Attack of the Killer Mogul

Jeffrey katzenberg is seated in a spare office at Steven Spielberg's enclave at Universal Studios. It's only three miles from the Walt Disney Studios, where Katzenberg ruled for ten years until he left last August after a bitter dispute with Disney's chairman, Michael Eisner. On this day, Katzenberg couldn't seem more content. He's leaning back in a leather chair, his feet crossed on the oak desk. He's wearing a loose white cotton shirt, jeans and sneakers--a pointed contrast to the buttondown conservative style at Disney. He's drinking a Diet Coke.

One of Katzenberg's assistants--he has three working in shifts from dawn to late at night--walks in with a list of at least 30 phone calls that have arrived over the past hour. (The calls number about 600 a week.) Katzenberg glances at the sheet. He will soon start returning the calls from top investment bankers in New York, powerful talent agents, several prominent directors. Calls from his new partners, Spielberg and billionaire entertainment executive David Geffen, are returned immediately.

Katzenberg zealously sought out these two friends to help him create the first new Hollywood studio in more than 60 years--an event in the entertainment industry that was not only front-page news but also a turning point in the life of the 43-year-old movie executive.

"I mean, when I was a kid I loved movies," he says expansively. "Spartacus, Ben-Hur, Lawrence of Arabia. I mean, like, Butch Cassidy and the Sundance Kid, The Bridge on the River Kwai."

He still loves movies.

And he still loves Hollywood.

And power, especially the power to wield control over his own company. Katzenberg's obsession with owning a company seized the studio chief the moment he slumped in his chair at Disney, stunned at Eisner's decision to dismiss him. Katzenberg realized then that, despite his millions of dollars in salary and bonuses, his stock options and his enormous clout at the studio, he was nothing more than a Disney employee--and a disposable one at that.

Three hours after his dismissal the phone rang. It was Spielberg, calling from Jamaica where he and his family were at the home of director Robert Zemeckis. Word that Katzenberg was out had surged all the way to the Caribbean.

As Spielberg expressed his dismay and anger at Eisner, Zemeckis, in the background, shouted jokingly, "Why don't you guys do something together?"

Spielberg tried to buoy Katzenberg's mood. "Jeff, let me quote to you from Back to the Future," he said. "I'll quote Christopher Lloyd's last line: 'Where you're going you don't need roads."'

Katzenberg impulsively replied: "What do you mean, 'you'? I'm thinking 'we."'

"We were teasing, I guess, but there was a moment in which it went from a playful and fanciful idea to a great idea," remembers Katzenberg.

Within a week the two were seated in Spielberg's home, with the 46-year-old director, the most successful in the history of the movie business, quietly voicing his own yearnings about the future. Throughout his life, Spielberg told Katzenberg, he had sought out older men to guide him. There was Steve Ross, former chairman of Time Warner, who was a father figure, and Sidney Sheinberg, the president of MCA Inc., who had discovered Spielberg and nurtured him. Sheinberg was like an older brother.

"I needed them," said Spielberg later of the two men. "But I grew up and began to foster children and have a large family. I felt I was ready to be the father of my own business. Or at least the co-father."

Geffen was called in by Katzenberg to guide the financial launch of the new company, but he was reluctant. His relationship with Spielberg was cordial but never especially warm.

"I wanted all three of us from the very beginning," Katzenberg recalls. "I had to make a marriage between the two of them." Katzenberg asked Geffen to meet with him and Spielberg, ostensibly to talk about financial issues. Katzenberg's real agenda was to cement a relationship between Spielberg and Geffen.

Finally, Katzenberg began pressing Geffen to turn the partnership into a threesome. Geffen's immediate response was: "Why do you need me? You guys cover all the bases." Katzenberg and Spielberg explained that Geffen's financial know-how, his doggedness in signing talent and his savvy as a record mogul were pivotal to the new company, which would not only make movies but also produce TV shows, start a record division and launch an interactive unit.

Geffen signed on. A delighted Katzenberg said at the time, "I feel like I'm driving the stagecoach and holding the reins of these two world-class stallions."

Yet despite his public exuberance, Katzenberg is plainly nervous. He is making the riskiest move of his career in founding the entertainment company, which will start producing films in 1995. More important, unlike Spielberg and Geffen, he's gambling virtually his entire fortune on the company.

The $250 million start-up costs are being divided three ways. According to Forbes, Spielberg is worth in excess of $600 million and rapidly rising. Geffen is already one of the nation's richest men, with a fortune estimated to be at least $1 billion. As a result of their reservoir of money, Spielberg and Geffen will hardly suffer if the new entertainment company founders. But the same cannot be said of Katzenberg.

