Supplementary Material: Disney

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**"Disney To Acquire CapCities/ABC in $19 Billion Merger," by Steven P. Rosenfeld, Associated Press, July 31, 1995**
NEW YORK (AP)-The Walt Disney Company will acquire Capital Cities/ABC Inc. in a surprise merger of entertainment giants valued at about $19 billion, the companies announced today.
Under the agreement, New York-based Capital Cities, which owns the ABC television network, will become a subsidiary of Burbank, Calif.-based Disney, which produces ABC’s hit comedy series, *Home Improvement*.
The combined company will be called The Walt Disney Company, with Disney’s chairman, Michael D. Eisner, a former entertainment president at ABC, continuing as chairman and chief executive.
Disney is best known for cartoon characters like Mickey Mouse, animated movies like *The Lion King* and *Pocahontas*, and its Disney World and Disneyland theme parks.
The company, which also has interests in parks in Japan and Europe, operates the Disney Channel on cable television. It has 400 Disney Stores and licenses its characters to manufacturers. Disney also publishes books, magazines and music.
In addition to ABC-TV, Capital Cities has a network of 225 affiliated stations and owns eight TV stations. It plans to acquire two more in August.
It also owns 80 percent of sports cable broadcaster ESPN Inc., has interests in the Lifetime Television and A&E Television Networks cable channels, and has 21 radio stations. It also publishes newspapers, shopping guides, magazines and books, and has interests in international broadcasting.
The acquisition, already approved by the boards of both companies, is subject to shareholder approval and federal antitrust review. The companies said they expected the deal to be concluded by early 1996.
Because the businesses are complementary, the companies said they do not expect jobs will be lost in the combination.
Under the proposal, Capital Cities shareholders would receive one share of Disney stock and $65 in cash for each of their shares.
At the close of trading Friday, Disney stock was at $57.37 1/2 a share and Capital Cities at $96.12 1/2. The deal would value Capital Cities at $122.37 1/2 a share.
The companies had combined annual revenues of about $16.5 billion in 1994.
The announcement comes at a time of consolidation in the media industry.
There have been reports for weeks speculating that Westinghouse Electric Corp. is putting together a $5 billion bid to buy CBS Inc.
Recently, Viacom Inc. agreed to sell its local cable television operating systems to Tele-Communications Inc. in a deal valued at $2.25 billion. Gannett Co., the nation’s leading newspaper publisher, announced it is acquiring Multimedia Inc., a publisher and producer of talk shows, for more than $1.7 billion.
Eisner said the deal "is a once-in-a-lifetime opportunity to create an outstanding entertainment and media company.″
"Disney and Capital Cities/ABC have created some of the most recognized and respected brands in the world,″ said a joint statement by Eisner and Thomas S. Murphy, chairman of Capital Cities. ``The merger will create tremendous value for the shareholders of each company by taking full advantage of the complementary strengths of each organization.″
Murphy will relinquish his titles of chairman and CEO when the merger takes effect and join the Disney board. Robert A. Iger would remain as president of Capital Cities/ABC, but also move to become president and COO of The Walt Disney Company, duties that Eisner has also been effectively handling for the past year, since the death of Frank Wells.
Eisner, appearing with Murphy this morning on ABC’s *Good Morning America*, said the deal fell together a week ago Thursday at an Idaho resort.
"I literally passed Tom Murphy in Sun Valley on the street ... and said, `Tom, I think the time is right now. Every part of your company is working. Every part of our company is working.
"There are no fires in any divisions. Disneyland in Paris is doing great. They’re No. 1 in prime time. Maybe now is the time,‴ said Eisner. "He simply looked at me and said OK.″
Murphy said, "We’re not putting two television networks together or two movie studios together or two theme parks together. We’re in allied fields but we’re in different fields.
"I don’t think there’s any domination of the media or any part of the media so that we would be damaging competition at all,″ he said.

**"Disney, Capital Cities/ABC Agree To Merge," BusinessWire, July 31, 1995**
*$19 Billion Transaction Will Enhance Value By Creating World's Leading Entertainment And Communications Company*
BURBANK, CA, AND NEW YORK-The Walt Disney Company (NYSE: DIS) and Capital Cities/ABC Inc. (NYSE: CCB), two of the world's leading entertainment and media companies, today announced that they have agreed to merge. The combined enterprise will have a unique ability in creating, packaging and delivering entertainment, news, and sports - all of which will generate significant new opportunities for domestic and international growth.
Under terms of the agreement, which has been approved by the Board of Directors of each company, Capital Cities/ABC shareholders will have the right to receive one share of Disney common stock and $65 in cash for each of their shares. At current share prices, the value of the transaction is approximately $19 billion.
In a joint statement, Michael D. Eisner and Thomas S. Murphy, chairman and chief executive officer of Disney and Capital Cities/ABC, respectively, said: "The combined company will become a vital and dynamic force in the entertainment and media business, reaching family audiences worldwide and providing them with unparalleled news, information and entertainment both inside and outside the home.
"Disney and Capital Cities/ABC have created some of the most recognized and respected brands in the world. The merger will create tremendous value for the shareholders of each company by taking full advantage of the complementary strengths of each organization. The combined enterprise will be better equipped to grow, to provide valuable services for our viewers, listeners, readers, sports fans and vacationers, and to capture the imagination of future generations."
As a result of the merger, Capital Cities/ABC Inc. will become a wholly-owned subsidiary of Disney. The combined enterprise, which will be known as The Walt Disney Company, will be led by Mr. Eisner, who will continue as chairman and CEO. Mr. Murphy, chairman and CEO of Capital Cities/ABC, will relinquish his current titles on the effective date of the merger and join Disney's Board of Directors. Robert A. Iger will continue in his role as president of Capital Cities/ABC and also become COO and president of The Walt Disney Company. The companies had combined annual revenues in 1994 of approximately $16.5 billion.
"This transaction is a once-in-a-lifetime opportunity to create an outstanding entertainment and media company," Mr. Eisner said. "The merger positions us for substantial growth worldwide and puts us in a strong competitive position in an industry which, by this transaction, we are helping to define. The Walt Disney Company will now have more global outlets to provide the highest quality entertainment, news and sports programming."
"We sought a merger with Capital Cities/ABC in particular because of our tremendous respect for the management team Tom Murphy has assembled and the outstanding collection of broadcasting and publishing assets they have built," Mr. Eisner said.
Mr. Murphy said, "This is a terrific opportunity for our shareholders and employees and will result in a world-class organization dedicated to providing the finest in information, entertainment and news. The dynamism of Disney, under the leadership of Michael Eisner, combined with the experience and energy of our operations under Bob Iger, makes this the most exciting new business venture in many years."
Mr. Iger said, "I have always had tremendous respect for The Walt Disney Company and its excellent management. Our assets and reach can help increase the scope of what is already a worldwide enterprise; but it will be our enthusiasm and spirit, added to theirs, that will give this combination a special dimension. I am very excited to be a part of this new venture and to have the opportunity to help build a unique force in international media. I am also honored to take the roles of president and COO of The Walt Disney Company and officially be part of Team Disney."
Under terms of the merger, any shareholder of Capital Cities/ABC can elect to receive proportionally more cash or common stock than provided for in the exchange ratio, subject to proration if either the stock or cash portion is oversubscribed, and subject to the option of Disney to increase the cash portion if requested by Capital Cities/ABC shareholders.
The transaction, which is subject to regulatory review and approval of the shareholders of each company, is expected to be completed by early 1996. The companies noted that because their businesses are complementary, they do not expect staff reductions as a result of the combination.
The Walt Disney Company is a worldwide leader in motion pictures and television production, theme parks and consumer products. Its film division, led by the success of animated titles like *Pocahontas, The Lion King*, and *Aladdin*, has been either first or second at the domestic theatrical box office over the past five years.
In television, Disney offers more than 58 hours a week of network and syndicated shows in the U.S. Two of its top network shows, *Home Improvement* and *Ellen*, run on the ABC network. Disney will establish a new record with the launch of 9 new shows in syndication during the 1995 season. In addition, Disney's international television programming is seen by audiences on every continent.
The Disney Channel, with 14 million U.S. subscribers, is currently extending its reach overseas. It made its foreign debut in Taiwan this spring and will debut in the UK this fall. Disney recently launched Super RTL as a joint-venture channel in Germany with a significant amount of Disney programming.
In addition to its film and television activities, Disney owns and operates theme parks in California (Disneyland) and Florida (Walt Disney World). The company also receives royalties from Tokyo Disneyland and owns 39% of Disneyland Paris. Disney also licenses its characters to manufacturers worldwide, operates 400 Disney Stores around the world, and publishes books, magazines and music.
In addition to the ABC Television Network, which consists of 225 affiliated stations reaching 99.9 percent of the nation's television households, Capital Cities/ABC owns and operates 8 television stations, with plans to purchase two others in August, reaching about 25 percent of the U.S. market.
Capital Cities/ABC also has a significant and rapidly expanding international operation - one of the most aggressive of any U.S. media company. These holdings include significant equity interests in Tele-Munchen and RTL2, Munich; Scandinavian Broadcasting Systems, Luxembourg; Hamster Productions and Eurosport, Paris; and The Japan Sports Channel, Tokyo.
Capital Cities/ABC also owns:
-80 percent of ESPN, Inc., which includes ESPN, its U.S. flagship sports channel which reaches 67 million households and, through its international program services, over 100 million households overseas; as well as ESPN2, serving 22 million households;
-21 radio stations and radio networks serving more than 3400 radio stations;
-50 percent of Lifetime Television, serving 58 million U.S. households;
-37.5 percent of A&E Television Networks, reaching 56 million domestic households;
-a large publishing group, with 7 daily newspapers, weekly newspapers and shopping guides, various specialty and business periodicals and books; and
-a multimedia group which develops and manages business opportunities in new and emerging media technologies.

**"The Media Business: The Merger; Walt Disney To Acquire ABC In $19 Billion Deal To Build A Giant For Entertainment," by Geraldine Fabrikant, *The New York Times*, August 1, 1995**
In the second-largest corporate takeover ever, The Walt Disney Company moved yesterday to create the world's most powerful media and entertainment company, announcing that it would acquire Capital Cities/ABC Inc. for $19 billion.
The combined company would bring together the most profitable television network and its ESPN cable service with Disney's Hollywood film and television studios, the Disney Channel, its theme parks and its repository of well-known cartoon characters and the merchandise sales they generate.
"These are the two premier family entertainment companies," Michael D. Eisner, the chairman and chief executive of Disney, told a news conference in New York.
The deal, which had already been approved by the boards of both companies when it was announced yesterday morning, was a stunning surprise. In contrast to the much-discussed offer that the Westinghouse Electric Corporation is known to be preparing for CBS Inc., not a word had leaked out about a deal that would create the most powerful entertainment company in the world. Westinghouse is expected to announce its offer today.
Driving the Disney deal is the belief at both companies that they will grow more quickly together than on their own. By acquiring Capital Cities, Disney will become the first media company with a major presence in four distribution systems: filmed entertainment, cable television, broadcasting and telephone wires, through its joint venture with three regional phone companies.
Yet the deal is not good news for everyone. Rival television producers may find that they have fewer outlets for their programs, other entertainment companies may find themselves outmuscled as they seek consumers' attention, and some consumer advocates expressed concern about whether the concentration of ownership might dilute the public's choices of programming.
Without making direct reference to the merger, President Clinton expressed concerns yesterday about the growing concentration of media ownership and said he might veto legislation to deregulate the nation's communications industries.
What Disney brings to ABC, a company that has usually bought its television programs from outsiders, is a highly creative culture committed to developing and distributing original and innovative programs. That should make the ABC network a more formidable rival to its counterparts and to the cable programming services that continue to erode the networks' share of audience.
"Taking nothing away from the senior management at the other networks, this will be the only one where the senior executive is trained true in the creative process," said Barry Diller, the former head of QVC Inc. and the man credited with creating the Fox network.
What Disney gains is a national distribution network for its programming, perhaps a Saturday morning television home for its cartoons, and a company known for its news and sports coverage, as well as hit comedies like *Roseanne* and *Home Improvement*.
There has not been a change of ownership at one of the big three networks since 1986, when the General Electric Company bought RCA, which owned NBC. Earlier that year, Capital Cities acquired ABC to form the company that Disney is buying.
Yesterday's deal comes at a watershed moment, because the Federal Communications Commission has unshackled the big three networks, so that by next year they will be able to produce and distribute as much of their own programming as they choose.
"It is a stunning fit strategically, in terms of corporate cultures and in terms of businesses," said Gordon Crawford, senior vice president at Capital Research Company, an investment firm whose clients are major shareholders in both companies. Mr. Crawford and others predicted that more mergers in the entertainment business would follow, as producers of programming try to gain access to distribution.
"You have to be brain dead if you don't understand that these businesses are vertically integrating," Mr. Crawford said.
The deal is expected to provide increased opportunities for Disney to expand overseas. "Exporting American entertainment is one of the things we do very well," Mr. Eisner said. "The key is to create it first."
David Londoner, a media industry analyst at Schroder Wertheim, said the merger would provide Disney with considerable muscle overseas, where Capital Cities/ABC is already distributing ESPN and has production investments.
Wall Street obviously thought the deal was favorable for both companies. Capital Cities/ABC's shares surged $20.125, to $116.25, while Disney's shares gained $1.25, to $58.625.
Under the deal, Disney said it would pay one share of its stock and $65 in cash for each share of Capital Cities/ABC, though it might allow shareholders to choose more stock or more cash.
Disney said it planned to borrow $10 billion to complete the deal. Even with the prospect of that added debt, many investors focused on the potential growth the combined company would have.
Still some analysts were skeptical. John Tinker, who follows the media industry for Furman Selz & Company, said Capital Cities/ABC was not growing as fast as Disney and might slow down the combined company.
In contrast to many other large deals involving media companies, like Time Inc.'s purchase of Warner Communications or Viacom Inc.'s purchase of Paramount Communications, Disney will not be forced to sell significant assets to help pay its debts. "This deal is not about cutting costs, this deal is about increasing revenues," Mr. Eisner said.
Mr. Eisner did say Disney might have to sell a television station in Los Angeles, where it and Capital Cities each own one station, to comply with government regulations.
A packed news conference in New York yesterday featured not only Mr. Eisner and Thomas S. Murphy, the chairman of Capital Cities/ABC, but also the two largest shareholders in their companies - Sid Bass, in Disney, and Warren E. Buffett, in Capital Cities/ABC.
The merger names ABC president Robert A. Iger as Disney president and COO, which now provides an obvious heir for Mr. Eisner, who had been criticized in the past for not having depth of management. But analysts seemed unconcerned yesterday that Mr. Eisner would now be running a far larger company, with a market value of about $40 billion.
Indeed, Disney becomes roughly the 11th-largest American corporation in the Fortune 500 list and by far the largest media company in terms of market capitalization.
Issues involving the company's executive suite have troubled Disney for some time. In the last year, Mr. Eisner did not name a No. 2 with extensive media experience to replace Frank Wells, the Disney president who was killed in a helicopter crash last year.
Several months later, Mr. Eisner had a quadruple bypass operation; after that, Jeffrey Katzenberg resigned as chairman of Walt Disney Studios when Mr. Eisner refused to give him Mr. Wells's post. Michael S. Ovitz, the former head of Creative Artists Agency, is now interim president, with Mr. Wells' duties, but will step aside for Mr. Iger in due time, and downgrade himself to a part-time adviser.
Yesterday, Mr. Eisner, whose health has recovered swiftly, was optimistic about Disney's prospects.
"I feel more comfortable with the two companies together," Mr. Eisner said yesterday, in part because he had great confidence in Mr. Iger. He announced that Mr. Iger would remain in his current post while being given Mr. Wells' duties and that of COO after the merger closed, and said he believed in Mr. Iger as his eventual successor. Mr. Eisner also said that Mr. Ovitz would be good enough to hold down the fort while the merger approval process occurred, and that "Michael has told me he doesn't see much of a place for him in the main organization, especially not after the merger closes, but that strategic advice is more up his alley."
Mr. Eisner has toyed for some years with buying a network and has talked about a merger with the CBS chairman, Laurence A. Tisch, reportedly as recently as several weeks ago. But yesterday, in a clear indication of his preference for Capital Cities/ABC, Mr. Eisner described it as a company that "has been moving forward strategically."
Harold Vogel, an analyst at Cowen & Company, said Disney's purchase was a better deal than Westinghouse's anticipated acquisition of CBS. Disney, he said, was acquiring a far stronger company, one in which both the network and the television stations were doing well.
For Capital Cities/ABC, Disney brings more financial power and more familiarity with the television business than other possible partners. Mr. Murphy described the deal yesterday as one that "capped his 41 years in the business."
It also resolves the question of succession at Capital Cities/ABC, where Mr. Murphy, who is 70, had no obvious heir.
For Mr. Eisner, the deal wipes out repeated criticism that he has been reluctant to use his cash-rich balance sheet for an acquisition. Yet what prompted him to do this deal now was not immediately clear, though the expected sale of CBS appears to have eliminated the last immediate possibility to acquire another network.
To Wall Street analysts, one signal that Mr. Eisner might be moving toward some kind of deal was his hiring of Stephen Bollenbach as chief financial officer. Mr. Bollenbach had been chief executive of the Host Marriott Corporation, where he was known for innovative financing of deals.
The talks between Disney and Capital Cities/ABC began in earnest in July during the annual Allen & Company media conference, when Mr. Eisner ran into Mr. Buffett, the Omaha billionaire. He asked Mr. Buffett, "Do you think our two companies could do something together?"
"Sure," Mr. Buffett replied, "but you should go find Tom," referring to Mr. Murphy. The three men had a short conversation, Mr. Eisner recalled, that basically consisted of him saying, "We're buying - are you selling?" and Mr. Murphy saying, "I'll get back to you."
Mr. Murphy did, indicating interest, but Disney wanted to pay cash, and Capital Cities wanted Disney stock, in part to avoid the tax consequences of a cash deal.
About 10 days ago, the two sides met in New York for two and a half hours. After that meeting Mr. Murphy telephoned Mr. Eisner to say the deal could be done at the price of one share of Disney stock and $65 in cash for each Capital Cities/ABC share.
Mr. Eisner said he was interested, and a deal was soon reached.

**"ABC's Winning Players," by Steve McClellan, *Broadcasting & Cable*, August 7, 1995**
No, it's not a list of state lottery winners, it's the handful of Capital Cities/ABC executives and board members making millions from Disney's acquisition of their company. That doesn't include Berkshire Hathaway CEO Warren Buffett, the largest single shareholder in CapCities. He'll earn roughly $1 billion on the sale through his 40% ownership stake in Berkshire. Berkshire stands to earn $2.5 billion from the sale of its 20 million shares, which it will trade for $1.3 billion in cash and another $1.2 billion in Disney stock (based on last Thursday's closing price of $58.62).
CapCities Chairman and CEO Thomas Murphy will benefit nicely from the deal as well, earning $65 million cash for his 1 million shares, and receiving 1 million shares of Disney stock, currently worth $58.5 million. Total value: $123.5 million. Company sources say it is likely that Murphy will reinvest his proceeds from the sale in Disney stock. Murphy will also take a seat on the Disney board. Buffett will not.
Retired CapCities CEO Dan Burke will earn almost $28 million for the sale of 428,630 shares and get $25 million in Disney shares, for a total value of $53 million. Ron Doerfler, the company's CFO, will earn $7 million from the sale of his stock and another $6 million and change in Disney stock. Owned stations head Michael Miliardi will earn about $2 million in cash and stock. CapCities President and COO and incoming Disney President and COO Robert Iger will earn about $1.5 million in cash and stock.

**"Disney's Michael Eisner: No Mickey Mouse CEO," by Steve Coe, *Broadcasting & Cable*, August 7, 1995**
*Holding the Disney banner high, the former NBC page has taken the studio to the top of the entertainment industry*
Disney's acquisition of ABC last week makes Disney CEO Michael Eisner, already the captain of one of the biggest ships in Hollywood, arguably the most powerful man in television-if not in all Hollywood. Known most recently for the hugely successful animated theatricals produced by the studio, such as *The Lion King* and *Pocahontas*, the ABC deal now returns the 53-year-old Eisner to his broadcasting roots.
Eisner began his career as an NBC page after graduating from Denison University in Ohio and eventually landed at ABC as a programing executive responsible for overseeing some of the network's 1970s hits, such as *Happy Days, Barney Miller* and *Laverne & Shirley*, that made the network number one. While at ABC, Eisner worked closely with Barry Diller and followed the former Fox CEO to Paramount. After Diller left Paramount to run Fox in 1984, Eisner was passed over for the top job at the studio, paving the way for his appointment at Disney.
It was at Disney that Eisner built his reputation as an executive of the first order. During those same 11 years, however, his reputation as an enigmatic manager almost paralleled the rise in Disney's stock price. Since his appointment as chairman and CEO of The Walt Disney Company in 1984, Eisner has resurrected all aspects of the studio's operations. On the television side, Disney is the children's programing leader with its top-rated Disney Afternoon syndicated block, which Eisner and ABC president Robert A. Iger have said will continue airing alongside Disney's product on ABC and The Disney Channel. Also during his tenure, Walt Disney Television, which produces primetime fare for the networks, has risen to number two (behind Warner Bros. Television) in total output. Buena Vista Television, the company's syndication arm, is responsible for the daytime success *Live with Regis and Kathie Lee* and most recently sold *Home Improvement* into off-net syndication for $3 million per episode, making it one of the most financially successful launches ever.
According to Disney, the company's annual revenue rose from $1.5 billion to $8.5 billion during Eisner's first nine years, and during that time its stock value jumped 1500%. "A lot of people say he can be a petulant child when he's moody and an absolute taskmaster," says one entertainment lawyer who has dealt with the Disney chief. "He can be egotistical about his place at the company and key executives below him to the point of either allowing them to leave or driving them away. On the positive side, he clearly is a leader who is capable of recognizing talent or valuable assets and going after them and making it happen. This deal is a perfect example of that. As for his management style, look at his record [at Disney]-he's earned it."
Although it came as a surprise that word of the impending deal didn't appear in print before Monday's announcement, those familiar with Eisner say it is evidence of his hatred of press leaks. Said one Hollywood executive: "He's obsessive about leaks to the point of checking phone lists of executives to try to find out who's talking." During the past couple of years, Eisner's management style has come under scrutiny for the loss of two key executives. In March 1994, Frank Wells, Eisner's second-in-command and co-architect of the Disney resurrection, was killed in a helicopter crash. It was widely assumed that Jeffrey Katzenberg, chairman of Walt Disney Studio, would be named to the post. When Eisner decided not to fill the position initially, Katzenberg left the company to form the DreamWorks studio with record and movie mogul David Geffen and Oscar-winning director Steven Spielberg. Most recently, Rich Frank, who oversaw all of Disney's television activities and was considered one of the brightest executives in the business, also left, citing a desire to explore other opportunities. Speculation at the time of his exit, denied by Frank, was that Frank left because Eisner would not grant him oversight of the film studio.
Problems with other executives aside, Eisner is credited with being one of those rare executives who is a shrewd businessman with keen creative skills. The head of a competing studio says Eisner "is very creative, with a terrific creative imagination. He believes in doing first-rate programing." "He's quite extraordinary," says Craig Zadan, who produced the 1984 theatrical *Footloose* for Paramount when Eisner was in charge of that studio's theatrical production. Zadan now has a three-year deal with Disney to develop and produce TV series and specials. "Michael saw the film in rough cuts and knew immediately [that] it was going to be a hit. He got involved in every aspect, including the marketing of the film. He gets involved in all elements rather than just sitting back and letting it happen. Usually, you have a great businessman who is lousy creatively, or vice versa. But Michael is quite remarkable in both areas."
One agent who has had frequent dealings with Eisner during the past 20 years says that one of the biggest changes in the chairman of the newly formed Disney-ABC is his ability to focus his creative thinking. "He has matured so that he doesn't come up with 50 ideas at once only to be shot down on 49." One thing that hasn't changed, he says, is Eisner's toughness in making a deal. "He pushes you to the limit, but knows just when to stop in order to make the deal."

**"Megamedia's Megadeal," by Steve McClellan, *Broadcasting & Cable*, August 7, 1995**
*Disney adds CapCities/ABC to its Magic Kingdom for $18.5 billion (one Disney share plus $65 for an ABC share); Wall Street blesses union, but some question hefty premium studio is paying for broadcast/cable/distribution*
During the past year, reams have been written about who would buy CBS or NBC and for what price. Capital Cities/ABC was said to be the one network not in play-too expensive, with an estimated market value of $16-17 billion. Well, $18.5 billion later, Capital Cities/ABC is joining the Magic Kingdom, prompting questions about whether the merged companies will conjure up the synergies needed to justify the hefty premium Disney agreed to pay. Executives involved hope to close the deal early next year. The combined company would have revenue exceeding $16.5 billion and operating profit of more than $3.2 billion annually. The deal proves, among other things, that you can't always believe Wall Street. Disney Chairman and CEO Michael Eisner, Wall Streeters used to say, was a "bottom-fisher," who would never pay the premium required to get into network television.
The sound of jaws dropping to the floor could be heard throughout the entertainment industry last Monday when Disney and CapCities/ABC announced their planned merger. Wall Street immediately blessed the union as made in heaven. CapCities' stock soared $20 in one day (July 31) and held the gain throughout the week. Disney was up $1.25 last week, which also was taken as a strong signal from the market that Disney was making the right move despite going $10 billion into debt. Usually, the stock price of would-be acquirers goes down, particularly when a large amount of debt is involved, no matter how good the proposed marriage.
Hal Vogel, senior media and entertainment analyst at Cowen & Co., echoing the opinion of many analysts, said last week that the proposed merger was "a good strategic fit. Program production and marketing costs are so high these days that Disney would want to amortize its programs over as many audiences as possible. A network presents them with a mass audience."
But executives involved in the deal say the advantages go much deeper. "It's not just domestic distribution merged with production, which, as you know, we have been doing a lot of," says Robert A. Iger, who has signed a five-year contract to remain president of CapCities/ABC, which would become an operating division of Disney, and, more shockingly, as been named as Disney's president and COO once the merger closes. "It is improvements internationally" as well as an ability to cross-market and promote "in-home entertainment," such as network and cable television, with "out-of-home entertainment," such as theme parks and movie theaters. Other sources note that during the past year Disney informally has sought CapCities' advice on overseas media activity, seen as one of the last great expansion opportunities for U.S. entertainment companies. CapCities' international holdings are extensive, including ownership interests in Germany's Tele-Munchen, Scandinavian Broadcasting System, Eurosport and Japan Sports Channel. It also recently started two children's cable channels in China, is primarily owner of animation company DIC Entertainment, and has a one-third stake in Paris-based Hamster Productions. Disney's most visible international foray is the Disneyland Paris theme park, formerly known as Euro Disney. It is known primarily as a gusher of red ink that has failed to capture the fancy of Europeans the way Disneyland and Walt Disney World have won the hearts of families in the U.S.
Iger also says the merger will give the two companies a leg up in the field of new media, where Disney has focused on distribution through its joint venture with BellSouth, Ameritech and SBC Communications, while ABC has focused on content development through its Multimedia Group. By most accounts, the merger would seem to greatly benefit Disney and CapCities, placing them in the top tier of a rapidly consolidating media world. But is it good for the industry? "I don't know about the industry," CapCities Chairman Thomas Murphy told BROADCASTING & CABLE last week. "I think it's good for the public because we'll have the ability to make the best possible entertainment and news programs we can for the future." Murphy also said the financial terms of the deal were sensational for CapCities' shareholders, who will get $65 cash for each share owned as well as one share of Disney stock, expected to grow significantly in the coming months from its current $58-plus value. "We wanted to be sure our stockholders had a ticket on the horse race for the future. That's why we were very interested in having Disney stock, because we think the combined companies are going to do even better than they are separately."
Eisner told reporters last week that Disney and Capital Cities have been flirting with each as potential marriage partners for well over a decade. "We had met with Leonard Goldenson" before ABC's sale to CapCities, recalled Eisner. "We were just outmaneuvered and - negotiated by Tom Murphy and [major CapCities shareholder] Warren [Buffett]." He continued, "There's has been a lot of discussion over the last eight years with [major Disney shareholder] Sid [Bass] and myself and Warren and Dan Burke and Tom." Bass and Buffett were on hand at last week's press conference to show their support for the merger. With that support, analysts say, shareholder approval is a shoo-in.
Eisner said the combined entity will spin synergies making "one and one add up to four." Many analysts agree, although some question whether Disney could accomplish similar goals through strategic alliances and joint ventures, as opposed to going $10 billion in debt to buy a network. Iger challenged that notion, arguing that more often than not, "alliances" turn into wheel-spinning with no positive result. "With a merger, you tear down walls. When you sit across the table to talk business with people, you're working for the same company and you're not sitting there trying to protect the property you bring to the table. In an alliance, you often spend more time negotiating how you're going to manage the alliance-and sometimes even how you're going to deal with it when it ends-than you do conducting business."
Eisner and Iger also announced that Creative Artists Agency head Michael Ovitz will be Disney's interim president until the merger closes and Iger can assume his duties, then Ovitz will remain involved as an adviser. "Michael doesn't want to have all those responsibilities I wanted to give him, so this is how we meet in the middle," Eisner said. "Be a babysitter until Bob is ready, to be not only president and COO, but my eventual successor." Iger also announced that for now, ABC Entertainment President Ted Harbert would remain in his post after the merger closes, but that should he depart, he would remain involved as an adviser, and that Brandon Stoddard, one of Harbert's predecessors and former head of in-house production unit ABC Productions, would be a key adviser for the organization. "This is to ensure that much of the Capital Cities era transfers over to Disney, and that ABC's stride that puts it on either Number 1 or Number 2 on the primetime ratings against the other networks continues unabated. We only get one shot to manage this merger right, and this is the best way to do so."
At the press conference, Eisner introduced his chief financial officer, Steve Bollenbach, saying, "without him, I would never have had the courage to take on this much debt." But Bollenbach said that taking on $10 billion in debt won't cause problems and, in fact, probably will be paid off in five to six years, given the huge income the combined entity will generate. "When I came to the company [last year], my challenge was to find a way to use the debt capacity of the company. It's not good for a company to have no debt, because it's tax deductible and makes it a cheap form of capital." In relation to the size of the company, said Bollenbach, "it's not much debt."
Disney will earn a $400 million breakup fee if the merger does not go through. The contractual deadline for completing the deal is October 1. The breakup fee would be payable if the deal has not been completed by then. Asked if there were other options if the deal doesn't close by then, Murphy responded, "I guess we'll worry about that if that happens. We don't expect something like that to happen."
Murphy and Eisner have talked at length with FCC commissioners about permanent or temporary waivers they may need to get the deal done, including a waiver to possibly keep KCAL-TV and KABC-TV, both in Los Angeles. As part of the merger agreement, Disney will program ABC's Saturday morning cartoon block, which it already has had much of a role in for several years. That arrangement poses questions about ABC's existing alliance with DreamWorks. CapCities/ABC officials, however, said they were hopeful that the DreamWorks alliance would survive the Disney merger.
But last week, no one at the three companies involved was prepared to say the DreamWorks-ABC alliance would proceed as planned. In fact, sources confirmed that the alliance has an out clause for either party in the event of a change of control of Capital Cities/ABC. With the Disney merger, DreamWorks can therefore simply walk away from its ABC deal. Whether that happens remains to be seen. Sources close to the situation said, "No hasty decisions will be made. Everyone involved would like it to keep going. And the decision will ultimately come down to business considerations and not personal things," such as the ongoing spat between Eisner and DreamWorks principal Jeffrey Katzenberg.
The DreamWorks-ABC venture, forged last fall, is wide-ranging but the details have never been fully divulged. Both sides are to commit $100 million to produce and distribute shows for various media and dayparts for CapCities and non-CapCities exhibition outlets. A key interest of both DreamWorks and Disney is animation programing.
Furthermore, Iger stated that while Disney would move to produce more content for ABC's airtime, it would not move to monopolize it, keeping no more than 35 or 40 percent of ABC's programming for Disney, keeping up necessary alliances with outside studios and networks, and keeping up Disney-ABC's output for other networks. Disney would also open up the purse strings to build a larger budget for programming costs, though costs will be cut in certain nonessential areas to match. Also, that The Disney Channel is contemplating a move from premium cable to basic cable in the future, but such a move would include carrying over much of the current programming, expand with larger amounts of children's programming (shows and movies), but also keep programming for families and adults like documentaries and concert broadcasts. "Together, we will truly make the most of this combination."

