DisneyWar by James B. StewartDisneyWar by James B. Stewart


byJames B. Stewart

Paperback | March 10, 2006

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The dramatic inside story of the downfall of Michael Eisner—Disney Chairman and CEO—and the scandals that drove America’s best-known entertainment company to civil war.

“When You Wish Upon a Star,” “Whistle While You Work,” “The Happiest Place on Earth”—these are lyrics indelibly linked to Disney, one of the most admired and best-known companies in the world. So when Roy Disney, chairman of Walt Disney Animation and nephew of founder Walt Disney, abruptly resigned in November 2003 and declared war on chairman and chief executive Michael Eisner, he sent shock waves through the entertainment industry, corporate boardrooms, theme parks, and living rooms around the world—everywhere Disney does business and its products are cherished.

Drawing on unprecedented access to both Eisner and Roy Disney, current and former Disney executives and board members, as well as thousands of pages of never-before-seen letters, memos, transcripts, and other documents, James B. Stewart gets to the bottom of mysteries that have enveloped Disney for years: What really caused the rupture with studio chairman Jeffrey Katzenberg, a man who once regarded Eisner as a father but who became his fiercest rival? How could Eisner have so misjudged Michael Ovitz, a man who was not only “the most powerful man in Hollywood” but also his friend, whom he appointed as Disney president and immediately wanted to fire? What caused the break between Eisner and Pixar chairman Steve Jobs, and why did Pixar abruptly abandon its partnership with Disney? Why did Eisner so mistrust Roy Disney that he assigned Disney company executives to spy on him? How did Eisner control the Disney board for so long, and what really happened in the fateful board meeting in September 2004, when Eisner played his last cards?

DisneyWar is an enthralling tale of one of America’s most powerful media and entertainment companies, the people who control it, and those trying to overthrow them. It tells a story that—in its sudden twists, vivid, larger-than-life characters, and thrilling climax—might itself have been the subject of a Disney classic—except that it’s all true.
James B. Stewart lives in New York.
Title:DisneyWarFormat:PaperbackProduct dimensions:608 pages, 8.44 X 5.5 X 1.6 inShipping dimensions:608 pages, 8.44 X 5.5 X 1.6 inPublished:March 10, 2006Publisher:Simon & SchusterLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0743267095