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Katzenberg viewed Eisner as the older brother he never had. The two men virtually grew up together, first at Paramount, where Katzenberg climbed quickly through the ranks to become president of production under Eisner, then at Disney, which Eisner took over in 1984 and where he named Katzenberg as studio chief.

When Eisner arrived, Disney was a somnolent enterprise with $1.5 billion in revenues, some lackluster family movies and a dormant animation division. The studio essentially lived off reissues of its animated classics.

In less than a decade Katzenberg successfully deployed his 14-hour days, lifting Disney from its near moribund status to become one of Hollywood's dominant studios. Disney Pictures, under Katzenberg, turned into a money machine (the company's revenues reached $8.5 billion in 1993) fueled by such enormously profitable enterprises as Beauty and the Beast, Aladdin and The Lion King, as well as popular television shows such as Home Improvement.

Moreover, Katzenberg led Disney's successful move to Broadway with Beauty and the Beast, and he played a central role in creating the company's lucrative marketing tie-ins to animated films.

But despite--or because of--the studio's success, the Katzenberg-Eisner relationship became strained.

Eisner began to resent Katzenberg's public persona. Katzenberg courted journalists and editors like no other studio chief, while Eisner shied away from them. Eisner was furious when Katzenberg's now famous 28-page memo was widely distributed in January 1991. The memo criticized Disney's film operation, saying that the company was spending too much time and money on big-budget disappointments such as Dick Tracy. The memo also implicitly criticized rival studios for producing such big-budget flops as Havana, Two Jakes and Bonfire of the Vanities.

The memo hurt Katzenberg. Rival studio chiefs scorned it, saying it stated the obvious and was another of Katzenberg's self-serving, self-promotional episodes. But even more damaging for Katzenberg, Eisner disliked the memo and felt Katzenberg had usurped the boundaries of his job by leaking the document, which Katzenberg has denied doing. Implicit in Eisner's anger was his sense that Katzenberg had not only overstepped his authority but also was, consciously or not, restlessly eyeing Eisner's job. Katzenberg says the notion is absurd.

Their relationship was never quite the same after the memo, with Eisner showing impatience and annoyance toward Katzenberg. Eisner patronized his protégé, often telling reporters that Katzenberg was his "golden retriever," a phrase that Katzenberg grew to despise. Eisner failed to give Katzenberg credit for the success of Beauty and the Beast, Aladdin and The Lion King--and blamed him for the avalanche of empty-brained comedies (including Cabin Boy, Hocus Pocus, Holy Matrimony and My Boyfriend's Back) that have been Disney trademarks in recent years. (Katzenberg's taste was so lowbrow that even Geffen and other friends complained to him.)

Eisner's disapproval and Katzenberg's dissatisfaction collided on April 3, 1994 when Frank Wells, the number two man at Disney and Eisner's closest advisor, was killed in a helicopter crash while on a skiing trip. Highly respected within the movie industry, Wells was a voice of moderation and accommodation at Disney. His death devastated Eisner.

Months earlier, Katzenberg had told both men he was restless and wanted to move up within the company. If that wasn't going to happen, Katzenberg implied he would leave. He backed up the decision with a move that amazed Eisner and Wells: He rejected $100 million in Disney stock options that would have tied him to the studio for several years.

In the months after Wells' death, Katzenberg made it clear that he wanted Wells' job--and Eisner made it equally plain that he was ambivalent about giving it to him. Fiercely opposed to promoting Katzenberg was Roy Disney, a member of the board, a nephew of Walt Disney's and the company's remaining link to the Disney family. Roy Disney, according to studio executives, was nominally the head of animation at the studio, but Katzenberg ran the show. As a result, Disney resented Katzenberg--he barely spoke to him--and he made his displeasure known to Eisner.

According to several sources at Disney, Eisner felt that Katzenberg was pushing too aggressively for Wells' job. He also felt that Katzenberg had an agenda in which he would ultimately seek out the top spot. Katzenberg has told friends that during a squabble with Eisner two years ago, the company chairman suddenly said, "Well, we're (continued on page 142) Killer Mogul (continued from page 84) competitive with each other."

Katzenberg was stunned.

"Michael, how can you possibly say that?" Katzenberg asked him. "We don't compete with each other. You invented me, you created me, you taught me, guided me. Everybody knows that. I am your creation. You're the parent. How can you think that anything I do doesn't accrue to your stature?"