**"The Young And The Ovitzless," by Charles Fleming, *Vanity Fair*, November 1995**
*When superagent Michael Ovitz departed Creative Artists Agency for Disney, he left a host of dangling alliances—and hungry Young Turks vying to succeed him.*
At four PM on the Friday afternoon of July 28, Walt Disney Company CEO Michael Eisner called Creative Artists Agency chairman Michael Ovitz on the telephone. Eisner and Ovitz had planned to meet that night, after dinner, at Ovitz's beach house in Malibu. Now Eisner wanted to change the time and the venue. "Can you come to my house this afternoon?" Eisner asked. Ovitz was alarmed. Eisner, 53, had undergone quadruple-bypass surgery the previous summer. Ovitz had been one of the first non-family members to visit him in the hospital. He found Eisner understandably frightened and deeply worried about his future.
Ovitz's first thought was that Eisner's health had again failed. But Eisner reassured him. "Don't worry. It's nothing bad."
Two hours later Ovitz was at Eisner's home in Bel Air, the woodsy, moneyed enclave preferred by many Hollywood executives. There Eisner told him that on the following Monday he was going to announce that his company would acquire Capital Cities/ABC, the country's top TV network, and thereby become the largest entertainment-and-information corporation the world had ever seen. Eisner was going to tap Robert A. Iger, the network/company president, to become Disney's president and COO, but that wouldn't take effect until the merger was consummated. Until then, he wanted Ovitz to help him run it. And when Iger took the position, Ovitz could move down to a strategic consultant, and be a troubleshooter and dealmaker more on par with his agenting days.
It was a tough call for the 48-year-old agent. Having thoroughly reinvented the business of talent representation during his 20 years of running CAA, he was arguably the most powerful man in the entertainment business. But he was getting bored, and his power was eroding. Just weeks before, the press had been galvanized by a protracted series of negotiations between Ovitz and Seagram owner Edgar Bronfman, Jr. Bronfman had wanted Ovitz to come to Universal City to run his newly acquired MCA entertainment empire. The talks had gone public, gone slowly, and gone on too long. Ovitz told a friend that he had felt powerless and embarrassed: "Everyone in America knows what I'm doing except me," he lamented. By the time it was all over, the press reported that Ovitz had turned down an offer worth more than $250 million—making it seem as if he'd overplayed his hand. He'd battled to bully Bronfman out of the CEO title, they said, and lost.
Leaving Eisner's house that Friday evening, Ovitz could not decide what to do. Among the salient points he considered: Disney was beginning to look like the only game in town; he had shown his hand by negotiating with Bronfman, and now it was clear that he aspired to be a studio executive. By late summer, Ovitz found that his agency had already changed. His longtime partner Ron Meyer took the job Ovitz had turned down at MCA. Meyer, CAA's top hands-on agent, had taken care of the day-to-day business, leaving Ovitz free to do the big deals. Now Ovitz found himself again having to take late night phone calls from distraught clients, again having to attend all the screenings of the stars' movies. Worse, the five younger agents at CAA known as "the Young Turks" had been unsettled by Ovitz's negotiations with MCA and began pressing for a "succession plan." The invitation from Eisner looked increasingly attractive. "It was eminently clear to me that this was a unique opportunity," Ovitz says now.
By coincidence, both the Ovitz and Eisner families chose the weekend of August 12 to escape the pressures of the industry at their vacation homes in Aspen, Colorado. On Saturday morning, Eisner and his wife, Jane, and Ovitz, his wife, Judy, and their children all went for a hike in the mountains. There, at an altitude somewhere near 10,000 feet, in a place known as Independence Pass, Eisner asked again if he would come to Disney. "Yes," Ovitz answered. Why, finally, did he give in? "He said, 'Please,'" Ovitz told the press after the fact.
One confidant puts Ovitz's compensation package at "Eisner less 10 percent", the same package Iger will get when he takes the number-two position sometime in early 1996—and Eisner's package has paid off in the hundreds of millions.
"We have a very firm succession plan at the company," Eisner told reporters. "Bob Iger's the No. 2 man, and if something happens to me, he'd be a pretty good candidate; he'll definitely take my spot when I'm gone. But if something happens to Bob, Mike Ovitz could also fill that role."
To most minds, he's already got the No. 1 job in the bag. While Eisner has been bullish on his post-op recovery—his father had similar heart surgery at roughly the same age and lived to 73—many around him say Ovitz has been promised de facto control of the studio. Eisner's health, they reason, won't take the trauma of running all aspects of the newly expanded Disney empire. They say Iger is certainly a very good pick to run things while Eisner scales down, but that Iger is certainly a head fake, a plant to get reporters off the scent, and Ovitz is the real pick. Besides, they add, nothing less could have induced Ovitz to come. "This is the end of the road for Ovitz," one well-connected attorney speculated. "Time Warner isn't happening. Sony isn't going to do another huge executive deal. But he is going to be the CEO of Disney. Make no mistake." Concludes another powerful attorney, "Michael Eisner will retire in five years, and Michael Ovitz will run everything. Not Bob Iger, because Bob Iger doesn't have the juice."
Except, of course, CAA. Some people believe the agency Ovitz is leaving behind will rapidly deteriorate into internecine warfare. Says one person close to CAA, "Ovitz's departure destroys the old ethic of all for one, one for all. Now the agents who weren't jockeying for top clients are chopped liver."
Already, CAA as we know it is mutating into a lesser beast. Within hours of the Ovitz announcement, the company's vaunted Tele-TV deal—in which CAA partnered with Baby Bells NYNEX, Pacific Telesis, and Bell Atlantic to deliver home video via telephone lines—collapsed. Robert Kavner, hired from AT&T in June 1994 to be the agency's telecommunications point man, announced that he and Tele-TV would be working without CAA's further input. (The morning of Ovitz's resignation, former CBS Broadcast Group president Howard Stringer was seen in the lobby of the Peninsula Hotel, across the street from CAA. Recently hired by Ovitz to oversee production for the Tele-TV consortium, Stringer was furious he had not been informed personally that Ovitz was leaving.)
Also in jeopardy, according to sources within the agency, is CAA's ground-breaking management of the Coca-Cola advertising account. "It's pretty iffy," one source says, adding that, like the Tele-TV arrangement, "it was all hinged on Mike." Also in doubt is the agency's visionary foster parenting of ailing MGM/UA—a consulting arrangement with the studio's then owner, the French banking concern Crédit Lyonnais. According to one CAA agent, CAA's relationship with MGM "is still pretty much up in the air."
Recently, CAA's relationship with its corporate clients was dealt another setback. On September 14, 39-year-old Sandy Climan, by most accounts the brains behind the Tele-TV and Crédit Lyonnais deals and an Ovitz lieutenant, announced he would leave CAA to report to Meyer at MCA as an executive vice president.
Despite dire predictions, however, client defections didn't happen. To quell the ubiquitous rumors she was leaving, Barbra Streisand actually released a statement. Director Ivan Reitman, who made *Ghostbusters, Kindergarten Cop*, and *Dave*, believes the new CAA will be stronger than the old; the changing of the guard, he says, "forces a housecleaning and a refocusing." Actually, the bodies seem to be running the other way in the first weeks after Ovitz's announcement: CAA has signed 18 new clients, including Jonathan Silverman and *Friends* star Jennifer Aniston.
Within the agency there is a sense of excitement, especially among the younger agents. Says one insider, "It's great to represent big clients without wondering what Michael is going to think." Another recounted how, in the past, at one point or another, every client would ask that some matter be "brought to Michael's attention." Since agents rarely followed through on such requests, it's a relief for them not to have to dissemble anymore.
The day after Ovitz's agency-shattering revelation, CAA announced the appointment not of a new leader but of a 12-man transition team. The transition team members were well aware of the potential pitfalls of restructuring the agency and the big egos involved. Says one agency source, "Everyone knew that no one was going to answer to anyone." The solution, announced within days, was a nine-member management structure. New managing directors would include agency stalwarts Lee Gabler, Rick Nicita, Jack Rapke, and Tom Ross, and the five Young Turks: Richard Lovett, Jay Moloney, Bryan Lourd, Kevin Huvane, and David "Doc" O'Connor.
CAA insiders say unabashedly—although, in the style made popular by mentor Ovitz, always off the record—that the new structure is designed specifically to "discourage" any destabilizing play for power. Says one top agent, "It's more parliamentary. It's more like a real estate company. The great salesmen will come forward. But no one will ever replace [Ovitz]."
That, however, won't stop several from trying. Hollywood prognosticators put Rapke at the head of the pack, with Nicita trailing by a nose. The 45-year-old Rapke joined CAA in 1980 and has put together major deals for his superstar director clients Ron Howard and Bob Zemeckis. Some view Rapke as more the bon vivant than the mogul; lunchtime finds him, many days, smoking expensive stogies in the Beverly Hills private cigar-club-cum-restaurant Grand Havana Room. Says one person close to the agency, "Rapke is the man." Nicita, whose actor client list includes such names as Al Pacino, Val Kilmer, and Kurt Russell, is also a huge force in what some see as the new Hollywood power structure—with actors receiving up to $20 million a picture, agents with superstar connections are going to be the next decade's dealmakers.
But those who are betting on Rapke and Nicita may be missing the real game. Nicita and Rapke are Ovitz's peers. The five Young Turks are almost a generation younger—and that much hungrier and more ambitious than their elders. Also, they are very, very united in their hunger and ambition.
As their nickname suggests, the Turks are as colorful and flamboyant as Mike Ovitz (whose style some characterize as "crypto-Japanese warrior") is not. As a group, the Turks go male bonding with some regularity, flying off to Hawaii for a weekend of "no girls allowed" golf, or to Texas for a weekend of macho horseback riding, or to the Grand Canyon for whitewater rafting, or to the Bahamas to charter a sailboat. They can often be found in pairs power-breakfasting clients across the street at the Peninsula, power-lunching in Beverly Hills at the Grill, or power-sushiing at Matsuhisa. Their black BMWs and Mercedeses are lined up like prize stallions in the CAA underground garage.
Says one observer, "They're all like frat boys—but from the coolest frat house on campus." Says another, "It makes people crazy to see that much power concentrated in a group that is so ostentatiously young."
The rail-thin, bespectacled Richard Lovett, aged 35, is generally regarded as the most ambitious of the group. He is known for being preternaturally upbeat and cheerful; when he has to tell a client bad news, he puts a positive spin on it. A graduate of the University of Wisconsin, he got his start at CAA as assistant to legendary agent Fred Specktor, whose clients include Glenn Close and Danny DeVito. Lovett represents Tom Hanks, Hugh Grant, and Robert De Niro. With Ovitz's departure he has been appointed president of CAA. One CAA staffer who was asked why told *Variety*, "He started doing it, and everyone just let him go with it." Another CAA source says, "He wanted to do it. No one else wanted it." Evidently the first thing Lovett did after getting officially anointed was rush to Barneys to buy several new suits.
At age 30, Jay Moloney is the youngest of the lot. He represents Scorsese and Spielberg as well as Bill Murray and Chris O'Donnell. Many Hollywood observers say that except for health problems Jay Moloney would be the frontrunner in the coming battle to fill the Ovitz void. He was hospitalized in July for surgery to correct a congenital heart defect. (One source reports that an agent from a rival company called director Joel Schumacher as Moloney lay recovering in the hospital. The agent told Schumacher that it was time to start thinking about getting new and better representation. Unfortunately, the agent didn't know that Schumacher was represented by Rapke, not Moloney. As one Hollywood insider who heard the story says, "It's bad enough to be a swine, let alone a stupid swine." The competition among agents for superstar clients is so intense that one source remembers an agent climbing over a child in a wheelchair at a charity event to get to Tim Robbins.) Still, no one should write Moloney off. He is very, very tough. Evidently unperturbed by his heart problems, he had a tattoo of a heart with a Band-Aid taped over it put on his arm after the operation.
Bryan Lourd, aged 34, and Kevin Huvane, aged 35, are best friends, sharing clients Brad Pitt and Ralph Fiennes. Huvane also represents Keanu Reeves and Meryl Streep, and Lourd represents Woody Harrelson and Ethan Hawke. Lourd hails from New Iberia, Louisiana. The well-groomed and socially polished former CBS page is not above resorting to a deep-southern-cracker accent when he's schmoozing a client or closing a deal. Huvane comes from a large Irish Catholic family in New York. After graduating from Fordham he started his working life as an elevator operator at the Wyndham Hotel in New York City before going into William Morris's famed mailroom—the launching pad of many of Hollywood's biggest executives. Soft-spoken and preppy, Huvane is the best-looking of the Turks. Along with Lourd he was brought to CAA by Ovitz as a sort of package from William Morris, and the two are sometimes jokingly referred to as a "pen-and-pencil set." They appear together in public, glued to their star clients in order to prevent anyone else—especially competing agents from ICM or William Morris—from getting close to them.
Only the balding, red-haired David O'Connor seems like a steady guy (especially since he stopped dating CAA client Helen Hunt), but at 37 he's the eldest of the bunch. He represents Sean Connery, Robert Redford, and Michael Douglas.
The Turks seem unable to turn down any opportunity to augment their happy-go-lucky image. Just a week before being named president of CAA, Lovett let himself get involved in the kind of stunt that must make Ovitz's hair stand on end. A bachelorette party at a Hollywood restaurant followed dinner with a good old-fashioned scavenger hunt. Three limousines carrying eight women each were used, and the list of things to be scavenged included such items as "Get a picture of yourself with Kurt Russell," "Perform onstage at the House of Blues," and "Take a photo of a naked agent." Lovett was bagged by two bachelorettes and he willingly got naked for the needed photo of an agent and several women. (A CAA source scoffs that one of the "bachelorettes" was "Tom Hanks's wife, and the other was Ron Meyer's wife. Lovett would have done anything they asked.")
In their romantic pursuits, the Turks don't automatically put pleasure before business. Jay Moloney has dated CAA agent Lisa Wong, whom he met when they were both in the CAA mailroom. Richard Lovett has lived with CAA client Kristy Swanson, the star of *Buffy the Vampire Slayer*, and is often seen out and about with "actresses." Bryan Lourd is divorced from CAA client Carrie Fisher. Huvane is married to CAA agent Ruth Ann Huvane but seems to be out with the boys and best friend Lourd as often as he's home. (The joke going around Hollywood these days is that to succeed under Ovitz, whose personal ethic was "high suburban," everyone at CAA had to get married. Now they have to dump their wives so they can party all night with the Turks.)
They may be wild, but the Turks are great agents. Lovett is credited with pulling Tom Hanks away from William Morris and Hugh Grant away from ICM. He's an expert at what one source calls "the pillow talk poach": if you can't get to the star, get to the star's love interest. Lovett reportedly signed Grant after signing Grant's less-than-stellar girlfriend, Elizabeth Hurley. The same technique is currently being applied to Jim Carrey. He's too hot to liberate from his current representation at UTA, but his girlfriend, Lauren Holly, isn't, so she's being avidly courted.
It is evident that, structure aside, the center will not hold at CAA. Collectively, the Turks are a powerful cadre. Before and after Ovitz's negotiations with Bronfman, and again now that he has decided on Disney, gossip has run hot about their plans. Just as Ovitz and four associates left William Morris in 1975 to form CAA, so have the Turks been expected to make a similar move for independence or further control of CAA. But the breakaway idea is risky, and expensive, and would incur the wrath of Ovitz, who has very strong feelings about his legacy and his agency remaining intact.
Perhaps just as Ovitz emerged over two decades as CAA's undisputed leader and largest shareholder, so will his successor emerge from this pack of men. "It's a question of what will happen to [Ovitz's] office, not who will get it," says relative veteran Nicita. "Leadership evolves," says the younger Lovett, downplaying his new title. "Appointments are made, but leadership evolves." In the short term, Moloney may be the man to watch. He got his start at CAA as an intern and became Ovitz's assistant when "Doc" O'Connor was promoted to full agentry. (One who knows CAA said being Ovitz's assistant meant working in "the Michael torture chamber," and likened Moloney and O'Connor to "Auschwitz survivors.") Moloney knows where the bodies are buried, and as the sorcerer's apprentice he has seen the master at work. With Ovitz taking his magic to Disney, Moloney may either assume the mantle of the master or, as Mickey did when he played the sorcerer's apprentice in *Fantasia*, make a mockery of the magic. The magic is called packaging.
"Packaging" is a CAA byword. It means, in short, making a top CAA actor client available for a movie project not only but especially if the writer, director, producer, and co-stars are also CAA clients. Viz. *Indecent Proposal*. Stars Demi Moore, Robert Redford, and Woody Harrelson are CAA clients. So is director Adrian Lyne. Viz. *Forrest Gump*. CAA represents Tom Hanks, Robin Wright, Gary Sinise, and Sally Field, as well as director Robert Zemeckis, as well as producer Wendy Finerman, as well as screenwriter Eric Roth. Viz. the just-completed-filming *Mission: Impossible*. The producer is Paula Wagner, a former CAA agent who is married to Rick Nicita. The star is CAA power client Tom Cruise, whose production company is run by Wagner and who also gets a producer's credit and fee. The director is Brian De Palma. The screenwriters are Willard Huyck, Gloria Katz, and David Koepp. All the above-the-line talent except Koepp is represented by CAA.
There is no reason to assume that, in Ovitz's absence, the packaging will end, but the damage that could be caused by his defection makes for interesting speculation. Ovitz is the man who made it his business to know everybody else's business. He negotiated the contract when Joe Roth, now head of Disney's film units, was hired by that studio. He negotiated Sherry Lansing's contract when she became head of Paramount's film units. His former CAA colleague Mike Marcus now runs MGM, the company Crédit Lyonnais hired CAA to put back into shape. Ovitz's former partner Ron Meyer now runs MCA/Universal and, in his first act of major business upon arriving there from CAA, made an unprecedented $60 million, three-picture deal with CAA client Sylvester Stallone. (An admiring competitor said, "It's amazing. He made the deal at one end and approved it at the other.") Those kinds of deals are complicated, because Ovitz and Meyer, as well as expected-to-leave partner Bill Haber, are reportedly not selling their shares in CAA—they have set up an "earn-out" arrangement whereby the new partners will become the new owners incrementally over time. (That means the new owners will be paying back Ovitz, Meyer, and Haber over five years from earnings. How much is CAA, with about 90 agents and a reported $150 million in annual revenues, worth? No one knows. But for comparison's sake, *Variety* reported, ICM, with 150 agents and an estimated $100 million in annual revenues, borrowed $63 million in a management buyout in 1988.)
Ovitz's move also upsets business in the making. Because Disney has itself forged an alliance with telecommunications companies—in its case, with Ameritech, BellSouth, Southwestern Bell, and GTE—Ovitz's former Tele-TV partners will have to reconfigure their entire game plan: Ovitz knows every play in their playbook. Because he advised Edgar Bronfman, Jr. on Seagram's 14.9 percent cash investment in Time Warner, and because he helped broker Seagram's $5.7 billion purchase of 80 percent of Matsushita's MCA, Ovitz knows more about the inner workings of those companies than any competitor would like him to. And everyone, now, is a competitor.
When Jeffrey Katzenberg left The Walt Disney Company in August of 1994 and subsequently unveiled DreamWorks with David Geffen and Steven Spielberg, he was the man on the way up and Eisner was the man on the way down. Eisner had lost Frank Wells, his longtime second-in-command, to a freak helicopter crash; he himself had undergone emergency heart surgery; and now Katzenberg, the only man who could keep Disney alive, was gone. Katzenberg was so bullish on his own future that he deeply offended Eisner and the man who, during the darkest hours of his hospital stay, had become Eisner's best friend. While Eisner lay critically ill and the press was rife with reports that Katzenberg would leave the company unless he was given the president and COO titles he coveted, Katzenberg never came forward to deny the rumors or to voice support for or loyalty to his boss.
Katzenberg's behavior was customarily cocky. In his final meeting with Eisner before boldly setting forth solo, he told the man who had been his boss for 19 years, "I'll start a company and later you'll buy it. Then I'll end up working for you." Well, Disney didn't buy DreamWorks, but it bought ABC, with which DreamWorks had just signed a seven-year television-distribution agreement. Katzenberg's TV division makes money only if ABC puts its shows on the air.
During September, Ovitz was splitting his time between CAA and Disney—and was joking to acquaintances, "I'd like to keep it that way, be a seller in the morning and a buyer in the afternoon and do all my own deals." Already he had stopped looking like an agent, wearing slacks and a polo shirt, instead of Armani suits, and seeming more at ease than he had in years.
Not everyone at Disney is so casual, though, about his arrival there. Even before he took the job, in fact, there were ruffled feathers. According to a studio source, Ovitz had forgotten to seek the counsel of his new boss when he extended tentative job offers to Sandy Climan and to his CAA press aide, Anna Perez. Eisner, the source says, said no to both offers. Further, there was a sense at the studio that if Ovitz came in as a heavy, executives would flee. "The minute he tells Joe Roth that he's having dinner with Robert Redford and wants to know if there's a picture for him at Disney, Joe is history," said a source. The most immediate battle, though, will be for office space. Chief of corporate operations Sanford Litvack moved into the office once occupied by the late Frank Wells. Now he or someone else may have to be evicted from his office on the sixth floor of Disney's executive building—to make way for Ovitz. Then Ovitz may have to make way for Iger.

**"The Media Business; Disney and ABC Shareholders Solidly Approve Merger Deal," by Geraldine Fabrikant, *The New York Times*, January 5, 1996**
Shareholders of The Walt Disney Company and Capital Cities/ABC approved a merger yesterday, and Disney executives said they expected the deal to clear the final hurdle of Government approval in the next few weeks.
Speaking to a packed shareholder meeting at the Waldorf-Astoria Hotel, Disney's chief of operations, Sandy Litvak, said the merger was scheduled for a vote by the Federal Communications Commission on January 18 but because of the government shutdown, the vote could be postponed. If the FCC votes on schedule, Justice Department approval could come shortly afterward, which would make the merger final.
During the meeting, attended by about 4000 shareholders and others, Disney's CEO and chairman, Michael Eisner, went out of his way to praise ABC's news division.
"I am affirming my commitment that ABC will continue to operate in the public interest without corporate interference and with the mission of pursuing the news aggressively, and reporting it without fear or favor," Mr. Eisner said.
There have been concerns that Disney might try to exert some control over news and Mr. Eisner was apparently eager to reassure ABC news executives that Disney would not do so.
Harold Vogel, an analyst who follows Disney for Cowen & Company, said yesterday that Disney was anxious to keep the successful news operation intact since it was one of the linchpins of the company's plan to expand its cable business abroad. ABC is starting a 24-hour business news service that it hopes to export overseas and Disney wants to expand ABC's successful sports channel, ESPN, abroad. Additionally, Mr. Vogel said Disney might be concerned about raising objections at the FCC.
One mystery that continued yesterday among shareholders concerned how much stock the investor Warren E. Buffett would choose to take in the new company. Mr. Buffett's company Berkshire Hathaway currently owns 13 percent stake, or 20 million shares of Capital Cities/ABC, and can choose the combination of Disney stock and cash he takes from the deal.
Investors are watching carefully because if Mr. Buffett leans heavily toward stock it would represent a vote of faith in Disney. Disney executives said yesterday that they did not know Mr. Buffett's preferences.
Capital Cities/ABC shareholders are set to receive $65 a share in cash and one share of Disney stock for each share of Capital Cities/ABC stock. If all shareholders settled for the standard payout, Disney would issue 155 million new shares and spend $10 billion in cash.
But Capital Cities/ABC shareholders can ask for more stock or cash once the merger is completed. Disney has said it will meet those requirements to the degree that it can but will not issue more than 155 million new shares of Disney stock.
Peter Russ, an analyst at Shelby Cullom Davis & Company, said that investors would probably only learn of Berkshire's position in the first quarterly report following the merger or the company's next annual report. Mr. Buffett did not return phone calls.
Both shareholder groups approved the merger by a wide margin. But 16 percent of Disney shareholders voted against a new stock option plan that allows Disney to issue 65 million additional shares.
Ann Yerger, deputy director of the Investor Responsibility Research Center, said Disney's new option plan, together with other shares available and outstanding options as of September 30, 1995, meant that the company could have as much as 16.7 percent more shares outstanding than it does now. Ms. Yerger said that number was high relative to other companies in the entertainment industry, though not high in comparison with some technology companies.
Although many shareholders do not like such dilution, Ms. Yerger noted that shareholders might base their judgment on Disney's performance. "Some investors have a sniff test," she said. "Some factors may raise a red flag, but other factors mitigate it."
Disney has made some of the largest grants of options in the entertainment industry, including grants of eight million shares each to Mr. Eisner and a grant of five million shares to Disney's interim president, Michael Ovitz, who will soon leave to make way for ABC president Robert A. Iger to be Disney's president and COO.
Graef Crystal, a compensation expert who is an adjunct professor at the University of California at Berkeley's Haas School of Business, said one reason for the size of the new option program might be to provide for additional options for Mr. Eisner, whose contract is up in 1998. A company spokesman said the new option plans were a move to accommodate the number of executives coming into the merged company.

**"Shareholders Approve Disney/CapCities Merger," by Steve McClellan, *Broadcasting & Cable*, January 8, 1996**
*Only thing left is FCC approval, expected later this month*
Disney and Capital Cities/ABC shareholders approved the $19 billion merger of their companies last week, and Sanford Litvack, Disney senior vice president, said the merger could close as early as January 18. when the FCC tentatively is set to approve the deal. The Justice Department is reviewing the merger's antitrust implications, although Disney CEO Michael Eisner said at the company's shareholder meeting in New York on January 4 that he doesn't anticipate any action from Justice that would block the deal or force a revision of its terms.
Votes representing 73% of Disney's outstanding shares were cast in favor of the deal, while about 80% of the outstanding CapCities/ABC shares were voted in favor of the merger. Disney was down 3/4 at the end of trading last Thursday (January 4), to 60 1/2, while Capital Cities/ABC was clown 7/8, to 124 1/8. Under the terms of the deal, CapCities/ABC shareholders would receive $65 per share and one Disney share for each of their CCB shares.
Michael Ovitz, who joined Disney as interim president shortly after the merger was announced last August, and will step down for Capital Cities/ABC President and CEO Robert Iger to assume the role of President and COO of Disney alongside his ABC title, told shareholders: "The future is about content-we create it; brands-we have them; marketing-we're the best at it, and distribution-we cover the world." Eisner made a point of noting that ABC News will be allowed to do its job unhindered by corporate interference, although it will be under pressure (as is true of all Disney divisions) to perform better financially than it does now. Disney's 1995 results: $12.1 billion in revenue, up 20%, with cash flow up 25%, to $3.5 billion, and a 27% earnings per share gain, to $2.60.

**"Disney to Acquire Pixar Animation Studios," PRNewswire, January 24, 1996**
Burbank, CA and Richmond, CA – Furthering its strategy of delivering outstanding creative content, Michael D. Eisner, Chairman and Chief Executive Officer of The Walt Disney Company (NYSE: DIS), announced today that Disney has agreed to acquire computer animation company Pixar Animation Studios in an all-stock transaction, expected to be completed by this summer. Under terms of the agreement, 2.3 Disney shares will be issued for each Pixar share. Based on Pixar's fully diluted shares outstanding, the transaction value is $2.4 billion.
This acquisition, coming soon after the official approval of Disney's $19 billion purchase of Capital Cities/ABC, combines Pixar's rising creative and technological resources with Disney's unparalleled portfolio of world-class family entertainment, characters, theme parks and other franchises, resulting in vast potential for new landmark creative output and technological innovation that can fuel future growth across Disney's businesses. Garnering an impressive box office and award nomination run with the release of last year's *Toy Story*, Pixar's creative team and global box office success have made it a potential leader in quality family entertainment through incomparable storytelling abilities, creative vision and innovative technical artistry.
"With this transaction, we welcome and embrace Pixar's unique culture, which has already fostered one of the most innovative and successful films in history. The talented Pixar team has delivered outstanding animation coupled with compelling stories and enduring characters that have captivated audiences of all ages worldwide and redefined the genre by setting a new standard of excellence," Eisner said. "The addition of Pixar significantly enhances Disney animation, which is a critical creative engine for driving growth across our businesses. This investment significantly advances our strategic priorities, which include – first and foremost – delivering high-quality, compelling creative content to consumers, the application of new technology and global expansion to drive long-term shareholder value."
Pixar President Ed Catmull will serve as President of the new Pixar and Disney Animation Studios, reporting to Eisner and Joe Roth, Chairman of The Walt Disney Studios. In addition, Pixar Executive Vice President John Lasseter will be Chief Creative Officer of the animation studios along with Roy Edward Disney and Animation Studios chairman Peter Schneider, CCO of Pixar, as well as Principal Creative Advisor at Walt Disney Imagineering, where he will provide his expertise in the design of new attractions for Disney theme parks around the world, reporting directly to Eisner. Pixar Chairman and CEO Steve Jobs will be appointed to Disney's Board of Directors as a non-independent member. With the addition of Jobs, 11 of Disney's 14 directors will be independent. Both Disney and Pixar animation units will retain their current operations and locations, and Pixar will continue to have its own financing source in place thanks to the earlier IPO.
"Disney and Pixar can now collaborate without the barriers that come from two different companies with two different sets of shareholders," said Jobs. "Now, everyone can focus on what is most important, creating innovative stories, characters and films that delight millions of people around the world."
"Pixar's culture of collaboration and innovation has its roots in Disney Animation. Our story and production processes are derivatives of the Walt Disney 'school' of animated filmmaking," said Dr. Catmull. "Just like the Disney classics, Pixar's films are made for family audiences the world over and, most importantly, for the child in everyone. We can think of nothing better for us than to continue to make great movies with Disney."
The acquisition brings to Disney the talented creative teams behind the tremendously popular original Pixar blockbusters to come, who will now be involved in the nurturing and future development of these properties, including potential feature animation sequels. Disney will also have increased ability to fully capitalize on Pixar-created characters and franchises on high-growth digital platforms such as video games, broadband and wireless, as well as traditional media outlets, including theme parks, consumer products and live stage plays.
"For many of us at Pixar, it was the magic of Disney that influenced us to pursue our dreams of becoming animators, artists, storytellers and filmmakers," said Lasseter. "For 10 years we have created our shorts, and now our films in the manner inspired by Walt Disney and the great Disney animators – great stories and characters in an environment made richer by technical advances. It is exciting to continue in this tradition with Disney, the studio that started it all."
"The wonderfully productive partnership that exists between Disney and Pixar provides a strong foundation that embodies our collective spirit of creativity and imagination," said Roth. "Under this new, strengthened animation unit, we expect to continue to grow and flourish."
Disney first entered into a feature film agreement with Pixar in 1991, resulting in the release of *Toy Story*, which has been hailed as an instant classic upon its release in November 1995. Disney had been looking to merely extend their relationship in a joint venture, but chose instead to acquire the company and ensure that Pixar remains a cherished unity of the Disney empire.
The Boards of Directors of Disney and Pixar have approved the transaction, which is subject to clearance under the Hart-Scott-Rodino Antritrust Improvements Act, certain non-United States merger control regulations, and other customary closing conditions. The agreement will require the approval of Pixar's shareholders. Jobs, who owns approximately 50.6% of the outstanding Pixar shares, has agreed to vote a number of shares equal to 40% of the outstanding shares in favor of the transaction.
The Disney Board was advised by Goldman Sachs & Co. and Bear Stearns & Co. The Pixar Board was advised by Credit Suisse.
About The Walt Disney Company
The Walt Disney Company (NYSE: DIS), together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise with four business segments: media networks, parks and resorts, studio entertainment and consumer products. Disney is a Dow 30 company.

**"Disney Completes $19 Billion Buyout of Capital Cities/ABC," by Skip Wollenberg, Associated Press, February 9, 1996**
Two deals down and two still up in the air.
The Walt Disney Company completed its $19 billion purchase of Capital Cities/ABC Inc. on Friday, creating the world's biggest media and entertainment conglomerate with movie and TV production prowess and the broadcast and cable networks to distribute programs.
The marriage was one of three media megadeals announced over a two-month period this in the summer and early fall of 1995.
Westinghouse Electric Corp. already has taken control of CBS Inc. in a $5.4 billion deal. Time Warner Inc. is still seeking regulatory clearance for its $7.5 billion purchase of Turner Broadcasting System Inc.
Disney's purchase of Capital Cities/ABC is the second-biggest corporate takeover on record after the $25 billion purchase of RJR Nabisco Holdings Corp. in 1989.
Disney and ABC had about $19 billion in combined annual revenue last year, putting the merged company ahead of the former leader, Time Warner, which generated $17.7 billion in revenue last year.
But Time Warner would reclaim its status as the world's biggest media entertainment combine if it can conclude the Turner purchase. Turner's revenues amounted to nearly $3 billion last year.
Time Warner officials hope to complete the deal this summer.
The Disney-ABC deal was announced last July, and combines the distribution muscle of a huge broadcasting and publishing company with the production expertise of a well known entertainment company.
Capital Cities/ABC owns the ABC television network and 80 percent of the ESPN sports cable network as well as radio and TV stations, trade publications and newspapers.
Disney owns theme parks, has made popular movies like *The Lion King* and TV shows like *Home Improvement* and has a huge library of animated programs with characters like Mickey Mouse and Snow White.
Under terms of the deal, Capital Cities/ABC shareholders are entitled to one share of Disney stock and $65 in cash for each of their shares. They can also choose all stock or all cash for their shares subject to certain limits.
If shareholders choose all cash, they would get $127 for each share. That is based on a formula described in the buyout agreement that resulted in placing a value of $62 a share for the stock portion of the deal.
Shareholders have until March 7 to choose what they would like in exchange for their ABC stock.
Disney shares dropped 87 1/2 cents a share to close at $62.75 Friday on the New York Stock Exchange.
The owner of the ABC television network becomes a subsidiary of Disney, based in Burbank, California.
The Federal Communications Commission approved the deal Thursday, giving Disney a year to comply with a rule forbidding a company from owning a radio station and a newspaper in the same market.
Disney now owns radio stations and a newspaper in two markets: Fort Worth, Texas, and Pontiac-Detroit, Michigan. To comply with the rule, Disney must sell or swap either the radio or the newspaper properties in each city.
But Disney might be spared making the choice on a sale because the FCC is planning to reexamine the 21-year-old rule within the year, and some commissioners favor revisions.
In Fort Worth, Capital Cities/ABC owns WBAP-AM and KSCS-FM and the *Fort Worth Star-Telegram*. It also owns WJR-AM and WHYT-FM in Detroit and *The Oakland Press* in Pontiac, Michigan.
The FCC waived local ownership rules so that Disney may permanently own TV-radio combinations in Chicago, New York, Los Angeles, San Francisco, Flint-Detroit, and Toledo-Detroit.
Disney previously agreed to sell one of two Los Angeles TV stations it owns as a result of the deal.
And Disney is not done acquiring. Before the ABC purchase was closed, Disney announced it would be buying Pixar Animation Studios, the maker of the computer-animated hit film *Toy Story*, for $2.4 billion.

**"Disney Completes Deal With Capital Cities/ABC," *The Spokesman-Review*, February 10, 1996**
Capital Cities/ABC Inc. is no more.
The Burbank, California-based Walt Disney Company completed the $19 billion acquisition of the broadcast and publishing concern Friday. Now all that's left in the deal to create the nation's largest media concern is for shareholders to decide whether they want cash, stock or both in exchange for their Capital Cities holdings.
"There is no longer a Capital Cities/ABC trading on the New York Stock Exchange," Disney spokesman John Dreyer said Friday, the last day of trading for Capital Cities stock.
Capital Cities shares closed at 127 1/2 Friday, down 1, while Disney stock fell 7/8 to end at 62 3/4. The new company holds the Disney name and will trade Monday under the company's stock symbol of DIS.
Capital Cities shares now are worth $127 in either cash, Disney stock or a combination of both. Shareholders will be mailed forms next week asking them whether they want one share of Disney stock plus $65 cash, all Disney stock or all cash, Dreyer said. The deadline to return the forms is March 7.
If too many shareholders seek all cash or all stock, Disney reserves the right to balance out the distribution, Dreyer said. If Disney stock rises significantly, shareholders may opt for more shares or more cash if it falls.
Disney plans to issue 155 million shares of new stock for Capital Cities shareholders. There are 154 million shares of Capital Cities stock outstanding and 523 million shares of Disney stock.
The two firms announced their plans to merge July 31, combining Disney, which owns film and animation studios, theme parks, sports franchises and a computer software business with Capital Cities, which owns the ABC Television Network, ESPN Sports Network, the Arts and Entertainment Network and several radio and publishing entities. Disney is not finished acquiring, though, as before the Capital Cities deal was complete, it announced it was acquiring Pixar Animation Studios, the producer of the computer-animated hit *Toy Story*, for $2.4 billion in stock.

**"Disney/ABC: $19 Billion Done Deal," by Steve McClellan, *Broadcasting & Cable*, February 12, 1996**
*FCC approval paves way for world's largest media company*
It became official last Friday, one day after the merger was approved by the FCC: Capital Cities/ABC is now a wholly owned subsidiary of The Walt Disney Company, which, with combined revenue of about $19 billion, becomes the largest media company in the world. According to analysts and other media watchers, Disney's priorities in the coming months will include keeping pressure on the television network to remain competitive with NBC, the current leader. Another priority: building the cable side of the business, which at ABC has had double-digit growth for the past few years. The latest initiative there is the company's 24-hour news network.
Sources say Disney still is mulling what, if any, businesses to spin off. Two divisions in particular have been the focus of speculation: radio, where ABC is a major player but Disney is not, and publishing. As for radio, analysts and brokers say it would make more sense to retain the division (21 stations and a network unit), one of the strongest in the industry, because of the tax consequences of an outright sale. Although a venture with a pure radio company has been rumored, Disney CEO Michael Eisner (in the just released 1995 Disney annual report) says he is "wary" of such partnerships.
"Disney/ABC has a very low tax basis, so to sell the [radio] stations would mean [that] they would be paying capital gains taxes on a huge amount of money," says media broker Charles Giddens of Media Venture Partners. "They would have to buy something else to immediately regenerate that cash and, in the case of a company that large, they would have to have another specific target that could generate the same revenue. And that is not an overnight thing," Giddens says.
Despite consummating the merger, Disney is still hungry for more. On January 24, Disney announced it was buying Pixar Animation Studios, the company behind computer-animated hit film *Toy Story*, for $2.4 billion.

