Disney Experience Drives Katzenberg
When he ran the studio of Walt Disney Co. in the mid-1990s, Jeffrey Katzenberg lobbied tirelessly to become heir apparent to Chief Executive Michael Eisner -- prodding, cajoling and pressuring his boss while toiling to turn out box-office hits that included the animated blockbuster "The Lion King."
Katzenberg wasn't rewarded with a promotion. Instead, Eisner unceremoniously fired him in 1994, putting out the word that his underling was an immature character with an oversized ego.
The battle scars from those days may well prove the best insurance policy for investors in the publicly traded entertainment company that Katzenberg is now poised to run as CEO.
"There's no question Jeffrey's got the motivation," said analyst Dennis McAlpine, principle of McAlpine Associates. "He wants to show Eisner what a mistake he made."
Last week, Katzenberg and his DreamWorks Studios partners disclosed that they were preparing this fall to take public one piece of their enterprise -- the computer-animation factory that is home to the biggest animated U.S. box-office hit of all time: "Shrek 2."
Yet for all of Katzenberg's determination, the gambit may well be the diciest of his career.
DreamWorks is angling to become the next Pixar Animation Studios, which enjoys an impressive $3.7-billion value on Wall Street, thanks to its flawless record in theaters. But while Pixar boasts a string of five straight hits -- among them "Toy Story" and "Finding Nemo" -- DreamWorks' record outside the "Shrek" franchise has been mediocre.
"Jeffrey has very good judgment, he's a master communicator and relationship builder and is too smart to make rookie mistakes," said one Wall Street source who knows Katzenberg well. "But a pure-play movie company is a high-risk proposition."
Certainly, others have found that to be true. Imagine Entertainment went public in 1986, only to be taken private again seven years later by its two principles, producer Brian Grazer and director Ron Howard. They created little value for investors or themselves, and failed in their attempts to expand beyond the volatile movie business.
Even Pixar's stock has been on a roller coaster ride, in part because of the long fallow periods of more than a year between its movies, when the company must rely on DVD releases and its shallow library for revenue.
- DreamWorks Animation Names Creative Chief Sep 30, 2005
- Ex-Disney Executive to Join DreamWorks Board Jul 13, 2006
- Wall St. Has a Hit on Its Hands As DreamWorks IPO Opens Big Oct 29, 2004
