Top executive's departure leaves Disney in turmoil

August 26, 1994|By New York Times News Service

HOLLYWOOD -- By refusing to promote Jeffrey Katzenberg to the No. 2 job at Walt Disney Co., Michael Eisner, the chairman and chief executive, has taken a risk that leaves not only the successful film studio but the entire company in turmoil, movie industry executives and agents said yesterday.

Mr. Katzenberg's decision on Wednesday to quit the company he helped build during the last decade after the rebuff by Mr. Eisner comes at an especially troubled time at Disney.

Once viewed as one of the most stable and successful entertainment-industry giants, Disney had been engulfed by a series of strains this year in its management and its businesses that have been compounded by the turbulence surrounding Mr. Katzenberg's departure.

The death of Frank G. Wells, the company's president and Mr. Eisner's closest associate, in a helicopter crash on April 3 was followed slightly more than three months later by Mr. Eisner's emergency quadruple heart-bypass surgery.

Mr. Eisner, 52, is working part time, and colleagues said he looks frail.

Losses at the Euro Disney theme park outside Paris, the slow growth at Disneyland and Disney World as well as a tide of opposition among historians and conservationists to a proposed Civil War theme park in Virginia, have added to the company's difficulties.

Most troubling for the company, industry analysts said, is the gaping hole Mr. Katzenberg's departure leaves in several areas.

His strong leadership of the animation division delivered movies, such as "Beauty and the Beast," "Aladdin," and "The Lion King," that earned billions of dollars for Disney in box office, video and merchandising receipts.

He was also energetically involved in the company's television programming as well as Disney's arrival on Broadway with the hit "Beauty and the Beast" and several musicals to follow.

And he shrewdly expanded the reach of the motion pictures division through the acquisition of Miramax, whose offbeat films are hardly traditional family-style Disney fare, and a production deal with the Academy Award winning team of Ismail Merchant and James Ivory, the makers of "Room With a View," "Howard's End" and "Remains of the Day."

Several people at Disney said that Mr. Katzenberg's mood changed from exuberance to sadness yesterday morning as he responded to dozens of messages from industry colleagues.

"He loved this job, he loved this company," said one of his top aides.

His departure was attributed to Mr. Eisner's insistence that he wanted to run the company alone, without a partner.

And several executives at Disney said that Roy E. Disney, vice chairman of the company and one of the few remaining links to the founder, Walt Disney, his uncle, was opposed to enhancing Mr. Katzenberg's responsibilities by elevating him to the No. 2 job.

Those reasons are said to be personal but unclear. Mr. Disney has been in nominal charge of animation for years, though Mr. Katzenberg has dominated the division's productions.

Yesterday, Mr. Eisner said Mr. Disney would serve as Mr. Katzenberg's replacement in the animated division.

Mr. Katzenberg, whose responsibilities will partly be assumed by Joe Roth, the former chairman of 20th Century Fox, met with Mr. Roth at lunch yesterday at Disney's studios in Burbank, Calif.

In a phone interview, Mr. Katzenberg said, "This is not an angry or hostile separation. This is really about two people who have worked in a relationship for 19 years. It reached a point in which I was seeking to redefine the relationship and become Michael's partner. I wanted a greater challenge and new opportunities. I wasn't looking to walk away from it, abandon it.

"Michael's the boss, and he has every right to run the company the way he's most comfortable," Mr. Katzenberg, who will leave in mid-September, said.

"I haven't a scintilla of resentment about that. Michael's been my mentor, my teacher and my friend for 19 years, and I adore him."

Mr. Katzenberg said his future plans are up in the air.

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