**"Television: A Better Mousetrap?" by Richard Zoglin, *Time*, April 15, 1996**
When Roseanne Conner took her television family on vacation to Disney World a month ago, TV's most cynical sitcom clan seemed to have been injected with happy juice. "Man, it's so clean!" marveled Dan, on first seeing the home of Space Mountain and giant Goofy impersonators. "I want to be worthy of living here!" exclaimed Roseanne's sister Jackie. Daughter Darlene was a sour holdout at first, but even she was won over-by a big hug from Winnie the Pooh.
The Conner family came to its senses a week later in another *Roseanne* episode, which satirized a Disney-style theme park where workers are brainwashed into cheery uniformity. Yet viewers could be excused for feeling a bit like outsiders at a family dinner where all the conversation consists of in-jokes. Ever since The Walt Disney Company announced its $19 billion purchase of ABC last summer, Hollywood has looked for signs that the network of *Home Improvement*, Ted Koppel and *NYPD Blue* is being transformed into a subdivision of the Magic Kingdom. Leave it to *Roseanne* to get the issue out in the open.
Never before has a network been subsumed by another media company with as polished an image and as relentlessly focused a way of doing business; how this plays out, both financially and content-wise, will be one of the most watched showbiz stories of the '90s, especially as Disney has also decided to follow up by buying *Toy Story* producer Pixar Animation Studios and is strongly rumored to be targeting George Lucas' Lucasfilm Ltd, adding *Star Wars* and Indiana Jones to the Disney arsenal. Of course, ABC hasn't become the Disney Network just yet-and most sources insist it never will-but even casual viewers will start noticing little mouse footprints soon. Along with *Roseanne*, two other ABC shows-*Boy Meets World* and *Step by Step*-have traveled to Disney's Orlando theme park to tape episodes this year. Producers of the shows and network officials insist that these trips were not related to the merger or to one another, pointing out that such on-location episodes usually do well in the ratings. Of course, they're not bad for company image either (Disney World has script approval of all programs shot there; among the verboten scenes are any that reveal human beings inside those Mickey and Goofy costumes).
The Disney touch could become even more apparent by next fall. The network is planning to launch a two-hour Disney family movie on Saturday nights, with Disney chairman and CEO Michael Eisner as the probable host. Six of the 29 pilots that ABC is considering for next season come from the Disney studio-a not uncommon bit of corporate synergy now that networks are allowed to own their own programs (and now that studios like Warner Bros. and 20th Century Fox own their own networks), but one that has nevertheless raised fears among other Hollywood studios that they will eventually be shut out. ABC executives deny that they'll play favorites, saying they will pick the best shows regardless of supplier, since drawing the biggest possible audience is what matters most, and that they'll never have more than 40 percent of ABC's shows be Disney shows and that Disney will never stop producing shows for other networks. Some producers are also worried that Disney's wholesome image will lead to tighter standards on sex and violence. More immediately, industry observers expect to see cross-promotional efforts linking ABC TV shows, Disney movies, theme parks and merchandise. "The Disney marketing machine will take over, and no network has ever had access to anything like that before," says International Creative Management agent Alan Berger. "General Electric does not paint the name of NBC's shows on their jet engines."
Chairman Eisner and his most noted informal outside adviser, former Creative Artists Agency chief and legendary dealmaker Michael Ovitz, have so far kept a low public profile and declined all interviews. On the other side, Eisner's No. 2, Robert Iger, who also still is president of ABC in addition to his Disney duties (though he is delegating more to other people at the network), is constantly giving interviews and stressing that he will not let Disney micromanage ABC to death. But all three's hands have been evident in a number of major moves since the merger. One of Ovitz's former colleagues at CAA, Michael Rosenfeld, has been hired as an entertainment division senior vice president, and more personnel shakeups are expected, particularly after a disappointing season in which ABC fell to a weak No. 2 in the ratings-and third in the important February sweeps, the same month the merger became official.
Eisner told a meeting of ABC affiliates that the poor February showing was "unacceptable" and vowed it "would never happen again." To insiders, that was code language for "Heads are going to roll." Eisner and Iger (and to a lesser extent, Ovitz) are "evaluating the team that's in place every day," says a well-placed ABC executive, who adds that the current development season, which will determine next fall's schedule, is key. Eisner has been reading some pilot scripts himself (his favorite: *Spin City,* a DreamWorks sitcom starring Michael J. Fox as a big-city deputy mayor). Thought to be most vulnerable among the existing ABC regime is programming chief Ted Harbert, who (aside from not finding any new hits lately and letting one get by, NBC's *3rd Rock from the Sun*) is said to have alienated his Disney bosses by pushing for a big raise after he was offered a top TV job at MCA. Iger has admitted that Harbert's position may not be permanent, but stresses that if that is the case, "we will happy to keep Ted around as an outside consultant, like we did with Brandon Stoddard after he quit last year."
In the meantime, ABC has been pursuing a highly regarded NBC program executive, Jamie McDermott, for a top post, and the tug-of-war over her services has prompted one of the bitterest network feuds of recent years. According to reports in *The New York Post* and *New York* magazine, McDermott-who had a role in developing such hit shows as *Friends*-sought to get out of her NBC contract by charging sexual harassment against the network's top West Coast executive, Don Ohlmeyer. McDermott's charges have been seen by some as a cynical ploy to free her for the ABC job. Insiders say Jack Welch, chairman of NBC's parent, General Electric, even contacted Eisner personally to complain about ABC's role in the episode.
Ohlmeyer, in an interview with TIME, heatedly denied the sexual harassment charge and placed the blame squarely on Ovitz, whom he accused of fomenting "rumors and innuendo that have no basis in fact." Said Ohlmeyer: "Michael Ovitz is the Antichrist, and you can quote me on that." Ovitz would not comment. Sources close to McDermott confirm she was upset at Ohlmeyer's behavior (though she never threatened to bring formal charges) and say ABC approached her only after Ovitz learned she was unhappy and seeking to leave NBC, a message that he then gave to Eisner and Iger.
If McDermott winds up at ABC, she'll find a company in the throes of corporate culture shock-or at least culture adjustment. Signs of Disneyfication have so far been small but symbolic. A new email system on ABC computers is decorated with Mickey and Minnie icons, and Disney's annual report prompted snickers by referring to Capital Cities/ABC employees, in traditional Disneyese, as "new cast members." At a corporate retreat in Phoenix, Arizona, Eisner, Iger and Ovitz joined in the wholesome fun as a group of ABC execs was dragged off to a bowling alley.
Behind the scenes, Eisner has been a visible and involved boss, paying visits to Capital Cities/ABC newspapers and radio stations and playing host (along with Iger and Ovitz) to a breakfast meeting with 50 top ABC News executives, producers and correspondents in New York City to reassure them that Disney will not interfere in the network's journalism. While Eisner and Iger have focused on programming and operational structure, ABC sources say, Ovitz has exploited his freelancer status and concentrated more on dealmaking and strategic matters like international business and new technology.
ABC executives insist that their authority has not been usurped by the Disney overlords. "They have been very supportive," says Iger, who still has the title of running the TV, radio and publishing operations from New York, even as he delegates those duties more to focus on his Disney job. Iger points out that most of the big moves attributed to Disney-including the recently announced plans to launch a 24-hour cable news channel-were in the works before the merger. He acknowledges, however, that the news channel might not have happened without Disney's deep pockets and aggressiveness: "It would have been a tougher sell with [former Capital Cities/ABC chairman] Tom Murphy. But I certainly am glad to be wearing two hats, because everyone wins; I ensure that the pre-Disney era strides at ABC continue even as Disney puts its spin on things, I rein in the worst impulses, free Michael Eisner to be his creative best while I focus on the business side. And I strive to make sure everyone wins."
The impact of Iger's new position and the presence of the two Michaels-Me and Mo, as some Hollywood wags have begun calling them-will be even more apparent when ABC picks its fall schedule later this spring. Those trips to Space Mountain will get old fast, but Mr. Eisner and Mr. Iger's (and Mr. Ovitz's) Wild Ride is just beginning.

**"Disney, ABC Integrate TV Operations," by Cynthia Littleton, *Broadcasting & Cable*, April 22, 1996**
*Iger will oversee distribution, Joe Roth TV production and home video*
The Walt Disney Company last week unveiled a restructuring plan to integrate its TV operations with Capital Cities/ABC, consolidating distribution under CapCities/ABC President and Disney COO and President Bob Iger, and giving studio chief Joe Roth oversight of production and home video.
The long-awaited redesign of the Walt Disney Television and Telecommunications unit was revealed two days after division president Dennis F. Hightower announced plans to retire in June. Disney officials said the reassignment of Hightower's responsibilities, which included worldwide TV production and distribution, is part of an ongoing effort to unify the newly merged Disney and Capital Cities/ABC.
In a joint statement, Disney Chairman Michael Eisner and Disney outside adviser and consultant Michael Ovitz said: "These changes will bring a more logical alignment of our production and distribution capabilities and take full advantage of our strong management depth... The expanded responsibilities of both Joe Roth and Bob Iger reflect our great confidence in their ability to lead creatively driven organizations." In announcing his decision to step down, Hightower noted that Eisner was aware of his plan to retire at age 55 when he became Disney's top TV executive following the departure of WDT&T Chairman Rich Frank in March 1995.
Under the new chain of command, Iger will oversee all cable, pay TV and Buena Vista Television's domestic syndication operations while continuing to supervise all CapCities/ABC broadcast and publishing units, with Iger delegating as necessary to be able to fulfill his Disney duties as Eisner's No. 2. Randy Reiss, WDT&T executive vice president responsible for pay TV and syndication, will report to Iger, as will Etienne de Villiers, president of Walt Disney Television International, and Geraldine Laybourne, the former head of Nickelodeon who was named president of Disney/ABC Cable Networks late last year. On the production side, Dean Valentine, president of Walt Disney Television and WDT Animation, will report to Roth, whose title switches from chairman of Walt Disney Motion Pictures to chairman of Walt Disney Studios. Sanford Litvack, Disney's senior executive vice president and the former COO prior to Iger's rise, takes on Hightower's responsibility for Disney TeleVentures, which includes Disney's Americast telco venture with Baby Bells.
Analysts praised the restructuring plan as a logical post-merger move and a major coup for Iger. The move to put Disney's syndication arm and the ABC O&Os into the same administrative unit follow industry trends by creating a built-in launchpad for Disney's first-run product. "Disney can buy just about any manpower they want," said Art Rockwell, media analyst with Yaeger Capital Markets. "They know they need a big-powered TV executive in there to consolidate that end of their business into workable groups."
But some insiders questioned whether Iger will be overextended, given his already full plate at both ABC and Disney. Even with his delegating more of his ABC duties since he took the job as Disney COO and President (from Litvack and the late Frank Wells, respectively), he could still run himself ragged. Sources say Reiss's duties eventually will be expanded to involve the Capital Cities/ABC Broadcast Group now that Michael Mallardi, a 30-year ABC veteran and senior vice president of the broadcast group, has confirmed plans to retire in June, though Mallardi will stay on as a creative consultant and adviser in the way that Brandon Stoddard has been since leaving last year, and that Ted Harbert may end up doing if he's out as head of ABC Entertainment. (For now, Harbert is still in control there, and seeking a new right hand.)
Although most believe there are more changes on the horizon, last week's restructuring announcement came as a relief to many who had been braced for a major shakeup of Disney's executive TV ranks. Details of the plan, in the works for months, were said to have been closely guarded by Eisner, Iger and Ovitz, fueling internal rumors and speculation about the fate of high-profile staffers at Disney and ABC.
The announcement did not quiet persistent rumors that Howard Stringer, former president of the CBS/Broadcast Group, is preparing to join Disney as a top executive. Talk of a possible merger of Disney's Americast and rival telco startup Tele-TV, which Stringer now heads, has heated up in the wake of the planned merger between Baby Bells SBC Communications and Pacific Telesis. SBC is a partner in Americast, while Pacific Telesis is aligned with Tele-TV. If the two sides join forces, sources say Disney may try to bring Stringer on board to manage its end of the combined venture. Ovitz, who was an adviser to Tele-TV before he became an adviser to Disney (and its interim President until the ABC purchase closed and Iger to come onboard) last year, is said to have high regard for Stringer.

**"McDonald's And Disney Announce Historic Marketing Alliance," BusinessWire, May 23, 1996**
Oak Brook, IL - McDonald's and The Walt Disney Company announced plans today to create an unprecedented global marketing alliance.
The alliance, which will begin in January 1997, partners the two worldwide leaders in their respective industries in a 10-year multi-divisional, multinational relationship, subject to renewal.
Under terms of the alliance, McDonald's will become Disney's primary promotional partner in the restaurant industry, sharing exclusive marketing rights in more than 93 countries, linking McDonald's 18,700 restaurants to Disney theatrical releases, theme parks and home video releases.
Michael D. Eisner, Disney chairman and chief executive officer, said, "This is the most ambitious promotional effort ever developed between two of the world's best-known family-friendly brands. The agreement we announce today is a true McDisney production."
McDonald's Chairman Michael Quinlan said "Disney and McDonald's share equal billing as the world's leading family-oriented brands, and this relationship now guarantees that the magic of Disney will touch the lives of our 33 million daily customers on a continuing basis, in every corner of the globe."
Former Disney Interim President, now strategic adviser Michael S. Ovitz said, "It is the companies whose brands are best known and most trusted that will succeed in the world marketplace of the future. McDonald's and Disney are two such brands. Our alliance will further enhance recognition of our preeminence in our respective industries."
Paul D. Schrage, McDonald's senior executive vice president and chief marketing officer, added, "The agreement represents a significant next step in a long relationship between our two global brands that will directly benefit our customers worldwide. From a business standpoint, the alliance represents breakthrough thinking in the global marketing arena, allowing McDonald's to achieve new levels of consumer excitement and marketing efficiencies around the world."
As part of the alliance, McDonald's will be the presenting sponsor of the Dinoland attraction at Disney's Animal Kingdom, opening in the spring of 1998 at the Walt Disney World Resort, Florida. McDonald's will also operate two restaurants within the Walt Disney World Resort and an additional restaurant at Disneyland Paris. It will also operate at least one freestanding limited menu location in each gate at Walt Disney World Resort.
The Walt Disney Company is a family entertainment company engaged in animated and live action film and television production; cable and broadcast television; theme parks and resorts; character merchandise licensing, consumer products retailing and newspaper, book, magazine and music publishing.
McDonald's is the largest and best-known global food service retailer, with more than 18,700 restaurants in 93 countries. Yet on any day, even as the market leader, McDonald's serves less than one percent of the world's population. We plan to expand our leadership position by profitably adding restaurants and by increasing sales and profits through superior marketing, excellent operations and cost efficiencies.

**"ABC Folds In-House Arm, Iger Promises Content Expansion," by Cynthia Littleton, *Broadcasting & Cable*, May 27, 1996**
ABC Productions, the first in-house production unit created by a network after the easing of fin-syn rules, will close down early next month. ABC officials say they no longer need an in-house primetime series production unit in light of Capital Cities/ABC's merger with The Walt Disney Company. ABC also has struck programming pacts with such top producers as Brillstein-Grey, DreamWorks SKG and Jim Henson Productions. ABC says it will try to find new jobs within the company for the division's 13 employees.
ABC will maintain its boutique production companies-Victor Television, ABC/Kane Productions, DIC Entertainment and Greengrass Productions. Created in 1989, ABC Productions was the first network-owned outfit to sell original programming to other networks.
Newly-installed Disney COO and President Robert A. Iger, who also continues to hold his position as head of ABC Entertainment, says that while Disney will move to fulfill the position ABC Productions had with producing primetime content, this does not mean that ABC is going to be cutting off new deals from other studios and producers, or that there will be any cost-cutting on series development, as many people had feared would happen at CEO Michael Eisner's behest after the merger.
"I've been in long talks with Michael, and I've convinced him not to retreat in television production whatsoever," Iger says. "We will let NBC and CBS and the other studios' TV units continue to produce new shows for ABC, in addition to Disney providing the network with shows, and ABC's pacts with Brillstein-Grey, DreamWorks and the others, spanning both scripted and unscripted content. The purse strings are going to be quite open, too, and no expense will be spared in funding series development. In addition, we're in the middle of rejiggering schedules where necessary for the benefit of ABC's affiliates, who have the option to opt out of showing certain programming compared to the ABC Owned Television Stations. We will shore up viewership where necessary and ensure that ABC continues to have a bright future."
Iger says that his having continued positions of leadership at ABC as well as his new Disney duties means that he is in a great vantage point to help the company as a whole, especially in managing the integration of all its new acquisitions, continued success of Disney's movie slate, building its theme park revenues, and even positioning it to take advantage of the new possibilities of the Internet.
"Michael can't take on all of this on his own, someone like me has to pick up the slack, the way Frank Wells did when he was alive. Naturally, not everything we do will be successful, and it's conceivable and even likely ABC will slip from the No. 1 position among the Big Three, at least for a time. But I believe Disney will have far more successes than failures, now that it has strong leadership with the nitty-gritty workaday details to match Michael's gumption with creative endeavors."

**"Disney to Acquire Lucasfilm Ltd.," PRNewswire, May 30, 1996**
*Global leader in high-quality family entertainment agrees to acquire world-renowned Lucasfilm Ltd, including legendary STAR WARS franchise.*
*Acquisition continues Disney's strategic focus on creating and monetizing the world's best branded content, innovative technology and global growth to drive long-term shareholder value.*
*Lucasfilm to join company's global portfolio of world-class brands including Disney, ESPN, Pixar, and ABC.*
*STAR WARS TRILOGY SPECIAL EDITION coming to theaters in early 1997. STAR WARS: EPISODE I feature film targeted for release in May 1999.*
Burbank, CA and San Francisco, CA – Continuing its strategy of delivering exceptional creative content to audiences around the world, The Walt Disney Company (NYSE: DIS) has agreed to acquire Lucasfilm Ltd. in a stock and cash transaction. Lucasfilm is 100% owned by Lucasfilm Chairman and Founder, George Lucas.
Under the terms of the agreement and based on the closing price of Disney stock on May 26, 1996, the transaction value is $2.05 billion, with Disney paying approximately half of the consideration in cash and issuing approximately 40 million shares at closing. The final consideration will be subject to customary post-closing balance sheet adjustments.
"Lucasfilm reflects the extraordinary passion, vision, and storytelling of its founder, George Lucas," said Michael D. Eisner, Chairman and Chief Executive Officer of The Walt Disney Company. "This transaction combines a world-class portfolio of content including *Star Wars*, one of the greatest family entertainment franchises of all time, with Disney's unique and unparalleled creativity across multiple platforms, businesses, and markets to generate sustained growth and drive significant long-term value."
"This is an extraordinary moment for me, for Lucasfilm, and for *Star Wars*," said George Lucas, Chairman and Chief Executive Officer of Lucasfilm. "At this moment, we are working on the restoration of the *Star Wars* trilogy, in order to create a special edition more in line with my original vision from 1975, that for various reasons, I couldn't have in the films as they were originally released. So, with the 20th anniversary of the original film on the horizon, this is a perfect opportunity for a new generation to be introduced to *Star Wars* and see it as it was intended. Then, the new trilogy, the prequel trilogy, establishing the backstory of Darth Vader, will be released and the story, as I've intended it, will be told. Having a new home within the Disney organization, *Star Wars* will certainly live on and flourish for many generations to come. Disney's reach and experience give Lucasfilm the opportunity to blaze new trails in film, television, interactive media, theme parks, live entertainment, and consumer products."
Under the deal, Disney will acquire ownership of Lucasfilm, a leader in entertainment, innovation and technology, including its massively popular and "evergreen" *Star Wars* and *Indiana Jones* franchises and its operating businesses in live action film production, consumer products, animation, visual effects, and audio postproduction. Disney will also acquire the substantial portfolio of cutting-edge entertainment technologies that have kept audiences enthralled for many years. Lucasfilm, headquartered in San Francisco, operates under the names Lucasfilm Ltd., LucasArts, Industrial Light & Magic, Skywalker Sound and THX, and the present intent is for Lucasfilm employees to remain in their current locations.
20th Century Fox, which distributed the original trilogy's theatrical releases and which had locked in ownership of the original *Star Wars* in perpetuity, has officially waived those provisions and transferred full ownership to Disney, allowing Walt Disney Studios Motion Pictures to distribute the forthcoming *Star Wars Trilogy* Special Edition in 1997 and all future films, and Buena Vista Home Video to control the home video rights.
Lucas himself, Lucasfilm President Gordon Radley, and co-chairman and producer Rick McCallum will report to Walt Disney Studios Chairman Joe Roth. Additionally, McCallum will serve as the brand manager for *Star Wars*, working directly with Disney's global lines of business to build, further integrate, and maximize the value of this global franchise. The *Star Wars Trilogy* Special Edition will be released in January, February and March 1997. *Star Wars Episode I* is targeted for release in May 1999, with the other two installments to come soon down the pike and Disney also expects more feature films and potential TV series expected to continue the *Star Wars* saga and grow the franchise well into the future. In addition, work on the *Indiana Jones* franchise, such as restarting the ABC series *The Young Indiana Jones Chronicles*, will also come down the line.
The acquisition combines two highly compatible family entertainment brands, and strengthens the longstanding beneficial relationship between them that already includes successful integration of *Star Wars* content into Disney theme parks in Anaheim, Orlando, Paris and Tokyo.
Driven by a tremendously talented creative team, Lucasfilm's legendary *Star Wars* franchise has flourished for nearly 20 years, and offers a virtually limitless universe of characters and stories to drive continued feature film releases and franchise growth over the long term. *Star Wars* resonates with consumers around the world and creates extensive opportunities for Disney to deliver the content across its diverse portfolio of businesses including movies, television, consumer products, games and theme parks. The franchise provides a sustainable source of high quality, branded content with global appeal and is well suited for new business models including digital platforms, putting the acquisition in strong alignment with Disney's strategic priorities for continued long-term growth.
The Lucasfilm acquisition follows Disney's very successful acquisitions of Pixar and Capital Cities/ABC, which demonstrated the company's unique ability to fully develop and expand the financial potential of high quality creative content with compelling characters and storytelling through the application of innovative technology and multiplatform distribution on a truly global basis to create maximum value. Adding Lucasfilm to Disney's portfolio of world class brands significantly enhances the company's ability to serve consumers with a broad variety of the world's highest-quality content and to create additional long-term value for our shareholders. To meet potential antitrust concerns, Disney will sell off 80 percent of its stake in Miramax Films, acquired in 1993 for $60 million, retaining only home video rights for films with Buena Vista Home Video.
The Boards of Directors of Disney and Lucasfilm have approved the transaction, which is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, certain non-United States merger control regulations, and other customary closing conditions. The agreement has been approved by the sole shareholder of Lucasfilm.
About The Walt Disney Company
The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise with five business segments: media networks, parks and resorts, studio entertainment, interactive media, and consumer products. Disney is a Dow 30 company.
About Lucasfilm Ltd.
Founded by George Lucas in 1971, Lucasfilm is a privately held, fully-integrated entertainment company. In addition to its motion picture and television production operations, the company's global activities include Industrial Light & Magic and Skywalker Sound, serving the digital needs of the entertainment industry for visual effects and audio postproduction; THX, an audio reproduction standards company for movie theaters and amusement park attractions; LucasArts, a leading developer and publisher of interactive entertainment software worldwide; Lucas Licensing, which manages the global merchandising activities for Lucasfilm's entertainment properties; Lucasfilm Animation; and Lucas Online creates Internet-based content for Lucasfilm's entertainment properties and businesses. Additionally, Lucasfilm Singapore, produces digital animated content for film and television, as well as visual effects for feature films and multi-platform games. Lucasfilm Ltd. is headquartered in San Francisco, California.

**"Growing Pains," by Ken Auletta, *The New Yorker*, July 29, 1996**
*How the Disney-ABC union is coping with its speed bumps*
Thomas S. Murphy has a notorious aversion to gossip, and for that reason, his remarks at a private dinner at Le Cirque on May 23 were startling. The dinner was a testimonial for Murphy, the recently retired chairman and CEO of Capital Cities/ABC, and the host was Roone Arledge, the president of ABC News. Peter Jennings and Barbara Walters were there, as were Ted Koppel, Diane Sawyer, Sam Donaldson several ABC News executives, and Robert Iger, the president of ABC, and now the president and COO of ABC's new corporate parent, The Walt Disney Company. Arledge said that while the news division "didn't always agree" with parent company, particularly about CapCities' stinginess, he regarded Murphy and CapCities as true patrons of ABC News. Murphy, the son of a Brooklyn politician, was a comforting presence, a man with a ready smile who liked to stand in line in the executive dining room with ABC colleagues.
The mood at Le Cirque was wistful, yet fairly joyous and filled with hope about the future. Of course the marriage between ABC and Disney, only three months old at this point, was not without hurdles, especially in how best to integrate the two, particularly the news division. Murphy, responding to Arledge's remarks, tried to reassure the newspeople that Disney understood the special mission of ABC News, and Iger said so likewise, saying "I will fight on your behalf in the boardroom, no matter what." Something was gnawing at Murphy, however, and finally he could not contain it; speaking of Disney's chairman and CEO Michael Eisner, and Disney's former interim president and now "outside adviser, consultant and roving troubleshooter/dealmaker" Michael Ovitz, he said to Bob Iger, "I hope you and the Michaels can work out your problems." Iger gulped visibly and he grew defensive. "What problems?" Sam Donaldson, stunned, reverted to press conference mode. "Yes, what problems?" And Barbara Walters said, "What about Ovitz?"
Murphy began to mumble and Iger tried to deflect, but that did not deter Donaldson or Walters. Donaldson turned to Sawyer, who was sitting to Murphy's right, and said, "Diane, you probably know Ovitz the best. What do you think?" Sawyer hesitated, then said, "He was my husband's agent"-Ovitz's Creative Artists Agency represented the director Mike Nichols-"and I've had dinner with him a couple of times." Before she could continue, Iger touched her arm and stopped her. "Listen, there is nothing wrong between me and Michael Eisner, me and Michael Ovitz, or between Michael Eisner and Michael Ovitz. No problems. None. The three of us work well together as a unit. And simply put, it's inappropriate for me to sit here and listen to a discussion of Michael Ovitz. This is done. No more. There's not a problem, and that's the final word." Everyone understood Iger's intervention. But everyone also understood Iger could've remained silent, for he had once been designated Murphy's heir, and he was that now, but delegating the majority of his ABC duties to lead Disney, and especially lead the union of the companies (and now added acquisitions of Pixar Animation Studios and Lucasfilm Ltd. as well) into the future. But no bigger change or thing affected Iger more than Ovitz.
The subject was changed, but the fact was out; Tom Murphy, who is on Disney's board, had just appeared to confirm to people at his table a rumor Disney (especially Iger) was eager to dispel-the rumor that Eisner and Iger were having considerable trouble with Ovitz. "Murphy volunteered it," one of five guests I spoke with says. "Obviously, it was something on his mind, and he could not keep it in, even with Bob Iger sitting there with him." Because of this rumor, both Michael Eisner and Bob Iger had gone to great lengths in recent weeks to demonstrate that Disney-ABC (and now Pixar and Lucasfilm) was a happy family. At ABC's annual meeting of affiliates, which was held at Disney World June 4-6, they publicly denied reports of friction, with Eisner in particular saying, "Despite what has been written, we're having a good time." He went on to tell the ABC station managers that Ovitz had been his friend for 25 years, and that the major reasons Disney had acquired ABC was his conviction he could hire Iger and Ovitz to help him manage this communications giant. Iger buttressed all of this, saying, "In his new informal role, outside of executive status, Mike Ovitz is able to accomplish more because he's not on a leash. He can get deals done the way he always has. We work well together. Michael Eisner is the creative guy, I'm the business guy, Mike Ovitz is the deals guy."
Privately, Eisner and Iger have groused about Ovitz's style, telling associates that Ovitz, with his agent background, often pursues too many deal options and flits from subject to subject, with no real commitment to one. Eisner has proven himself surprisingly adept at sharing power with Iger, but Ovitz completely stymies both of them. They have to deal with a big name who enjoys the spotlight as much as Eisner does, and this rubs against Iger's quiet style thoroughly. In the Hollywood colony, everyone has an opinion about the Eisner-Iger-Ovitz triad, but few have any facts. At Disney, anxiety about the partnership is expressed by many people, including one executive who admires Eisner and knows him well. "He said to me one time, 'You know, I knew and vacationed with and dined with Michael Ovitz for 25 years, but I didn't know him at all. That's the mistake I made when I brought him in here. He doesn't know how business operates, and he and Bob are like oil and water. I'm glad I only made Ovitz president temporarily!'" Although there are those who think highly of Ovitz and think things have improved, especially after his temporary stint as president ended, the griping persists among both ABC and Disney executives, as well as among Pixar heads Steve Jobs and John Lasseter, and George Lucas and his associate and partner Rick McCallum. Some of these people are jealous that yet another person besides Iger has been interposed between them and Eisner.
Obviously, Ovitz, as he has told friends, "has a steep learning curve." As chairman of the Creative Artists Agency, he had about 500 employees; Disney has about 125,000 "cast members", as employees are called. In contrast to Eisner, who conveys an infectious enthusiasm, and Iger, who has a calming and soothing presence and is friendly but utterly professional, Ovitz has a grave mien. Some of his new colleagues, among them Herbert Granath, the chairman of Disney-ABC International Television and a longtime ABC executive, who traveled to China and Europe with Ovitz, think he has taken well to his new role as a roving ambassador of sorts. "He's a quick study," Granath said. "Very bright. A clear thinker. I like him, and I was prepared not to." In denying rumors of friction with Eisner and Iger, Ovitz asks associates, "If our relationship were as bad as the rumors suggest, why would we go on vacation together?" On June 8, the three men and their wives-Jane Eisner and Judy Ovitz are close friends, and Iger's new wife, Willow Bay of ABC's *Good Morning America*, has been accepted into the fold by them-joined five other couples for a weeklong bicycling trip through the Loire Valley.
The sometimes bumpy three-way marriage between Eisner, Iger and Ovitz parallels the path that Disney has traveled since it announced late last July that it was purchasing Capital Cities/ABC for $19 billion. At the time, Eisner talked about the "synergy" and "branding" possibilities that combining the two companies would permit, and about linking ABC to the Disney TV and movie factory. CapCities would bring to the new company the ABC network, 10 TV stations, 21 radio stations and six radio networks, ESPN, and a variety of other assets. Disney would bring its film, television and animation studios, The Disney Channel, syndicated "Disney Afternoon" package, theme parks, publishing enterprises and retail stores. Together, they create the world's largest media company, especially now with subsuming Pixar and Lucasfilm, giving it a market value of nearly $60 billion. "The four most important programming platforms that enable media and entertainment companies to compete successfully in overseas markets are news, sports, movies and family entertainment," Ovitz later told Disney shareholders. "Without ABC, Disney only owned two of these basic four platforms-family entertainment and movies."
When the merger was announced, ABC was ranked first in primetime entertainment, first in nightly news, and first in morning news shows with *Good Morning America*. 10 months later, ABC trailed NBC primetime entertainment ratings and lost about 10 percent of its core audience. *Good Morning America* is now a distant second to NBC's *Today*, and according to a senior ABC executive, the network is scouting for new anchors. News executives fret that *World News Tonight with Peter Jennings*, after seven years in first place, will be overtaken by the Summer Olympics on NBC, and that they may lose Diane Sawyer when a 90-day window opens in her contract this fall, and even lose Ted Koppel when his contract expires in December. Right now, ABC's ratings are being shored up admirably, but the news programs still aren't budging. Iger also assures people that Sawyer and Koppel won't go anywhere and they'll easily pay whatever they're worth. But that doesn't end things whatsoever.
ABC's yo-yo ratings have been accompanied by its having to adjust to an entirely different corporate culture. Murphy and his longtime partner, Daniel Burke, who imparted a sense of family to ABC, have been replaced by a California-based colossus that has hardly digested them before launching two more massive acquisitions. Where Murphy and Burke prided themselves on decentralized management, Disney and the omnipresent Eisner demand more and more centralized management. Murphy and Burke shut down ABC's strategic planning department; Disney relies on one. Murphy and Burke shied away from publicity, and Iger follows their model; Eisner and Ovitz are showmen. "Disney's culture revolves around Eisner and Burbank," an Eisner intimate says. "Ideas come from the top." Despite officially wearing two hats, at ABC and Disney, Iger clearly considers his Disney duties to be the priority and is delegating his ABC responsibilities. Still, he tries to divide his time equally between New York and Burbank, doing work in his offices and making sure to talk to people in person, on the phone, or through email. He makes sure to attend Eisner's Monday lunches with top Disney managers, and also makes sure to spend one day a week on lunches with ABC executives to get the lay of the land at the network.
Having spent $19 billion to acquire ABC, Disney of course feels that it has the right to intrude. Personnel flaps rarely got into the press at pre-Disney ABC. But last winter, ABC was humiliated when the president of ABC Entertainment-a job that wasn't vacant-was offered to a 31-year-old NBC programmer, Jamie Tarses, who wasn't available. ABC was also embarrassed after it announced in November that it would launch a 24-hour cable news service to rival CNN's, only to abandon the ambition in May. A company that was rarely the subject of rumor during Murphy and Burke's tenure was suddenly awash in intrigue. The merger of Disney and ABC (as well as the Pixar and Lucasfilm deals) raises questions about the drawbacks of giantism, and about whether synergy is as good for the public as it may be for Disney-about, essentially, whether Disney is too big, too centralized, too intent on asserting managerial control. CapCities was insular, even unimaginative, about spending money. Disney is willing to spend, but it insists on doing things the Disney way-another form of insularity, perhaps. In recent years, the approach has got Disney in trouble in France, where the company sought to impose American notions on Euro Disney, and in Virginia, where it wanted to erect a theme park near hallowed Civil War sites. Unlike most media companies, Disney rarely seeks partners for joint ventures. Eisner's fierce response to competitors and the press only encourages the company's go-it-alone approach. The word "enemies" is frequently uttered at Disney. A top Disney executive, asked to explain the first few months with ABC, replied, "There have been a series of events that might have gone unnoticed but were highlighted by our enemies."
When the merger was first announced, Capital Cities/ABC executives, not unexpectedly, worried about their own fates. Although Eisner took care to assure Bob Iger that Disney planned to rely on him to run ABC, Iger, a handsome man with a courtly manner, had reasons to be distressed. With the advent of Disney, Iger found his place on an organization chart was equal to that of other Disney division heads. Then, within two weeks, he was pushed down another rung, when Eisner surprised Hollywood by announcing that Michael Ovitz would temporarily become Disney's president-a position that had been vacant since the death of Frank Wells in a helicopter accident in April 1994. Then, Iger was elevated not just to his previous position, but above them all, with Eisner's announcement that Iger would become president and COO when the merger closed, with Ovitz moved as mere consultant and troubleshooter. In a mere month, Iger had experienced a yo-yo pattern not unlike what ABC has been experiencing since the merger closed.
People at ABC didn't know much about Ovitz, but they were enthusiastic about Eisner. "He has an uncanny ability to look at a project, whether it's a film or an animated feature or a theme park ride, and after 100 really smart people have screened it, he will invariably come in and ask the simplest, smartest question," says Stephen Bollenbach, who was Disney's CFO from April 1995 until last February, when he left to become CEO of the Hilton Hotels Corporation. Eisner's exuberance is apparent even in Disney's annual reports. In his letters as chairman and CEO, he writes about things like his family, Thanksgiving in Vermont, and the stage version of *Beauty and the Beast*, about which he commented, "I love this show! I have seen it at least 30 times. You would think one of my kids wrote it!" Because Eisner is unabashedly commercial, he does not hesitate, as Paul Goldberger once observed in the *Times*, to treat classics as raw material. Most recently, Disney transformed *The Hunchback of Notre Dame* into the story of a lovable animated character named Quasi. Why frighten children who buy Disney T-shirts?
Besides the good cheer spread by Eisner, executives at Capital Cities/ABC had other reasons to be pleased with the merger. Disney paid generously for its new stock, and some of the executives fattened their wallets. Iger received more than $19 million in stock and benefits, and would soon receive a pay comparable to Eisner's as his No. 2; the network president, David Westin, received more than $8 million. But this winter, Capital Cities/ABC also received a signal about synergy and a more centralized style of management when Steve Burke, the president of Euro Disney, was hired as executive vice president of Capital Cities/ABC. (Burke is the son of Dan Burke, Tom Murphy's partner.) He had spent 10 years at Disney and was credited with launching what would become 500 Disney Stores in 10 countries. The word "synergy," which is gospel at Disney, is defined by Eisner as the "cross-promotion…engine that helps drive our company." In 1995, Disney sold more than $15 billion worth of Disney merchandise worldwide-a figure more than seven times the global box office for Disney movies.
The networks are familiar with the notion of synergy, but Disney has pushed it further than anyone else. Not only did ABC, as a condition of the merger, agree to offer Disney a weekly primetime hour and to open the whole of every Saturday morning to Disney-produced programming, it also pledged that half an hour every week could be filled by an animated series based on the Disney-owned NHL team and entitled *The Mighty Ducks*, but with virtually no real connection to either the movie or the actual team. Disney's Hyperion Books released bestselling autobiographies by three ABC sitcom stars, Tim Allen, Brett Butler, and Jeff Foxworthy. Early this summer, the ABC network broadcast a half-hour special on *The Hunchback of Notre Dame*, placing it between two episodes of *Home Improvement*, the top-rated show on ABC. To assist one of CapCities' newspapers, the *Fort Worth Star-Telegram*, Eisner agreed to a Fort Worth premiere of *Hunchback*, which the paper sponsored. Michael Ovitz is a believer in synergy. Soon after he began work at Disney, in late September, he took his Gulfstream jet to Japan and China, began meeting monthly with the heads of Disney operations in Europe, held negotiations about a possible Disney purchase of the California Angels and the Los Angeles Lakers, and helped entice former clients of the Creative Artists Agency such as Sean Connery and Martin Scorsese to the Disney fold. He hoped to increase the company's overseas revenues from 23 percent of overall revenues to 50 percent within 5 years, a task that Iger agrees with and is seeking since taking the reins from Ovitz.
Ovitz was not shy about taking-and seeking-credit. In December, he was credited with hiring Geraldine Laybourne, who had built Nickelodeon into a Disney rival. According to a press release, she would become the president of Disney-ABC's cable programming efforts and also of a proposed 24-hour cable news channel. Ovitz told Disney shareholders in January that he had "known and worked with Gerry for many years;" in fact, they barely knew each other. Iger had known Laybourne for five years, and Laybourne has told friends that the key recruiter was Iger, not Ovitz. Laybourne was excited about ABC's plan for a cable news channel. The cost involved had always led Murphy and Burke to spurn Roone Arledge's pleas to launch such a venture, but Disney appeared more willing to spend money, and Iger was a willing proponent, arguing that the company had to go forward to protect the ABC brand name in news. The happy message that that this decision conveyed to Capital Cities/ABC was that Disney believed in ABC News and would spend whatever it took to keep it competitive.
At ABC Entertainment, however, Disney's involvement has sometimes been deemed disruptive. For example, Ted Harbert, the president of ABC Entertainment, and Bob Iger wanted to sign Tom Selleck for a half-hour comedy, but Eisner, according to a person close to Selleck, was not a fan of the actor or of a project that seemed vague to him-there was no script and no writer. This person said, "Eisner told Iger, 'I do not want to make that deal.' This was the first time anything like this had ever happened to these guys. Eisner had legitimate reasons for saying no. But a deal was closed at CBS less than 24 hours later." A Disney spokesman denies that Eisner alone made the decision, but Steve Bollenbach points out that Eisner's tendency is to micromanage "to a fault," and adds, "The fault is that it physically drains him. Now, with Bob Iger, he doesn't have to do that so often, but once in a while, he just can't help himself."
Inside ABC, while there is widespread respect for Eisner's skills and they admit that he's been surprisingly quite good at sharing power with Iger, some people worry that creativity is being stifled by Disney's insularity. There has been a falling out between Disney and Brillstein-Grey Entertainment, a successful TV and movie production company that had signed a contract with Iger before the merger to produce shows for ABC. Perhaps as a result of Disney's resistance to partnerships, Brillstein-Grey recently decided to sell an equity interest in its company to MCA, and there is a chance it will sever its ties with ABC altogether. One Brillstein-Grey executive summed up Disney's philosophy this way: "They like to own the product they produce." Iger, distressed by what appeared to be Disney-inspired leaks to *The Wall Street Journal* disparaging Brillstein-Grey and its deal with ABC, sent a pointed memo to Eisner and Ovitz. The memo, according to people with firsthand knowledge, complained that Disney was sending the wrong message to the creative community. Making a home for creative talent became more and more important at ABC this winter because the arrival of Disney coincided with the collapse of ABC's primetime ratings. As the ratings sank, so did staff morale. It fell lower when rumors appeared in the press that Howard Stringer, the former CBS Broadcasting Group president, was being recruited by his friend Ovitz to replace Bob Iger. Disney denied the rumor, and it solidified its support of Iger, especially his becoming president and COO. Another rumor, however, turned out to be true. It was the clumsy attempt to hire Jamie Tarses away from NBC-where she had helped develop many of the network's urbane comedies-first to help, then to replace, Ted Harbert. This was eventful because the ABC Entertainment leadership and the network president would be the people with whom Iger would delegate his ABC responsibilities in order to focus on things at Disney.
Separately, Iger and Ovitz made contact with Tarses in the winter to see if she would be interested in the job. At one meeting with Iger, Tarses said she was eager to leave NBC, but Iger was circumspect, saying he could do nothing until she extricated herself from her two-year contract. Harbert, whose job she would be taking, did not know about these conversations until Warren Littlefield, the president of NBC Entertainment and Harbert's friendly rival, telephoned him. Tarses asked NBC for a release from her contract, and was granted a leave of absence while the network planned its fall schedule. Within days, the news was leaked to the press. One thing that remains unclear is who spread the unsavory rumors that Dan Ohlmeyer, NBC's West Coast president and Littlefield's boss, had sexually harassed Tarses. The rumor first appeared in *The New York Post* on February 23. Ohlmeyer believes Ovitz was the source. He was so incensed after the story appeared that he told *Time*, "Michael Ovitz is the Antichrist," and accused him in the *Los Angeles Times* of "spreading rumors with the sole intention of destabilizing NBC and my position here." He is still angry, and recently told me, "I have no question in my mind that this thing was choreographed by Ovitz." As for Ovitz, he has told associates, "On my children, it's not true," and he said the real source was David Geffen, his erstwhile archenemy, working to destabilize Disney and destroy Ovitz in particular in order to shore up the DreamWorks SKG partnership he formed with Steven Spielberg and former Disney studio chairman Jeffrey Katzenberg. Geffen, of course, angrily denies this report, and Ohlmeyer says, "I know for a fact it's not David Geffen. That's not his style."
An ABC executive says it's not Ovitz or Geffen, and that Tarses did complain about sexual harassment during discussions early that winter, well before she approached her superiors about her contract. Publicly, Tarses denied that she was sexually harassed. Jack Welch, the chairman and CEO of NBC's parent company, General Electric, was so irate over what he took to be an assault on Ohlmeyer's name and Tarses' contract that he dispatched an angry missive to Eisner. A Disney source says that Eisner and Iger were upset with Ovitz, and a Disney spokesman deflects criticism, accusing Welch of having written a "threatening" letter, saying, "if anyone leaked this thing, it's Jack Welch." No one emerged from this episode unscathed. Aware of the frustrations and the unhappiness at ABC, Eisner and Ovitz became more solicitous of Bob Iger, especially in giving him Ovitz's former duties. In March, they expanded his ABC duties (and those, moreover, of his deputies) to include not just everything that fell under Capital Cities/ABC, but also three Disney divisions: Walt Disney Television International, The Disney Channel, and Buena Vista Television's domestic syndication and pay-TV arms. An Eisner intimate describes the Disney chief's attitude toward Iger this way: "He loves Bob. Bob is one of the best executives inside Disney, and Michael knows that and wants to make sure that Bob feels rewarded and comfortable. That's why he's the president and COO, because he can take the burdens Michael can't handle anymore. He also knows that Bob can wear both hats and find the best people to delegate to for his ABC duties. He'll be able to shore up both sides of the company quite thoroughly. No doubt, he's Michael's best hire."
But Eisner's attention isn't always well received by ABC executives. In May, some ABC executives, including Iger, were dismayed when Eisner and Ovitz impulsively toyed with the Thursday 10 PM time slot. During a week when executives of the Entertainment division had flown east to make decisions about the fall schedule, Eisner and Ovitz proposed that News fill that hour with a new magazine format. There had always been a plan to grant this hour to News, but Eisner startled everyone by suggesting that Barbara Walters and Diane Sawyer be co-hosts. There were three problems with this idea. First, a senior News executive says, Walters and Sawyer have a prickly relationship. A friend of both women says that Sawyer is still angry that Walters aced her out of an interview with Bill and Hillary Clinton that she thought was hers. Second, there was no solid editorial idea behind the proposal. And, finally, all this was being discussed on a Friday, and the schedule hat to be set by Saturday. In the end, Eisner and Ovitz backed off, but they and Iger and many others at ABC continued to worry about the new season, especially since it was the first real test of the network under Disney's aegis. "They have a network identity crisis," a former network president observed. That identity crisis would be taken care of, a senior Disney official told me, because ABC would now be known as "the family network." He hastened to add that not all shows, in fact, not even a majority of them, would be G-rated, just that there would be more family programming than there was prior, and Disney would not monopolize ABC's air, but this hardly allayed fears at ABC.
The day after the schedule was presented to advertisers and the press, Eisner, Iger and Ovitz were to have lunch with the ABC News bureau in Washington. At the last minute, the lunch was cancelled. One reason, an ABC executive says, was that Iger and Disney had made a decision to kill the 24-hour cable news channel, and Eisner didn't want to talk about their cable news plans when he knew they didn't have any. Iger had changed his mind because of the fact that Rupert Murdoch had swooped into their space to get cheap cable carriage rates for his Fox News Channel, meaning that Disney would have to spend at least double what was originally planned for, and because, after putting all these new numbers in, Geraldine Laybourne and others had shown him projections that the network could lose $400 million or more in the next four years. A senior network official, who, like others at ABC and Disney, did not wish to be quoted by name, has defended both the original decision and the final decision: "We had to take a look at it. And yet there was no way we could get an honest read on whether cable companies would carry us unless we said we were serious. This isn't necessarily the end of the road. Maybe sometime after the year 2000, we'll be ready to try this for real. Because Ted Turner, Rupert Murdoch and MSNBC shouldn't get everything in that arena, especially in order to ensure news coverage is fair and honest." Most upset about the decision was Roone Arledge. He told Johnnie Roberts of *Newsweek*, "I'm very disappointed."
On June 4, when the ABC station managers stepped out of their buses that carried them from their hotels at Disney World to a 7 PM cocktail party and dinner for the affiliates at Disney-MGM Studios, they were greeted by a crowd of cheering, confetti-throwing people pleading for their autographs. The station managers smiled at these Disney "cast members." The next morning, the Contemporary Resort Convention Center's Fantasia Ballroom, the network president, David Westin, came onstage after the blaring music stopped, and, without softening the audience by telling a few jokes, conceded that ABC was a network "in a season of transition." Later in the morning, Ted Harbert, who still didn't know if he was going to be replaced, used gallows humor while presenting ABC's new fall schedule. "Next week, I'm starting as an elevator door operator" on a Disney ride, he declared. Just after lunch, three men sat onstage-Iger sandwiched between Eisner and Ovitz. A question period began, and Eisner reassured the station managers, "The essence of the broadcast business is a local delivery business." He knew that a network rents rather than owns most of its distribution system. Then, he spoke of "the sanctity of News," adding, "The public does not want to think that News is going through some Disneyesque sieve." "Except for Peter Jennings putting on mouse ears," Ovitz cracked.
When Ovitz was asked to cite the biggest threat to ABC, he smartly responded, "Audience erosion," implicitly reminding the station managers that, despite the rebound all the networks seemed to enjoy between 1992 and 1994, the nearly two-decade trend of declining network audiences has accelerated in the past two years. That, he said, is why Disney believes that only powerful brand names that stand for quality can stanch the bleeding. It was a good meeting for ABC. Eisner praised Harbert's new schedule as "fantastic." The chairman of ABC's affiliates, Andrew Fisher, who is also the executive vice president of the Broadcast Division of Cox Broadcasting, in Atlanta, told me that he was impressed by ABC's team, adding, "I'm of the view that people don't have brilliance one week and wake up stupid the next week."
On June 8, a few days after the affiliate meeting, a story by Bill Carter in the *Times* described still another corporate soap opera. It reported that Eisner had held discussions with Marcy Carsey and Tom Werner, the heads of television's most successful independent production company, about acquiring their operation and library, and also about hiring Carsey to supplant Harbert. The *Times* reported that Carsey and Werner had rejected both proposals. Once again, the future plans of Jamie Tarses and Ted Harbert returned to center stage. On June 18, Iger flew out to the West Coast, and over the course of two days he persuaded Tarses to become the president of ABC Entertainment and Harbert to become its chairman. She would do the creative part, and he would control the purse strings. The handling of the entire affair remained an embarrassment.
Perhaps this rocky beginning will one day be seen as similar to ABC's initial year of adjustment to CapCities, in 1985. But as the first year of this marriage was ending, a media executive who is not at ABC surveyed the scene and said, "Ted Harbert was hung out to dry. Jamie Tarses was hung out to dry twice. Michael Ovitz was hung out to dry by Eisner, who went around him to Marcy Carsey and Tom Werner. And Bob Iger was asked to clean up the mess left by the elephants."