ISBN - 13:9780743267090

Appropriate for ages: All ages

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Read from the Book

Prologue Roy E. Disney pulled his red 1999 Ferrari into the parking lot of the Bodega Wine Bar in Pasadena. It was late on a Thursday afternoon, November 20, 2003, just a week before Thanksgiving. Roy loved the Ferrari, one of the few conspicuous indications that the modest, unassuming seventy-three-year-old nephew of Walt Disney was one of America''s wealthiest men. The car stood out in the Disney parking lot, where Roy had a space near Michael Eisner, Disney''s chairman and chief executive. Because of the car, everybody knew when Roy was at company headquarters. Roy hated the "Team Disney" building designed by noted architect Michael Graves at Eisner''s behest to serve as the Walt Disney Company''s corporate headquarters. Though the monumental facade was leavened by bas-reliefs of the Seven Dwarfs in the pediment, Roy felt the building represented everything that was bloated and pretentious in the company that Eisner had created. As he did from time to time, Roy wondered what his uncle Walt would have thought. Walt''s office was still there, in the modest old animation building. Eisner had used it as his own office before moving to the new headquarters. Now Roy had moved into it, preferring it to the Team Disney building, so barren and vast that he joked he had to leave a trail of bread crumbs to find his way out. In recent months Roy''s physical separation from Eisner and other top executives had become more than symbolic. Even though he had brought Eisner to the company almost twenty years ago, he now felt deceived and betrayed by him. Eisner had come to Disney after a dazzling career in programming at ABC and in movies at Paramount Pictures. But Roy now attributed Eisner''s earlier great successes to his partnerships with others: with Barry Diller at ABC and Paramount; with Frank Wells and Jeffrey Katzenberg in the early, amazing years at Disney. Since Wells''s tragic death in a helicopter crash in 1994, and Katzenberg''s acrimonious departure soon after, responsibility for Disney had been Eisner''s alone. In Roy''s view, the results had been disastrous. As the financial performance and creative energy of the company ebbed, Eisner had clung to power with a King Lear-like intensity, convinced that he and he alone had the creative instincts and managerial skills to shepherd Disney into a twenty-first-century world of giant media and entertainment conglomerates. Indeed, Eisner claimed the mantle of Walt himself, appearing each week on TV screens in the nation''s living rooms as host of "The Wonderful World of Disney," just as Walt had. In this respect, Roy felt that Eisner was only the latest in a series of pretenders to the throne Walt had occupied. Why was it, he sometimes wondered, that so many people wanted to embody Walt? Nobody went around Hollywood claiming to be Louis B. Mayer or Cecil B. DeMille. What gave people the illusion that they could fill Walt''s shoes? First there had been E. Cardon Walker and Ron Miller, Walt''s son-in-law, who, as Disney''s chairman and chief executive, had constantly invoked Walt''s memory. Then it was Jeffrey Katzenberg, who claimed Walt''s legacy as head of the Disney studio. They had gone too far; Roy had to step in, and they were replaced. Now Eisner was overstepping the bounds. Roy didn''t claim to be Walt, but if anyone was entitled to the legacy, it was he. He was the one paraded before the world as the embodiment of the Disney Company and what it represented, the last company official bearing the Disney name. Just a month earlier, Eisner had publicly praised Roy''s efforts on behalf of the company at the grand opening of "Mission: SPACE," the new attraction at Walt Disney World, which had drawn big applause. Crowds always seemed to respond to Roy, perhaps because, at age seventy-three, he bore such a close physical resemblance to Walt. But Eisner''s public praise masked a mounting private hostility. When Eisner''s wife, Jane, passed Roy and his wife, Patty, shortly before Eisner''s speech, they had pointedly ignored each other. Roy had long ago stopped attending Eisner''s weekly meetings with top executives, or the lunches where he had once kept Roy informed of company plans and strategy. Roy had stopped trusting Eisner after he learned that Eisner had planted a spy next to him in the animation department to report on everything Roy said or did. They had avoided contact at the recent New York premiere of Brother Bear, the Disney studio''s latest--and in Roy''s view, mediocre--animated feature. Worst of all, when Roy''s mother, Edna, and Walt''s widow, Lillian, had been posthumously honored at that year''s Disney Legends awards, and Roy accepted on the family''s behalf, Eisner hadn''t shown up. It was the first time Eisner had failed to attend the event, and soon after, word circulated within Disney that the company''s chairman and vice chairman