Three months after Wells died, Eisner--52 years old and facing obvious strains about the future of his company--was taken to the emergency room of Cedars-Sinai Medical Center for quadruple heart bypass surgery. Eisner was registered under an assumed name and the surgery was kept secret for several hours.

It was by total coincidence that Katzenberg called Eisner's home early the next morning to discuss the weekend grosses of some Disney films. Eisner's wife, Jane, promptly told Katzenberg about her husband's heart surgery.

Katzenberg, who had donated more than $1 million to Cedars-Sinai, said that he was on the board of the hospital and would do whatever was necessary.

"Michael is really concerned that it be kept quiet," said Mrs. Eisner.

"Well, Jane, you can't keep this quiet very long. Tell me who knows."

She proceeded to reel off the names of eight people who had been called, most of them executives from the studio, plus Michael Ovitz, the powerful agent who had chilly relations with Katzenberg.

Katzenberg was taken aback. He hung up the phone and turned to his wife, Marilyn.

"It's over," he said, referring to his association with Eisner. The fact that he wasn't phoned by the man he considered an older brother was the death knell of the relationship.

On August 24, Katzenberg was called into Eisner's office to present his boss with a memo of proposals on Disney's future. Instead, Eisner shocked Katzenberg by presenting him with a four-page announcement about staff changes at the company, including the fact that Katzenberg was quitting.

Within a few days Katzenberg was ousted from the extraordinarily successful movie and television company that he had helped build.

Eisner's offhand dismissal, which included telling Disney employees they could not throw a farewell party for Katzenberg at the studio, informing Katzenberg he was unwelcome at the London opening of The Lion King and asking him to leave his office quickly, left Katzenberg dismayed. And furious.

Katzenberg was immediately offered lucrative jobs at CBS and other entertainment companies. But the dream of owning his own company obsessed him. Katzenberg wanted to control his professional life and future, and he yearned to make Eisner profoundly regret the decision that many in Hollywood, even those who don't especially like Katzenberg, viewed as a serious blunder.

"For Jeffrey, the bottom line was that you can devote this much of your life to a company and have it be so unappreciated by the guy for whom you've worked for more than 20 years," says Geffen. "In the end Jeffrey realized that no matter how talented you are, no matter how hard you work, no matter how effective you are, you end up working for Michael Eisner or Rupert Murdoch or Martin Davis. You end up with the sticky end of the lollipop. It was inescapable for Jeffrey: He wanted to own his own business."

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Organization and control consume Katzenberg. As a studio executive, he used to schedule two breakfasts, one lunch and two dinners to meet writers, agents and directors. (His 5'7", 128-pound frame is kept in shape by an intensive early morning workout during which he manages to read several newspapers.) He once read 14 scripts while on a four-day vacation in Hawaii. He drives a black Mustang convertible because, he says, a Jaguar or Porsche would make him feel too adult. (He recently bought an extra Mustang, one of the last of its kind, and placed it in storage.)

His message to the staff in his first days at Disney was: "If you don't come in Saturday, don't bother to come in Sunday." He scheduled marketing meetings on Sunday mornings. Once, when trying to reach Sam Cohn, a prominent New York agent who wouldn't return his calls, Katzenberg had his three secretaries call Cohn's office every ten minutes until the agent yielded. He has phone lists of people to call once a week, once every two weeks, once every three weeks. A newspaper reporter who had a dinner meeting with him at Locanda Veneta, one of Katz' favorite restaurants, got three calls from Katzenberg's office: He's ten minutes late, he's on the way, he's about to arrive. A joke in Hollywood is that Katzenberg and his wife, Marilyn Siegel, a former kindergarten teacher in New York, had twins, a boy and a girl, 11 years ago because it was more efficient than having children one at a time.

Like the Thirties moguls Louis Mayer, Jack Warner and Irving Thalberg, Katzenberg's up-from-the-streets style is without pretension. In many ways, he has the tastes of ordinary people. On weekends, he sees movies at the Century City shopping mall, where he buys huge tubs of popcorn. He's a compulsive junk food eater and often takes his kids--or friends such as Spielberg--to McDonald's. In his heyday at Disney, he once referred to the studio as "the McDonald's of the film industry" and meant it as a compliment. Katzenberg added, "I love McDonald's. I don't look down on it. It's the cleanest. It's accessible to the masses. Hamburger taste is American taste--not the lowest common denominator but the highest common denominator." Some rival executives said that the McDonald's analogy underlines Katzenberg's lack of judgment about films.