**Interview of Michael Eisner, Michael Ovitz and Bob Iger on *Larry King Live*, aired on CNN September 30, 1996**
LARRY KING: Good evening. We thank our guest hosts for sitting in while on vacation: Jim Moret, Paula Zahn and Dick Thornberg. It's great to be back, and great to welcome as we return our first guests of the night. They are with us from Orlando, Florida, where Disney World is celebrating its 25th anniversary.
On the left is Michael Eisner, the chairman of the board and CEO, and on the right is Michael Ovitz, the former interim company president and a strategic consultant on the Disney payroll. And since they're both Michaels, we'll use full name in addressing them with questions. In the middle, between them, is Robert A. Iger, the company president and COO. To fit in, we'll also address him by full name.
The park opened October 1, 1971. Where were you that day, Michael Eisner? 25 years ago, what were you doing?
MICHAEL EISNER, DISNEY CHAIRMAN & CEO: I am trying to think. I was working actually at the American Broadcasting Company in New York.
KING: Doing?
EISNER: "Movie of the Week," program development, sell properties, serials, games shows and children's programs.
KING: Michael Ovitz, what were you doing 25 years ago?
MICHAEL OVITZ, FORMER INTERTIM DISNEY PRESIDENT & DISNEY CONSULTANT: I was an agent at William Morris trying to sell television shows to this guy.
KING: Did you remember, Mr. Ovitz, the opening of Disney World? Was that particularly impressive to you when it opened? Did you give it any thought?
OVITZ: Well, I didn't give it the kind of thought that I am now, Larry, but I will tell you that it was an even for those of us that grew up in the San Fernando Valley in Los Angeles and watched Disneyland open.
KING: Bob Iger, what were you doing?
ROBERT A. IGER, DISNEY PRESIDENT & COO: Actually, Larry, I didn't have a job. My first job started a few months later, working on a show on the campus of Ithaca College. I did join ABC in 1974, so I have that connection with Me. That's what we call these guys, Me and Mo.
KING: But you do remember Disney World opening?
IGER: Yes, very much so. It was a very big day for all of us, especially since it was five years after Walt Disney himself had died. When Walt died, the world stopped, it was a big blow. We wondered if the company could survive. But it has survived, and is thriving. It's his legacy.
KING: Michael Eisner, did it mean anything to you, other than possibly ABC covering it?
EISNER: Well, I had a new, young son, beginning of a family. I figured that someday I would probably go to Disneyland and Disney World. So like anybody else in the country, I was just watching with interest as this new destination resort was being built.
KING: All right. As a theme park, as we rate them, we'll start with Michael Eisner. Where does this rank in the world in attendance, in draw, in attention?
EISNER: Let's see, No. 1, 2 and 3. How's that?
KING: I mean where are you?
EISNER: No, I'm serious actually. There are three theme parks at Walt Disney World, and they are the No. 1, No. 2 and No. 3 largest theme parks in the world. No. 4 is in Anaheim.
KING: And then do we have Japan and Paris and other competitive theme parks, but they are the first three?
EISNER: Yes. Japan's up there very high as is Disneyland in Paris. The Disney parks together, I think we have something like 100 million people a year that see our theme parks.
KING: Bob Iger, what do you think about those comments?
IGER: I think it's very true. We have the most popular theme parks in the world, a premier experience for guests. The best attractions, the best stories, the best architecture, the best amenities. Much of that success is due to our Imagineers, the people that conceive and build it all.
KING: Imagineers?
IGER: Yes, it's imagination and engineering, because that's what makes the parks a reality.
KING: Michael Ovitz, you have not been associated with this end of the business. Do you like it? Do you like this attraction side?
OVITZ: Well, first of all, Larry, I started as a tour guide at Universal Studios when I was in high school, and it was something that I enjoyed then. And I must say now working with Michael and Bob at Disney, this is really a fun side of the business that allows you an enormous amount of creativity and imagination and we've got the most extraordinarily gifted people working in this side of the business and it's just fun to interact with them.
KING: Since that, Michael Ovitz, is where Disney's fame began in characters and theme and movies, how important and integral a part of the company is it?
OVITZ: The theme parks?
KING: Yes.
OVITZ: Well, I think the one extraordinary thing about The Walt Disney Company is how well integrated it is, both vertically and horizontally. And I think that all of the parks, the films, the animated series, the television shows, the network, the cable companies, the cable channels, all of the different parts, the news divisions, sports, all interact with each other and all work together. And I must say that the company has worked very hard over the last 10 years to make sure that all of the synergies available from these different divisions complement each other.
KING: There's lots of areas to cover. Michael Eisner, is ABC synergetic? Is it working well?
EISNER: Very. I mean, ABC on its own is a very important company. The primetime schedule has just been presented. Obviously, for those of you that are bored with this, you can watch the Dallas-Philadelphia game on ABC. We are very much intertwined. I worked at ABC for 10 years. I started at ABC.
I know a lot of people at ABC and I kind of have ABC in my blood. So the synergies between ABC and now Disney I think are pretty self-evident and pretty comfortable.
IGER: I can vouch for that, Larry. Much of my career has been at ABC, prior to this merger, and I know the network inside and out. It's a great fit for Disney, and I'm making sure the pre-Disney progress that made it the No. 1 network in the ratings is being maintained. I officially wear two hats, I still have my ABC duties, but I've delegated to a great team so I can focus on my Disney role.
KING: Disney owns ESPN, which it inherited with ABC. You have also bought Pixar Animation Studios, the maker of *Toy Story*, and Lucasfilm Ltd., maker of *Star Wars* and Indiana Jones. You've had a relationship with Miramax Films for three years, but are spinning that off to meet antitrust concerns. You're buying sports teams, the California Angels in the MLB and the Mighty Ducks of Anaheim in the NHL. You also have a deal to distribute the films of Japan's Hayao Miyazaki, and a global marketing alliance with McDonald's. Are there synergies there?
EISNER: Absolutely. These brands fit very well in the Disney mold, and they make Disney truly stronger, worth more than the sum of its parts. Disney is a force to be reckoned with.
IGER: Disney achieves more by these brands achieving more. It reflects well on all of us. You have to prepare for the future, and this is how we do it.
OVITZ: Michael and Bob certainly hit the nail on the head. I very much applaud them and their leadership.
KING: What, Michael Ovitz, do you think of the coming synergy between Time Warner and Turner?
OVITZ: I am sure it will be terrific. We don't really care to comment about other people's businesses. We're too busy working on our own.
KING: But would you expect the competition to be more fierce?
OVITZ: I don't think that we're in competition particularly with them. They're in a different - in the theatrical business, obviously, and the recorded music business everyone's in competition with each other, but there is plenty of room for everyone to be successful, but we're in a different set of businesses than they are when you get right down to it.
We have characters that are 50 years old and some that are five weeks old. And our job is to create new characters, work with creative people, both internally and externally, and perpetuate the Disney brand and various brands under The Walt Disney Company. These acquisitions and alliances are part of that for us, in inheriting older characters and making new ones.
KING: Michael Eisner, how do you that? How do you perpetuate the name almost to the effect that Walt Disney, it feels like he's alive?
EISNER: Well, I think it's through quality, excellence, attention to detail, creation of new ideas, respect for the old, and just a lot of hard work. Present a great experience to our guests that come down, for instance, to Walt Disney World. We - it seems easy, but it's hard work and we're dedicated to it.
The brand is what we think about morning, noon and night, and we don't want to do anything that would upset it. And, at the same time, if you just sit back and do nothing, the brand will start to wither. So I think the just diligence and attention to detail and the striving for excellence.
KING: But you never stop marketing, do you?
EISNER: Well, you can't market something that is not good to begin with. Otherwise, you'll just tell people how bad it is. Yes.
KING: But you can't rest on laurels?
EISNER: No. You have to make a - for instance, we're building a new theme park down here and hopefully in 15 years or 25 years I'll be back here in my wheelchair talking about how great the Animal Kingdom is, but you've got to do things that are new and exciting and unique. And then you got to let the world know about it through interesting and unique areas. And having a 25th anniversary to celebrate it, to bring 2500 Boy Scouts, boys and Girl Scouts down here who have never had the opportunity to be in one of our parks or are from underprivileged families to see what we do is all a part of what makes us feel good and also I think that is also what makes our company be good.
KING: The Disney saga goes on. There's lots of talk about the three gentlemen who are our guests. We thank them for being with us. And when we come back more questions for each and then your phone calls. Michael Ovitz, Bob Iger and Michael Eisner. This is LARRY KING LIVE. Don't go away.
(COMMERCIAL BREAK)
*Now back to Larry King.*
KING: October 1 is the 25th anniversary of the most successful attraction in the world: Disney World in Orlando or outside of Orlando, Florida, and our guests are the head honchos, Michael Eisner, chairman and CEO, Bob Iger, company president and COO, Michael Ovitz, the former interim president and now consultant.
We would be remiss in not discussing so many reports in the papers. We will start with Michael Ovitz about a possible rift. Let's ask the question this way, would you take this job if it were - if we could go back a year, year and a half? Would you do this same thing again?
OVITZ: If we go back a year, a year and a half?
KING: Yes.
OVITZ: Absolutely. The alleged comments that you're referring to I think started when we met each other in 1970.
KING: Well, then straighten it out for me. What's causing all these stories that continue that the three of you are just - you're all too high profile, too high powered?
OVITZ: I don't know. How do you explain that. Who are you asking that to?
KING: All of you. All right, Michael Eisner first.
OVITZ: Should we answer it together?
EISNER: I think it's typical, competitive, Hollywood gossip. It's like the media - ah see I'm pretty - you know what, I take blame. Because when I was at Paramount, I was part of the group that created *Entertainment Tonight*. And I think *Entertainment Tonight* was the beginning of filling cable channels and all these media outlets with gossip and entertainment news.
And even though we benefited well when I was at Paramount for *Entertainment Tonight*, what we begot on the world is a maniacal interest in personalities that are behind the camera.
KING: Well, it can't be helped. You also are a very, very public company, Michael. I mean you would agree with that. You're on - you buy ABC, you buy Pixar, you buy Lucasfilm, you're on the stock exchange. The people know your names. People on the Street know your names. It is a story.
OVITZ: It is. I'm sorry.
KING: Go ahead, Mr. Ovitz. Go ahead.
OVITZ: Larry, please don't call me Mr. Ovitz. That's my father.
KING: OK.
OVITZ: We call each other by our first names down here. And everyone else calls Michael and I by Me or Mo, as Bob said. We have been living with a sensation in the media business that really has little or nothing to do with the results of particular businesses. There seems to be an extraordinarily deep interest in the fascinations of the gossip side of our business.
The Walt Disney Company, unlike a lot of other entertainment companies, a diversified company that is in a lot of different businesses. And we're really interested in results. And I think our results speak for themselves with respect to how the company's doing.
And Michael will correct me if I'm wrong, but I think in every division the company, we're having probably the best year ever.
EISNER: We've never done better in my 12 years of Disney than we're doing now. And the interesting thing is that the better you do, the better the morale is. The worst you do, the worst the morale is because people are worrying about their jobs and layoffs and how to pay their mortgage and so forth.
The only thing that goes with doing well is it's like a breeding ground for gossip and talk around the water cooler. And the fact of the matter is, our company - I would like this gossip to continue if coincidentally with the continuing of our performance.
KING: Bob Iger, tell me your side of things. You haven't said anything.
IGER: Well, I have nothing but the highest respect for Me and Mo. Mo did well when he held down the fort before I could take the seat, and he's a valuable asset now, being able to be like an agent again. He helped consult a great deal on the Pixar and Lucasfilm deals, the Angels and Ducks deals, getting the alliance with McDonald's, and the Studio Ghibli deal. That's a credit to Mo's talent. If something happened to me, I'd gladly put him in my place, and Me would happily put him in his. I don't say that blithely. I don't say something if it's not true or that I don't believe.
KING: Michael, when Frank Wells died, he was a close friend of yours and a great guy. We knew him very well. You replace him with Michael Ovitz. First, would you do that again? I asked Michael Ovitz if he would take this job again. Would you offer it again, Michael Eisner?
EISNER: I offered it - I actually offered it when Frank Wells was alive. Frank and I both wanted Michael to join us and Frank selfishly would say to me consistently that we needed Michael Ovitz in this company. I will move to a third position…
KING: Really?
EISNER: Absolutely. And I've known Michael Ovitz since he tried to sell me a game show in the early '70s and I got annoyed because he sent flowers to my wife because he thought she liked the show. He hasn't sent her flowers since, by the way.
KING: Well Frank - so Michael Eisner, you would hire Michael Ovitz again today?
EISNER: Yes. Are you offering him again?
KING: No. All things being - in other words the…
EISNER: Yes. The answer is yes. The answer is yes.
KING: I mean that would certainly clear up any rift stories. Do you have any idea…
OVITZ: By the way - by the way, there has not been one story where one person is quoted directly about any problems inside our company. It's just all baloney. The fact of the matter is, we, together, have almost as many enemies as Saddam Hussein, so it's very difficult not to have this kind of gossip here.
KING: Didn't you, Michael Ovitz, as a veteran of this business and the city of Los Angeles kind of expect this?
OVITZ: Well, you never really expect it, but you live with it. It's something that I lived within the agency business for 27 years. I once gave an interview to the *L.A. Times* about 10 years ago where I spoke to the reporter and I must say the reporter really nailed the essence of what we were trying to communicate, which is that this business is a collaborative business and the creative process is a collaborative process.
And one of the things that I find extraordinary in the film business, unlike the record business and less so in the television business, there is an amazing competition of who's No. 1 and who's No. 2. The record business doesn't experience that much because they have a top 10 record, it seems to be very acceptable and there is always room for many number ones.
The entertainment business, itself, just insists on being obsessed, in the film business particularly, with this whole issue of everyone gossiping about everybody else's lives, and I lived with it in the agency business. We tried very hard, when I was at CAA, to not really deal in client's personal activity and not perpetuate that.
One of the things that, Larry, we worked very hard at, which we even do Disney and Joe Roth is really good at, is we don't comment about other companies' movies for example. It's negative and that's not what this business should be about. It should be a collaborative effort. It should be people helping each other.
And if you look back into history, when directors all worked on the same lot, they many times helped each other with cuts of their films and worked very collaboratively with other directors that released films that were competitive to them.
KING: Michael Ovitz, is it difficult to run a company and then work for someone else?
OVITZ: Well, you know, I've been asked that question about…
EISNER: Somebody as nice as me?
IGER: Or me?
KING: Someone even as nice as Mr. Eisner and/or Mr. Iger?
OVITZ: We - I've been asked…
EISNER: He has to say yes, Larry. I'm sorry.
KING: No, he doesn't, he's got the stock.
OVITZ: That's true, Larry. It's on the air now, Larry, we can't be criticized. The - I worked for over 1000 clients in the 27 years that I was an agent. And anyone that works for a public company or works in the service business or works in any kind of a business where you're working with other people, you're always working for somebody.
And it was really in this situation, Michael and I, we've been friends for over 25 years, our families are friends, working together in the initial inception was made easier by the fact that we knew each other and probably more difficult by the fact that I had to learn the business.
And you don't walk into a business that someone else created that's been running for a long time - by the way, running really well. He and his management group did a terrific job over the last 10 years of taking this company from a very small company to a very large company and that comes from a lot of thought and a lot of hard work. Bob here, he's a great part of the company, he's a great and integral part of Michael's team. He fits like a glove, and even he has to really learn the company the same way I do.
We can't expect to learn that company in a month, two months, six months a year. Frankly, when we first talked about this we talked about a two-year learning curve. So, I must say, having been here just about a year now, I probably know about 1 percent of what I need to know. Bob is doing better, he's admittedly learning faster than I am, but he still only knows about 10 percent of what he needs to know.
IGER: Guilty as charged. I may be a quick study, but even I have my limits. I'm learning new things about Disney every day, and it's exciting for me. Me is someone great to study at, and I'm honored he has given Mo and I so much power, so much responsibility, while he can scale back and focus on his core strengths. He's the master, we're the students, but he's very confident, ecstatic for the day when we'll surpass him. He'll leave behind a great legacy, and we'll be the ones to pick up the torch and carry it forward.
KING: So Michael Eisner, what you're saying, before we take a break, is this is enemies involved. These are people who are in competition with you spreading stuff that isn't true?
EISNER: I don't know who's spreading stuff. First of all, it's minuscule the - you know, Michael is the top agent in the world for 20 years. And if you are representing Tom Cruise and you're angry at Tom Cruise for what you pay him what you do is you take it out on Michael. So Michael…
KING: The bad guy.
EISNER: Not bad guy, but he was extremely well known because he represented the most well-known actors in the world. As far as we're concerned, it's an irrelevant gossip mongering kind of thing and they wouldn't be interested in us if we weren't doing well. So I guess we should sort of be flattered.
KING: OK.
EISNER: Or we will be a third-party candidate.
IGER: I second all of that. He's a great, impressive figure, and many people are jealous. I don't know who specifically is responsible for this, though.
OVITZ: I know who's spreading this stuff, but I'm gonna be a gentleman about it.
KING: Where goes it with Disney on their 25th anniversary of Disney World? That's next on LARRY KING LIVE. Don't go away.
(COMMERCIAL BREAK)
KING: Another word used to describe the Disney Corporation is "progressive," in the area of politics and other areas.
Michael Eisner, you have decided to give health benefits to all your employees: same-sex benefits to people who are coupled. You've come in for a lot of criticism for that. Was that a tough decision?
EISNER: Actually it was not a tough decision. Every single company in the entertainment industry - 400 other companies. IBM just did it. We believe it's appropriate, nondiscriminatory. We have a nondiscriminatory policy at The Walt Disney Company and we are following and leading, but in this case, we are amongst the most prestigious companies in America.
KING: But you might have been easier taking the safer road, right?
EISNER: No. The…
KING: No?
EISNER: The safer road is the right road. The right road was to provide health benefits to all employees and not discriminate against anybody. And it may seem to you or to other people at this time risky, but to me, if you do the right thing, you really probably in the end avoid the risk.
KING: Bob Iger, what do you say about all that?
IGER: People like to say we're "progressive" or "political." I disagree. We're not political. People make things political when they want to, when they complain about us. Doing what's right is not political, it's a bipartisan thing. And we want to appeal to the left wing and the right wing at the same time. We shouldn't do things just to be politically correct or reactionary or to score points or to goose our stock price. Just do something because it's the right thing to do.
KING: Michael Ovitz, what do you make of some of the Christian Coalition's efforts against Disney like boycotts and the like? First, have they been effective? And, second, your reaction to them?
OVITZ: Well, first of all, I can't comment about their effectiveness and they surely have every right to feel the way they want to, but when you start looking at overall entertainment, I think that the history of this company, right up until today, this company's record - track record just stands for itself.
I mean, we produce more quality family entertainment than any company in the history of the world and we have a mandate and a constitutional charter from our founder to do that and we'll continue.
Occasionally, when things occur that either are done or not done, with or without the knowledge of the company, or we get involved in certain situations, when you compare it on an overall basis to what we've done for the history of the company as well as the remainder of what we do, I mean it's a minuscule amount of issues.
KING: *Ellen* is a Touchstone production, the television show, *Ellen*, and there are strong rumors that she is going to, in a sense, come out of the closet. Mr. Eisner, do you have a thought about that at all?
EISNER: No, it's one of our better shows on ABC at 8:00 on Wednesday night. I'm promoting it, as you can see.
KING: I mean, will she come out? Does that bother if you does? Does it make any difference to you?
EISNER: Well, in the first place, I don't know whether she is or she isn't. She's working on her material. No matter what she does, it won't happen unless the scripts are excellent, unless the storylines of the individual episodes lead in a meaningful and humorous direction. I have not been told, and I've asked, as you can imagine.
KING: You haven't been told?
EISNER: No. Whether she is or she isn't through the direction of the show. So I think this is something to discuss on a later day.
KING: Bob Iger, what do you have to say, since it more involves you over at ABC?
IGER: I'm not going to breach Ellen's confidence. I don't know what's going on there, but even if I did, I wouldn't leak that. I pride myself on having good relationships with everyone. When everything comes out, then I'll talk about it. Because that's proper and ethical.
KING: If Ellen DeGeneres were your client, Michael Ovitz at CAA and she asked your advice, what would you say?
OVITZ: I think we'd sit down and probably talk it through with respect to what was important to her creatively. I agree with Michael. It's an issue of what's funny and what works. And it would be an issue of what she feels she needs to do and then that has to be balanced against the life of the show and the audience that she's playing to and I think it's a very complex equation.
I don't think that any single person can make the decision. And I think ultimately however the shows go are going to be a series of decisions that are made in conjunction with a lot of people. What's going to happen? I don't think anybody knows. I think a lot of it has been pushed beyond where the actual feelings are or what the - I don't think there was a game plan for this.
KING: Can you say though, all three of you, that you will support her whatever they do as long as it's funny?
OVITZ: Well, what we will probably do is support ABC and the ABC management and how they best see the progress of their television network. It is just by coincidence in this case that the program is produced by Touchstone Television. So it is complicated, as Michael said, because it's an ABC show on the ABC schedule. It's a little early for us to decide. It's certainly gotten a lot of public interest.
KING: Ink.
OVITZ: Well, people are interested. I think, you know what, I think they like Ellen DeGeneres. They like her character. They like the show. And therefore, when she say what - or somebody says about her what's going to happen, they're interested. I don't think it's that big a public policy issue, however.
EISNER: You know, also, Larry, she's a very talented lady and she's got fantastic comedy instincts and she's got great instincts, as well as her producers do, as far as what she feels works for her. And this is also an ABC issue and this is not an issue that we will directly - this is not something we legislate. These are creative issues and I think it's important that we understand that this is - there is no program for this. There isn't something that's laid out in stone, which is how something is going to go.
IGER: I've learned to delegate a lot, as I've said, so I'm not personally involved in a lot of the discussions there. I'm not making the final call on this show. But whatever happens, I will gladly stand behind, because I trust the people running ABC. And Ellen is a lovely, wonderful woman, wonderful human being, and I'm proud to be involved with her.
KING: When we - we'll come back and we'll talk about the coming attractions at Disney World and why this is going to be a 15-month celebration. We will also include some of your phone calls, and then Joseph Bosco.
On Wednesday night, an hour with Michael Jordan live. Thursday night Johnny Cochran. His first live interview with phone calls on the anniversary of the date of the verdict. We'll be right back.
(COMMERCIAL BREAK)
KING: Our guests are Michael Eisner, Bob Iger and Michael Ovitz, the chairman/CEO, president/COO and interim president/consultant respectively of Disney. We'll get a call in and then I want to ask about Animal Kingdom.
South Charleston, West Virginia, hello.
CALLER: Hello.
KING: Hi.
CALLER: Yes, Mr. Eisner, I just wanted to ask you, do you think the high prices at Disney World exclude the average American family from taking a vacation there?
EISNER: No. I think our prices are reasonable. If you look at the amount that you get for what you spend, I think it is enormous. We've done a lot of excellent research. We find our guest satisfaction are twice value has been very positive.
KING: What's a day cost now about?
EISNER: It all depends on the time of year. Anywhere from $35 to in the 20s, depending whether you buy a one-day ticket or a five-day ticket, it varies. The - you know, the most expensive part actually is transportation getting here. Once you're here, the price is reasonable.
KING: No, is it still all rides inclusive in the - when you buy the tickets?
EISNER: Yes, yes.
KING: Michael Ovitz, what's Animal Kingdom?
OVITZ: Animal Kingdom, I think, is the most exciting project coming up on the Disney horizon. It is an 800-acre animal park that is divided into a section which is going to have exhibits and live animals that are in a - put up in a very special way, which I think is going to be very educational for children.
And then there is going to be a wide open area which I think is, what, about four, 500 acres safari, where we're going to take guests through the area where a lot of individuals have worked very hard to recreate the African plains.
It's really going to be quite a project.
EISNER: Probably the - I think the closest thing we can say about it is what the - a Disneyland was to hard, iron rod amusement parks, the Animal Kingdom will be to zoos.
KING: Really? It's the next step from zoodom?
OVITZ: Our goal is to take live animals and present them in an exciting way with rides and with information and in an environment where you don't see cages and you don't see barriers. Of course, they'll be there. It's the next level up of presenting animals on. I think…
KING: How far away is this?
OVITZ: It's at Disney World, it's on our land. It's…
KING: Tell me about when will it be…
OVITZ: Oh, '98, '98.
KING: Bob Iger, what do you think about the park?
IGER: It's a great, amazing addition to Walt Disney World. It sits alongside the Magic Kingdom, EPCOT Center and Disney-MGM Studios as a natural fit. It's truly the next stop for the resort.
KING: Will it be the final park added there?
IGER: Maybe, maybe not. You never know. Nothing is ever set in stone. Walt Disney World has 27,000 acres of land, plenty of room to expand. Granted, most of it will remain in its natural state, so if there's more than five parks, I think we need more land.
KING: Let me get a break. And a few more moments with Michael Eisner, Bob Iger and Michael Ovitz, take a few more phone calls, and then Joseph Bosco, who's written a new book, *A Problem of Evidence*. He was in the courtroom for the entire trial. We'll be right back.
(COMMERCIAL BREAK)
KING: Couple of moments more on this 25th anniversary. Michael Eisner, why a 15-month celebration?
EISNER: It, actually, we think will take that long to present all of the stuff that we're going to present. We have things that are new in EPCOT Center and the Disney-MGM Studios and the Magic Kingdom and Blizzard Beach and Typhoon Lagoon.
And the celebration which we haven't discussed, Disney Institute. And we thought a 15-month period would be enough time to concentrate and spotlight each one of those individual attractions.
KING: Anything on the board, Michael Ovitz, for another amusement park somewhere? I just asked Bob about more parks at Disney World, but what about the rest of the world?
OVITZ: Well, we are in the process of developing a second gate in Anaheim next to Disneyland and it has been covered. It's in the process of going through approvals through the city of Anaheim. And the designs are done. We have just gone over them as recently as about two weeks ago. And it's going to be quite an exciting second gate.
KING: Any other big thing coming for the company, Michael Ovitz?
OVITZ: Well, there's a lot of exciting projects on the board. We've got some fantastic films coming out. We've got *Ransom* coming out with Mel Gibson, directed by Ron Howard. We have *101 Dalmatians*, which is our big Christmas picture, which we have seen in preview form and is really going to be a big hit.
We have a picture called *The Preacher's Wife* coming out, Penny Marshall directed with Whitney Houston and Denzel Washington, that we're very excited about. There's the special edition versions of the *Star Wars* trilogy, coming out for the first movie's 20th anniversary, and will build excitement for George Lucas' prequel trilogy. We've got some really terrific films coming out.
We're very excited about the Animal Kingdom, about our second Anaheim gate, redesigning Angels Stadium. There's a lot of projects on the boards.
KING: Bob Iger, what are you thinking about all this?
IGER: The future is very bright for Disney. I'm proud to be part of shepherding all of these great ideas, great projects, into reality, and to help Me run this vast empire.
KING: Mighty Ducks look all right, Michael Eisner?
EISNER: Well, we have a hit *Mighty Ducks* Saturday morning television program, where next week we come up with a third *Mighty Ducks* television movie.
Oh, that's right I talked to you about the *Mighty Ducks* last time and have a hockey team.
KING: I'm a hockey fan.
OVITZ: Yes, well now we have Teamu Solani…
KING: I know, I know.
OVITZ: Now we're talking about business here. Wait a second. Paul Kariya, Jare Kuri, we got a tough line.
KING: And who you going to try to get to manage the Angels?
EISNER: Michael's going to do that. That's what all the rumors are all about.
KING: So that's it. That's it. You got it. There we have it tonight: Ovitz manages the Angels.
OVITZ: It'll be in the paper tomorrow, Larry, trust me.
KING: Thank you all very much. Thanks for being with us. Thanks for being frank and open and honest. Continued good luck, and as we can safely report, Michael Eisner, the triangle flourishes, right?
EISNER: Thank you. Good night.
KING: Good night.
OVITZ: Good night, Larry.
IGER: Happy to be here, Larry. Good night.