were no longer speaking. Roy wasn''t looking forward to the drink he was about to have with John Bryson, chairman and chief executive of Edison International, the parent of Southern California Edison. Bryson, who''d joined the Disney board in 2000, was chairman of the powerful nominating and governance committee. Roy rarely spoke at board meetings. But his ally, business partner, lawyer, and fellow board member Stanley Gold more than made up for his silence. For years, Gold had been sharply critical of Eisner''s management and the financial performance of the company. But his comments at board meetings had fallen on deaf ears. The directors seemed to support Eisner blindly. Those who didn''t, such as Andrea Van de Kamp and Reveta Bowers, had been purged, a warning to others of the perils of dissent. Roy was especially suspicious of Bryson, an Eisner loyalist who had first displaced Gold as chairman of the governance committee, and then voted him off the committee altogether. Beginning the previous September, Gold had issued a series of letters to his fellow board members that were harshly critical of Eisner''s performance and compensation. He and Roy thought it would be more difficult to ignore comments in writing, and they wanted to make their views perfectly clear. Most recently, Gold and Roy had opposed Eisner''s latest compensation package, which awarded him a $5 million bonus in a year in which the company''s operating income declined 25 percent and the company''s shares hit a new fifty-two-week low. Bryson had called Roy a few days before. "I need to talk to you," he said, and insisted they meet somewhere they wouldn''t be seen. Roy agreed, though he thought the tone of Bryson''s voice had a "mortuary quality" to it. He feared that the Eisner loyalists were going to try to purge Gold. The atmosphere at recent board meetings had been increasingly tense. "How can I protect him?" Roy wondered about Gold as he walked into the bar. He couldn''t understand why the rest of the board would want to cut off the last remaining voice of dissent. As soon as they ordered their drinks, Bryson dispensed with small talk and got to the point. "You know, Roy, you''re past the mandatory retirement age," he said. Roy was taken aback by Bryson''s directness, and murmured something noncommittal. Yes, technically he was, since the retirement age was seventy-two, and he had turned seventy-three. But it didn''t apply to board members who were also part of management, and he was the head of animation. Disney was famous for the longevity of many of its employees. "The committee has met," Bryson continued, "and Tom Murphy and Ray Watson are going to step down." Murphy, the former chairman of Capital Cities/ABC, had joined the board after Disney acquired ABC in 1995; Watson, Disney''s chairman before Eisner''s arrival in 1984, was, after Roy, the board''s longest-serving member. Both were over seventy-two. Roy wasn''t surprised, since they had mentioned to him their plans to retire. "We''ve concluded that you shouldn''t run for reelection," Bryson said. Roy looked at him in stunned disbelief. He was speechless. He felt like a knife had been stuck into his heart. It had never crossed his mind that the board would go this far. It wasn''t just that he was still one of the company''s largest shareholders. He had given fifty years of his life to Disney. He was the only direct link to Walt on the board. Walt had told him stories and fairy tales and read "Pinocchio" to him as a child. Together with Walt, Roy''s father had created this company. There was an awkward silence. Finally Bryson said, "I had to tell Warren Christopher the same thing," referring to Bill Clinton''s former secretary of state, who had reached the mandatory retirement age while a member of Edison''s board. "Good for you," Roy said. "Of course, you can be an honorary director for life," Bryson said. "We''d still like you to show up at the parks, at special events . . ." Roy cut him off with a laugh. So they still wanted to parade him around like one of the Disney costumed characters. It was insulting. There was another awkward silence. No doubt they thought he''d go quietly, retreating to his castle in Ireland or his sailboat to sit out his retirement years. But despite his age, he felt a surge of energy and determination. Roy had been underestimated all his life. It had happened before. It was not going to happen again. He had only one thing left to say: "You''re making an awful mistake," he said, looking directly at Bryson. "And you''re going to regret doing this." Then he got up and walked out. It is late May in central Florida, a brilliant, clear day. Though it''s only ten in the morning, the mercury is climbing into the nineties and the humidity is just as high. It doesn''t take much imagination to believe that Disney''s Animal Kingdom, one of four theme parks that constitute Walt Disney World, is actually located in tropical Africa. Goofy is standing just outside the park