His rivals admire Katzenberg's executive skills. "No one works harder and no one is more tenacious," says Thomas Pollock, chairman of the MCA/Universal Motion Picture Group and head of Universal Pictures. Robert Daley, chairman of the board of Warner Bros., says simply, "A fabulous executive. He has a tremendous knowledge of the business, understands it. And he's very, very aggressive. A lot of this business is follow-through and, God knows, Jeffrey follows through." Barry Diller, his onetime boss at Paramount, says, "He's as good an executive as exists in the entertainment business. He's willful, he's committed to succeed. Pound for pound, he's the best there is."

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Beneath the business veneer, however, the question that even his friends sometimes ask is, Does anyone really know Jeffrey? (No one in Hollywood calls him Mr. Katzenberg.) Katzenberg himself refuses to speculate on what, really, makes Jeffrey run.

Asked several years ago what motivates him, Katzenberg paused. "I'm not having a shy attack," he said. "I'm just lousy at self-analysis. I'm great at analyzing other people. I know whether I can get the best work from someone by putting him in a straitjacket or leaving him alone."

His personal life is remarkably private. He rarely gives or attends parties and he lives in a sedate home in Beverly Hills with his family. Less sedate is his lavish home in Malibu and a ski house in Deer Valley, Utah. He and his family spend two weeks every Christmas in Oahu, Hawaii, but they are often accompanied by a gang of friends from Disney that includes Laurence Mark, a movie producer.

"Because Jeffrey lives and breathes his work, he's often thought of as someone without a personal life," says Mark, who has known Katzenberg for 25 years. "But that's an unfair description. He just happens to keep his homelife separate from work far more than other people here."

Marilyn Siegel Katzenberg, a private, funny, unpretentious woman who was raised in the Bronx, is usually described as a voice of reality for her husband. "Marilyn's a real person. She lays it out like it is and is not a Hollywood wife," says Press. "She doesn't care about the trappings. She's a very basic, down-to-earth person who hasn't forgotten where she came from."

Nor, for that matter, has her husband.

Although he grew up on wealthy Park Avenue, Katzenberg was definitely a kid of the New York streets.

A lousy student at the exclusive Fieldston School, Katzenberg has said he never dealt well with "rigid, institutionalized situations." Even as a boy Katzenberg had a solid entrepreneurial streak. He sold lemonade on the street and shoveled snow. When he was 14 and attending Camp Kennebec in Maine for the sixth tiresome summer in a row, Katzenberg claims he got himself thrown out by organizing a poker game for M&Ms.

So instead he spent that summer as a volunteer in John Lindsay's first campaign for mayor--and stayed by Lindsay's side for seven years. They were, he now says, the most formative years of his life.

Lindsay's associates fondly remember Katzenberg as a tenacious pit bull they called Squirt. "He was always there, even at two in the morning, taking in everything," says Richard Aurelio, who became deputy mayor in Lindsay's second administration. "You couldn't satisfy his intense desire to know every scheme, leadership trick, management technique and strategy."

While his friends were protesting the Vietnam war or smoking dope, Katzenberg was, indeed, part of the establishment serving the mayor of New York. "I was out there being an adult," he says. "I never had a normal high school or college life."

At the behest of his parents he enrolled at New York University. "I went there for about 28 seconds," he says. "I think there was a police strike right in the middle of exam week." Katzenberg says his experiences with City Hall, traveling around New York from the time he was 15 until he was 22, altered his life. "I learned things about growing up, the fragility of people and what it is to have and not have things," he says.

"It was better than college," he says.

"I was in a structured environment. I worked. I had responsibilities. I learned about people and had the most extraordinary experience in my life."

At the time, Katzenberg grew friendly with David Picker, a United Artists executive and later an independent producer. He was also befriended by Daniel Melnick, a producer. Both men suggested that Katzenberg get into the entertainment business, and he soon landed a job as an agent at a talent agency called IFA. But Katzenberg didn't like the notion of servicing people and representing them as an agent. "It didn't work for me," he said. "Wrong rhythms."

Picker hired Katzenberg as an assistant. In 1975, Barry Diller, the newly appointed chairman of Paramount, hired him as a personal assistant. Soon Katzenberg was ordering Diller's staff around, and there were threats of revolt. "He was so aggressive and impossible, he ruffled so many feathers, that I couldn't keep him," says Diller, who in 1977 shipped Katzenberg to Paramount's marketing department on the West Coast "to see if he could survive those vicious people."

Shortly before Katzenberg left for Los Angeles, Geffen met him for the first time. "I was coming back from Europe with Barry Diller, and this kid got us through Customs and took care of our bags in a second and it was like a whirlwind," recalls Geffen with a laugh. "It was like being met by a hurricane. Who is that masked man? So I asked Barry who he was, and Barry said, 'That's Jeffrey Katzenberg."