**"Fear And Loathing In The House Of Mouse," by Bryan Burrough and Kim Masters, *Vanity Fair*, December 1996**
*CAA overlord Michael Ovitz was known as the most powerful man in Hollywood until his stunning decision to leave his I.M. Pei-designed lair and take the number-two job at Disney for an interim period, then become a glorified consultant when Bob Iger took the reins. Publicly, Ovitz is an integral part of the team, alongside Iger and chairman/CEO Michael Eisner. But is Ovitz truly that indispensable, or merely a third wheel? Bryan Burrough and Kim Masters infiltrate the Mouse Kingdom to find out why Ovitz can't make alliances at Disney, and whether he can make it work in his new, passive position.*
The Walt Disney Company executives arriving at Michael Eisner's Bel Air home that Saturday afternoon in August 1995 were stunned, angry, and confused, and the reason could be summed up in two words: Mike Ovitz. That morning, Eisner had informed his top aides that he intended to hire the founder of Creative Artists Agency, the man sometimes called the most powerful in Hollywood, to become Disney's new president for a temporary period, then he would cede the position to make way for Robert A. Iger, the man Eisner had signified as his number two. Then, when that happened, Ovitz would become an independent, outside strategic adviser and consultant, and be paid for his advice. It had been a month of explosive news. Just days earlier, Disney had shocked the financial world by announcing plans to buy Capital Cities/ABC in a merger valued at $19 billion. In one bold swoop, Eisner had transformed Disney into what is now the world's second-largest media conglomerate, a $44 billion behemoth comprising theme parks from Southern California to Tokyo, a vibrant film studio with animated features that gross billions, retail outlets in 11 countries, a New York publishing house, a cable network, and now one of the four major networks. (And of course, earlier this year, Disney clinched deals for *Toy Story* producer Pixar Animation Studios and George Lucas' Lucasfilm Ltd. in order to add *Star Wars* and Indiana Jones to the Disney roster, making the company larger yet.)
Of the three men who settled around Eisner's dining room that day—Stephen Bollenbach, Disney's canny chief financial officer; Sanford Litvack, the conglomerate's general counsel and COO until he would give that position over to Iger when the ABC merger closed; and Irwin Russell, a seasoned lawyer and Disney board member—Bollenbach appeared most dismayed. Already that morning, when Eisner had called to tell him of his choice, Bollenbach, who had been one of the key architects of the ABC deal, expressed serious concern.
"Why are you doing this?" Bollenbach kept asking the shrewd Disney chairman. He didn't know Ovitz and didn't especially want to, even if Ovitz was only going to be a glorified seat warmer; he worried aloud that the introduction of an outsider would damage the chemistry of the tight-knit group that ran Disney. "You'll take a really good management team and destroy it," Bollenbach warned.
Eisner explained that the idea of hiring Ovitz, his friend and sparring partner for 25 years, had hit him during meetings at ABC. "You know," Eisner said, "I always knew how complicated this [deal] was. But it's just come to me how much there is to do. I can't do it all myself. That's why I'm hiring Bob to become my real number two, but I also think Mike has plenty to offer, not just as interim president, but as an adviser." What he needed most, Eisner went on, was someone to share creative responsibility for the combined Disney-ABC, hence especially why Iger would rise in the ranks but also keep his ABC duties (with necessary delegation).
Bollenbach protested that Ovitz had no experience running a major public company.
"It's not like he doesn't know about business," Eisner said, mentioning Ovitz's 20 years running Creative Artists Agency. "He's run a big company."
"That's not a big company," Bollenbach shot back. "It's a *tiny* company."
Seeing that Eisner was dead set on Ovitz, Bollenbach changed tack, suggesting that Disney form a four-man office of the president consisting of himself, Litvack, Iger, and Ovitz. Eisner said no; he had seen it tried at other companies—he mentioned Sony—and said it always looked like a "display of weakness," as if the CEO couldn't decide on a chain of command. "When Bob becomes president and COO, he needs full control, and thus Mike will need full control when he's there."
"Well, I won't report to him," said Bollenbach, whose contract explicitly stated that he would be supervised only by Eisner.
"I won't do it, either," said Litvack, who was key. Since the death of Disney president Frank Wells two years before, the trim, 59-year-old chief of corporate operations had emerged as Eisner's consigliere. Bollenbach had warned Eisner that Litvack would probably quit rather than report to Ovitz.
There was also quite a great deal of attack on Ovitz's post-merger position. "You're going to be paying him to sit on his ass!" Litvack said. "When Bob takes over, Mike Ovitz has no reason to stick around, but you're going to give him a cushy title with no power, and a massive pay package. Why? What good is that?"
Eisner insisted this was no mere sinecure. "Mike Ovitz is a dealmaker. He can help negotiate great deals on our behalf. As a freelancer, he'll have more autonomy to do so. He can really help us, not just Bob and me, but the two of you as well!"
Amid the debate, Ovitz himself arrived, joining what quickly became an intensely awkward meeting. After strained introductions, Eisner took Ovitz outside for a walk to explain the situation privately. "We're certainly prepared to work with you," Bollenbach volunteered when Ovitz returned. But it was implied clearly that they did not intend to work for him. Ovitz defused the situation, acknowledging that neither executive would need to report to him, especially since he'd be gone when the ABC merger closed.
Tensions rose sharply in the following weeks as Ovitz settled into his new interim job. Roy Disney, the vice chairman and board member who retains supervision of the animation group, fired off a memo indicating that animation chief Peter Schneider would continue to report to Eisner until Iger took control. Ovitz found himself almost immediately surrounded by entrenched and resentful coworkers and with no clearly defined responsibilities. "He struggled with just what he was supposed to do," recalls Bollenbach. "He had a huge problem setting an agenda. He just showed up for work the first day trying to make things happen, even though he wasn't going to stay around for long."
In those first few months, Bollenbach says, he and Litvack looked on in dismay as Ovitz busied himself with a string of what they regarded as marginal projects. A scheme to buy the Los Angeles Lakers basketball team went nowhere. An effort to buy the Seattle Seahawks football team blew up in Ovitz's face when other owners signaled that they might block the proposed move to Los Angeles. Ovitz's most ambitious project, a plan to consolidate Disney's far-flung operations in a single place where executives could mingle and share ideas, fell flat after staffers calculated that the lot would need to stretch across several miles. It would hardly foster the creative intimacy which Ovitz envisioned.
"You can't suck up company resources doing things that are meaningless," Bollenbach finally told Ovitz. He suggested that his new colleague sit down with briefing books and familiarize himself with the details of company operations. "Let's you and I take a day, a day and a half, and I'll go through all this with you, go through a budget, and you'll understand this business," Bollenbach remembers telling Ovitz. "His response was 'Great. I can't thank you enough, let's set up a meeting.' That conversation occurred 25 times. And we never had the meeting. The point was, Michael Ovitz didn't understand the duties of an executive at a public company and he didn't want to learn. He never bothered to learn before he gave up the chair, and now that he's a 'roving troubleshooter', he's still not interested in learning. It's so easy to ignore him and focus on only on what Bob wants."
Almost everything about Ovitz bothered Bollenbach and Litvack—and Eisner also seemed irritated. Ovitz ran late to meetings and, upon arrival, was perpetually interrupted by phone calls. One habit especially vexed Eisner's inner circle. Early on, the company's interim president developed the gesture of whispering in Eisner's ear—both in meetings and at public events. "That was Ovitz's little power trip," recalls Bollenbach. "It was so clear Michael Eisner was uncomfortable with it, and Michael Ovitz was so clearly doing it to show he literally had the boss's ear. I told Eisner, 'You gotta stop this. You look crazy.' He said, 'I know—someone else told me that, too.'"
Steve Jobs, the Apple Computer cofounder that is chairman and CEO of Pixar and now a Disney board member after the deal, is also said to despise Ovitz with a passion. "Steve uses his favorite word to describe Ovitz-bozo," says Bollenbach. "He says that about anyone who doesn't get it; it's how he's always described John Sculley at Apple. Steve definitely got into Ovitz's face and chewed him out, said he was dead wood that contributed nothing. He even said, 'You better stay the fuck away from Pixar if you know what's good for you.'" (Jobs declined to be interviewed.)
When Iger took his position in February, he certainly shut Ovitz down in no uncertain terms, at least to hear Bollenbach tell it. "Bob took Ovitz aside, and basically said, 'You're a figurehead here. You're basically going to have no power here in your advisory role. Michael and I will operate without you.'" Iger, for his part, refuses to say anything unkind about Ovitz when interviewed for this article. "Mike Ovitz is a key player in Disney today, and we are proud to have him. We're a true team, him, Michael Eisner and myself."
Bollenbach, who left Disney last February to become CEO of Hilton Hotels after Iger took the reins, says Eisner quickly realized that he had not hired an equal. "He was disturbed that Ovitz didn't come in and relieve him of a burden, the way Bob clearly has. He came in and created a new one during those few months. He was also offended by the Ovitz style in terms of staff: having six or seven secretaries, whatever he had; having drivers sitting outside when it was clear he wasn't going to need them. Eisner was horrified," Bollenbach remembers. "He would tell me, 'I've known [Ovitz] for 25 years, but after he came to the company, I don't know him at all.'"
"Michael Eisner bought into the mystique of Michael Ovitz," seconds another former Disney executive. "What actually happened at the crux of this was that Eisner believed everything he came to read and hear about Ovitz— that he was really the biggest, bestest, smartest, most entrepreneurial person in Hollywood. That's what he thought he was buying. And he learned the truth within days. . . . You know, Michael Ovitz has dug himself into a hole of serious dimensions. Yes, he's no longer president, but as an adviser, he's enmeshed in a culture he doesn't understand and can't assimilate into. He may have a lifelong sinecure, but the fact he has no real power is going to be killing him. He's in a goddamn snake pit, and I don't know how he gets out of it."
If his enemies had met to devise the most exquisite torture imaginable for Mike Ovitz, the current situation at Disney might well have been it. The man who for years maniacally cultivated an aura of omniscience, unlimited power, and Zen-like control is now perceived as a confused and diminished figure who is no longer in charge of much of anything. To hear insiders tell it, he has spent his 15-month reign at Disney (seven as president and eight as adviser) in a frustrating limbo of bungled personnel moves, strained relationships, and wasted time. When Disney unveiled its new stars, Eisner, Iger and Ovitz told the world they would run the company as a true partnership, with the last figure working his legendary magic in every nook and cranny of the empire. In fact, what emerges from interviews with dozens of current and former Disney staffers and Hollywood executives is a portrait of a still-struggling and less-than-autonomous Ovitz. Forced to run many details by Eisner and Iger for approval, offering deals that the two of them can easily kill off, the man once called omnipotent is now often obliged to backtrack on promises made to industry veterans.
"He's not Michael Ovitz anymore," declares David Geffen, his least reticent and most prominent adversary. "He's a guy who has a job working for Michael Eisner and Bob Iger. And if you think everyone's not aware of it, you're very wrong."
Ovitz himself, who declined to be interviewed for this article, regularly acknowledges that he has a lot to learn. In a rare public statement, during a September 30 joint interview with Eisner and Iger on *Larry King Live*, he said that he and his new bosses have "talked about a two-year learning curve. ... I probably know about 1 percent of what I need to know." Yet, faced by a growing chorus of critics both inside and outside Disney, Ovitz has urged Eisner and Iger to defend him publicly. Eisner and Iger have complied, though their endorsements sometimes seem less than completely convincing.
In recent weeks, Eisner has talked to a few reporters—briefly and reluctantly—about his former No. 2 man and biggest outside adviser. He repeats a fairly packaged message but still hesitates when asked if he was surprised by the flatness of the Ovitz learning curve. "I don't think I could really address that," the Disney chief begins before plunging into a more complete response. "When I went to ABC and took over daytime, I had never seen a serial," he says. When Eisner got to Paramount, he knew nothing about making movies. When he became chief executive at Disney in 1984, he had no experience with theme parks. "There is always a period of learning the business, the lingo," Eisner says. "He understands the entertainment business . . . and I am very satisfied with his performance. Besides, the fact that Bob Iger has been an amazing fit since he took the number-two job in February should matter more, not what Mike Ovitz does and doesn't do."
Eisner's voice betrays some exasperation at the media's unending fixation on Disney and Ovitz—a scrutiny that reached its apex when radio personality Don Imus devoted several minutes one October morning to analyzing the body language of Ovitz, Iger and Eisner on the *Larry King* show. Why all the attention, Eisner asks, when the company is succeeding in television, movies, theme parks, animation, and consumer products? Why all the attention when Iger is the man at Eisner's side now, and by all accounts, succeeding admirably. (This is indeed a fact that all Hollywood and Wall Street watchers agree with Eisner on, that Iger was a true bona fide successful pick, and he's already making his mark on the company.) "From my point of view and the point of view of our shareholders, we're doing just great," he says. "Our performance is spectacular. Whatever we're doing, we must be doing it at least reasonably well. Bob Iger is part of the top management of the company and this performance is on his watch. And Michael Ovitz gives us wonderful advice that we always seriously listen to. Bob and I couldn't do this without him."
The notion that Ovitz is just a figurehead that is basically getting paid to sit down and shut up is one that Eisner dismisses as "ludicrous." Asked about Ovitz's specific contributions to date since Iger took over, Eisner says, "He has been extremely helpful outside the United States, specifically in Asia and in Europe. And in corporate governance, in cheerleading, in strategy for the company. He helped advise Bob and I on the decisions we took to really take charge in those divisions. He helped divine our strategy." So what about cross purposes and the idea that Iger and Eisner could override him? "Total hogwash. Bob and I value Michael Ovitz too much. He's an incredible guy. He's truly number three with us."
Second-in-command or a metaphorical third-in-command (to take Eisner at his word) isn't a role Ovitz has ever seriously attempted. And being No. 2 and then No. 3 to Eisner, a mercurial, temperamental genius, wouldn't be easy for the most subtle corporate diplomat. Eisner's previous second, the late Frank Wells, was his ideal match, able to ride herd expertly over the company's squabbling divisions while slipping his own ego under a desk. Iger, as No. 2, clearly is very much in the Wells mold, and he has an amazing rapport with all the various divisions, admired universally for his calm and unflappable demeanor, his decidedly "nice guy" persona, his calm and measured approach coupled with a bold, swing-for-the-fences mentality goading Disney to push the envelope and take risks to maintain its mammoth success.
For Ovitz, reinventing himself in such a role at a major publicly held company, where shareholders, the investment community, and the press demand easy confidence, requires muscles he has never fully developed. Eisner and Iger's public faces—the cheerful, seemingly effortless avuncularity perfectly suited to the Disney culture—would appear diametrically opposed to the solitary and often intimidating posture which Ovitz has perpetuated during all of his professional life.
And just when Ovitz needs to start afresh, no one wants to let him.
Sensing the relative vulnerability of Michael Ovitz, a legion of newly emboldened critics, limited for years to whispered complaints about Ovitz's threats and intimidation tactics, are airing their grievances. Bernie Brillstein, the veteran manager and producer, claims that during a late 1980s spat, Ovitz threatened that his CAA "foot soldiers" would ruin him (just as screenwriter Joe Eszterhas alleged in a subsequent, more public confrontation). "Foot soldiers!" Brillstein marvels. "Can you believe it? The guy was out of control. Now the past has come back to haunt him, and all these guys want to kill him."
Similar, previously unutterable comments now stream from executives who once proclaimed themselves friends— at least in the specialized Hollywood sense of the word— of Ovitz.
"Michael Ovitz's concept of friendship is simply not that which people of character have," says Sid Sheinberg, former MCA president and chief operating officer, who felt Ovitz "deceived" him during talks to sell MCA to Edgar Bronfman, Jr. "I was seduced by him. That's all part of his mystical craft," adds Sheinberg. "I was basically hurt by it. I'm sure he couldn't give a shit."
During the past 18 months, Ovitz has also managed to alienate onetime allies from Brad Grey (a principal in the Brillstein-Grey management and production company) to MCA president Ron Meyer, his longtime CAA partner. In fact, the 20-year relationship between Ovitz and Meyer seems irreparable, and other former allies at CAA are equally resentful, having finally grasped since Ovitz's departure the extent to which they were kept out of the loop at the agency. (For instance, only after the chieftain's exit did most agents learn that Ovitz kept a private jet. It appears that he had told anyone who asked that the jet actually belonged to producer Sydney Pollack.) "It wasn't about us, it was about him," says CAA agent Tom Ross. "It was always 'We're all in this together and we're looking for one big payday' . . . but he pulled the wool over all of our eyes."
Another executive, who used to speak to Ovitz daily, says, "He's estranged from so many of the people he used to talk to. The whole thing is kind of messy and sad. It's riddled with self-destruction. Ovitz doesn't understand that there are consequences to behavior over a long period of time."
Perhaps sensing the change in climate, Ovitz has recently tried in vain to ease rifts with everyone from Geffen to Jeff Berg, his former rival at International Creative Management. Inside Disney, moving from board members to corporate vice presidents, he has worked diligently, and with some success, to create new alliances, and to especially build a rapport with his bosses. "He is a world-class schmoozer," says one Disney vice president. "He has that ability of making everybody he comes in contact with feel special. It's a gift. He even schmoozes guys like me, and I'm a VP! He remembers your name, even your kids' names." A star animator is similarly charmed. "He gets rosy cheeks when we talk about art," he says. "I think he's probably good for us. Especially as just a roving troubleshooter and dealmaker."
Iger is incredibly effusive in his comments. "I'm in envy and awe of Mike Ovitz, and I think that for him to build up what he did in his career shows he knows which way is up in this industry. Disney is strengthened immeasurably by his presence, advising us on our deals. He was especially a great presence in helping us get the Pixar and Lucasfilm deals done, our exclusive 10-year global marketing alliance with McDonald's, our dubbing and distribution deal with Studio Ghibli."
Close friends are urging the notoriously thin-skinned Ovitz to ignore the brickbats and stick to his work. "An awful lot of this is envy, I suspect," says former CBS president Howard Stringer, whom Ovitz recruited to head Tele-TV (CAA's faltering programming venture with three Baby Bell telephone companies). "When you've been as successful as he has been for so long, the losers—and there are losers in every deal in Hollywood—are seething. This is an opportunity for the 'seethers' to express anger and hostility, to get even for all the years of personal repression."
"It's all completely predictable," says tycoon Barry Diller, "and could not have been any other way. Executives go from one side of the business to the other, and inevitably the first thing that happens is they get discounted and bashed. It happened to me. It happened to Mr. Eisner. The fact is you can't go into a new world without making a lot of early mistakes. Until you get the rhythm of the place and work out all the interpersonal kinks with the people of the company, all of whom treat you as an alien force, you can't begin to be really useful to the new enterprise."
Preordained or not, the damage to Ovitz's veneer has been real. "There are no countermoves he can make," says a former studio chairman who has known Ovitz for many years. "He has no constituency. ... I know he is shocked, not only by how much antipathy there is to him, but how vocal people are now that he can't hurt them."
For all the backbiting, of course, Ovitz answers to a constituency of two—Michael Eisner and Bob Iger, whose disclaimers have not been effective in silencing those hoping for a showdown between the superegos: "It's what we sit around talking about all day," acknowledges a Disney staffer. "The betting is it's like *The Godfather Part II*. You've got Hyman Roth, who says he's going to die and pass it all to Michael Corleone. But in fact, it turns out that Hyman Roth thinks he's going to live forever; he isn't going to give Michael Corleone anything, and in fact ends up trying to kill Michael Corleone."
The rumors may have been fed by Eisner's style and the volatility that has always defined the relationship between the men. The Disney chief can be withering in his criticism of Ovitz in smaller groups of executives, but Eisner can be equally dismissive of any of his subordinates. And the 25-year friendship between Eisner and Ovitz has conflicting attributes which for years have left coworkers shaking their heads. "Almost every business deal [with Eisner] was a screaming match," says an agent who worked at Ovitz's side for years at CAA. "They could do that almost every day, and on the weekend hang out together. It was like a Jekyll-and-Hyde relationship. I can't imagine that radically changing, since it's the dynamic of the friendship over 15, 20 years."
And it hasn't, according to Steve Bollenbach, who witnessed the duo's heated arguments firsthand. "Eisner can really get after him, you know: 'Mike, that's not it! You don't get it! Forget it!'" says Bollenbach. "And Ovitz gives it right back: 'Bullshit, I get it!' Then, later in the evening, you'd see them practically holding hands."
Flip through the pages of the 1964 yearbook from Birmingham High School in suburban Van Nuys, California, and you see the smiling, carefree faces of hundreds of San Fernando Valley teenagers, their lives stretching before them. Then look at the pictures of 17-year-old Mike Ovitz, vice president of the student body: stern and unsmiling, disconcertingly baby-faced in cardigan and inch-wide tie, Ovitz had more natural gravitas than half the faculty. A class behind Sally Field and Michael Milken (in one group shot the future junk bond king looms over the seated superagent-to-be), Ovitz was marked from an early age for greatness by friends and teachers. "We knew in the fifth grade," says Fred Fox, a boyhood friend, with a laugh. "From the beginning, you just felt he was going to be very successful."
One friend from the Zeta Beta Tau fraternity at UCLA remembers Ovitz as a strong-willed president who engineered the chapter's move into an abandoned hotel on Wilshire Boulevard while the house was being rebuilt. Ovitz persuaded his fraternity brothers to choose his girlfriend, Judy Reich, as the official ZBT sweetheart because she belonged to the Waspy Kappa Alpha Theta sorority. He believed the selection would be a coup for the predominantly Jewish ZBTs. "Mike says, 'It's good, it's good, that's what we need, we need that image,'" recalls former frat brother Daniel Beck, now a Santa Rosa attorney. "Mike knew he was going to be a star as far back as I can remember. . . . He had the same vision and determination. He was just destined."
After graduating in 1968, Ovitz joined the staff of the William Morris mailroom, the traditional starting point for would-be agents. Even as a junior agent, delivering letters to sets of such shows as *That Girl*, Ovitz projected an air of omniscience and mystery. "There were two messengers from William Morris—one was Mike Ovitz, the other was Barry Diller," remembers Bill Persky, the veteran writer and producer. "I was scared of them then. They were such presences, you just knew they were going to be dealt with. . . . Ovitz, he was so mysterious. It was always like he knew more than he was telling. Michael, even as a junior agent, always convinced you there was something he knew that was going to make a difference."
It was a tactic which Ovitz later honed to perfection at CAA, where, at Wednesday staff meetings, he was prone to cryptic announcements of major events anticipated at a certain studio in "30-60 days" or sometimes "60-120 days." Everyone paid attention. "It gave the impression to the people staring at him that he was in control of everything in the entertainment business," remembers a former CAA agent. "It was so funny. You got to wondering, 'Is it going to happen on Day 31? Oh well, it doesn't matter, because Mike knows.' 95 percent of the people left CAA staff meetings feeling, 'He's got it wired.'"
At William Morris, Ovitz rose to the position of assistant to Howard West, a leading television agent, who says he was impressed by Ovitz's long hours as well as the "insatiable thirst to learn" that his young employee revealed while servicing clients on *The Carol Burnett Show* and elsewhere. After a year, however, Ovitz surprised West by quitting to take a crack at law school, only to change his mind and beg for his job back. "Senior management said 'No,'" remembers West, currently an executive producer of Seinfeld. "The attitude of upper management was: You leave, you're dead. But I saw something. They eventually gave in and let him come back, as a favor to me." Elevated later to full agenthood, Ovitz plunged into the minutiae of packaging television game shows, a task at which he greatly impressed his new office partner, Ray Kurtzman, who later joined CAA. "As I sat there and listened to him, I thought this fellow must be one of the best young agents I've ever seen. He was totally prepared. He was a great salesman. He was, and is, the most dedicated person I know when he gets his teeth into something. . . . He just does not take 'No' for an answer."
By 1975, Ovitz, Ron Meyer, and three other agents had left William Morris to form CAA. Ovitz, though the youngest of the group, quickly emerged as the most driven and was anointed as the little agency's president. Immediately he began to form important alliances: literary agents, such as Mort Janklow in New York, who began funneling him bestselling books to package as miniseries; studio executives, whom he helped gain new and better jobs; and especially entertainment lawyers. Gary Hendler, an attorney who had offices in CAA's building, guided several of his major clients—including Sydney Pollack and Robert Redford—toward Ovitz and CAA.
Producer Frank Marshall, who had roomed with Ovitz in college, was breaking into the business, but still had no office or secretary. Ovitz represented him "as a favor," Marshall says. One summer afternoon, the aspiring producer decided to slack off and go sailing. As he ambled toward the boat, a phone on the dock rang. It was Ovitz, urging his client to sign on as line producer of a Walter Hill picture called *The Driver*, a project which Marshall had already turned down. "He says, 'I want you to do this movie. You need to do this movie. This is good for your career,'" Marshall remembers. "It was probably the best piece of advice I ever received. [But] I've always wanted to ask him how he got the number of the phone on the dock."
In a business brimming with bluster and gimcrackery, Ovitz was a model of steamroller drive and iron discipline. A sense of momentum developed as CAA slowly ate into the client lists of older, slower agencies such as William Morris. The build peaked in the summer of 1980 when CAA secured the trio of Robert Redford, Paul Newman, and Dustin Hoffman.
As Ovitz consolidated his power, he pressured his partners for an ever-increasing stake in the company. By the mid-'80s, he held 55 percent of CAA, while the other remaining founders, Ron Meyer and Bill Haber, split the rest. In 1990, Ovitz celebrated CAA's achievements when he persuaded I.M. Pei to design a new building at the corner of Wilshire and Little Santa Monica Boulevards. By the time of the building's completion, it was clear that he had amassed a degree of influence in the industry unmatched since the agenting days of MCA's Lew Wasserman, who had been forced by antitrust regulators to drop out of the business in 1962. "Lew Wasserman and Michael Ovitz did it much the same way," says a longtime student of Hollywood politics. "They ran their agencies as businesses and not as a collection of individual fiefdoms."
CAA became known for its lockstep discipline, its seamlessness. Agents were well remunerated—million-dollar-plus bonuses were not uncommon—and generally proud to be part of the slick, successful machine. "Ovitz was great at making you feel part of a whole," says a former colleague. "It was Nirvana," says Tom Ross, recalling the early days of the Ovitz reign. Adds CAA's Jack Rapke, "We felt we had the best company in the entertainment business. Was it a perfect place? No. Did we rock-'n'-roll? Damn right we did."
Even as he endlessly promoted himself inside and outside CAA, Ovitz created a mystique, an aura of mystery surrounding his every move. In his sleek new headquarters, nothing was hidden—or revealed. Ovitz reflected a similar kind of contradiction. He craved the constant and public acknowledgment of his power, but he controlled his image by remaining aloof and unknowable. "He thought everybody was looking at him all the time, but he wanted that, too," says a CAA agent. The agency, the observer adds, was run as a benevolent dictatorship. "Mike preferred to be feared rather than loved." The general attitude was respect and admiration—from a distance. "When he walked by," a CAA insider recalls, "the halls would go silent."
Defections were rare and retribution swift. When David Greenblatt and Judy Hofflund left to set up their own shop in 1988, Ovitz instructed the maître d' at the Palm restaurant to seat them in less-than-premium positions. Ovitz reportedly fired a third agent, who had had the temerity to breakfast with Greenblatt. The new agency folded after four years.
Many important clients were happily served by CAA, and their loyalty was the source of the agency's power. Warren Beatty, Robert De Niro, Tom Cruise, Barry Levinson, Sydney Pollack, Barbra Streisand, and dozens more lent their cachet to the agency. Ovitz used his art collection to impress director Tim Burton. Other approaches were planned and timed with similar care. "What Michael Ovitz did well was to make talent feel both good and fearful at the same time," says a veteran executive. Valued clients, such as Frank Marshall, found Ovitz to be persuasive, not coercive. "He's a great listener, a great collaborator," Marshall says. "He wouldn't say, 'You have to do it this way.' He would say, 'Here are your options.'"
It is possible to play a parlor game of would-be avengers by connecting the names of writers, directors, and studio executives who feel they were scarred by Ovitz. A former CAA screenwriter remembers complaining to another Ovitz client that their agency had promised him a network job which had failed to materialize. "45 minutes after saying that," this writer recalls, "I get a call from my agent, and she threw me out of the agency. She said, 'Mike heard you were badmouthing the agency, and we don't want you here anymore.' There are dozens of disparate stories like this that happened to people large and small all over the place. . . . It was typical of the thuggishness there."
Rosalie Swedlin, the agent who allegedly fired this particular screenwriter, later found her own loyalty to Ovitz in question. When Joe Roth, a longtime friend who then headed the Fox studio, asked her if she wanted to run a film division, Swedlin expressed interest, going as far as to meet with Barry Diller, then company chairman. When Swedlin approached Ovitz, he was enraged that he had not been consulted before discussions began. He not only rebuked Swedlin within the agency, but also froze Roth out for months. It seemed sometimes that there was no way to win. When Jeffrey Katzenberg, then running the Disney studios, went the "proper" route and asked Ovitz for permission to address Swedlin, Ovitz withheld his blessing.
Swedlin wasn't the only CAA agent who passed up opportunities to move on—Jack Rapke and Tom Ross did the same. Less than two years before Ovitz left CAA, Ross was offered a deal with RCA worth more than $25 million. After trying for several weeks to contact Ovitz about his pending job offer, Ross sat down with his boss, who began, "I've known about this for months." Ross says he realized that Ovitz "had no clue of it before the previous week. But that was Mike's spin." Ovitz's counterplay continued: "I can put you at CBS," he told Ross. "I can put you at Warner Bros." On the subject of the RCA offer, Ovitz warned, "You'll fail there."
On the phone the agent customarily spoke in a voice so low that listeners had to strain to hear; his legendary half-whisper could sound, by turns, soothing or menacing. "'Do you want to keep your job?' He would always say things like that," says a former studio chief who recalls other standards: "'Have I offended you in some way?' The 'I'm confused' line is famous. 'I find it hard to understand your rudeness.' He starts conversations to bring everything into the intrigue of a world in which he is at the center pulling all the strings."
Bernie Brillstein sold his management firm to the Lorimar production company in 1986—without giving Ovitz a role in the deal. When Brillstein assumed the helm of the newly combined entity, he discovered that CAA was not going to be doing him any favors. Ovitz, it appeared, wanted to send the message that he expected to be cut in on everyone's action. A former CAA agent remembers, "Mike felt betrayed and blindsided. There was kind of a mandate to service Lorimar but do nothing to help it grow." Another executive then at Lorimar recalls attending a getting-to-know-you meeting with a group of agents at CAA. Expecting a lively exchange of ideas about projects and clients, the Lorimar contingent was greeted instead with stony silence. CAA cannot be blamed for Lorimar's ultimate failure (the company was sold to Warner Communications in 1989), but agents who were with CAA at the time conceded that their company could have done more to help.
The most publicized blowout during Ovitz's CAA years came when Joe Eszterhas claimed, in a series of "leaked" letters, that Ovitz had threatened him when he tried to quit the agency. Using a vow that was already familiar to Brillstein, Ovitz allegedly told the writer that his "foot soldiers" would "blow your brains out." (Ovitz denied making the statement.) The story created a sensation, but there were no serious repercussions. "It didn't hurt us at all," says one CAA veteran. "In fact, I would say it was probably helpful. The people in this business want to have tough representatives. They're not interested in having nice representatives. When that all happened, people said, 'Wow, this guy is really ready to stand up and fight.' It kind of gave Mike a cachet. It added to the aura he had."
The episode illustrated Hollywood's profound ambivalence about Ovitz. On one hand, Eszterhas's defiance gave the industry a deep sense of satisfaction: someone had finally defied the terrifying father. Yet, at the same time, the community's famously spoiled citizens had such a powerful yearning for authority that they conspired, at some level, to create and maintain the myth of the all-powerful and unapproachable czar. Someone had to play God.
Sometimes, of course, Ovitz appeared less than divine. "He periodically tried to win me over," David Geffen remembers. "I was curious to see what his rap would be. So we met for lunch and he said, 'You know, Judy loves you.' I said, 'Judy? Judy Ovitz?'
"And he just said, 'She loves you.'
"I said, 'I didn't know that.' He said, 'Yeah, she really does.'
"I said, 'Judy Ovitz loves *me*? Does this work for you? If she loves me so much, how come she never calls? If she loves me, why hasn't she ever sent me a card or letter?' Two months later, Arnold Stiefel, Rod Stewart's manager, calls and tells me, 'I had lunch with Mike Ovitz and you'll never believe it, but Judy loves me.' I said, 'So you went to the Bar Mitzvah?'" Stiefel said no.
"'How about dinner at the house?'"
"'No.'"
"'Calls? Letters?'"
"'No.'"
"'Really? I hope everybody doesn't love you this much.'"
Ovitz made a quantum leap in the late '80s when Sony's quest to buy an American studio gave him a chance to reposition himself as a man who had moved beyond mere agentry by brokering a big multinational deal. Ovitz introduced Sony executives around Hollywood and spoke to them about his vision of the industry. When financier Kirk Kerkorian came forward as a seller of MGM/UA, Sony tried to figure out what the anemic studio was worth. "What was surprising was how little business background Mike's people had in terms of putting values on these companies," says a Sony source. "He was unable to really understand the future cash flows. Everything was 'This is great' or 'This is a dog,' but he never had numbers."
At the time, one of the available "greats" was MCA, but the studio was pricey and patriarch Lew Wasserman wasn't ready to make a deal. So it was widely assumed that, as a sort of substitution, Ovitz introduced Sony to Columbia Pictures, then controlled by Coca-Cola. In fact, according to a source at Sony, Mickey Schulhof, then head of Sony's U.S. operations, actually cold-called Columbia Pictures CEO Victor Kaufman and later personally ironed out the terms of the deal with the investment banker Herbert Allen, who was a former chairman of the Columbia board. Ovitz had no involvement at all in brokering the Columbia deal, the Sony insider says. The agent was asked to help educate Sony's investment bankers at the Blackstone Group about Hollywood as they set a value on the studio. (In the end, Sony paid a price that had "no relationship to the worth of the entity," as one executive close to the negotiation said.)
As the acquisition loomed, Sony's most pressing concern was finding management. Ovitz was the first choice, and Sony's legal team drew up a proposal—codenamed "Superman"—for hiring him.
But Ovitz wanted to be more than Superman; he made a bold play to run not only the studio but also Sony's record division, which had earnings of $2.9 billion. (The move foreshadowed the rapaciousness which would characterize his much-publicized negotiation for a similar post at MCA last year.) With the help of the Morgan Stanley investment banking firm, he sought control and a package reportedly worth about $200 million from Sony.
The proposal actually accomplished something seemingly unprecedented: Sony was presented with a price it wouldn't pay. Insiders say that the Japanese felt betrayed by Ovitz's audacity. When his offer was rejected, Ovitz tried to return to the bargaining table, scaling back his demands. Sony politely turned him down again. Ovitz then asked some executives in the Sony camp to back him up as he spread a story in which he had rejected Sony's advances. (Ovitz has claimed he turned down the Sony offer.)
Ovitz collected a reported $11 million consulting fee from Sony. But unbeknownst to most of his CAA associates, funds from CAA's consulting activities, including work for Coca-Cola, Nike, and others, were part of a separate consulting partnership. The CAA agents didn't know where the money came from or how it was allotted. They didn't ask questions. As Tom Ross explains, "All of us made more money each year, so we felt we must be getting part of this."
Remembering the words that Michael Ovitz said to him at the ceremony commemorating the start of construction on CAA's I.M. Pei headquarters, Ross realizes how naïve he was. "He said, 'Tom, this is going to be your building. You're going to own a piece of this building.'" Only later did Ross and his colleagues learn that the building was owned by Ovitz, Haber, and Meyer. The agency now rents the building from the trio.
"I come in an hour early every day," Ross laments, "looking for my piece of the building."
Ovitz succeeded in creating the impression that he had brought the Sony transaction together, and by 1990 he had a new client—Matsushita, the Japanese electronics giant—to shepherd into the Hollywood fold. This time, Lew Wasserman was ready to sell MCA.
Shrewdly anticipating a culture clash between staid Matsushita and the Hollywoodites—particularly Wasserman's lieutenant, the outspoken Sid Sheinberg— Ovitz kept the parties as separate as possible throughout the negotiations. Sheinberg says he didn't object; he trusted Ovitz despite a moment when doubts arose. As the deal neared its conclusion, Sheinberg says, the MCA faction went to New York to talk price. When they arrived, they were immediately told that the range would be lower than they had expected.
"People in our camp thought we were brought there under false pretenses," Sheinberg says. "I kept saying we should trust Ovitz." In fact, Ovitz had not willfully misled the MCA faction; instead, he had all but talked his client, Matsushita, into paying a price that its investment bankers immediately vetoed as unreasonably high. Despite the disappointment, attorney Bob Strauss acted as mediator and closed the deal for $6.6 billion.
The honeymoon between the new partners was brief, and within weeks it became clear that Ovitz had been wise to maintain the distance between the factions. Nonetheless, neither Sheinberg nor Wasserman considered Ovitz accountable for brokering what became a shaky marriage—the purchase had, after all, generated huge profits for both men. "I viewed him at the time as a very constructive force in making the deal," Sheinberg says. He supported Ovitz to such a degree that he gave him the ultimate blessing by endorsing the decision of his protégé Steven Spielberg to sign with CAA.
Ovitz may have been the best talent agent Hollywood will ever see. As a negotiator, he was unsurpassed. As an investment banker, he showed real promise. But as a businessman, he compiled a track record that was decidedly mixed. His most visible single investment outside CAA was a 9.8 percent stake in a Los Angeles bank holding company, National Mercantile Bancorp, whose fortunes promptly collapsed after Ovitz's investment was unveiled in early 1990. Bad loans were piling up, overhead was soaring, and entertainment clients left in droves, concerned that information about their personal finances might find its way to Ovitz's desktop. A year later, federal regulators forced the bank to correct "deficient" management and lending practices. The value of CAA's stake in the bank plummeted.
In the late 1980s, federal investigators began asking questions about another Ovitz investment. In 1991, the superagent and Bill Haber and Robert Goldman (two other CAA executives), all trustees of the CAA pension funds, were sued by the Labor Department's Pension and Welfare Benefits Administration, which alleged they had illegally transferred nearly $1.25 million in CAA pension money into a private real estate partnership. All three entered into a consent decree and sold their interests in the partnership. David Ganz, a federal pensions official, says Ovitz and his partners relied on overaggressive legal advice. "Frankly, they were more concerned with the press release than the settlement," remembers Ganz. "They were very concerned with appearances, because Ovitz is such a public figure."
But Ovitz's splashiest failure may have been CAA's championing of a new sound technology, called QSound, which in retrospect appears to have been a classic stock hype. In 1988, Ovitz signed a 25-year agreement with a tiny Canadian company, Archer Communications, in which he pledged to stay personally involved in CAA's push to press QSound into every corner of the music industry. (In return CAA received stock options and the rights to two seats on Archer's board.) With CAA's help, major artists-including Madonna, Sting, Bryan Adams and U2— signed on to use QSound, which was also featured in one of the CAA-designed ads for Coca-Cola. (In another Ovitz innovation, the agency was also moving into advertising.) But, plagued by technical problems, QSound was ultimately rejected by the record industry—in large part because of CAA and Archer's decision to demand a steep, 1 percent royalty on its use.
These failures were largely ignored by the press.
By 1992, Ovitz was spending much of his time on CAA's outside consulting business. He left the clients to Ron Meyer and younger agents. This caused some unsettling shifts. One CAA agent says Ovitz, perhaps recalling his own exit from William Morris, was predictably uneasy when he learned that a cadre of his younger agents was forming a potentially influential bloc inside the agency. Initially, Ovitz was determined to break the alliance. Then he decided to keep the ambitious "Young Turks" (Bryan Lourd, Kevin Huvane, Jay Moloney, Richard Lovett, and David "Doc" O'Connor) together at CAA; they could be useful in helping CAA maintain its preeminence in its bread-and-butter business. During this period, a string of high-profile assignments—the Coke ads, the masterminding of the Tele-TV joint venture for the Baby Bells, a public role in helping Credit Lyonnais rid itself of MGM/UA—led to a swelling tide of fawning press reviews for Ovitz. His celebrity had already been confirmed by a 1991 New Yorker article in which an unnamed "friend" suggested that Ovitz's ambitions might even include the White House. Eventually he was named to the Council on Foreign Relations, as well as the board of the Museum of Modern Art in New York. Several former allies say the plaudits began to go to Ovitz's head.
During this golden age, a knowledgeable source says, Ovitz declined to meet with an executive from General Motors' Buick division, who was interested in having CAA write ads for a new line of cars. "I'm not interested in a single car," Ovitz said. "I want the whole of General Motors. I want the whole industry." An Ovitz ally says this response was consistent with the agent's interest in helping clients create brand-name awareness. He wasn't attempting to develop an ad agency. But another erstwhile friend sees the decision as typical of Ovitz's grandiosity. "Toward the end," he says, "the delusions had really taken over."
Many in Hollywood feel Ovitz's self-importance contributed to what some would perceive as the beginning of his downfall: the collapse of 1995 talks with Edgar Bronfman, Jr. that would have placed CAA's superstar at the helm of MCA. It was an episode that resulted in a long string of broken relationships—with friends, clients, and colleagues. In the view of many industry executives, it left Ovitz with only one option: Disney.
The MCA debacle began with the frustration of Sheinberg and Wasserman, who were angered by Matsushita's thwarting of their efforts to expand the company's empire. The colleagues felt humiliated by the treatment they had received from their Japanese owners, and called on Ovitz to help smooth things over.
But unbeknownst to Sheinberg, who had made the approach to Ovitz, Matsushita had reconsidered its relationship with the man who had brokered its entry into Hollywood. Like their countrymen at Sony, the executives at Matsushita had cooled on Michael Ovitz. At this point, in fact, he had so little influence with the company that when Matsushita began deliberating about what to do with its troublesome studio and the Sheinberg-Wasserman team, it balked at the idea of Ovitz's being involved in any role. (Matsushita's American lawyers and investment bankers involved Ovitz nominally as repayment for having included them in the original MCA purchase.)
Sheinberg thought that his old ally would help the Japanese in Osaka understand the value of the services that he and Wasserman provided. They wanted to continue their leadership of the company they had led for decades. But as the old pros waited for the Japanese to decide their fate and the future of MCA, there was a new development. The recently formed and highly valued DreamWorks production company, created by Sheinberg's friend Steven Spielberg in combination with Jeffrey Katzenberg and David Geffen, needed a distributor for its films and other products. Out of loyalty to Sheinberg and Wasserman, the DreamWorks partners transformed their red-hot company into a bargaining chip: DreamWorks would make a distribution deal with MCA only if Wasserman and Sheinberg were given more control.
Despite Sheinberg's confidence in Ovitz, at least two of the DreamWorks partners—Geffen and Katzenberg—were not convinced that the agent was truly representing the interests of their friends with the Japanese. The doubts were justified: Wasserman and Sheinberg soon learned that, instead of supporting them, Ovitz had taken a bit part in the sale of MCA to Seagram's heir Edgar Bronfman, Jr.
"I had at least one, maybe two conversations where Mr. Ovitz purported not to know what was going on when he knew goddamn well what was going on," Sheinberg says. While some Ovitz associates say that the agent was awkwardly positioned and couldn't tell Sheinberg the truth, the former MCA leader thinks Ovitz should have dropped out of the discussions and given him and Wasserman some kind of warning. "He would have had no problem with Matsushita, no problem with Seagram's, and no problem with us," Sheinberg says. "He really doesn't know what it is to be honorable and a friend. He doesn't know any better and he's never going to be any different and that's just the way it is."
Sheinberg laments, "I was the guy defending Ovitz in the councils of DreamWorks. They kept looking at me as if I were crazy. When he did what he did to us, they just turned to me and said, 'Putz!' . . . They were probably thinking to themselves, How can this guy be such a fool? . . . And I guess I was. I really thought Mike Ovitz was a friend of mine."
Wasserman, who even in the best of times perceived Ovitz as an arriviste, was even more appalled, according to Sheinberg: "In his heart, he's further to the left than David Geffen."
As it happened, Ovitz wasn't just working on the MCA sale. He was angling for Wasserman's job, the first step toward the most destructive episode of his career.
Ovitz had first encountered Edgar Bronfman, Jr. in the mid-'80s when he called the Seagram's heir to ask a favor. Bronfman was then running his family firm's U.S. spirits division. Ovitz's father, who worked for a Southern California liquor distributor, was being forced into early retirement. Could Bronfman help? Within an hour, young Bronfman phoned back and said, "Call your dad. He's back in his office."
In the next few years, the two became friendly. Bronfman asked CAA to provide some general advice on entertainment companies, though—unlike Sony—he didn't make the mistake of relying on a talent agency to help place a value on a firm. As he prepared for the MCA bid, Bronfman came to believe that Ovitz was the logical choice to run the company. He was aware that Ovitz lacked experience in corporate management, but he thought that the agent had a good sense of the industry and its future. He also believed that Ovitz would assemble a strong team to help him run the organization.
Hollywood knew that Ovitz would have to make the deal of deals. The elder Bronfmans (Edgar Bronfman, Sr. and Charles Bronfman) questioned whether Ovitz was worth the kind of package that was already being outlined. Among friends, the younger Bronfman compared Ovitz to a teenager who asks his parents for a Rolls-Royce expecting to settle for a used Volvo.
But Bronfman Jr. came to realize that Ovitz was serious about his demands. At the same time his own concerns were growing: he began to see how little Ovitz knew about running a public company and he was becoming weary of Ovitz's paranoia. He found it trying that Ovitz would initiate even trivial phone conversations by asking, "Are you on a hard line?"
CAA associates believe that Ovitz's extravagant demands were rooted in his anxiety and ambivalence about taking on a new professional identity. "An agent is Teflon. Nothing sticks," says a former agent at CAA. "You can put a client in a movie for $20 million and if the movie tanks it's not your fault." At a publicly held company, that agent continues, Ovitz knew he would be scrutinized, held financially accountable for every move: "He realized that he would be so exposed."
In the next round of negotiations with Bronfman, Ovitz overplayed his hand. Every concession he exacted left him wanting more. "Mike pulled back, thinking they wouldn't go away, and they went away," says a Hollywood executive involved in the talks. "It was the same as Sony. He said to me, 'Who are they gonna get? It's only me.' And they left. ... He makes people not want to be with him anymore. He had everything he wanted. It wasn't enough."
In the end, says an insider, "the Seagram's guys just turned off to him." Another executive close to Bronfman says, "Edgar had been friends with Mike for years and didn't really know him."
Soon after the Ovitz talks collapsed (Ovitz's demands had reportedly accelerated to a package worth $250 million), Ron Meyer had dinner with Bronfman and agreed to take a lesser version of the job offered to Ovitz. Rather than engage in a protracted negotiation, the two men simply shook hands and agreed to come to terms later. Meyer called his wife, Kelly, and then Ovitz, with the news. Ovitz was stunned. Meyer has told friends that his old partner seemed to regard him "the way Cinderella's stepsisters looked at her: 'You mean the slipper fits *her*?'"
"After Ronnie left," a former associate says of Ovitz, "Mike was left with a coat and a tie and his underwear." Since the mid-1980s, Ovitz had gradually withdrawn from the client hand-holding duties that most agents dread. Meyer, in fact, had long since taken on most of the task of administering CAA. (Meyer would later tell friends that he felt like the Harvey Keitel character in Pulp Fiction, who has to mop up when the brains get spattered.) "Ronnie was the agency," says one veteran producer. "Ronnie was Mike Ovitz. It was *The Wizard of Oz*. Who's that behind the curtain? Ronnie."
"Ronnie was the key to the whole thing," says Bill Persky. "Without Ronnie, nothing would have happened. Mike, certainly from a business point of view, a handling—positioning—mysterious—Oriental studies—manipulating—everything point of view, was important. But that's not the heart of something. Ronnie was the heart and the soul and the spirit and the truth of that agency. Not Mike."
A return to direct supervision of CAA, dealing with the petty complaints of spoiled movie stars—not to mention the increasing demands of the Young Turks—was the last thing Ovitz wanted. Kingmakers don't spend their days getting movie stars softer couches for their trailers. For days, Ovitz "applied the full-court press" on Meyer to change his mind, as one former CAA executive puts it. They debated for hours about whether MCA was the right place for Meyer to go, but as they talked, the subtext of Ovitz's arguments increasingly irritated Meyer.
"There was no doubt about it—he didn't think of [Ronnie] as qualified to run MCA," says one executive close to the talks. "Ronnie saw [Ovitz] wasn't interested in what was good for Ronnie, but what was good for Mike Ovitz." Despite his friend's pleas, Meyer wouldn't budge. Instead, he urged Ovitz to rethink his own career path. "Quit," Meyer told him. "Go do what Barry Diller did. Go sit on a beach. This won't work for you anymore. It won't. . . . Go sit on the beach and someone will come get you."
Meyer joined MCA on July 8 of last year, leaving Ovitz to coddle the stars. One of the first CAA clients to grow agitated was Sylvester Stallone, long a big moneymaker for the agency. "When Ronnie left, Sly started going crazy right away," says one Hollywood veteran. "Mike called me and said, 'What do I do with this guy?' I said, 'Mike, you gotta hold his hand.' He said, 'I can't do that.'"
"When the MCA deal fell apart, he was so transformed—the crush of all the articles and all the press and the impact it had on CAA—it was clear to him he couldn't go home again," says Howard Stringer. "For the first time, you could see things were out of control. You could see that really shocked him. To me, that really humanized Michael Ovitz."
It was then, at his lowest moment, that Michael Eisner beckoned.
Ovitz and Eisner had met in the early 1970s when Ovitz, still at William Morris, pitched a new game show to Eisner, then vice president of daytime programming at ABC in New York. When Eisner declined, Ovitz sent flowers to Jane Eisner, a frequent Ovitz tactic that merely annoyed Eisner. But Ovitz kept at him, and in 1975, when CAA was formed, Eisner was among the first to honor Ovitz and his four partners at a luncheon. Later he closeted a group of ABC programming executives with Ovitz's team and told the ABC faction that they couldn't leave until they generated projects to do with CAA. In the late 1970s, Eisner also hired Ovitz's brother, Mark, at Paramount, though he later had him fired.
Ovitz cemented their friendship in 1979 when he packaged an ABC sitcom called *A New Kind of Family*, which featured a screenplay written by Jane Eisner and her friend Margie Gordon, then the wife of producer Larry Gordon. Ovitz asked Bill Persky to rewrite the script. "At first I said, 'I'm not going to prostitute myself,'" remembers Persky. "[But] he said, quite frankly, that [for] the agency it was an important relationship. If the agency delivered me, that would be important. ... It turned out the script was pretty good . . . [and] I had a wonderful time doing it."
The show, broadcast as a lead-in to *Mork & Mindy*, with Robin Williams, was canceled after only a handful of episodes.
During the 1980s, the Eisner and Ovitz families shared several ski vacations as well as occasional Sunday night dinners at the Palm in West Hollywood. It was Eisner to whom Ovitz turned when he attempted to kill the first major newspaper profile of him, a 1986 front page article in *The Wall Street Journal*. "If you print this, it's going to be very bad for you," Eisner told reporter Michael Cieply. "But if you're going to insist on doing this; I'll help you." Cieply gave the cooperative Eisner dozens of questions on a Friday afternoon, and on the following Monday morning Eisner returned with answers to every last one, presumably given to him by his friend Michael Ovitz. The story labeled the agent "the most powerful individual in Hollywood."
But the central dynamic of the Eisner-Ovitz "friendship" was, even then, Eisner's ability to war with Ovitz all day and see him socially. For years, Disney and CAA were constantly at odds over star salaries. Ovitz did his best to inflate his clients' bankrolls, while Disney executives, led by Jeffrey Katzenberg, did everything possible to contain spiraling studio costs. Time and again, Ovitz phoned Eisner and begged him to corral Katzenberg. "Eisner loved scheming and hearing about all of the fighting and barking," says one former Disney insider. "When Ovitz asked Eisner, 'Will you stop Jeffrey,' Eisner told Katzenberg, 'Just keep it up. Do it more.'"
Never was the Eisner-Ovitz relationship on sharper display than when Eisner underwent quadruple-bypass surgery at Cedars-Sinai Medical Center in Los Angeles in 1994. During Eisner's hospital stay, Ovitz appointed himself the Disney chief's unofficial gatekeeper, stationing himself at his friend's bedside and screening calls and guests. As Eisner lay in bed, Ovitz continued to do CAA business, chattering away on a cell phone. At one point, Ovitz could be overheard pounding out the final details of the deal that became Tele-TV. Eisner, who had been arranging Disney's own deal with another group of telcos, waited until Ovitz visited the men's room to telephone Katzenberg. "Ovitz is about to put Tele-TV together," Eisner whispered to Katzenberg. "You have 48 hours to close our telco deals." A former Disney executive remembers, "This is how [Eisner] feels about his 'best friend.' He couldn't wait for his best friend to take a tinkle so he could screw him."
Once Ovitz agreed to take the Disney job for far less money than Bronfman had been willing to pay, the Eisner-Ovitz relationship assumed a new character. As the media hordes encircled the Disney enclave, the principals attempted to shelter themselves from prying eyes. Ovitz has declined to give interviews and spent several minutes during a September retreat in Aspen decrying the evils of leaking information to the press. Later that month, an article ran on page one of *The New York Observer* declaring that Ovitz had been transformed from "sorcerer to schmo." When a friend called Ovitz to offer sympathy, Ovitz responded with typical bravado. "What article?" he asked.
From the day Ovitz started at Disney, he found that if he hiccupped, the news went on the Hollywood gossip wires within seconds. And he soon gave his public some ammunition. Last winter, Disney wooed Jamie Tarses, NBC's 31-year-old senior vice president of primetime programs, for a job at ABC. In an effort to get free of her contract, Tarses was rumored to have threatened NBC's West Coast president, Don Ohlmeyer, with charges of sexual harassment. (She denies the incident.) Hollywood, defending Ohlmeyer, cried "ethics" more loudly and clearly than at any time in recent memory, and many blamed Ovitz, though there was no proof he had supported Tarses's alleged tactics.
Just as the episode was fading from memory, the fight got another charge from the media. Ohlmeyer referred to Ovitz as "the Antichrist" in a *Time* interview. David Geffen commented, "Apparently, Don Ohlmeyer thinks more highly of Mike Ovitz than I do." Insiders say Eisner had serious reservations about bringing Tarses aboard. (A spokesman said at the time that Eisner would support Ovitz's personnel decision, but the big man at Disney offered not a word of support for Tarses.) When Eisner's play to bring in producer Marcy Carsey to run ABC failed, Tarses was finally given the position.
Ovitz was also perceived as meddling in studio chief Joe Roth's division, signing deals with such former clients as Frank Marshall and his partner-wife, Kathleen Kennedy, whose latest projects include the movies *Congo* and *Milk Money*. (Marshall says Roth signed the deal, but an informed source says he acted at Ovitz's behest.) After Roth got the title of studio chairman in April (before that, he had been chairman of motion pictures), outsiders looking for signs of strain were amused when the *Los Angeles Times* asked Roth whether he would report to Iger or Eisner. Roth replied, "I legitimately don't know." (He now says that the correct response would have been' "Both.") When asked about where Ovitz fell in after Iger's ascension, Roth also again said, "I don't know." (Roth now says, "I should've said, 'He's valuable and needed.'")
The Disney crown jewel, of course, is animation. Its successes in the past few years have been a mighty engine driving every other division of the company. In this arena, Ovitz has had mixed results in both his positions. He charmed star animator Andreas Deja by inviting him to his home to see his art collection. Then, when Ovitz requested that the artist give him a tour of the animation library in Glendale, the new executive pounded on the walls (to test their strength) and lamented that the treasures in the Disney vault weren't being protected properly. All this stood him in good stead with Deja.
Animation, however, is a delicate area— the fiefdom of John Lasseter, the Pixar chief that Steve Jobs personally left to run the day-to-day operations there and who now is overseeing the animation division; and also of Roy Disney, who became disenchanted with Katzenberg for grabbing what Disney saw as too much credit for the division's success. Clearly, Ovitz must be careful. Though he spoke, soon after his arrival, of reviewing the entire animation library (he asked one animator to give him an informal seminar on the genre), he didn't follow through. For Christmas, however, Ovitz had five watches made, each with an image of Mickey Mouse hand-drawn by Deja. Just above the drawing, the artist was asked to write in the date that Ovitz began at Disney. Ovitz kept two for himself and his wife and presented two more to Michael and Jane Eisner. The fifth went to Deja.
Wristwatches aside, despite the boundless energy that has propelled him to examine dozens of projects, it is difficult to identify specific contributions Ovitz has made to Disney in the last 15 months, despite Eisner and Iger's assertions he helped shepherd Disney's splashiest deals throughout 1996. It is true, as Eisner observes, that he represented the company on a trip to Washington with other high-level executives to discuss the V-chip. And he managed to meet with the Chinese president. And he was in the room, at least, regarding the Pixar, Lucasfilm and McDonald's deals. But, meanwhile, his miscues—from the Lakers to Tarses—got wide attention in the Disney rumor mill. At a time when the network's ratings were falling before Iger took the helm and got it back on an impressive upward swing to be back to number one in the standings, the Tarses mess created chaos at ABC Entertainment and led to the departure of several executives, including Michael Rosenfeld, a former CAA agent whom Ovitz had personally recruited. An ambitious plan to buy Howard Stringer's Tele-TV fell through when Ovitz proved unable to reconcile the interests of a half-dozen different telephone companies. His initiative to resolve Katzenberg's brewing lawsuit against Disney (he approached Katzenberg at Iger's wedding, asserting that the matter would be settled within two weeks) foundered when it became clear that he could not propose any concrete settlement, says a source close to Katzenberg. Even a small experimental theater project Ovitz planned with Robert De Niro—requiring barely $250,000 over three years—reportedly bit the dust when Eisner objected.
A more stinging disappointment was Ovitz's abortive attempt to buy Brillstein-Grey Entertainment's television production unit, which is responsible for shows such as *NewsRadio* and *The Larry Sanders Show*. Brad Grey, the company's canny, 38-year-old CEO—an Ovitz protégé whom some call "the next Ovitz"— was apprehensive at first when Disney acquired ABC's 50 percent interest in his company. Ovitz offered Grey a number of jobs at Disney, even suggesting he might be right to succeed Bob Iger at ABC's helm. But, to Grey's surprise, Ovitz wavered when it came time to follow through on his own suggestions, especially regarding the price Disney might pay.
"The clear sense was Michael was trying to get Eisner and Iger's approval on every beat of what he was trying to do," says one executive close to the negotiation with Ovitz. "Michael didn't have the wherewithal to follow his instincts without having to double- and triple-check. I thought that was a recipe for disaster." Brillstein-Grey executives were openly dismayed by Ovitz's passive role. And, according to one observer, "so was Ovitz."
The talks turned nasty when Grey refused to lower his price. At one point, when *The Wall Street Journal* published an article suggesting that Brillstein-Grey was encountering financial difficulties, Grey accused Ovitz of the leak. The two men, once the closest of friends, engaged in several heated phone arguments, including one, a Brillstein-Grey executive insists, in which Ovitz threatened to destroy Grey. Says this executive, "I don't think anything is out of bounds for him to say." Brillstein-Grey subsequently struck a lucrative deal with MCA.
Ovitz enjoyed a temporary success: his effort to help CAA retain an important client—Barry Levinson—who was on the brink of defecting to ICM. Levinson, Ovitz reportedly advised, had to consider the fate of his most recent project, *Sleepers*. Ovitz's argument, one source says, was that *Sleepers* was packed with CAA clients, including De Niro, Dustin Hoffman, and Brad Pitt. "If you leave now," the argument went, "what incentive does CAA have to support the film?" Levinson stayed—but only until the film opened.
Preoccupied as always with his own image, Ovitz has worked hard to maintain his aura of power. On the V-chip excursion to Washington, he annoyed other heavy hitters, including Bob Daly of Time Warner and supermogul Rupert Murdoch, by skipping a minibus ride to Capitol Hill. Ovitz took his own car instead. Then he beat the hoi polloi to the White House and pulled strings to ensure that the photo op would find him placed beside the president or Al Gore.
Ovitz told several associates about his summer biking trip in the South of France with the Eisners, and offered up the vacation as evidence of his continuing closeness to his boss. But an executive with ties to Disney says that the Ovitzes weren't on the guest list until Judy Ovitz got Jane Eisner to include them. In fact, the relationship between the two wives is considered an important link between the husbands, according to many who know both couples. Jane Eisner is said to be genuinely fond of Judy Ovitz. It is also believed, however, that she is supporting Ovitz in the hope that he will relieve her husband— who has, after all, a heart condition—of some of the stresses of running Disney.
Despite his rocky start, few predict Ovitz's will simply try to extricate himself from his remunerative Disney consultancy job, never mind the periodic rumors that he will resign to join another media conglomerate. The most cynical of Ovitz's longtime associates believe Ovitz himself is the likeliest source of those reports. "Ovitz told me he gets offered two jobs a week, and Sony was one," says a skeptic who speaks regularly to the executive. Ovitz clearly has not outgrown his need to create an impression of his own infallibility. But conventional wisdom in the industry now holds that both Eisner and Ovitz have too much at stake to let their partnership founder.
Given the spate of recent negative articles, in fact, there may even be the first signs of a backlash in support of Ovitz. "In a way," says one Hollywood veteran, "I feel sorry for him because he is stuck in a job where he has no power."
"He's trying to swim through a culture that he knows very little about," says an executive who at close range has watched Ovitz operate. "It's a $65 billion company with people who have been there for years and who probably aren't that interested in Mike's learning curve. . . . I feel bad for him and I hope to God he finds his way through this. He's put himself in a position that he's not equipped to handle."
"The problem for Mike is this company is in such good shape that there's nothing for him to do," says a longtime Ovitz associate. "He wants to make his mark. . . . It's important to him to have created Mickey Mouse. That can't happen."
Ovitz also has some important supporters, including Herbert Allen and Gordon Crawford, a money manager who controls the second-largest block of Disney stock. While Allen recognizes that Ovitz is "being hoisted by his own petard," he adds, "It'll blow over. He'll learn the business and do fine. He'll be a true partner to Eisner and Iger." Crawford says Eisner "needed more firepower" to run the mammoth company that Disney has become, and he believes Iger can do the job, and that Ovitz will add a necessary ingredient of his own. "I know Mike is an OK guy," he says. "Does he have character flaws? Yes. But at the end of the day, what matters is what he is able to accomplish, whether he can open up a market like China for Disney products through his freelancing." Others agree, but it is Ovitz's own tenacity that most supporters cite as the reason for their optimism about his eventual success. They say that to win at Disney he will, if necessary, reinvent himself from the marrow out and really ingratiate himself with Iger, in particular. "I don't think I have ever met anyone with more focus or a greater ability to achieve his goals," says Rosalie Swedlin. "I have no doubt he will succeed."
In the end, Eisner's assessment may be the key: as long as Disney thrives, Ovitz may be free to progress at his own speed and keep on consulting, no matter what the other Disney people have to say about the relationship. And Disney is certainly looking to keep thriving with Iger as No. 2. "Disney is doing better than anyone else by a long shot," acknowledges an executive from a rival shop. "You can hate it all you want, but that's the way it is."

