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COVER STORY : Angst at Disney's World : All Hollywood's eyes are on Disney Studios Chairman Jeffrey Katzenberg. How much have Frank Wells' death and Michael Eisner's heart surgery changed his future? Time will tell, but his relationship with Eisner is the real story.

July 24, 1994|CLAUDIA ELLER and ALAN CITRON | Claudia Eller is The Times' movie editor and Alan Citron is a Times assistant business editor who covers the entertainment industry.

Just three weeks ago, Disney Chairman Michael D. Eisner sat in his office atop corporate headquarters in Burbank and for the first time reluctantly discussed what has been on the minds of all of Hollywood--the fate of his studio chairman, Jeffrey Katzenberg.

Katzenberg's future in the ever-expanding entertainment empire had been the source of intense debate since April, when Frank G. Wells, Disney president and chief operating officer, died in a Nevada helicopter crash. While much of the industry assumed that Katzenberg would step into Wells' job, based on his decade-long record of success, Eisner said in this candid two-hour interview that he had no intentions of sharing the Disney throne.

Such speculation intensified after last Saturday's unexpected turn of events--which found the 52-year-old Eisner undergoing emergency quadruple heart bypass surgery. While a Disney spokesman said on Wednesday that Eisner's position remains unchanged, it's widely assumed that he now will be forced by events to appoint a second-in-command to help carry the heavy load of running one of the industry's biggest entertainment companies.

So the spotlight instantly returns to Katzenberg--who is known to covet the crown as Prince of the Magic Kingdom. In his interview, Eisner said that there is no one in the industry he trusts more than the 43-year-old studio chairman, whom he has mentored for the past 20 years since their days at Paramount Pictures.

"He is extremely trustworthy and loyal and very supportive of the whole company--he is very much a team player," Eisner said of Katzenberg three weeks ago.

But behind the harmonious facade of Team Disney, there exists a complex, tension-filled relationship between Eisner and Katzenberg that many see as a psychological barrier to change.

His friends and colleagues say that despite Katzenberg's accomplishments, Eisner has never given his close associate the due he has always sought. Indeed, sources say the two have never even discussed the issue of Katzenberg's future in the post-Wells era. "This is about a withholding father and a son looking for love and recognition from that father," a close associate of both men said last week.

It was a decade ago that Eisner left as head of Paramount and brought his fast-talking, hyper-ambitious president of production with him to Disney. Together they helped transform the moribund studio--which had only $225 million in revenue in 1984--into the $4.5-billion revenue producer it is today.

As studio chairman, overseeing motion pictures and television, Katzenberg has made contributions to the empire's animation franchise and other endeavors that would seem enough to make him the obvious heir to the throne. His track record is among the best in Hollywood, even though the studio has been struggling for years to recapture the lost luster of its live-action movie business.

Disney's latest animated classic, "The Lion King," has so far grossed nearly $200 million at the box office in just over four weeks, reconfirming Disney's utter dominance of the feature animation kingdom. Under Katzenberg's supervision, Disney's first foray into live theater, Broadway's "Beauty and the Beast," is the top-grossing show on the Great White Way. The ABC series "Home Improvement," produced at Disney under Katzenberg and studio president/TV head Richard Frank, was this past season's No. 1 TV show.

But achievement isn't always rewarded generously in the corporate jungle. The untimely death of Wells, who had always served as adviser and the mediator between Eisner and Katzenberg and a confidant to both, compounded with Eisner's sudden health problems, complicates their relationship even further, sources suggested.

"These two events add an artificial drama to what was already a real-life drama. This situation became much more complicated when . . . the father became vulnerable," observes one.

At this point Eisner isn't the only one who's vulnerable. Friends say that Katzenberg, widely considered a control freak, has been emotionally frayed by the sudden uncertainty surrounding his career. After turning down countless job offers in the past, Katzenberg last week confided to those closest to him that he will leave the company if Eisner passes him over.

Katzenberg refused to be interviewed for this story. And given his powerful position in the industry and the delicate nature of relationships in Hollywood, dozens of his associates and friends also would not speak on the record. But privately there was no shortage of people willing to speculate on Katzenberg's future, and the unusual dynamic that exists between him and Eisner.

"If this is not cleared up soon, it could become a very dangerous situation . . . Jeffrey could become impatient. And both of these men are of incredible value to that company," a source who is close to Eisner and Katzenberg said last week.

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