At Paramount, Katzenberg caught the eye of Michael Eisner, president of the studio, who eventually asked him to oversee the transformation of Star Trek the TV show into Star Trek the feature film. If Katzenberg lacked a certain polish and tact, he made up for it in his restless ambition and work habits. What many executives overlooked, though, was his steel-trap mind and his ability to focus on one project, then move on with the same intensity to the next.

The eight-year Diller-Eisner run at Paramount, with Katzenberg rising rapidly, was a golden era that produced such hits as Raiders of the Lost Ark, An Officer and a Gentleman and Saturday Night Fever.

By 1984 Eisner had left Paramount to run the Disney Company and brought along Katzenberg to oversee the studio's film and television divisions.

Katzenberg's strategy was unusual: placing hungry movie and television actors in high-concept comedies that were developed in-house rather than purchased for millions of dollars from agents such as Ovitz. Everything was done on the cheap. Katzenberg went out of his way to find actors--including Richard Dreyfuss, Bette Midler and Richard Gere--whose luster had faded. (Robin Williams joked that Katzenberg spent most of his time hanging around outside the Betty Ford clinic.) The result was a string of early comedy hits that revived Disney: Pretty Woman, Outrageous Fortune, Down and Out in Beverly Hills, Ruthless People, Three Men and a Baby and Good Morning, Vietnam.

But the Eisner-Katzenberg team's arrogance and indifference to writers and directors, the studio's cheapness, Katzenberg's habit of meddling in scripts and casting, and the cookie-cutter films made Disney less than alluring to many performers and directors. Alec Baldwin, after his disastrous 1991 film The Marrying Man, said of Katzenberg, "He's the eighth dwarf--Greedy."

Movie stars such as Dustin Hoffman worked with Disney once and vowed never again to return to the studio. So did many writers and directors. Robin Williams was especially angry at Disney's stinginess. Having paid him about $75,000 for his speaking role as the genie in Aladdin, Disney proceeded to use the character in the hugely successful merchandising efforts that were tied to the film--despite a promise not to. Williams, who ordinarily earns millions for his film roles, angrily complained that Disney exploited him. He promised never again to work at Disney's studios in Burbank. (As soon as Katzenberg's successor, Joe Roth, former chairman of Twentieth Century Fox, took over, he apologized to the comedian.)

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Whatever Katzenberg's flaws, he does not seem so consumed with accruing huge sums of money as, say, his two partners. "I don't care about money," he said several months ago. "It's not the measure of anything I deal with." He has told friends that he has enough money for his wife, his two children and some nice homes. But beyond that, Katzenberg insists that accumulating wealth is not an issue for him. Of course, he has been offered jobs with salaries reaching into the millions.

Katzenberg, in an uncharacteristically reflective mood, once remarked about money, "People wear it differently. Some people wear it for show, some people are quiet about it. Some are phenomenally generous with it and use it as a social tool to accomplish good, and some are incredibly selfish with it. There's no question that it can be a narcotic and that it can tempt people off their natural course. And when that happens it's horrible to watch."

Whenever Katzenberg speaks now-- to reporters, to close friends or to associates--a hint of self-analysis, even melancholy, shadows his comments. Several close friends have died, some from AIDS. He has recently seen friends' marriages disintegrate. While he has the optimism and energy of a teenager, Katzenberg is aware that, as a man in his forties, he's facing an unpredictable future despite the hoopla about what he has called

"the dream team."

Over the past few years he has veered away from his obsessive work habits and reached beyond the studio. He has raised millions of dollars for AIDS charities and has donated millions more to hospitals in Los Angeles. He has contributed so heavily to the Democratic Party that President Clinton invited him to the White House.

But what has changed him irrevocably--what has darkened his mood, according to friends--is the realization that his 20-year bond with his mentor, Michael Eisner, was nothing more than a sham.

Seated in his temporary offices, Katzenberg makes it plain that having turned the corner on 40 and witnesssed the deaths of several friends, he's gazing at his future with, for the first time, a certain tentativeness. Yes, he has read all the books about the Hollywood moguls.

Asked if he resembles any of them, Katzenberg pauses. "I have no idea," he finally says. "I have yet to meet a single person who can look in a mirror and objectively critique what it is and who it is that they are looking at. And that includes me."

On weekends, Katzenberg sees movies at the Century City shopping mall, where he buys huge tubs of popcorn.