incident at his mother’s funeral in New York that was “another final straw” for Ovitz. It involved “an altercation outside the chapel on Fifth Avenue where someone was driving a car, and he (Ovitz) thought they were in the way of the hearse and made a giant scene. I was in no mood to be understanding. It got me thinking about my own mortality and about the person who was in line at Disney and I thought that I have to inform somebody that this cannot be my replacement.”
Still, Eisner also all but acknowledged he had tossed his new president into a pit of vipers by badly mismanaging the transition with his top execs. In particular, Litvack and chief financial officer Steven Bollenbach resented Ovitz’s appointment and weren’t contractually obliged to report to him.
“I wish I had handled it better … I hadn’t really thought it through,” Eisner said.
He said Bollenbach’s first words to Ovitz at a small dinner party the night after the new prexy signed on were: “This is a great thing for the Walt Disney Company. I’m thrilled to be a shareholder. The stock is going to go up. Congratulations. And by the way, I’m not reporting to you.”
“It was so cold and so quick that even I was shocked,” Eisner said.
He recounted that when Barry Diller wooed him from ABC to Paramount, “he neglected to tell me that the head of the motion picture division David Picker was going to keep reporting directly to him. I went to Barry and said ‘I thought I was going to run the company.’ He said, ‘Don’t worry about it’… and I didn’t …. In corporations things like that flow and I was hoping I would have some time to have some conversation with Michael.”
But he stressed that he had truly believed when he hired Ovitz that it was a brilliant move and was “reinforced by everyone else that it was the right decision.”
The realization of failure came gradually over months. He said even as he wrote that ” ‘there was no chance’ I was still holding out hope.”
He dismissed assertions by former Disney shareholder Sid Bass that Ovitz’s tenure hit the rocks almost from the start. Bass had no documents, he said. “Mr. Bass was off on the timing.”
In a memo around Christmas of 1995 he wrote to Ovitz that “this is going to be a great year,” used the words “happy” and “delighted” and said, “Your instincts were right in coming to the Disney company, and mine were right in suggesting you.”
Ovitz, he told the court, had been “traveling, was performing well,” despite tensions in the company.
But early in 1996, the clouds started to gather.
In January, Ovitz alienated scores of Disney managers and “cast members” at a retreat at Disney World in Orlando.
He didn’t “join the group, the activities. We’d all take a bus, and he’d take his limo. And his special driver didn’t really know where to go.” The hundreds of cast members in the park all had walkie-talkies and “you heard them on the walkie-talkies going around, saying, ‘Who is this guy demanding this and demanding that.’ I had lots of complaints and a lot of people were very unhappy. There just was a bad vibe.”
Ovitz seemed unable to function in a “non-Hollywood environment,” he said.
“It wasn’t a big thing and it didn’t affect the stock, but it was uncomfortable and certainly was the grist for rumors.”
He cited some unspecified misbehavior by Ovitz during a bike trip with himself and board member Gary Wilson later that year.
And he said Ovitz began pushing ever harder to do deals, often initiating talks without informing execs like studio head Joe Roth or ABC chief Bob Iger. Disney had just absorbed a massive $19 billion purchase of ABC and was wholly focused on managing its existing operations.
“I had no reason to believe that he was trying to do something that was not in the best interest of the company, but I believed that he was so interested in doing something that makes him look good that it clouded his judgment.”
“He was running fast and seemed to lack focus and a lot of people at our company smelled blood. He was like a .400 batting average hitter, and everyone expected him to hit it out of the park every time he came to the plate. But it wasn’t the same park. It wasn’t even the same game.”
Steven Bollenbach ankled in March of 1996, blaming Ovitz in part for his departure. Sandy Litvack and Bob Iger both threatened to quit, saying they couldn’t work with Ovitz.
The negative press heated up. Eisner and Ovitz clashed in New York one dismal weekend over the ribbon cutting and other issues. “I said he had his priorities completely wrong.”
The two men, thoroughly out of sorts, attended the hot new musical “Rent.” It was “a depressing story…and the guy who wrote ‘Rent’ had dropped dead two days before,” Eisner said. Eisner said he was reading Richard Cory, the poem about the man “who went home and put a bullet through his head” and Ovitz kept making Boorda allusions.
“I ran into Sid Bass on Fifth Avenue and told Sid about my fear of Ovitz’s suicide and he said it was more in my imagination.”
“Sid Bass said at some point, ‘Just fire him.’ I said, ‘It’s not that easy.’ I still had this optimism (and) hope deep down that I could correct the situation.”
Ovitz asked to pursue talks with Sony. Eisner perceived an “elegant” solution all around.
Eisner pretended to play hardball, asking for concessions from Sony like the rights to soap “The Young and the Restless.”
“I’m negotiating his exit here, trying to. I’m saying, ‘Michael there’s no deal unless there’s are some goodies for us.’ I frankly thought that if I didn’t do that Sony would think that we didn’t want him, even though, in fact I was trading him and didn’t want him. (I figured) the more I asked for, the more they would want him.”
Basically, he said, he would have given Ovitz up free and clear if Sony would have taken him.
The deal fell through, something that clearly still infuriates Eisner.
“He had it,” Eisner said.
Asked why it failed, he said, “I heard different stories from different people. Michael Ovitz told me he was asked to report to a committee and didn’t want to and that they had capital levels he couldn’t’ go over without going to the committee and he just didn’t want it. Other people told me that, like Seagram, he had asked for the sun and the moon and they decided it was just too rich a deal.”
Ovitz sent him a memo regarding Sony. “I’ve decided to end those discussions and recommit myself to you and to Disney.”
There followed the decision to can Ovitz and the months of letters and conversations to convince him that he was out.
“I was talking to him about his leaving and it’s like we were talking about the weather. I couldn’t get him to address it.”
Ovitz and Disney haggled over the terms of his exit, including a car he wanted to keep, and a plane he wanted to buy for book value not market value. He wanted to stay on the board, and he wanted a consulting agreement. In the end, he just took his pile of cash.
Eisner’s testimony continues today.