fence, ready to make an appearance. Just as tourists on safari in Africa hope to spot one of the "Big Five" game animals, visitors to the Animal Kingdom look for Disney''s "Big Five"--Mickey, Minnie, Donald, Pluto, and Goofy, the biggest celebrities in the Disney pantheon, and the most coveted autographs. Goofy is a dog, of course, with fur, a long snout, floppy ears, a slight potbelly, and big paws. He''s also the tallest of the characters, standing over six feet, and on this day he is dressed for the Animal Kingdom. He has on a big safari hat, hiking shoes and socks, lime green shorts in a dinosaur print, a bright red-checked shirt and suspenders, and a khaki neckerchief. What many people don''t realize is that Goofy''s eyesight isn''t all that good. Those long ears obstruct his peripheral vision, and the oversized nose further limits his view. What he can mostly see is the ground around his feet. Fortunately, Goofy has two human handlers to guide him into the park. They open a door and gently push him forward. He has to duck to get through. Goofy can''t really tell where he is, but he hears the murmur of voices in the distance. He''s nervous, and he can feel his heart beating. Only seconds have elapsed when he hears: "There''s Goofy!" He hears more children''s voices and he sees several running toward him. Goofy waves and demonstrates the "Goofy walk," the silly lope that is one of Goofy''s hallmarks. The children love it! More are running over, and their parents are starting to catch up. Suddenly Goofy sees a young girl closing in on him. She looks about five or six, and seems a little apprehensive. As she gets close she shyly extends an autograph book and a pen. Goofy clumsily grips the pen with his paw, and manages to sign the open page, carefully making the backward f that always shows up in Goofy''s signature. What a relief, really, that dogs can''t talk. "Hug Goofy!" an adult voice cries out. The young girl looks a little wary, but Goofy extends his arm, and she slips in next to him. He gives her a gentle squeeze. Then, for a moment, Goofy gets a clear look at the little girl''s face. The shyness melts away, her eyes widen in delight, and her face glows. She leans in and plants a kiss on Goofy''s nose. Flashbulbs are going off. Goofy wishes he could get his paw over to wipe the tears that have suddenly welled in his eyes. Or maybe it''s perspiration. * * * The moment when a young child''s apprehension vanishes, to be replaced by awe and delight, is what most Disney employees are talking about when they use the word magic to describe their work. It''s why many come to work as high school or college students, and find they''re still there twenty years later. Goofy, of course, is real. He was real for that young girl, and in that moment, he was real to me. I was no longer an author and journalist dressed in layers of padding and fake fur. I was Goofy. Although it''s a standard part of the orientation for top Disney executives to appear as a character in a theme park, only after I accepted the role of Goofy was I told I wouldn''t be able to write about it, at least not in a way that stated or implied that Goofy was an actor inside a costume. People in charge of the theme parks had imposed this condition on the grounds that the illusion the Disney characters are real had never been publicly breached with the company''s cooperation. At first I thought this was preposterous. This is about as credible as the existence of Santa Claus, and surely everyone above the age of eight or ten knows there are people inside these costumes. But the people who work in the theme parks insisted, and once I met them, I had a better understanding. Just about everything inside Disney World is illusion: prettier, cleaner, safer, better, more fun than the real world. It was Walt''s genius to recognize that it is not only children who want an escape from reality. Like any good magician, you have to believe in the illusion, or it falls apart. It is a secular faith that has been embraced so passionately by so many Americans that the name Disney has become all but synonymous with an idealized American culture in which dreams come true. Like many aspects of Disney, this changed in the tumultuous year and a half after I made my debut at the Animal Kingdom. After Comcast Corporation, the giant Philadelphia-based cable company, launched a hostile takeover bid for Disney in February 2004, Disney endured a withering barrage of publicity, and an article in The Wall Street Journal disclosed that top Disney executives had appeared in the theme parks dressed as Disney characters. With the cover blown to a national readership, Eisner agreed there was no longer any point in my pretending that Goofy was real, and agreed that I could describe my own character experience. I had first met Michael Eisner many years earlier, before I was a journalist. In 1978 I was a young lawyer at Cravath, Swaine & Moore, a large New York firm, and Eisner was the president