Could Disney Owe Katzenberg $400 Million?
Around Hollywood, folks are looking forward to Nov. 18, when one of the juiciest shows of the season will open. On that date, Walt Disney Chairman Michael D. Eisner and his former studio chief, Jeffrey Katzenberg, will meet in a Los Angeles courtroom to play out the latest act in their bitter feud. Katzenberg quit in a 1994 blowup--after Eisner wouldn't name him president to succeed the late Frank G. Wells. Katzenberg then sued over his exit package, leading to this showdown.
Even by Tinseltown standards, the payoff could be epic. Katzenberg's suit seeks 2% of the profits from the films and TV shows he put into production between 1984 and 1994: His lawyers say this money was promised in his contract. That figure, according to Katzenberg's filing, starts at $250 million. But according to documents filed in a California state court, Katzenberg's lawyers say he is also owed money from "all forms of exploitation." His lawyers have asked for figures on everything from a Who Framed Roger Rabbit? theme-park ride to the Broadway Beauty and the Beast--and even on the Mighty Ducks hockey team. Disney argues that Katzenberg forfeited any such bonus by quitting while his contract still had a two-year option.
One Katzenberg confidant says the claim could exceed $400 million. But that could be just the beginning of the damage, says Ladenburg, Thalmann & Co. banker Porter Bibb. "This could blow the lid off Disney and show just what a money machine it is," he says. "What do you do if you're negotiating with a star or a toy company and they know just how profitable you are?"
Oddly enough, the executive who may play the biggest role is Wells, who died in a helicopter crash five months before Katzenberg quit. Wells negotiated Katzenberg's 1988 contract. Using what Katzenberg intimates call "a smoking-gun memo" said to be written by Wells and supporting the ex-chief's contentions, Katzenberg's side staged--and won--a pair of mock trials in September. "If there is a smoking-gun memo, I don't know about it," retorts Disney lead attorney Louis M. Meisinger. "He can take the mock jury to his mock bank account." Just the kind of script Hollywood loves.