Jeffrey Katzenberg: No More Mr. Tough Guy?

It's lunchtime at Walt Disney Co., and Disney Studios Chairman Jeffrey Katzenberg has pulled out a long white note card covered in type and emblazoned with the smiling face of Mickey Mouse. Mickey, of course, is everywhere in the corporate dining room. He's grinning from the napkins. He's silhouetted on the chair backs. Reach for a pat of butter, and there he is again: a plateful of little yellow Mickeys, chilled but chipper.

Disney has always been slightly unsettling in this way. After all, the fun and games stop quickly enough when the doors shut on a contract negotiation or a movie deal. In the nine years since Katzenberg and his boss, Disney Chairman Michael D. Eisner, took over the slumbering company, Walt Disney has become notorious for its hardball tactics. As anyone in Hollywood can tell you, there's nothing Mickey Mouse about dealing with Team Disney.

NEW SPOTS? Lately, though, some of Mickey's jocularity seems to have rubbed off on the 43-year-old Katzenberg. His customary tailored suits have been replaced by jeans and Reeboks. The note card, inscribed with his daily schedule, today includes a list of the "Top 10 Myths About Jeffrey Katzenberg"--the outgrowth of a reputation he'd very much like to debunk. No, he says, he never told employees, "if you don't come to work on Saturdays, don't bother to come in on Sunday." And no, he didn't have twins 10 years ago merely "to save time."

Is Jeffrey Katzenberg out to change his spots? Well, sort of. Having bulled his way to creating the most profitable studio in Hollywood, Katzenberg is intent on projecting a mellowed, more conciliatory image. Part of the impulse, he insists, is personal--a '90s-style reclamation of his free time and family life. But don't be fooled: Katzenberg's self-styled renaissance is largely a business proposition. To keep Disney growing, the boss needs some help.

It boils down to how Eisner and Katzenberg view the future. While many media companies have flocked toward the "digital age" by forging alliances with cable television and telephone companies, Disney is focusing on producing as many films and television programs as it can to fill the information pipeline. This year, plans call for 60 films, 37 more than in 1992. And total production costs--$1.4 billion--represent a one-year commitment unprecedented in Hollywood (charts).

To get there, Katzenberg has had to moderate his near-maniacal, hands-on style. "This company is just too big," he says. "I have too many things to accomplish to be involved in every little project." Consequently, he has spent lavishly since 1991 to acquire the services of a slew of headstrong producers and directors. To woo them, he has had to grant them unprecedented freedom.

Katzenberg still keeps a tight grip mn Disney's exceptionally lucrative animation studio and its homegrown Disney, Touchstone, and Hollywood Pictures units. But this year, almost 50% of the company's output will come from hired guns such as former Twentieth Century Fox executive Joe Roth, Rambo producer Andy Vajna, and Harvey Weinstein, whose Miramax Pictures distributes The Crying Game and The Piano. Vajna, known for his big-budget productions, minces no words about his new relationship with Katzenberg: "Jeffrey needs my films, so they leave me alone to make them."

AILING PARK. The question is, will the new system preserve Disney Studios' golden profitability? Since 1985, Katzenberg's micromanagement has expanded studio revenues from $320 million to $3.7 billion while increasing the profit margin from 11% to 17%. Movies and television shows now make up 36% of Walt Disney Co. operating earnings, up from 8% over the same period. So far, production has ramped up profitably enough, but with EuroDisney ailing and the other theme parks growing slowly, the pressure on Disney Studios has never been greater.

Katzenberg's usual response to pressure is to handle everything himself. He learned as much in Barry Diller's Hollywood finishing school during the 1970s. Although he grew up the son of a Park Avenue stockbroker and attended private schools, Katzenberg dropped out of New York University after one year and hired on at Paramount Pictures Corp. in 1974. There he quickly became a disciple of Diller, Paramount's hard-boiled chairman at the time.