of Paramount Pictures. My firm was representing CBS in an antitrust case filed by the Justice Department against the television networks, which argued that they had conspired to drive down the costs of programming produced by the Hollywood studios, who were the instigators of the case and stood to benefit from any remedies. I was assigned to the Paramount aspect of the case and helped take Eisner''s deposition. I remember arriving at his office at the Paramount studios in Hollywood. He had a spacious corner office on the second floor, with an outdoor loggia shaded by a trellis and vines. For someone being questioned by a team of lawyers, Eisner was disarmingly confident and funny, joking about his sometimes contentious relationship with Paramount chairman Barry Diller. He slipped off his shoes and relaxed in his stocking feet--something I''d never seen in a New York law firm. Though we were on opposite sides of the case, Eisner gave me tickets for that night''s taping of the "Mork & Mindy" show, then a Paramount hit television series. It was the first time I saw comedian Robin Williams live. In the long stretches when the cameras weren''t rolling, Williams continued a frenetic comic monologue that kept the studio audience convulsed with laughter until the early hours of the morning. This all made more of an impression on me than Eisner; the government ended up dropping the case. When I asked Eisner if he remembered me or the deposition, he drew a blank. Many years had intervened, and he had gone from being the brash young upstart at Paramount to the venerable, successful, and wealthy chairman of Disney. When he arrived at Disney in 1984, the company was faltering, its studio and legendary animation division moribund, its assets coveted by corporate raiders eager to break up the company and sell off the parts. Eisner had not only saved Disney, he had transformed it into the world''s leading entertainment company and protected its beloved brand name. I approached Eisner about writing a book about the company in 2001. Ever since my work on the network antitrust case, I''d been interested in the workings of the entertainment business and Hollywood. Having written books probing the worlds of Wall Street finance and Washington politics, Hollywood seemed like the next major center of power and influence worth exploring. Disney, with its vaunted image, creative success, not to mention a fair amount of corporate intrigue, seemed the obvious choice. Eisner was predictably cool to the idea. John Dreyer, then head of public relations, was polite but discouraging. Even so, as I continued to gather information about the company, Dreyer invited me to meet with him at Disney''s headquarters in Burbank. I hadn''t expected to meet Eisner himself, but as Dreyer and I were having lunch in the company dining room, Eisner suddenly appeared and joined our table. He asked a few questions about my proposed book, but then told me how much he had liked a recent article I''d written in The New Yorker, titled "Matchmaker," about Erica Feidner, a woman with a seemingly magical ability to find the perfect piano for Steinway customers. I was flattered, but Dreyer looked uncomfortable. "Michael," he said, "I''m not so sure I''d get into that right now," he said, but Eisner persisted. "I see this as another Mr. Holland''s Opus," Eisner went on, referring to the movie starring Richard Dreyfuss as a beloved high school band director. "I told Nina [Jacobson, president of the Disney studio] to develop this." I wasn''t expecting this twist. I thanked him for his interest, but pointed out that I couldn''t very well be involved in a Disney movie while I was writing a book on the company. It didn''t dawn on me then that perhaps that was the whole idea, that if Disney bought the movie rights I would drop the book idea. Or maybe it was a combination of the two, since Jacobson later told me that she actually did think the story would have made a good movie. Whatever the truth of the matter, nothing came of it. Several weeks later terrorists attacked the World Trade Center. Disney''s theme park business went into a tailspin as tourism collapsed and the Disney parks seemed like obvious potential terrorist targets. Dreyer called to say that cooperation on any book was now out of the question, and I, too, put the project aside to write about the events surrounding September 11, resulting in my last book, Heart of a Soldier. By the time I called again, in early 2003, Zenia Mucha, who brought a new, more aggressive posture to the position, had replaced Dreyer as head of corporate public relations. A former senior policy adviser to New York governor George Pataki, Mucha was elevated to the position after distinguishing herself as head of public relations for the ABC network. Though hardly thrilled by the prospect of a book about Disney, Mucha seemed inclined to offer at least some cooperation. Eisner was going to be in New York in March, and she arranged for the three