In a decade, Michael Eisner and Jeffrey Katzenberg transformed the slumbering Walt Disney Co. into an $8.5 billion entertainment giant whose success has seemed magical. Investors surged to the company, and its stock price multiplied. Its top executives were lavishly rewarded. Eisner, the chairman, earned more than $203 million last year.
This year, Disney is enjoying the most profitable film ever, "The Lion King," the top-rated television show, "Home Improvement," and Broadway's most successful musical, "Beauty and the Beast."But five weeks ago, Eisner shocked the entertainment industry by denying Katzenberg's request for a promotion to the No. 2 position at the company and essentially dismissed Katzenberg, his longtime colleague and ally.
Now Disney is suffering the consequences.
Without Katzenberg, the studio division that was the most profitable in Hollywood and the star performer at Disney in recent years has been nearly paralyzed, according to Disney studio executives and Hollywood producers and agents. And the company has been embarrassed as Eisner and Katzenberg have lashed out at each other.
Shocked entertainment executives in Hollywood and New York are watching Disney as if passing a car wreck.
Since Katzenberg's departure, an animated movie in production, "The Hunchback of Notre Dame," has been delayed, according to Disney executives. The theater division that Katzenberg also ran, which is responsible for "Beauty and the Beast," is leaderless.
And there is uncertainty about the timing of the show's openings and the shape of future theatrical projects like "Aida" (with music by Elton John).
Katzenberg's efforts to sign a superstar, Janet Jackson or Whitney Houston, to record songs for Disney's next animated film, "Pocahontas," due next summer, have been halted.
Several Katzenberg projects have been discarded, and Disney executives have been told that the company plans to halve the number of films it makes each year.
One of Disney's newest and most profitable divisions, interactive games, which was also run by Katzenberg, is now rudderless as the holiday season approaches.
And the producers of several coming Disney films said the marketing side of the company seems crippled.
"It's an incredibly distressed organization," said one top producer with a Disney film set for release. "When someone as powerful as Jeffrey leaves, insecurity in the ranks takes a tremendous toll."
Then there's the remarkable animus between two former allies. The anger is so intense that Katzenberg was told he would not be welcome at the London premiere of "The Lion King," at which John, who composed the score, wanted to have a party for him.
Animators at the studio who sought to hold a farewell party for Katzenberg were barred from doing so by Eisner.
Perhaps most cutting for Katzenberg, Eisner has sought to diminish the impact of his role in animation and even taken some credit for the new film "Quiz Show," approved by Katzenberg.
(Eisner has said that he saw a PBS special on the quiz show scandals, and told Katzenberg to get a movie script on the subject. Actually, Robert Redford, the director, and Barry Levinson and his former partner, Mark Johnson, were largely responsible for the idea.)
The level of genuine rage now between Eisner and Katzenberg hardly diminishes their extraordinary success. Taking over the moribund company with Frank G. Wells in 1984, the men built an empire embracing theme parks, stores, hotels, publishing, sports and, notably, films and television.
Except for "Jurassic Park," which was made by Universal Pictures, the highest grossing films in history are from Disney - "The Lion King," "Aladdin" and "Beauty and the Beast."