**"ABC Daytime Plans Major Reshuffle," by Cynthia Littleton, *Broadcasting & Cable*, December 7, 1996**
In a major move to satisfy affiliates and shore up viewership, ABC and its ABC Daytime division has announced a reshuffling of its programming lineup of soaps, particularly regarding its youngest offering, *The City*, a 30-minute spinoff of *Loving*.
In the new schedule, *One Life to Live* will now air at noon, directly against CBS' popular soap *The Young & the Restless*, which The City had been doing, and losing badly, with a 2.9 viewer rating, up against *Y&R'*s healthy 7.2/28 share, which makes it the No. 1 daytime soap. Because of this continued bleeding of viewers, many ABC affiliates have strongly considered to stop airing *The City* altogether, and the show was in very real danger of being dropped. However, ABC executives felt that reshuffling the schedule and giving their stable of soaps more rope would be better, and even put ABC in a better spot, competition-wise, with CBS during the noon slot. *One Life to Live* was felt to be the best contender for the slot.
At 1 PM, *All My Children* will air, with *General Hospital* airing at 2. Between 1 and 2, *The City* will air, and then, starting on June 1, another brand new 30-minute soap, a spinoff of *General Hospital* called *Port Charles*, will air at 1:30.
General Hospital executive producer Wendy Riche praises the decision. "ABC Daytime has solidified its future, especially for the affiliates who were considering opting out. Now ABC has a stable of five quality soaps to entertain and enamor viewers five days a week, and *Port Charles* will be part of that heritage. *Port Charles* is something impressive; this will be a mutigenerational show, which is the kind of drama we've always done at *GH*, and it is in fact expanding on everything you love and enjoy about *GH*."
*Port Charles* will focus on a university medical school in the namesake town, home to the titular General Hospital of the parent show. The new generation of nurses and doctors will receive their training here, guided by familiar faces. "Unlike most spinoffs, which center on only a few central characters, PC will have the unique opportunity to rotate key *General Hospital* cast members in high-concept storylines that intersect while creating two self-contained programs," says Pat Fili-Krushel, President, ABC Daytime.
Riche will have the executive producer position for *Port Charles* in addition to the original show, and Richard Culliton will be head writer for both shows. *Port Charles* will use the same facilities and sets as *General Hospital* and be taped in Los Angeles. It will premiere less than two months after NBC debuts a new daytime drama, *Sunset Beach*.

**Interview with George Lucas for *60 Minutes*, aired on CBS January 25, 1997**
*As everyone knows, this year marks the 20th anniversary of* Star Wars. *So you're celebrating by re-releasing all three films in theaters this year. Why did you choose to do that?*
Of course, 20 years is a massive, important milestone for anything, but *Star Wars* has basically become something in and of itself, a phenomenon unlike anything else. I certainly had no idea it would become this big, but I'm quite pleased. There's also the fact that *Star Wars* is a story meant to be experienced on the big screen, in the movie theater, if you've only seen it on your TV, you haven't really experienced it. The thing is that, I'm very much someone who's concerned about the future of film and of individual films. I want to ensure that something is around in a viable medium for audiences many generations from now to enjoy. A lot of the early films of the first few decades, up through the '50s and '60s, have been lost forever because of poor stewardship and happenstance. I wanted to ensure that *Star Wars* would never suffer that fate. And indeed, when we pulled up the negatives to begin work on restoring, we'd found they'd deteriorated faster than we'd anticipated, so we had to do this now. At the same time, I had an ulterior motive, there were a lot of things on the films that I'd wanted to accomplish but didn't, things that had to be cut, shots that didn't turn out well, effects shots that didn't turn out that well. So what I've really wanted to do was, basically, fix the films to accomplish what I originally couldn't.
*How different is this from many restoration works, director's cuts and things of that nature?*
On projects like that, those are things the studio ordered to be cut, over the director's objections, wishes and whatnot. With *Star Wars*, these cuts and removals I'd made because time, money and scope didn't properly align, and in quite a lot of ways, I basically settled for "good enough", rather than "great." Plus, some effects don't look as impressive as they did when they were originally released in theaters, and a new generation's coming up that hasn't seen these films, but seen movies with breathtaking visuals like *Terminator 2* or *Jurassic Park*, and where do these movies fit in? So really enhancing the visuals was quite important.
*Does this have something to do with the new films you're working on, the prequel trilogy that you're doing?*
To an extent, yes. When those films are made, they're going to be made using real state of the art visual effects, especially digital effects, and even with digital cinematography, without film stock, or at least the last two will be, because we're not sure we can get it to work on the next film just yet. But I need to effectively get familiarized with what the filmmakers of today are using to tell their stories, and basically have a "proof of concept" that it works. So using the digital effects on the original trilogy, the special edition, is a good way to test it out.
*What kind of response do you have for certain moviegoers who might say, "Why these new effects? The movie was just fine as it was?"*
Well, everyone's entitled to their own opinion. I also think when it comes to the film and any enhancements done, you take it on a case by case basis, because enhancement would be good for some films, not good on others. In my case, I've always thought of the original trilogy as incomplete films, because I basically released them unfinished, in terms of the original vision. So what I'm doing is going back to complete the films at last.
*Some might call you a hypocrite, because you've talked, in your efforts on the Film Foundation and film preservation, against films being tampered with and changed.*
When I said that, I was talking about choices done without the director's consent or vision, things like, you know, Ted Turner colorizing old black-and-white movies to show on his station. But all of this, with the special edition, is my vision through and through, and I'm doing it for myself, really. I have one person I'm aiming to please with the special edition, and that's myself. I'm happy to be able to remove these thorns in my side that I've had to live with for so long.
*Now, the special edition comes out on a staggered schedule,* Star Wars *on January 31,* The Empire Strikes Back *on February 21, and* Return of the Jedi *on March 7. Besides the new visuals and scenes being added back in, the most notable thing about these releases is that they're being distributed not by 20th Century Fox, who did them originally, but Disney, as a result of them buying Lucasfilm Ltd. last year. Why did you make that call?*
Well, it's much the same reason Disney bought ABC. They had a relationship with us that lasted a long time, producing attractions for their parks, and we were part of their culture already. We just wanted to make it official. Besides, Michael Eisner said that he wouldn't interfere or tell us what to do, and just wants to give the films extra promotional muscle.
*What about the merchandising? You've long been very protective of merchandising rights, especially when Fox showed so little faith in the first film initially, they sold those rights to you.*
The contract states that we will share the rights equally until the third prequel is out, and then it will go entirely to Disney. And, yes, I'll admit that merchandising rights have been quite good for me, that I've made a lot of money from licensing deals, but I've never considered it the be all, end all of things. The movies are what I love most, and that's what matters the most to me. Having Disney for a partner is quite creatively fulfilling.
*Does that mean that they're pouring money into the budgets and...?*
No, I'm still paying for the prequels out of my own pocket. I'm still raising the money. I could easily take Disney's money to help, yes, but I don't want to. I want to be absolutely certain of creative control, that no one's coming in to say "No, you can't do this, no, you can't do that, we're not paying more for that." It's not that I don't believe Michael, I do, but having an insurance policy doesn't hurt. I still value my independence greatly, and having Disney be distributor doesn't change that. Plus, Michael saw it as a can't-lose opportunity; Disney doesn't have to fret about the budget, so they can put their money to the prints and advertising costs, and we all know Disney has a mammoth machine for that.
*So no concerns from them at all?*
The one thing Eisner was worried about was that I was rusty, having not directed since the original film. You know, I had a lot of stress making the original film, I was actually hospitalized for chest pains and high blood pressure, so I didn't want to experience that again, so I dialed things back, especially when I went to focus on my family, having children. This the first real time in 20 years I've gotten that active again, not just writing and producing but directing the next one as well. And I originally didn't plan to direct this film. I asked Steven (Spielberg), Ron Howard, Bob Zemeckis to do it, they all said no, told me I should do it.
*And how does the prospect of directing the next film feel for you?*
Well, I've always wanted to direct again, I just wasn't necessarily sure it should be *Star Wars*. And I do understand concerns about a long time away from the director's chair, I do. So while the script is being polished by my good friend Larry Kasdan, and even from Carrie Fisher on the side, I've been making some private movies to get in the habit and the rhythm of it again. Movies that will never be released to the public, but just to prove I can do it. I think, that when we start filming in Tunisia and Venice this July, I'll be as prepared I can be.
*When you do complete the next three films, where do you see things going? Will there be more* Star Wars*?*
The next three films are the completion of my original story. When I made the original films, I had to write an extensive background, to learn and understand how Anakin Skywalker became Darth Vader, I had to figure out where Ben Kenobi fit into everything, I had to figure out that Luke and Leia were twins, about who their mother was and why she died. I know the background already, but the rest of the world doesn't. Because the movies are really the story of Anakin Skywalker, the original three films are about how his son brings him back to the light, but you don't know how he fell, and the trauma that he went through to become this symbol of evil. The third of the prequels will reveal and show that part, and it's the last of the stories I want to tell. To me, the story I set up over 20 years ago is complete. Any future films, which I'm sure Disney will want, will be at their discretion.
*So any future films by Disney, you wouldn't be a part of?*
Not actively, maybe in a very limited way, but not in the production. And I would be fine with that. You know, the Disney deal, setting all this up, this was about ensuring that *Star Wars* has a home that is safe, and can be preserved.
*Do you have ideas of what else you'd do?*
Well, *Indiana Jones* is just as big in the scheme of things as *Star Wars*, another important aspect of the Disney deal. I helped make the TV series, *Young Indiana Jones*, which ABC aired, before Disney bought them. It was a really great show, a great narrative to show how Indy becomes the hero we know and love, but the network cancelled it. Now, we're going to get it restarted, to finish the narrative and the timeline I'd conceived, which will be easy since the prepubescent and teenage adventures have been finished, so we can focus solely on Indy as a young adult. I also do very much plan to make a fourth movie with Steven, down the line, though Disney wouldn't be alone, Paramount contractually owns rights to a fourth movie, so Disney might have to be mere profit participants on that one, but still. I don't have a story yet, a setting or anything, but it will be done. I also imagine continuing my association with Disney on theme park attractions, creating great experiences there. And there are things I'd like to do that don't necessarily involve Disney, but are dreams of my own.
*Like what?*
Television, I really want to be involved in stories for television. I got the bug from doing *Young Indy*, and I think there's a real opening for a new wave of storytelling there, that there are opportunities that are going to open. I also want to make some experimental films, things not for the general public to see. And I also really want to help push things with digital filmmaking, really broaden those horizons.

**"Disney May Sell ABC Units," CNNfn website, January 29, 1997**
The Walt Disney Company reportedly wants to sell off the publishing operations it acquired last year through the $19 billion takeover of Capital Cities/ABC Inc.
Published reports in *The Wall Street Journal* and *Daily Variety* Wednesday said Disney has little interest in holding onto such eclectic businesses as the *Fort Worth Star-Telegram, Women's Wear Daily, Institutional Investor* and *Kentucky Prairie Farmer*.
Any sale is not expected to include Disney's Hyperion book division.
Unlike the broadcasting operations and the subsequent purchases of Pixar Animation Studios and Lucasfilm Ltd. - all of which have an obvious fit with Disney's movies, theme parks and resorts - analysts said the publishing operations have little synergy with the rest of the entertainment and media giant's holdings. Company officials said they can better serve shareholders by selling the units either to pay down debt or make investments in other businesses.
Analysts said a deal for the publishing operation could fetch as much as $2 billion. Potential suitors include K-III Communications, Gannett, Hearst and Reed Elsevier.

