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Storming The Magic Kingdom

Part Ii.

February 15, 1987|John Taylor | John Taylor is a staff writer for Manhattan, inc. magazine. His book, "Storming the Magic Kingdom," will be published by Knopf in April.

In the war of succession at Disney, the directors have split into two camps. One side favors Dennis Stanfill, former head of 20th Century Fox; the other side backs film executives Michael Eisner and Frank Wells. Stanfill's supporters are outraged when the Eisner-Wells faction takes the battle 'to the streets.' They fight back in kind.

DURING THE SUMMER OF 1984, WALT DISNEY PRODUCTIONS had been so battered by shareholders hostile to its management that it had become virtually crippled. Disney's board of directors believed that the major stock owners--who by then included not only Walt Disney's nephew Roy E. Disney but also financiers Sid Bass of Texas and Irwin Jacobs of Minneapolis and arbitrageur Ivan Boesky--would cease their disruptive agitation only if Ron Miller, the company's chief executive officer, stepped down. And on Sept. 7, 1984, the directors unanimously asked him to resign.

Before that meeting, Disney's chairman, Raymond Watson, had interviewed Michael Eisner, then president of Paramount Pictures, to see whether he was interested in replacing Miller. Watson also talked to Frank Wells, the former co-chief executive of Warner Bros. Eisner and Wells had both been recommended by Roy Disney, who together with his financial adviser, attorney Stanley Gold, had joined the Disney board early in the summer. Watson had been so taken with Eisner that he told him that he was going to recommend that Disney's board hire him as chief executive.

However, a majority of the board, led by its senior outside director, Philip Hawley, declared that it wanted a chief executive with more "corporate experience," and the directors formed a screening committee to review all the possible candidates. Hawley, for one, thought that Dennis Stanfill, the investment banker who had headed 20th Century Fox, should be put in charge at Disney. He suggested that Eisner and Wells be offered second-tier jobs. Shortly after the board meeting, Watson, at Hawley's urging, did ask Wells whether he would accept such a position; Wells, insulted by the proposal, said no.

The offer also outraged Gold, who advised Wells that if he wanted the top job at Disney, he would have to pursue it vigorously; no one was going to give it to him. Gold and Wells were friends; they went running together most mornings. And the morning after Wells had rejected Watson's proposal, Wells and Gold met for their customary jog. As they set out through the Hollywood Hills, Wells said he had made up his mind; he would actively seek a top position at Disney. With that, the stage was set for the contest to succeed Ron Miller.

IT WAS PHIL HAWLEY, with his constant refrain about "corporate experience," who was the primary obstacle on the board to both Michael Eisner and Frank Wells, and in the aftermath of the "insulting" offer to Wells, the dispute over Ron Miller's successor assumed for Stanley Gold the dimensions of a personal struggle. It became a contest of wills. It became Stanley Gold versus Phil Hawley.

On Friday afternoon, Sept. 12, the screening committee met at the headquarters of Carter Hawley Hale, the Southern California retail giant, and Hawley made a strong plea for Stanfill. Stanfill knew his market; "Star Wars," which had been produced at Fox under Stanfill's leadership, was precisely the sort of family entertainment Disney ought to be making. Stanfill was smart; he could master the most complex financial reports. He commanded respect on Wall Street. He was well connected. And he was available. "That's the kind of talent we need here," Hawley said. "We can always buy creative talent."

"You're wrong, Phil," Gold retorted. "You think creative talent can be bought as a commodity. You see guys like Eisner as a little crazy or a little off the wall. I don't mean to be difficult with you," he went on, "but every great studio in this business has been run by crazies. What do you think Walt Disney was? The guy was off the wall. His brother Roy kept him in check."

Not surprisingly, Hawley disagreed. "I think you're wrong," he said. "I just can't bring myself to accept that. Eisner and Wells are very, very impressive, but they're divisional. They've never run anything but a division."

"I guess that's right," Gold said, "if you call Paramount Pictures a division of Gulf + Western. That's a billion-dollar division. If you call Warner Bros. a division of Warner Communications. That's a billion-dollar division."

Hawley suggested a compromise: to offer Eisner head of production and Wells head of business affairs. He knew as well as Gold, however, that Eisner had already said he would come to Disney only as chief executive and that Wells had turned down a less-than-senior corporate role. Hawley was unyielding in his refusal to recognize the two men as first-rate corporate material.

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