of us to have dinner. Eisner chose the restaurant, which was Nobu in Manhattan''s Tribeca neighborhood, a favorite of visiting Hollywood celebrities. When he arrived, there was a buzz of recognition in the room, and several people stopped him to say hello and shake hands as he made his way to the table. He was as relaxed and funny as I''d remembered him at the deposition. He seemed willing to discuss any subject I brought up, whether it was ABC''s recent unsuccessful courtship of David Letterman, negotiations with the Chinese government to open another theme park, or the looming war with Iraq ("Surely Bush won''t do anything so stupid," he told me). Mentioning the near heart attack that almost killed him in 1994, Eisner picked through the menu looking for low-fat options, and urged me to take Lipitor, the cholesterol-lowering medicine that he credits with prolonging his life. Eisner is a good storyteller, a skill that has no doubt guided his selection of countless scripts and treatments that were turned into hit movies over the years. During that first dinner, I told Eisner my plans for a book: a behind-the-scenes look at the workings of the country''s best-known media and entertainment company as it grappled with all kinds of creative and technological challenges. I wanted to see the creative process in action, to show how Disney shaped culture, or was shaped by it, and how executives grappled with both a profit motive and artistic aspirations. To Eisner''s credit, Disney had escaped the debacle of a merger like that of America Online and Time Warner, but it was nonetheless still predominantly a company that produced "content," and faced competition from media giants like Viacom, News Corp., and Time Warner that also owned distribution systems such as cable and satellite television. It struck me that Disney was at another turning point in its history, and I proposed to follow it for at least the next year. How the book turned out, I suggested, whether it would be "positive" or "negative" from Eisner''s point of view, would in large part depend on what happened. I acknowledged that cooperating with me would be something of a gamble, since there was no way of knowing how the story would unfold. I made no promises; there could be no quid pro quos for any cooperation. Eisner seemed intrigued. He said business was on an upswing at Disney, and in any event, he was an optimist by nature. He''d written his own book that was published in 1998, called Work in Progress, but he was disappointed in the critical reaction, which suggested that he''d glossed over some of the most controversial incidents in his career, especially the departure of Jeffrey Katzenberg in 1994 and Michael Ovitz a few years later. (Eisner later conceded that the book had been heavily edited by lawyers and other Disney executives, who made him cut anything that might have been controversial.) Eisner said he welcomed scrutiny. "I really don''t mind your investigating the company," he said, "because I''ve got nothing to hide. You may find that we''ve made some mistakes, but not because we didn''t try to do the right thing." By the end of dinner, Eisner seemed to have warmed to the prospect. We got into his chauffeur-driven, black SUV, and he dropped me off near my apartment. Just before I got out, he mentioned that he loved his job. "There''s no point in doing something if it''s not fun," he said. "So let''s have fun with this book." Of course no one could have anticipated the dramatic events that were about to unfold, sowing turmoil at the company and keeping Disney on the front pages of the nation''s newspapers: a boardroom revolt led by Roy Disney and his ally Stanley Gold; Roy''s and Gold''s abrupt resignations from the board; the collapse of negotiations with Pixar Animation Studios; a management shake-up at ABC; a hostile takeover bid from Comcast; and a shareholder revolt that left Eisner publicly humiliated and stripped of his chairmanship, if not his day-to-day power. I was at a meeting with Eisner in the midst of all this, the day after Pixar and Apple Computer chief executive Steve Jobs abruptly terminated their negotiations to extend the lucrative partnership that had contributed Toy Story and Finding Nemo to the Disney library. "I can see your book is turning into Barbarians at the Gate," Eisner wryly observed. Two months after that first dinner with Eisner, on Thursday, May 21, a car picks me up at 6:30 a.m. at the Animal Kingdom Lodge in Walt Disney World. I''ve been staying at the Lodge, a spectacular interpretation of the thatched-roof safari lodges found in East Africa, for several days while immersing myself in the theme park, revisiting rides like Space Mountain and The Twilight Zone Tower of Terror, roaming through the "backstage" areas reserved for "c

Editorial Reviews

"[Stewart] weaves the creative, corporate, financial and personality streams of the Disney Co.''s fate into one astonishingly complete and gripping real-life drama."