**"Disney to Sell Publications Inherited With Capital Cities," by Geraldine Fabrikant, *The New York Times*, January 29, 1997**
The Walt Disney Company announced yesterday that it was putting up for sale the publishing businesses it acquired in its 1995 purchase of Capital Cities/ABC Inc.
The list of properties that Disney is putting on the auction block range from seven newspapers, including *The Kansas City* (Missouri) *Star* and *The Fort Worth Star-Telegram*, to consumer publications like *Women's Wear Daily* and *Los Angeles* magazine, to the trade magazines *Institutional Investor* and *Automotive Industries*.
All in all, analysts said, the sale could fetch $2 billion to $3 billion.
Disney also announced a 33 percent increase in net income in its first fiscal year 1997 quarter, which ended on December 31, to $749 million, from $565 million in the similar period a year earlier, and a 7 percent gain in revenue in the same period, to $6.28 billion from $5.89 billion. The earnings were bolstered by the sale of KCAL-TV, a Los Angeles television station, for $135 million.
The fiscal year 1996 results were restated to reflect the near-simultaneous ABC, Pixar Animation Studios and Lucasfilm Ltd. acquisitions.
Analysts attributed the gains in large part to the strong performance of the cable TV sports channel ESPN and of Disney's theme parks. And although broadcasting did well, the company said the broadcasting business also benefited from amortization costs related to the ABC purchase.
''The network's performance was somewhat down but the TV stations did fairly well, I believe,'' said David Londoner, who follows Disney for Schroder Wertheim & Company.
Disney also announced that it was teaming up with the Comcast Corporation to acquire control of E! Entertainment Television, a cable programming channel, for $320 million. Comcast, which already owns 10.4 percent of E! Entertainment, will increase its stake to 50.1 percent, and Disney will own the rest as the result of the purchase of Time Warner Inc.'s 58.4 percent stake.
Unless Disney comes up with a clever tax strategy, much of the proceeds from the planned sale of its newspapers and magazines could go to the government in capital gains taxes.
Disney inherited Capital Cities/ABC's cost basis for calculating those taxes, and it is relatively low because Capital Cities had owned many of the publications for years. Indeed, last year Michael Ovitz, then the interim Disney president, told at least one investment banker that the company did not plan to sell the publishing operations because the tax bite would be so large.
Apparently Disney's CEO and chairman, Michael D. Eisner, assured some key managers of that commitment.
The newspaper industry analyst John Morton said that during a meeting with analysts last year, Philip Meeks, president of the publishing group, told his audience that Mr. Eisner had reiterated the company's decision to stay in publishing. Mr. Meeks was out of the office yesterday and did not return phone calls.
But Wall Street was hardly surprised by the sale. ''Everyone assumed that it was not their prime focus, and that they would consider divesting those assets,'' said Harold Vogel, who follows Disney for Cowen & Company. Although Mr. Eisner is known to be uncomfortable with debt, Disney's debt levels are reasonable, even after having spent about $25 billion on the three acquisitions. And analysts generally agreed that the lack of strategic fit was a key factor for the sale, adding that Disney is likely to pay off some of its debt in any case, both from the print divestments and its proceeding with spinning off a majority of its ownership stake in Miramax Films, a move done to help satisfy antitrust concerns after the three mergers.
Disney no longer breaks out publishing earnings separately, but Mr. Vogel said that the publishing division was likely to bring in about $200 million in operating profits in the 1997 fiscal year, which ends in September. He added that the unit's performance has clearly improved since 1986, when it reported its high for the decade of $160 million. Typically, publishing companies sell for 10 times or 12 times cash flow, which explains why investors expect the sale to generate at least $2 billion.
Wall Street seemed pleased with both the earnings reports and news of the pending sale: Disney's stock advanced $1 yesterday, to $72.875.
Mr. Morton, the newspaper analyst for Morton Research, said he believed that the sale of the papers alone would bring in about $1 billion. But he cautioned that a lot of potential buyers, including Gannett, the Tribune Company and A.H. Belo, are already digesting major acquisitions, although he viewed Newhouse and Hearst as potential acquirers.
Analysts say they will be watching to see whether Disney can find a buyer for the whole package or whether it ends up having to sell the publications piecemeal.
Disney said yesterday that its creative content business saw profits rise 10 percent, to $719 million: broadcasting profits jumped 38 percent, to $470 million, and theme parks turned in $238 million in profits, a gain of 21 percent.

**"Beyond *Star Wars*," by Kevin Kelly and Paula Parisi, *Wired*, February 1, 1997**
No director has fast-forwarded filmdom into the 21st century as far as George Lucas has. His popular galactic fairy tale *Star Wars* is the classic saga of a charming princess and brave knights, but also of very unclassical warp drives, Wookies, bots, and droids. Lucas's mythmaking is a novel convergence of Hans Christian Andersen and Isaac Asimov, the blending of soul and tech, the meeting of inner child and inner nerd.
In the late '70s, Lucas fleshed out the scope of his interplanetary opera with a new cinematographic technique: computers married to cameras, called motion-controlled cameras. He used technology not to make his tale unbelievable, but to make it ultrabelievable. Each new installment of the trilogy - *The Empire Strikes Back*, then *Return of the Jedi* - revved up the cinematic wizardry by making the special effects more potent yet less visible. This month Lucas and company have reissued the first *Star Wars* episode with additional scenes and superior effects, in effect declaring that a movie is a dynamic creation (like a Web page!) that can be forever tweaked. Ever the rebel, Lucas is busy conjuring up the next revolution - an innovative way of "nonlinear 3D filmmaking" that we bet will become the dominant form of cinema production on the other side of 2000. Soon in the future, Lucas predicts, in a garage not very far away, two guys will use digital video technology to make a movie you'll never forget.
Wired: What has surprised you in the last 10 years?
Lucas: A lot of the things that I believed in in the past are coming to pass.
W: Such as?
L: What I call 3D filmmaking. In 3D filmmaking, I can take images and manipulate them infinitely, as opposed to taking still photographs and laying them one after the other. I move things in all directions. It's such a liberating experience. It's like you said "I wish I could fly" and then the Wright Brothers come along, and then you can fly, and you can't get over the fact that it is so astounding. I am still in that phase of saying "This is so amazing."
W: Everything seems to be going digital. When do you expect to make a complete movie using just a video camera and no film?
L: Well, we were going to do the next one with all video, but we're having a little problem with the widescreen format, so we may not be able to accomplish it on this film. But the next one we will. Definitely. If I wasn't doing widescreen, I could do it today.
W: In two years you'll make a completely digital feature with no film?
L: Yes. Two or three years.
W: What have you changed in the reissued *Star Wars* films? Have you created new characters?
L: In the original *Star Wars*, the Dewback, the creatures the Stormtroopers ride on Tatooine, they've gone from rubber mannequins to freely-moving digital creatures, and there's some additional seconds of footage of them, showing more Dewbacks and more Stormtroopers. We did that by not just computer enhancement but even shooting a few new seconds of film to match the original sequence. There's a greater scale and size to Mos Eisley, more shots, more creatures, more citizens, more buildings. The Death Star battle has digital X-Wings and TIE fighters, and more, new camera angles. In *The Empire Strikes Back* there was a snow monster you didn't really see. It was just shadows and sounds; we always wanted the creature but were never able to accomplish it. Now we actually have a creature there. We have a lot of new shots in Cloud City to make it be bigger and look better. And the snow sequence was one of those state-of-the-art things at the time - doing white mattes on a white surface, which nobody had ever accomplished. Now, with digital, we can do that much better. In *Jedi*, there was a sequence in Jabba's palace that was meant to be a musical number. But it ended up just a little tiny thing with this dancer, Ula, that was maybe 15 seconds long. Now we've turned that into about a minute and a half. There's a bigger band and backup singers. It is what it was meant to be originally; we just didn't have the wherewithal to do it then.
W: That makes new films cheaper, too! You were once trying to cut moviemaking's economies of scale down to one-tenth the normal cost. What will your *Star Wars* prequels cost?
L: I'm hoping to do the new *Star Wars* films for between $60 and $70 million. These are maybe $120 to $140 million movies.
W: That's amazing! A talking head drama like *The Bridges of Madison County* costs maybe $50 million. How are you making a new *Star Wars* installment for only $10 million more?
L: This first film will be a big experiment, because we're taking a lot of the ideas I've learned from doing the *Young Indy* TV series and moving it to this larger level to see what happens. Some of it is going to work; some of it's not. The reason I'm directing the first one is so I can learn how to do it myself. We're going out there in a whole different style of filmmaking.
W: And despite having Disney distribute the films, including the new Special Editions, you're not taking any money from them for the budgets?
L: Not a penny. It's my own money, every cent. This helps further ensure creative control, and everything goes where it needs to go.
W: You say you don't intentionally set yourself up as godfather of the digital era, but is what you are working on the paradigm for 21st century filmmaking?
L: People ask me about it more, I guess, but other people are doing it, too. Imagine having to publish a story the way films are made. The publisher does the outline, then turns it over to you, the "writer," and says, "OK, write the story." You write it, but once you've written there's no such thing as being able to take words out and change them around. Then you turn it over to me, the editor. The editor says, "Now, I'm going to put it in my word processor. I'm going to move everything around," and he does. You get to check in once in a while and say, "No, no, that's not what I meant. I meant this." "Oh, really, I had no idea that's what you were talking about. OK, I'll put that." And then you turn it over to the printer, the printer retypes it however he wants, and then prints it that way. Then you say, "But you can't do that!" That is the way it's done in movies. We've all got a word processor now, so why not just let one person do the whole thing? You can say about halfway through the story, Gee, we should add this new section in the outline and put it in there because that's even better.
W: Writers say they write to find out what they think. Are you saying that you can't determine what the movie is really about until you film it?
L: It's very hard to have planned out at the very beginning what is going to happen at the very end. Obviously real life comes into it, personalities come into it, and the process of doing it sequentially forces you into making certain kinds of decisions in a certain way. Instead of making film into a sequential assembly line process where one person does one thing, takes it, and turns it over to the next person, I'm turning it more into the process of a painter or sculptor. You work on it for a bit, then you stand back and look at it and add some more onto it, then stand back and look at it and add some more. You basically end up layering the whole thing. Filmmaking by layering means you write, and direct, and edit all at once. It's much more like what you do when you write a story.
W: How exactly does that change what you do while making a movie?
L: Everything is different. The actors, the contract, the crew is assembled in a different way. We work a lot in Hi-8 before we get to the actual movie. It's a little more like animation, where you are storyboarding and writing and shooting and editing - all happening all the time. I have been writing [the next *Star Wars* episode] for two years, even with Larry Kasdan and Carrie Fisher polishing things and helping me out, but I've also been shooting and editing, exploring different kinds of actors for different kinds of parts, and shooting and figuring it out. It's not done sequentially at all. I'll be able to add more things and change more things. Then I can go back and finish shooting. Then as we cut that together, I have already scheduled another three weeks of shooting six months later to add more stuff and change more things, and rewrite it in that period, and then I've got another three months, and then I've got another two weeks of shooting after that. I'm shooting now, and I'll be shooting three years from now.
W: Sounds like the film is never done!
L: There is no such thing as "the film." The film is the thing that gets spit out at the very end. Whether I'm doing notes on paper or doing notes electronically, it all comes down to the same thing. Except now I've a very, very clear picture of what it is I'm doing. It's like a painting. You rough it in. You say, Oh, I was going to do this, and then halfway through you change your mind. You can see it evolve; you can sort of be with the work, rather than draw.
W: That kind of uncertain approach must drive some people in the film industry crazy.
L: The film business is designed in a kind of industrial way, vaguely the way buildings are built. The architect does the blueprint and turns it over to the contractor. The contractor then follows the instructions, and if nobody is there to say "wait, wait, wait," and if nobody goes in and makes those change orders - which, of course, nobody wants to do because it's very expensive - you end up with a building that's only sort of interesting.
I'm of a carpenter mentality. I have a rough idea of what I want to do, but I'm going to start hammering, and then when I get along here, I'll look at it and say, "We should move this wall here, it would be even better." A lot of Victorian houses were built that way. They weren't built with plans, just by the carpenter saying, "Well, all right, let's measure out the room, it will be 20 feet this way, and it will be 40 feet that way, and when we get the first floor built, we'll figure out what's going to be on the second floor." If you are a good craftsman, you really know what to do, and you understand the structure, you can build a very nice building, but it's very organic. It feels better than something that someone who had a set of plans bolted together.
W: You take visual notes and some of them - rewritten or not - eventually become part of your film.
L: The important thing, something Francis [Coppola] taught me, is to go through and do a lot of different layers. He said, "Look, when you write a script, just go as fast as you can. Just get it done. Don't ever read what you've written. Try to get it done in a week or two, then go back and fix it, and then go back through as fast as you can, and then go back and fix it - you just keep fixing it. But if you try to make each page perfect, you'll never get beyond page 10."
W: Do you think digitalization of film changes things much?
L: Digital is like saying, "What kind of camera are you going to use? Are you going to use Panavision or an Arriflex? Are you going to write with a pen or on your little laptop?" I mean, it doesn't change anything.
W: On one hand you are saying digital technology doesn't change much, and on the other hand you are saying it will make a huge difference.
L: Everyone seems to think that digital technology devoids the medium of content, but that is not true at all. If anything, it broadens the content. There were vast numbers of things you could do in a literary medium that you couldn't even think about doing in a movie. If you said, "There are 10,000 people trudging over the hill," well, to accomplish that in real life is a very, very difficult undertaking. To do a movie like *The Ten Commandments* or *Ben-Hur* would be cost-prohibitive now.
But digital technology allows us to do even more. Until this point in film we have been limited to the short story in terms of scope. Digital technology allows us a much larger scope to tell stories that were pretty much the grounds of the literary media.
W: Would you say it is revolutionary?
L: Digital technology is the same revolution as adding sound to pictures and the same revolution as adding color to pictures. Nothing more and nothing less.
W: Certainly there must be some issues raised by the fact that these digital layers can be amended later on - by either you or somebody else.
L: Yes. Digital in film is just like digital in writing. It makes the medium much more malleable; you can make a lot more changes. You can cut and paste and move things around and think in a more fluid style - and I love that. We're just getting into that on a grand scale in film. I don't think I'd ever go back to analog. I haven't used an editing machine with film on sprocket holes for almost eight years. I hardly even know how to hold a piece of film anymore, let alone to take a razor to cut footage, then paste it together - I don't think I could do it. It's just too much work: It's too cumbersome, too slow, and you can't manipulate it enough. It would be like going back and scratching things on rocks!
W: Are you at all worried about the other consequences of this ease of redoing things? Would you be concerned about someone making Yoda walk long after you're dead and gone?
L: It doesn't make any difference whether you're digital or analog: somebody can recut your movie and make it completely different than what it is. The issue is artists' rights. In book publishing, usually the artist owns the copyright, and therefore it's impossible for somebody to go back and rewrite the book. But in film, the copyright is owned by a studio, and they can go do whatever they want whenever they want. One of the things that's being pushed through Congress is to try to allow the artist in the film industry to have the same rights that a painter or an author has, which is the way copyright was intended. It wasn't intended for a large corporation to own copyrights; it was intended for the artist to own the copyright. The thing that is problematic in film is who is the artist? Who is the author? Writers claim authorship; the director claims authorship; the producer claims authorship. Ultimately, somebody should be designated the author - not the corporation that owns the copyright that sells it to another corporation that sells it to another corporation. It has nothing really to do with technology.
W: So who do you think should be the author?
L: I'm not completely sure whether it's the producer, the director, the writer, or all three. It's up to the world to designate an author, because if you say it's the producer, then a lot of directors will become director-producers. That's what I do. I solved the problem by owning my own copyright, so nobody can screw around with my stuff, even after I sold Lucasfilm to Disney. Nobody can take *Star Wars* and make Yoda walk, at least not yet, because I own it. Now, when I'm done with the prequels and I've done everything in *Star Wars* I want to do, by the terms of the contract, Disney has free rein to do whatever they want, whatever stories they want. But while I'm doing the prequels, I'm calling the shots.
W: What about the temptation to change your own work -
L: That's what I'm doing! I'm doing that with *Star Wars* right now.
W: Right, but certain changes may only be pandering to the public at large, or to political correctness.
L: You know, we didn't have artists' rights in this country until about three years ago. It's my artistic vision. If I want to go back and change it, it's my business, not somebody else's. Somebody bought a Henry Moore sculpture and painted it white - it was a bronze - because it fit better with her backyard. Moore was just absolutely furious. The fact is, in this country you have a right to do that. Well, you shouldn't. If Henry Moore came and said, "I'll paint it white," that's his business because he's the artist. Whoever's name is on the work, whoever's reputation is on the line has the right to alter the work.
W: That process works really well when you have a world of originals (as in painting and sculpture), but in a world filled with copies (videos, music albums, books), it's a little less clear. It's easy to mess with a copy of something, and should an artist care if I mess with my copy?
L: An artist has a legal right to say, "You can't do that." That's how copyright got to be developed in the first place - to protect the artist so that people couldn't exploit his work without him getting something for it. People can take material and then reconfigure it for their own personal needs or turn it into something else. But where you cross the copyright law doing that is an issue that is being debated in court. It's the same issue as somebody taking a famous photograph and then making a sculpture out of it.
W: I mean, who owns the copyright? The guy who took the photograph or the guy who made the sculpture off the photograph?
L: Some people even claim that the scene the guy photographs and the sculptor recreates - say, a building or a face - is itself a copyrightable work. Some owners of public buildings won't allow photographers to take a picture of the building without permission.
I'll probably get in trouble for this, but I am an ardent subscriber to the belief that people should own their own image, that you shouldn't be allowed to take anybody's picture without their permission. In the film business, that's the way it is. If I come in here with my Panavision camera, and I take pictures of you guys and then put it in my movie without getting your permission, it's against the law. Now ABC News isn't any more or any less commercial than a Paramount picture, but if I come in here with the same camera, do the same thing, and give it to ABC News, I can do it. My feeling is we should just simply make it all the same: nobody is allowed to use anybody's image unless they give them permission. It's not a matter of freedom of the press, because you can still write about people. You can still tell stories. It just means you can't use their image, and if they want you to use their image, then they'll give you permission.
W: Many people further believe that their informational image, so to speak - say, their address - should also be just as private. Do you think others should need my permission to use my name and address?
L: I think so, but the one that gets abused most, actually, is the image. That people should own their own image, which is true in the most primitive cultures, is something we've given away. It's just become a cultural thing. Obviously, the electronic media would go nuts if you couldn't take people's picture without asking permission. But how do you rationalize a supermodel who makes her living posing for pictures at $5000 an hour, yet the paparazzi can come along and take her picture and then turn around and sell it for, say, $50,000 to the cover of *People* magazine, and that's legal. And you don't need to pay her.
W: Computers make this more fascinating because someone could create a working model of your face, that is, a 3D virtual likeness of you. The artist would have spent a lot of time doing it, so they would think they own that likeness, and you, as the subject, might think you would own it.
L: Unfortunately, in this country the issue is where does it go? If you put it on the show *Friends*, you'd get sued. But you wouldn't if you put it on *Entertainment Tonight*, which is considered news. And what is the difference between those two shows? Nothing.
W: Are you surfing the Web these days?
L: When I'm interested in something, I'll look it up, but I don't have time to just spend on the Web.
W: So do you think there's anything worth paying attention to on the Web, or is it just a fad?
L: I think it's very important. It's a great asset for education and for school and for anybody doing research. The social aspects of it are very interesting. It's a kind of new town square - a place where people go and meet. Our society doesn't foster that kind of thing, which was the center point of most communities 100 years ago. The Net, I think, is renewing that whole concept of social interaction.
W: Are you using the Net in that way?
L: Not very much. Again, my issue is I've got a lot of stuff that goes on in my life.
W: Do you use email for that?
L: No. No. For being sort of a state-of-the-art guy, my personal life is very unstate-of-the-art. It's very Victorian, actually.
I like to sit on a porch and listen to the flies buzz if I have five minutes, because most of my life is interacting with people all the time. I interact with a couple of hundred people every single day, and it's very intense. I've got three kids, so I interact with them whatever's left of the day. The few brief seconds I have before I fall asleep are usually more meditative in nature.
W: When you were growing up, films were something that everybody stood in line for. Of course, these days, with big screens in our houses, the crowds are going to be hard to replicate. Do you think that's a big deal? Will we lose the association of movies and a crowd of other people?
L: I don't think we will. That's the experiment I'm doing with reissuing the *Star Wars* trilogy. What we're doing is to say, "Here is a movie that was designed to be seen on the big screen with a lot of other people. It's a communal experience and something that needs overwhelming size to make it the kind of experience it was designed to be, and it was. It was designed to be on a wide screen with full surround sound, with a lot of other people sharing the moments." There's something about the shared experience of everybody laughing at the same moment, everybody gasping at the same moment, everybody yelling and cheering at the same moment that takes it to a whole different level than just sitting and watching it on a TV screen.
We will see what happens, because nobody has tried to reissue a movie on the scale we're doing since video has been invented. When we started, there was a lot of skepticism about whether all the money poured into fixing the movies would ever be recouped and all that sort of thing, but my feeling is it's like going to a baseball game or a rock concert. You can see it better on television or hear it better on the album; but there's something about the experience of being there that lifts it way above just listening to the CD or watching it on TV.
W: So will you shoot your future films for the large screen, or the small TV screens that are more ubiquitous?
L: I love television because you can tell different kinds of stories that you could never tell on the big screen. The big screen is very demanding in a very particular kind of way; on the small screen you can actually tell a more intimate story with more intellectual content.
W: I can foresee a third screen happening, a home screen somewhere between TV and a movie screen in size.
L: What's happening is the movie screen is becoming that "third" screen, and the big screen is becoming the IMAX or the next 3D, super-engrossing experience. They're building more and more of these. Before, there were like 20, and now there's more than 200 IMAX, OmniMax, 3D experience theaters. And their films are getting a little bit longer and a little more dramatic. Most multiplexes are probably going to end up with one of those, and you're going to see more people making movies for those screens, so that's going to be this kind of super-encompassing experience. Then at home you'll have a TV screen, which will be, you know, 5 feet by 2 feet.
W: And someday it will be high-definition TV. Will HDTV change the nature of what is shown on television?
L: I don't think it will change content much at all. HDTV is just a sharper image - but not that much sharper. Going to a movie theater to see an image that is 20 feet high and 40 feet long while sitting with a thousand people in a room is a very different experience from watching TV - even HDTV - alone at home. Content is much more influenced by market forces than by technology. Stuff made for television is different because the market is different. It's free for one thing; people are less discriminating about what they watch. So the creator can be more adventurous. You can tell more interesting stories on TV than on film because there are more outlets, cable and such. Feature films are so expensive that what you make has to fall into three or four market niches or it is simply not going to happen. Digital technology allows us to cross media. Normally TV is limited by resources to talking heads. But I was able to do grand scale on TV for the same budget because I was using digital technology. And digital technology allows me to make stories for film on a bigger, epic scale, with a grander sweep, than was even conceivable before.
W: Another question about scale: "Two guys in a garage" is the basic building block of Silicon Valley. Can you imagine a time when a culturally significant movie can be made by just two guys in a garage?
L: Definitely. Definitely. That's what we did in film school. So far nothing culturally significant has been made in a film school, but it's all relative, of course. On my first film, *THX 1138*, there was a very, very small crew. I mean, it wasn't two people, but it was less than 20, so it was a very small group. It was made with very, very little money. Now we have things like Hi-8 and Photoshop. Some of the special effects that we redid for *Star Wars* were done on a Macintosh, on a laptop, in a couple of hours. And they look exactly the same because they're intercut with the old shots. Obviously, they were done by somebody who's brilliant. But at the same time, the mechanical technical wherewithal to do it exists today. I could have very easily shot the *Young Indy*TV series on Hi-8 rather than 16mm. *Young Indy* looks like big, giant movies, especially as the planned reediting of certain episodes for home video is proving. I mean, the quality is just as good; no one would have known the difference. So you can get a Hi-8 camera for a few thousand bucks, more for the software and the computer; for less than $10,000 you have a movie studio. There's nothing to stop you from doing something provocative and significant in that medium.
W: So why aren't there more guys in garages doing great movies?
L: It's hard. Why aren't there more people writing great American novels? I mean, that's what it comes down to. All the stuff is there. Everybody in this country who has graduated from high school, in theory, should be able to write the great American novel. Why don't they? Or at least a bad, sleazy novel that can sell for hundreds of millions of dollars to the film industry.
W: That's what they're doing!
L: Yes, but not even many people do that. The thing that stops it now is the marketplace, the distribution thing. Of course, it takes talent and courage and most people don't want to attempt it, but you're going to find more and more people - especially as the Internet-cable configuration begins to become more accessible - start doing it. Once distribution frees itself up and more people have access to the distribution channels, you're going to find more people doing that; if you can sell a "view-on-demand" movie for 50 cents and it cost you $50,000 to make, you could find enough people - 100,000 - who will watch it. The big problem is doing marketing and trying to figure out what your thing is; but if you can develop a channel that has a certain cachet to it and if you can continually pump that kind of material out, you've suddenly got yourself a channel.
W: We've heard this promise before in the technology of the '90s - interactive, CD-ROM stuff. What happened to that?
L: That was a nonidea to begin with.
W: Yes, but you guys at Lucas were pretty involved with it on some level.
L: We have a games group, a branch that makes video games. Interactivity is games - how hard is that to figure out? Everybody said, "Well, you're going to have to have interactive movies." You don't have to have interactive movies. There's games, and there's movies. Movies are storytelling; you tell somebody a story. A game is interactive; you participate in some kind of an event with a lot of other people or with yourself, or with a machine. Those are two different things, and they've been around forever. Games have been here since the Greeks, and so has storytelling.
W: You don't think those two are going to cross over at all?
L: No! Because by definition they're different - storytelling and games are two different mediums. The fact that games are going to look more like movies, and you'll be able to interact with cybercharacters that look very real, and you'll be able to have conversations with them, that doesn't suddenly make it a movie or storytelling. You're using the same techniques that you're using to make movies in a game environment, but it's still a game. I don't care how you do it, once you have no story to tell, it's different. If I'm interacting, then that's a whole different kind of experience. We're talking, and I don't know what you're going to say; you don't know what I'm going to say. If I punch you in the nose, I don't know what the reaction is going to be because it will be different every time it happens. That's a game. If I'm telling a story, and the interest in it is the fact that I'm telling you something, and you are listening because I can tell it to you in an interesting way, that's why you're there. Psychologically, it's a different kind of experience.
W: We agree they are different, but perhaps there's some imaginable hybrid. I don't know how big a possibility space it would be, but I could see semidirected stories. Like improv dinner theater where you become part of a mystery while you eat. It feels like something in between a story and a game.
L: Yes, but it's so marginal. You're doing one for one reason and another for another reason. I mean, that's the difference between playing catch with your son and reading a book. You're doing them for two different reasons. The idea of combining reading the book and playing the game isn't that interesting. It's like trying to swim and fly at the same time - um, I guess they call that diving.
W: Is there any technology you're working on today that has the potential to revolutionize film a few years from now?
L: We are still pushing the envelope to get a really good and well-run all-digital post system.
W: What's holding it up?
L: We developed a system called EditDroid, but we didn't want to be in the hardware business, so we sold it to Avid. They are focused on the mass market. It's a matter of getting their enthusiasm for something that is considered to be a high-end item, even though obviously it would trickle down into the mass marketplace. In EditDroid we were able to store over a million feet of film. It advances every year, but we always need more storage.
W: This [holding up pencil] is an imaginary magic wand. You wave it and it does whatever you want. It could be a black box - only it has to be something that would help you and not help others. What would you have it do?
L: That's hard, because most of the things I do are to help others.
W: Well, it could be that editing system you always wanted.
L: If I could have that magic wand, I guess what I'd love to have is infinite storage.
W: You think a lot about education - indeed, you have been producing educational materials. You even wrote an essay on education for this magazine. Do you think that the online networks and educational software that currently complement schooling will ultimately replace it?
L: You need an educational system. I can't fathom how it would work without one. One of the more important parts of education is socialization - learning to cooperate and work with other people, particularly in the workplace. Interpersonal relationships are very crucial to the educational system, and they need to be done in a communal environment, which means you will always need an educational system.
W: Like a lot of kids who read science fiction, I thought I knew what the future looked like - it was stainless steel and clear plastic. Yet, one of the most surprising things about your vision of the future in *Star Wars* was that it was filled - for the first time - with grime and dirt and wear and tear and cheery dilapidation. It took the sterility out of the future. This high tech lowlife changed how a lot of people thought about the future. That was a very profound insight; where did it come from, and when did it come to you?
L: I wanted to tell a story. I wanted to make sure that what I was doing was not construed as science fiction: This was space fantasy. This was like opera. This was a genre of fairy tales or mythology. But although it was completely made up, at the same time it had what Kurosawa would say is "immaculate reality." If you are going to strive for immaculate reality, obviously everything is kind of dirty in the real world, and everything is kind of beat up, and everybody doesn't drive around in a brand-new car. *Star Wars* is a completely made-up universe; it doesn't hold to any scientific rules, really. But at the same time, it is very logical in a certain kind of clock way. Once you've set up a particular kind of rule, you don't break that rule, so I was very careful to make it as realistic as possible even though it is a completely fantasy world.
W: I've heard you buried a time capsule here at Skywalker Ranch. An interesting fact about time capsules is that a significant portion of them are lost, even within 10 years of being buried. Are you are sure you know where it is?
L: Yes, it is in the corner of the building.
W: Do you know what's in it?
L: I don't know everything that's in it. There are a lot of artifacts from *Star Wars*, and from the company. It's just trivia stuff, basically.
W: When is it due to be resurrected?
L: Never.
W: Never?
L: Well, I mean it's for some archeologist 2000 years from now to discover. There is no point in raising it. We have an archive, over there [points out the window to another building], and it is very big. But after a few hundred years it will be gone, so the only thing left is the time capsule.
W: Why did you make it?
L: I don't know, just for the fun of it. When we are all gone and the microbes have taken over, and they begin to speak and think and do things that we have done, they will dig it up some day, and say, "Look, humans were here."
W: You have a pretty extensive library here, which is a bridge to the past, and you have a time capsule, which focuses our attention on the far future. That extremely wide span of attention is very unusual for a modern American. Where did that come from?
L: I'm a history buff. I started out in anthropology. I am very interested in culture. Most of what I do centers on that.
W: If we gave you one round-trip ticket to go to the past or to the future, which way would you go?
L: Well - that's an interesting question. That would be a struggle for me. Can I get two? Boy, I don't know. I'd probably go to the future.
W: How far?
L: At least 1000 years.
W: Why 1000?
L: Because my feeling would be that if I went too much further it would be incomprehensible. A thousand years isn't going to be that different. I would at least have some kind of sense of what it was I was looking at. If I was born 1000 years ago and I came here, it would be pretty amazing, but it wouldn't be so much so that I couldn't sort of adapt. If you brought someone from 5000 years ago, they probably could not adapt. It would be so overwhelming that they would be at a loss.
W: Well, one thing they will probably have 1000 years from now is virtual personalities that are viable, bankable commodities. If somehow you had a 3D digital Luke Skywalker, you could be putting him into movies for the next 100 years.
L: That's what I'm doing anyway. I can put Yoda in a hundred movies.
W: You can rent him out?
L: I can put him in the next Jim Carrey movie if I want to. I could work him just like an actor. Conceivably you can get to a point where you can create a character that anybody can use, and you can put him in any kind of an environment. Kermit and some of those characters are the same way. Bugs Bunny, though not quite digital, could be a digital character. He looks as much like a digital character as Woody or Buzz Lightyear does, and they would argue about who is the better looking of the group.
W: So how do you imbue them with spirit, and soul?
L: It's no different than what Tolstoy did. You are going to be able to take Anna Karenina, turn her into a three-dimensional person, and put her into a particular environment instead of just a bunch of words on a page. The fact that eventually you'll have artificial intelligence that will be able to take on a particular persona is a whole other issue; it won't happen in our lifetime, so I'm not too worried about it. But we will be able to create the 3D character. That's going to happen in a few years. The 3D character is animated by a human being to make it react in a particular way, and that's Tolstoy. The real question is when that character starts to think for itself ...
W: Who owns it? And who owns what it says?
L: It's not a matter of who owns it, but what are you going to do with it? How are you going to relate to it? What happens if you fall in love with it? The question will be when do they start asking for their own rights? They'll say, "I have as much right to be here as you do, and the problem with these humans is that are they are too dirty." And they will.
W: Speaking of digital characters, why did you sell off Pixar?
L: I had Pixar for 10 years. At that time it was primarily a hardware company that developed a lot of technology: digital printers, the first nonlinear editing system we developed, high-speed graphics.
I wasn't particularly interested in being in that business. I'm a movie company. But I had companies that needed those technologies, Industrial Light & Magic and Lucasfilm. A couple of guys at Pixar, Ed Catmull and John Lasseter, wanted to do computer-animated movies. There was a lot of investment that had to be made there, and I wasn't really interested in spending $50 million developing animated films. I would much rather take that $50 million and develop a game company, or a lot of other things, than push the special effects company. It was basically a hardware company with a couple of guys whose hearts were into the animated films. So they went off, and Steve [Jobs] bought it, and after a few years Steve sold the hardware company to somebody else, and he took John and Ed and a few of those guys and said, "OK, I want to make movies, too, so let's all get together and make movies," and that's really where it started. ILM is exactly like Pixar, except we don't do animated movies. We do animated pieces in feature films. I didn't need two companies that were doing the same thing.
W: Of course, after *Toy Story* came out, Disney bought Pixar, along with ABC and Lucasfilm, so you're basically indirectly reunited with Pixar, John and Ed.
L: I didn't plan it to be that way, naturally, and I'm sure Disney didn't, either. But I like John and Ed, I really like Steve and he's fun. Of course the news Steve is back at Apple is also somewhat exciting as well. Clearly Michael Eisner thinks we're all very important to him.
W: You've listed Japanese samurai films, *Flash Gordon* serials, and Joseph Campbell as the influences that inspired you while writing the first *Star Wars* trilogy. As you begin this prequel series, are you finding any new sources of inspiration?
L: The influences I use are just the way I live my life. A lot of this stuff I've been gathering since I was in college; the basics were done 20 years ago. In the case of *Star Wars* I had studied mythology in my cultural anthropology class for a year, so I knew something about it, but then I went back and started doing a lot more research in that area, and in history. I just keep going through it. I'm obviously reinterpreting it for today, but the core of it is actually pretty old.
W: At one time you said, "Technology won't save us." Do you think technology is making the world better or worse?
L: If you watch the curve of science and everything we know, it shoots up like a rocket. We're on this rocket and we're going perfectly vertical into the stars. But the emotional intelligence of humankind is equally if not more important than our intellectual intelligence. We're just as emotionally illiterate as we were 5000 years ago; so emotionally our line is completely horizontal. The problem is the horizontal and the vertical are getting farther and farther apart. And as these things grow apart, there's going to be some kind of consequence of that.
W: So would you say your films are a bridge between those two curves of emotion and intelligence?
L: Storytelling, art, mythology has always been an attempt to bridge that gap. I'm not doing much better than Sophocles did (if I could only aspire to that level). Even after Freud, we're still bouncing around with so little sense of what controls that intellectual part. But I'm very optimistic. We managed to get past a nuclear era that was the perfect example of a stupid caveman with a club, a club that can destroy the planet. You can't keep the intellectual side going without expanding emotional intelligence, too. Intellectual intelligence is not fair. It just gives you a bigger club. It doesn't at all tell you how to use it. We're still just figuring out how to make a bigger club.
W: A futurist in our magazine said Yoda was his hero. Who are your heroes?
L: I won't answer that. It's too revealing. Yoda is just one of my kids.

**"Disney Hitch To Starwave?", CNNfn website, February 14, 1997**
The Walt Disney Company has reportedly signed a letter of intent to acquire roughly one-third of Starwave Corp., which designs and runs Websites including Mr. Showbiz and ESPNET SportsZone.
According to Friday's *Los Angeles Times*, the preliminary agreement also calls for the entertainment giant to take over management control of the company despite its minority ownership.
The deal values Starwave, which is owned by Microsoft cofounder and billionaire investor Paul Allen, at close to $300 million, making it the highest price ever paid for a company which designs and operates websites. A source close to the situation said Disney's investment would be in the $80 million range.
Neither Allen's representatives nor Disney would comment on the deal, the *Times* said.
Disney's interest reportedly springs from a desire to use Starwave's talent to launch an online news site with its ABC unit. It also hopes to offer more family-based fare on the Web.
Starwave has won critical acclaim for its work on the ESPN site but is widely thought to be poorly managed. Disney's reputation for putting strong management in place may explain Allen's move to give them control, the *Times* said.
Disney added ESPN to its list of impressive holdings last year as part of its $19 billion acquisition of Capital Cities/ABC Inc., then followed that up with their purchases of Lucasfilm Ltd. and Pixar Animation Studios, in exchange for spinning off 80 percent of Miramax Films.
Bellevue, Washington-based Starwave does not disclose earnings but its revenues are estimated to be about $15 million and analysts assume it is losing money.
Allen's other properties include the Portland Trailblazers basketball team, Ticketmaster Group Inc., a string of high-tech companies and a large stake in DreamWorks SKG.