Diller and Eisner, then Paramount's president, taught that ideas, not stars, were king. They regularly browbeat actors, directors, and writers to get the best deal, then insisted on total control to make sure the film they wanted got made. For his part, Katzenberg was nicknamed the Golden Retriever for his ability to deliver the goods. When he and Eisner left for Disney in late 1984, they didn't lighten up.

Katzenberg has regularly waged battles over contract issues with such high-profile stars as Sister Act's Whoopi Goldberg and The Marrying Man's Kim Basinger. His run-ins with superagent Michael Ovitz are a Hollywood legend. In 1989, Honey, I Shrunk the Kids director Joe Johnson had the temerity

to snub Katzenberg when the boss voiced some concern over the extended use of a $175,000-a-day set. Without warning, Katzenberg had the set ripped out, forcing Johnson to complete the film with existing footage.

These days, though, Katzenberg is discovering that he can ill afford to clamp down on everybody. When Robin Williams complained loudly last year that he wasn't paid enough for his role as the Genie in Aladdin, Katzenberg took the un-Disneylike approach of buying him a $1.8 million Picasso painting. Williams still wasn't happy, but he stopped griping. "I realize I don't have to get the last nickel out of every deal," Katzenberg says. "If we pick the right people to make films, we're going to have more winners than losers."

In picking Roth, Vajna, and Weinstein, Katzenberg has hedged his bets. Vajna's films can cost $40 million or more, for instance, but Disney pays no more than $12 million, leaving the producer to round up the rest from other investors. Disney, in return, gets the theatrical, video, and other U.S. rights. Miramax, which Disney bought last year for an estimated $60 million, is likewise capped at $12 million, though Katzenberg does give some leeway. When Weinstein asked his new boss for an additional $5.5 million to make Pret-A-Porter, a Robert Altman film about the fashion world starring Julia Roberts, Katzenberg didn't flinch. Why? Weinstein is known in Hollywood for being as tough as Katzenberg.

The Disney boss isn't cutting any slack in the animation studios, however. Twice a week, he travels to the unit's cluster of nondescript buildings in Glendale to review such coming features as The Lion King scene by scene. In early December, a Broadway-bound stage version of Beauty and the Beast hit trouble, so he jetted to Houston each Sunday to iron out problems. Animation is fabulously profitable. Beauty has generated more than $500 million for Disney in film, video, and licensing rights. Moreover, says Steven Spielberg, who was involved in Disney's 1988 hit, Who Framed Roger Rabbit: "Animation is one of the few areas that Jeffrey can still control totally. After all, the characters don't talk back, and the backgrounds don't ask for more money."

But some think Katzenberg is still stretched too thin. This past summer's lineup, which featured such flops as My Boyfriend's Back and Fatherhood, was lackluster at best. And while Disney ended 1993 with five straight $50 million films--including Roth's Three Musketeers and Vajna's Tombstone--its Hollywood Pictures unit is a mess. Since 1989, only 11 of the unit's 26 films have grossed more than $20 million. Many have raked in less than half that amount. In December, Katzenberg had to help Hollywood Pictures President Ricardo Mestres seal a long-stalled deal to have director Oliver Stone bring the Broadway musical Evita to the screen.

"MORE TO LIFE." Such problems don't leave much room for error among his new hires. And they don't leave Katzenberg much time for a personal life. That bothers him. The 1991 death of Aladdin lyricist and friend Howard Ashman affected him deeply. So did the divorce of Warner Bros. Chairman Bob Daly, a Malibu neighbor and buddy. To get away, he recently built a ski house in Utah, and has begun taking annual Mediterranean cruises with Marilyn, his wife of 19 years. "I think he suddenly realized there was more to life than working crazy hours and being away from those he loved," says record producer David Geffen, another longtime friend.

That's one reason he's not likely to join Barry Diller, who has dangled Katzenberg's name as a potential executive recruit as he tries to win backers for his hostile takeover attempt of Paramount Communications. Katzenberg insists he's going nowhere. Learning to give up some control at Disney is one thing. Sharing power with the irascible chairman of QVC is another.

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