**"New Team On Top At ABC News," by Steve McClellan, *Broadcasting & Cable*, March 10, 1997**
*Arledge still calling shots, says Westin, whose previous post as network chief will be restructured; news division reports to Iger; Friedman role in new order unclear*
The Arledge-Westin era at ABC News has begun. David Westin has been named president of ABC News, succeeding Roone Arledge, who steps up to the newly created post of chairman of the news division. Westin's old job as head of the network will be restructured and eventually filled. Indeed, the role has changed since Westin has been in it. When Jamie Tarses was named president of entertainment, the entertainment unit began to report to company president (and Disney president and COO) Bob Iger rather than Westin. Now, with the changes in news, that unit will also report to Iger.
Westin's appointment surprised many inside and outside the news division, with insiders saying it was a closely kept secret until just a couple of days before the announcement. The appointment was well received within the division. Westin is seen as smart and capable; in his previous role as head of the ABC network (and before that as corporate general counsel), he also was perceived as strongly supportive of the news division. But sources say a large contingent within the division now feel uncertain of their future, given their close ties to Paul Friedman, executive vice president, ABC News, who until last week was widely assumed to be Arledge's successor.
Insiders suggest that the changes at the top had more to do with the working relationship that evolved between Arledge and Westin than any falling out between Arledge and Friedman. But others note that Friedman has been involved in trying to right the course of both *Good Morning America* and *World News Tonight* and perhaps was being blamed, tacitly or otherwise, for the fact that things weren't moving in the right direction fast enough. In a press release, the company stated that Friedman "will work closely" with Arledge and Westin in running the division. But privately, insiders say Friedman will take some time to sort things out before making any commitments.

**"Knight-Ridder Agrees to Buy 4 Newspapers From Disney," by Nikhil Deogun and Bruce Orwall, *The Wall Street Journal*, April 7, 1997**
Knight-Ridder Inc.'s planned $1.65 billion acquisition of four newspapers from The Walt Disney Company brings the Miami media company back to its roots as a newspaper publisher and caps the reversal of its onetime strategy to diversify into other businesses.
On Friday, the company said it agreed to acquire two large metropolitan newspapers - the *Kansas City Star* in Missouri and the *Fort Worth Star-Telegram* in Texas, and two middle-market newspapers - the *News Democrat* in Belleville, Illinois, and the *Times Leader* in Wilkes-Barre, Pennsylvania. In addition, Knight-Ridder said it plans to divest Knight-Ridder Information Inc., an online information service for business and professional users. One analyst estimated that the unit should fetch $400 million to $500 million.
Mark of CEO Ridder
The moves are the latest in a series of steps by Anthony Ridder, Knight-Ridder's chairman and chief executive officer, to build the company's core newspaper business, boost profitability and shed underperforming assets. Prior to Mr. Ridder taking over as CEO in 1995, the company had pushed heavily into electronic and financial information services, saying it wanted to limit its exposure to newspapers, which are more cyclical and subject to the vagaries of newsprint prices and advertising revenue.
During the past year, however, Mr. Ridder has shed the company's stake in a cable venture and sold Knight-Ridder Financial, a provider of real-time financial information. Now with the planned divestiture of Knight-Ridder Information, which includes Dialog and DataStar, the company has rid itself of nearly all its non-newspaper operations.
"I wish we could have held onto Knight-Ridder Information," Mr. Ridder said in an interview. But he said he found he had to divest it to maintain the company's credit ratings. "Besides, and this would be an understatement, I love newspapers," he added.
First Step for Disney
For Disney, the sale is a big first step in the dismantling of an estimated $2 billion in publishing assets that it inherited as part of its $19 billion acquisition of Capital Cities/ABC Inc. in 1995. Disney announced its intention to sell the publishing assets in February, saying the publications' strategic fit wasn't as strong as other properties it acquired in the Cap Cities/ABC deal, nor as important or strong as its later acquisitions of Pixar Animation Studios and Lucasfilm Ltd.
The sale had attracted interest from a number of large newspaper chains, including Times-Mirror Co., Hearst Corp., Tribune Co., and Hollinger Inc.
To finance the transaction, Knight-Ridder will issue $660 million in convertible preferred stock. It will also assume $990 million in debt. The company said the transaction, which is expected to close in 60 days, will dilute Knight-Ridder's earnings by about 10% in the first 12 months. But the acquisition should add to earnings by the third year, the company said. Knight-Ridder plans to repurchase 15 million of its common shares in the open market during the next 12 months.
News of the transaction was released after markets closed on Friday. In composite trading on the New York Stock Exchange, shares of Knight-Ridder rose 37.5 cents to $39.50, while Disney closed at $79.75, up $1.125.
Climate for Publishers
Analysts generally applauded the deal. Combined revenue for the four publications was $500 million in 1996, with an operating margin of about 25%. "I think it's an attractive price," said Michael Kupinski, an analyst at A.G. Edwards & Sons Inc. in St. Louis.
As for the company being too dependent on newspapers, Mr. Ridder said that owning papers in small and large markets provides geographic and distribution diversity, protecting the company from regional economic fluctuations. Knight-Ridder publishes 31 daily newspapers in the U.S., including the *Philadelphia Inquirer*, the *Miami Herald* and the *San Jose Mercury News*.
The climate for newspaper publishers has been upbeat of late, with low newsprint prices and solid advertising revenue boosting profitability. Knight-Ridder reported 1996 net income of $267.9 million, including a gain of $87 million from the sale of assets, on revenue of $2.77 billion.
The deal with Knight-Ridder leaves Disney still holding a handful of small papers, such as the *Oakland Press* in Michigan and the *Albany Democrat Herald* in Oregon, as well as a long list of trade publications. "We're still looking at the alternatives for those and a number of other publications," a Disney spokesman said.

**"Disney Quashes Rumors Of *Little Mermaid* Theatrical Re-Release," by Adam Dawtrey, *Variety*, May 20, 1997**
Robert A. Iger, COO and President of The Walt Disney Company (as well as ABC Entertainment) announced in an open letter today that contrary to rumors, Disney is not launching a theatrical re-release of *The Little Mermaid* this November. These rumors had taken ahold because Disney has done various relaunchings of its classic films in the past, partially to generate interest for their home video releases, and many felt that the 1989 film that resurrected Disney from the brink of irrelvance and kickstarted its run as an emerging corporate behemoth, was ripe for such a run. Many also felt Disney would do this partially to head off competitive runs from emerging rivals, such as 20th Century Fox and Don Bluth's *Anastasia* and Paramount Pictures/Nickelodeon's *The Ren and Stimpy Moving Picture Talk-O-Rama*, both also set to release in theaters in November.
Iger admits in his open letter that this option was on the table, predominantly suggested by CEO and Chairman Michael Eisner and Walt Disney Studios chairman Joe Roth, and that this wasn't the first time such a strategy to potentially kneecap competition was floated, as last year Disney had mulled doing a re-release of its 1988 film *Oliver & Company* to compete with MGM's *All Dogs Go to Heaven 2*, which was released to a piddling $12 million at the box office (the budget has not been revealed, but it is firmly believed this is a considerable loss) and universally negative reviews by critics. "I told Michael and Joe that it wasn't necessary to do this, and that I felt confident that movie would fail on its own, and it certainly didn't need us to push it and kick it while it was down. But they really wanted a re-release this year, and I was dead set against doing anything that could be perceived as putting our thumb on the scale and anticompetitive behavior. Our movies have always succeeded or failed based on their own merits, so it's only fair that our competitor's offerings do likewise."
The open letter has actually earned Disney a glowing reception, and burnished Iger's status, to the point many are considering him as the prime candidate to be Eisner's successor as CEO. Disney's stock has risen by $14.75 just on the basis of the letter, and prices for News Corporation (parent company of Fox) American depositary receipts and Time Warner, Seagram (parent company of Universal Pictures), Sony and Viacom shares also had a considerable climb.

**"Just One Big Happy Family," by David Margolick, *Vanity Fair*, June 1997**
*The legendary Roone Arledge has ceded his role as president of ABC News to his ostensible superior. David Westin, a nonjournalist whose in-house romance recently made tabloid headlines. With Arledge ensconced as chairman, DAVID MARGOLICK dissects the tensions and rivalries that led to Westin's appointment, the agendas of network powers including Barbara Walters and Diane Sawyer, and the quiet concerns of Disney's Michael Eisner*
The walls of the fifth floor conference room at 47 West 66th Street in Manhattan, the nerve center of ABC News, are lined with huge color photographs of some of the historic moments its correspondents have covered—Operation Desert Storm, Clinton's 1993 inauguration, refugees in Rwanda, Yitzhak Rabin's funeral. But on the afternoon of March 6, 1997, the room itself was the scene of a milestone, one no photographer was present to record. Roone Arledge, the 65-year-old architect and soul of ABC News, perhaps the toughest act to follow in the history of television (in more than one sense), was anointing his latest successor.
The atmosphere was tense, formal—ABC News is not an overly straitlaced organization, but none of the men took off his jacket that day—and there were no wisecracks or small talk. It was also surreal, for if the stories circulating were true, something illogical was about to happen. David Westin, the man set to succeed Arledge atop television's most successful news organization, had never reported a story, met a deadline, edited a minute of film. And he'd been chosen over Arledge's longtime heir apparent, the 51-year-old Paul Friedman, a man who'd been doing all of that and more for the past 30 years. Moreover, Westin was, at least on paper, taking a demotion to assume the post.
"Everyone was pissing on the rumor for two weeks," said one of those present. "It just seemed too stupid."
On hand were about 40 of the news division brass— largely executives and senior producers from the shows Roone Arledge had created and nurtured in the two decades he'd run the ABC News division: *Primetime Live, 20/20, World News Tonight, Nightline, This Week with David Brinkley*. A smattering of "talent" was there in person: news anchor Peter Jennings, correspondent Cynthia McFadden, and one of ABC's two star Sawyers (Forrest); ABC veterans Sam Donaldson, Ted Koppel, and Cokie Roberts were on the speakerphone from Washington. Arledge sat at his customary spot at the head of the long rectangular maple table, beneath a photograph of the launching of the space shuttle. At his side was the handsome, boyish Westin, the president of the ABC Television Network, and Arledge's ostensible boss until now. By the door, looking as if he wanted to bolt the room, was Friedman, whose long-simmering, tense relationship with Arledge had reached this denouement.
You've been hearing lots of rumors, Arledge told the troops, and at least one was true: he would be assuming a newly created, more elevated post, chairman of ABC News, with Westin succeeding him as president. First as general counsel of ABC and then as network chief, Westin had been a big supporter of the news division, Arledge said; now he would officially be his partner. Arledge left little doubt who the senior partner would be—"David will report to me," he said—and Westin eagerly concurred. "Obviously, I have a lot to learn," he said obligingly. When, someone asked, does the new era start? "Right away," Westin chirped. "I'm already calling Roone 'Boss.'"
Sam Donaldson, always ready with a question, asked, Who do we go to for what? To which Westin replied, "Roone and I will have to work that out, but I hope we're a seamless partnership."
To reporters afterward, Arledge made the decision to pick Westin over Friedman sound easy. "It's pretty obvious what your choice would be," said Arledge, who said he and his 44-year-old colleague would act "like two people dancing as one."
"I still do not know exactly what happened," Friedman said after he'd been passed over. "I have heard different explanations from every major executive involved in the decision, so it's hard to know what the truth is." Friedman, who has opted for a second turn as the top producer of ABC's *World News Tonight*, a post he held from 1989 to 1993, would not elaborate.
For about a decade at ABC there had been talk of who would succeed Arledge, and when. It had begun when the network was bought by Capital Cities Communications in 1985 and intensified when Capital Cities itself was bought by Disney in 1995, and as the news division's fortunes began to fall. After more than seven years on top, from October 1989 to December 1996, *World News Tonight*—the program Peter Jennings likes to call "the engine that drives the news division"—slipped behind NBC Nightly News and was racked by dissent and demoralization. NBC's *Today* was shellacking ABC's *Good Morning America*, and the problem only grew worse when Arledge inherited responsibility for the show nearly two years ago.
ABC News had failed to sign Bryant Gumbel, who had been on the market for the last year until he left NBC for CBS in March; far worse, Diane Sawyer was threatening to walk last winter, in part because she'd wearied of forever fighting Barbara Walters for big-name interviews. In recent months a North Carolina jury, outraged by *Primetime Live's* gaining access under false pretenses, had awarded $5.5 million in damages to supermarket chain Food Lion, targeted by the program for selling spoiled meat; another jury had awarded $10 million to a Florida banker libeled, it ruled, by *20/20*. Barbara Walters had interviewed Andrew Lloyd Webber without disclosing that she'd sunk $100,000 into one of his musicals, *Sunset Boulevard*. David Brinkley had closed his distinguished career with an embarrassing televised blast of disparaging remarks about President Clinton on Election Night, arguably because his bosses left him on the air too long that evening—or too long, period. And Disney had rejected a proposal reportedly championed by Arledge—though he insists it was the brainchild of Robert Iger, head of ABC Inc. and also Disney's COO and president—for a 24-hour all-news cable channel. (Disney CEO and chairman Michael Eisner decided the proposal lacked the necessary plans to get the service on the air in enough places and wouldn't turn a profit for at least 10 years.) More Americans still got their news from ABC News than from any other source, the network proudly proclaimed at the end of each television news broadcast, but if true, it was only because ABC owned more radio stations than NBC did.
Not all of these problems, of course, could be laid at Arledge's feet. But his famously extravagant, laissez-faire management style—the long absences, leisurely lunches, and afternoon golf games; the waiting limousines and unreturned phone calls; the indecisiveness; the tendency to distance himself from debacles, then take credit as things turned around; the aversion to confrontation, and the penchant for letting matters fester—had grown more pronounced and less tolerable over the years, particularly as his division ran into trouble. Though he'd become a millionaire many times over and had little left to prove, Arledge clung tenaciously to the job. The power, the cachet, the A-list cocktail parties were too good to give up. Instead, like another great figure in television history, CBS head William Paley, Arledge refused to groom a successor and devoured anyone imposed upon him.
No one was more mindful of the situation than the three men above him: Eisner, Iger, and Westin. Many of the problems had bubbled up to them. Arledge's contract, which he signed in 1995, allowed ABC to make him chairman—a new title as powerful or powerless as Arledge's superiors chose to make it—in June 1997. But for reasons of tradition, loyalty, and fear, it was unclear whether they would pull the trigger. Arledge had built ABC News virtually from scratch, and even subpar, he was arguably better than anyone else. As exasperating and elusive, erratic and baffling, suffocating and remote as Arledge could be to them, most of ABC's star anchorpeople were fiercely loyal to him. Even the hardheaded, bottom-line executives deciding his future had sentimental attachments to him. Eisner had once worked alongside Arledge at ABC; Iger had worked under him there and profited from his patronage, especially to head first ABC itself, and then to becoming Eisner's No. 2 at Disney. To oust this legendary figure would seem ungrateful, unseemly. And dangerous, given the fuss Arledge and his allies could make; Iger even expressed fears that Arledge might sue for age discrimination.
Arledge, in short, had to be replaced—and was irreplaceable.
Iger came to a compromise: Arledge would move up and Westin would report to him, but only for another year or two, when the job of chairman would be made largely ceremonial. Arledge would be allowed to announce the decision as his own. By this point the game had almost become a tradition; three times in six years now, Arledge's superiors had installed someone below him either to monitor him or to succeed him, each time letting Arledge claim he'd made the appointment himself.
Still, this time the solution had seemed promising, if not downright elegant, and not just because Arledge had reached retirement age. In one fell swoop, Iger had installed the seemingly unthreatening Westin, his own eyes and ears, in the news division, and had found a way not only to keep Arledge around and spur him on, but also to begin to nudge him out. The goal was, as one of the executives involved had put it, to "bury Roone without Roone burying the news division," and this was the first step. But when the dust had settled, Arledge remained very much in control, perhaps more so than Eisner, Iger, and Westin had wanted, and he seemed to think he could stay in the saddle as long as he wished.
There is nothing dazzling about Roone Arledge in person; as visionaries and geniuses go, he seems ordinary. The day we met he wore a navy-blue blazer with a pocket-square and a shirt with monogrammed cuffs, but there remains something unfinished about him. His hair is wispy, struggling to cover his scalp. While he makes his points, he is not especially articulate, and his speech still bears traces of his native Queens, New York. Riding an Exercycle while watching *Nightline, Good Morning America,* and *This Week* and drinking Poland Spring mineral water have not kept him as trim as he would like. Though his office is not spectacular, Arledge won the contest I was running, as I interviewed executives at the three major networks, for most television screens; he has nine, a testament not just to his clout but also for figuring out how to retain ABC's old audience and gain new converts.
Arledge said that he signed the 1995 contract (which runs until 2001) so that he could assure himself that ABC News post-Arledge would not deteriorate as ABC Sports had done when he was forced to relinquish it in 1986. Asked when he might feel so assured, he grew vague and a bit contradictory. "It might be tomorrow, it might be years from now. It's hard to tell," he told me. "I think there's a general understanding that I'm not going to be here more than a couple more years." Having survived prostate cancer, he insisted that, though he feels fat, he's fit. "In today's world, you're not old until you feel you're old," he said. Though he tried to steer clear of sports metaphors—for all his success in news, he still fears being thought of as a jock for his long stewardship of ABC Sports—he said he's "absolutely at the top of my game."
Any move to ease out Arledge was, in a sense, self-defeating. As a producer, administrator, and show doctor, he has always worked best in crises—everything from the 1972 Olympic massacre in Munich to such professional embarrassments as the famously awful debuts of *20/20* and *Primetime Live*. "I don't know where a story would have gotten out that I have somehow disengaged myself," he said. "If anything, I may be more engaged now. When programs are in trouble, that's when I really dive in." And if some say he's slipped, where is the evidence? "If you look at ABC News day in and day out," he declared, "the people we have, the programs we have, the ratings we have, the audience we have, the impact we have, the innovations that we do, it is still the premier news organization by far."
That he had survived again was not surprising to veteran Arledge-watchers. "If Roone's staying, he's going to run it," says Dan Rather. "The road is littered with the bodies of people who thought they were going to succeed Roone Arledge." Ted Koppel agrees. "As long as Roone wants to remain in charge, Roone will be in charge," says Koppel, who tried 20 years ago to block his appointment because he thought Arledge would employ the same razzle-dazzle he had brought to *Wide World of Sports* to go up against Walter Cronkite with a *Wide World of News*. Since then, however, Koppel has become one of Arledge's greatest fans. "There are times when Roone may have lost interest for a while or been so involved in the politicking that sometimes becomes a part of that job that it might cause people to conclude that," he continues. "But when Roone wants to be engaged—and I have the feeling that he wants to be engaged now—he's still very much at the top of his game."
Along with Koppel, Barbara Walters and Diane Sawyer are deemed Arledge's most fervent loyalists among "the talent." While Iger may have sworn not to let any of the network's superstars pick their own boss, he would have been crazy not to have listened to his most prized possessions. And if he kept Arledge on partly to prevent Sawyer from jumping ship, as she was threatening to do, the strategy worked. "Roone is why I came here, Roone is at the heart of what I have always cared about here, and Roone's vitally important to my decision to stay," Sawyer said after ending her long and highly publicized flirtation with CBS (whom ABC poached her from back in 1989) in March. ("How do I sleep tonight?" Arledge had asked her shortly before she decided to stay at ABC. "You don't have to worry," she purred. "You can sleep well.") According to a highly placed ABC source, only months earlier Sawyer had confided to Iger and Westin that she feared Arledge had grown old.
Sawyer says now that what she meant was that Arledge seemed drained by the kinds of administrative tasks that Westin would now handle.
"Because I'm married to one [the movie director Mike Nichols], I know: you can only tie so many tin cans around the ankles of dreamers before they run their batteries down," she said.
If Arledge's future is uncertain, so, too, is Westin's. He rose meteorically to the top at ABC on brains and drive and shrewdness—but suddenly he has become the sycophantic subordinate. As the No. 2 man in the news division, Paul Friedman had been so openly contemptuous of Arledge that Iger and Westin had cautioned him to work harder to conceal his bad attitude; Westin, by contrast, is now ostentatiously subservient, wasting no opportunity, public or private, to let Arledge know who is in charge. ABC colleagues have likened Westin, an almost corny Midwesterner on the surface, to the ingenuous, boy sitcom doctor Doogie Howser. In fact, Westin is playing Jimmy Olsen to Arledge's Perry White, though he has taken to calling Arledge "Boss" rather than "Chief." And the new chairman of ABC News, unlike the editor of *The Daily Planet*, doesn't mind a bit.
"I did not want to come in and give anyone, least of all Roone, the sense that I was dying to be No. 1 by a certain date or whatever," Westin told me in his modest office (smaller than Arledge's and with only two televisions, though one screen has four pictures) a few doors down from his new boss's. "I from the beginning have said, 'You're the boss and I won't undercut you. I'll be the junior partner and I'm comfortable with that.' "
But Westin's loyalties ultimately lie with Iger, not Arledge; the two are good friends, working out together at the Reebok club—the mammoth, space-age fitness complex across the street from ABC—and sailing together on Long Island Sound. And his sweet talk is surely strategic. After nearly three years as Arledge's boss, he, more than anyone, is aware of Arledge's shortcomings. "I can't get him to move," Westin had often lamented, referring to Arledge's foot-dragging. Time is on Westin's side, but if Arledge holds on, the two may be on a collision course; the next few years at ABC News could be a corporate version of *Prizzi's Honor*, where the two heroes coo at each other while trying to do each other in.
"Westin's got all the smarts, all the management skills," said someone who knows both men. "His big problem is that he reports to the guy. Whether the talent winds up standing behind him—and not with knives— and the extent to which Iger and Eisner support him will determine the whole thing. I still think it's 50-50."
Should Westin outwit or outlast Arledge—and he got off to a terrible start with news about his extramarital affair with Sherrie Rollins, a top ABC executive and the wife of bare-knuckled political consultant Ed Rollins, splashed all over the tabloids—a more serious question will arise: does Westin have the courage, judgment, vision, and imagination Arledge was known for—traits even more important now that Americans are tuning out the evening news?
Three months before the news presidency changed hands, media moguls, colleagues, and competitors gathered at the Plaza hotel in New York to see Roone Arledge collect the 1996 Center for Communication Award, a prize that had previously gone to such legends as William Paley, Katharine Graham, and Punch Sulzberger. Iger and Arledge were to be main speakers and co-chairs of the luncheon.
For Arledge, winning prizes was nothing new; he'd taken home 36 Emmys alone. "We had to install 'Award Waiting' on the phone system in his office just to deal with it," said Iger jokingly. Nonetheless, Arledge seemed deeply moved by the occasion, as if he were hearing such praise for the first time. The printed program was filled with salutes, including one from the employees of ABC News. "Everybody else works for a boss. We work for a legend," it stated. That sentiment started at the top. "Roone, so many successful people in our business . . . state proudly and with great honor, 'I worked for Roone Arledge,' and I know and say that," Iger told the crowd. Peter Jennings, who, like Koppel, had opposed Arledge's takeover of the news division, admitted how wrong he'd been. Arledge's handpicked keynote speaker, Henry Kissinger, recalled how he'd told David Brinkley in 1981 that Sunday morning news shows like the one Arledge was offering Brinkley at the time were losers, and of his own futile attempt on behalf of CBS to entice Barbara Walters away from ABC. "I might have succeeded if I could have lured Roone with her," he said.
All three network presidents got off wisecracks about Michael Ovitz, the former interim Disney COO and president until Iger moved into the position, and Iger recalled that, with both Howard Cosell and Sam Donaldson sporting rugs, people once thought Roone Arledge didn't really head ABC News and ABC Sports, but ABC Carpet. But on Arledge's accomplishments the speakers were serious. Iger called him "the greatest television producer in the history of this business." Dick Ebersol, head of NBC Sports, went further. "I will be the first to say today—and I am sure people will be saying in 50 years—that he is the single most influential TV figure of our time and perhaps of all time," he said.
As Marc Gunther chronicles in his 1994 book, *The House That Roone Built*, from the moment Arledge became head of ABC Sports, beginning in 1968, he revolutionized the way sports were covered, giving America instant replays, slow motion, stop action, handheld cameras, sideline microphones, reaction shots of coaches and spectators, cheesecake shots of cheerleaders, the landmark cavalcade of obscure athletic competitions known as *Wide World of Sports* ("The thrill of victory and the agony of defeat…", a phrase Arledge had scribbled on the back of an airline ticket), Howard Cosell, and the Olympics as a primetime television event. In 1994, Sports Illustrated declared that in its world over the previous 40 years only Muhammad Ali and Michael Jordan had mattered more. Then, beginning in 1977, Arledge had added the news to his portfolio. He created *Nightline, This Week with David Brinkley, 20/20*, and *Primetime Live*, lured Diane Sawyer from *60 Minutes*, and resurrected or recycled Barbara Walters (who had failed as co-anchor with Harry Reasoner of the ABC Evening News), Hugh Downs (who had retired from *The Today Show*, also formerly Walters' domain), Ted Koppel (a relatively obscure ABC State Department reporter), Sam Donaldson (an ABC political correspondent), and David Brinkley (who was fading at NBC), and made a true star out of Peter Jennings from the ground up—devising flashy vehicles for them and showering them with money and publicity. In doing so he created a caste of celebrity "anchormonsters," generally more famous and better paid than the people they were interviewing. Armed with the most sophisticated technology, Arledge's newspeople covered—and may even have catalyzed—the major events of the epoch: the fall of the Soviet Union, the dawn of peace in the Middle East, the end of apartheid in South Africa. In 1990, *Life* magazine named Arledge one of the 100 most important Americans of the century.
Yet even mega-fame didn't guarantee job security. When Dan Burke and Tom Murphy, the notorious penny-pinching owners of CapCities, bought ABC 12 years ago, they quickly reined Arledge in. Fed up with his extravagance, irked by his unavailability, and concerned that he had stopped thinking and hiring creatively, they stripped him of the sports division. They might eventually have taken away news as well, but were fearful of the consequences. "What would happen if I went through the halls here with Roone Arledge's head on a platter?" asked Burke, who later was heard to say, "I should have killed Arledge while I had the chance." Instead, in 1991 they installed a Washington lawyer named Steve Weiswasser directly below and next door to Arledge, both to cut costs—$25 million in one year—and keep tabs. The two fought bitterly. Weiswasser moved on within two years; Arledge was still standing.
While CapCities agonized over Arledge, others flirted with him. Arledge said that Michael H. Jordan of CBS extended feelers to him and that Rupert Murdoch offered him the top slot at the Fox News network. And Arledge also claims he declined an offer in 1993 from Jack Welch of General Electric, NBC's parent company, to head NBC News. (One source at ABC disputes this, maintaining that, while the talks proceeded a long way—Welch sent Arledge half a case of champagne, with a pledge to send the other half when the deal was done—Welch eventually concluded that, as one source claims Welch put it, "Roone couldn't get it up anymore." Welch says that he discussed the job with Arledge, but that Arledge said he was too tied to ABC to pursue the matter.)
Shortly after Disney bought ABC in August 1995, Michael Eisner spoke to his new employees on closed-circuit television. "All [Eisner] could talk about was Roone Arledge and what a genius he is," one ABC correspondent recalled. "Afterwards everyone said, 'Well, that seals it. For better or worse, Roone's around for as long as he wants.'" Iger, closer to the scene and more mindful of Arledge's deficiencies, nonetheless seemed smitten with him; Iger often went to Arledge's office rather than the other way around, despite filling the shoes of the late Frank Wells at Disney and giving Eisner much-needed help running the company. "Just remember, I used to be the guy who changed the pictures on the walls outside his office," Iger said.
But loyalty is one thing, business another. And business at ABC News started to falter, even as ABC itself was largely firing on all cylinders since Disney assumed control.
First, there were the problems at *World News Tonight.* After gaining inexorably for a time, in late 1996 *NBC Nightly News*—buttressed by the network's Olympic coverage and winning lineup in prime time, and with fancy graphics and a sprightlier, softer mix of stories—finally overtook Peter Jennings in the ratings. Shortly afterward, on the daily conference call to the bureaus, Arledge exploded. "We will not be No. 2!" he declared. "No job is safe! We're not going to have any mediocre correspondents on the air! This network is not going down the tubes under me!" A bit of an overreaction, since the network itself was doing fine, but to everyone's credit, people are proactive regarding any little slip. But *World News Tonight's* problems were too deep for any pep talk to cure.
The new executive producer, Kathryn Christensen, who had come to *World News Tonight* from the *Baltimore Sun*, was hugely unpopular among some of the correspondents and producers, who considered her condescending and rude—"empathy-impaired" was what one reporter called her. She had problems particularly with women, many of whom aired their grievances during two highly emotional meetings with her in late 1996. (Christensen replies, "I don't think I'm any more abrasive than other people. I am direct and some of my directness may be mistaken for abrasiveness.")
Furthermore, Christensen was unable to hold Jennings in check, as the anchorman's best executive producers have always done. Jennings, too, is legendarily insecure, a trait usually attributed to the fact that he never finished high school. Now, left increasingly to his own devices and fearful for his own future, he was riding roughshod over correspondents, overediting their copy, stealing their best phrases, treating them patronizingly. Often, it seemed the best, most literate reporters were the hardest hit; some even refused to work for the show.
"I regard Jennings as the best anchor in the history of TV networks," said one correspondent. "However, he is a wretched person to work with." In an interview with me, Jennings confessed to a certain roughness. "Am I on occasion thoughtless? Yeah, probably," he said. "This is not a popularity contest; this is about getting a good broadcast on the air every day. The really talented people get enormous support."
*World News Tonight* descended into chaos. Stories were assigned late, edited late, killed late. A panicked Arledge imported Jeff Gralnick, the former producer of *NBC Nightly News,* to watch over things. But by badmouthing and second-guessing everyone, sending out nasty emails, and creating yet another layer of authority, he only made matters worse. ("I'm not going to comment on what my style is or isn't," said Gralnick.) The show lurched thematically from hard news to soft to such "news you can use" features as "Solutions," which once did a three-minute segment on snoring.
Things were even worse at *Good Morning America*, which Arledge reluctantly took over from the entertainment division in May 1995, despite it being not exactly news. With little feeling for the peculiar demands of morning television, the news types threw out the show's homey, suburban set, its warm lights, and whatever else made it cozy and appealing. While too quick to change some things, Arledge resisted changing others, notably the show's anchors, Charles Gibson and Joan Lunden. Indeed, while Gibson had expressed a desire to move on, Arledge gave Lunden a new, three-year contract, one which will cost ABC millions if, as expected, she is now let go. Morale fell through the floor. And a chasm, far broader than the gap in the evening broadcasts, opened between *Good Morning America* and *Today* in the ratings.
There were other headaches. David Brinkley was slipping—at various times he read the same copy twice on the air, strayed from agreed-upon subjects, forgot the names of guests, or mistakenly appeared in the studio on a Saturday, thinking it was Sunday. Anxious to spare the venerable newsman any embarrassment, his cohorts on *This Week with David Brinkley* begged Arledge to intervene. Also, Iger, Westin, and Friedman leaned on Arledge to fashion an equitable way to divvy up big-time celebrity and newsmaker interviews between Diane Sawyer and Barbara Walters rather than have them fight continually over them. The three executives also pressured Arledge to go after Bryant Gumbel more aggressively, though it was unclear whether ABC had anything to offer him. In each instance, Arledge moved slowly or not at all. His critics said he had grown risk-averse, fearful of tarnishing his legend.
ABC let such talented senior producers as Neal Shapiro, now head of NBC's *Dateline,* leave the network without much of a fight. And Arledge lost ABC's longtime White House correspondent Brit Hume, who went to Fox News. 15 years ago, Hume told me recently, Arledge the negotiator had been "a man of immense charm and geniality." And to tantalize people into coming or discourage them from leaving, he had been endlessly inventive. But when Hume discussed his future at ABC with Arledge, he recalled, his boss "seemed out of sorts and out of ideas. He didn't have anything to say. I came away very saddened."
In December 1995, Westin told an ABC producer that Arledge had 18 months left. Westin himself says that he and Iger began discussing succession in the spring of 1996. (At some point, Michael Ovitz also shopped the job around, though whether Eisner, Iger, or Westin ever knew about it is unclear. Westin wouldn't say; Eisner, Iger, and Ovitz declined to be interviewed for this story.)
Of course, an heir was already apparent: Paul Friedman, who had come from NBC (where he had produced *Today*) to ABC News in 1982 and had led *World News Tonight* to dominance in the late 1980s. When Weiswasser ended his short and unhappy partnership with Arledge in 1993, he put Friedman in his place, and with his ties to CapCities management, Weiswasser could assure Friedman that he would one day replace Arledge. Burke and Iger indicated likewise—repeatedly. That was how ABC reporters perceived it. So did Peter Jennings; several years ago he spurned *60 Minutes* executive producer Don Hewitt's offer to join the CBS program, partly because he expected Friedman to take over. Friedman's contract, signed in late 1996, all but guaranteed him the job. "The logical person was Paul," Arledge conceded.
A month after Friedman was named number two, the producer Rick Kaplan, whose childhood memories of Chicago politics prepared him well for life inside ABC News, advised him to count on nothing. "I cautioned him that a lot of people thought they were going to be Mayor Daley's successor, and Daley ended up giving the eulogies at their funerals," he said. In fact, according to Arledge and another high-ranking ABC News man, by late 1996 Iger had decided that Friedman would not get the job.
What did Friedman in? Some think he was being blamed for the problems at *World News Tonight*. Some think it was the collapse of *Good Morning America*, which fell under his authority. Some think it was his personal style, which can be dark, sarcastic, impolitic, and blunt. "The Prince of Darkness," some called him. "People would come out of his office feeling bad," one of ABC's biggest stars said. Some think he'd simply been number two too long, playing bad cop to Arledge's benevolent uncle.
But two theories dominate. The first is that, apart from his close tie to Jennings, Friedman failed to stroke the talent (his remarks to affiliates that ABC's anchors were aging did not endear him to them) and actively antagonized two of them, Diane Sawyer and Ted Koppel. Friedman had vehemently opposed Sawyer's 1995 interview with Michael Jackson and Lisa Marie Presley, which he considered more gossip than news, and trimmed it back from 90 minutes to an hour; furthermore, he had disparaged *Primetime Live* and *20/20* for being too soft. ABC sources claim that Koppel thought Friedman was insufficiently committed to *Nightline*, disloyal to Arledge, and too loyal to Jennings, with whom Koppel has a difficult and highly competitive relationship.
Diane Sawyer disputed that hypothesis. She told me she considered Friedman "a really good newsman." Both she and Koppel dismissed the idea that their opinions much mattered to management: "The suggestion that the anchors are determining who becomes the next president of the news division is a delicious way to propagate the idea of 'anchormonsters,"' Koppel said. I asked whether he had at least weighed in on the subject. "There are private conversations on lots of topics," he replied. "When I participate in a private conversation it remains private." Asked his views of Friedman, he replied, "I like Paul fine."
When there is the theory that Arledge offed Friedman. Friedman may have been doomed from the outset, because of his departed patron—"Anything Weiswasser did, Roone wanted to undo," as one ABC News staffer put it—or because he coveted Arledge's job too much. He was conspicuously contemptuous of his boss, taking few pains to hide his exasperation with him, chafing in his presence, rolling his eyes or folding his arms or fidgeting when Arledge spoke. Arledge returned Friedman's low opinion, but more subtly and more maliciously, according to one veteran ABC reporter, who speculated that Arledge dragged his feet on major decisions not because he was dilatory but to make Friedman look bad. This reporter said Friedman had been "Rooned"—an ABC insider term which meant "to be outfoxed, outplayed, outspent, outdelayed, outmaneuvered." Arledge nonetheless called their relationship "very good" and said he never threatened to leave or make a fuss if Friedman was promoted.
Both Arledge and Westin say they concurred with Iger's decision not to promote Friedman, but for differing reasons. To Arledge, Friedman lacked the right touch with the talent. "These people not only have the same kind of adulation and demands and everything else that rock stars have," said Arledge, "or sports heroes or sitcom stars, but they're very, very smart… I don't think he would have been as good [at that] as he would at other things." Arledge said that last November he offered the job to someone else within ABC News and was turned down. While courting this person, whom he refused to name, Arledge was negotiating to run things until the millennium, says an ABC source—so there would have been precious little for this particular "successor" to do.
Westin, on the other hand, said that "history"—read: Friedman's ties to Weiswasser—disqualified him for the job. "It was better to bring in somebody from the outside," he said. Of course, Westin was the most inside of outsiders. When did he evolve from chooser to chosen? Things got serious only a week before the decision, he claimed; the idea was "sort of thrown out," by whom he couldn't recall. And the deal was sealed only the night before the announcement, when he and Arledge dined together, over glazed game hen, at Arledge's home.
ABC News is in the business of reporting truth, but Westin's account of selection-by-epiphany is something no sane person could buy. Ted Koppel says he had heard rumors about Westin's appointment three or four months previous to this, and gave them enough credence to ask Westin about them. "He was sufficiently evasive that I suddenly realized it happened to be true," Koppel recalled. In fact, Iger has told colleagues that Westin had campaigned for the job. What seems likely is that Iger had long ago agreed to replace Arledge with Westin, with Friedman remaining as No. 2 if he could be persuaded. But torn over betraying his mentor and dreading any confrontation with him, Iger waited until late February to move, especially as he delegated more and more of his ABC duties to focus on his Disney job. With Arledge pleading that he was "still at the top of my game," Iger relented, letting him stay on but hoping that, with a successor in place, he would quickly disappear. That meant Westin had to settle for the second spot, at least for starters. Friedman was out.
Arledge says he never had to lean on Iger, because he always assumed that as chairman he'd retain all his powers. He too says, equally unconvincingly, that he cannot recall when Westin first became a candidate. I said that seemed strange to me. "It is strange. It is strange," he replied. "However the idea came up, it just seemed like a natural, so we did it very quickly." Arledge has told others, however, that Iger and Westin presented him with a fait accompli. He denied published accounts that Eisner had intervened with Iger on his behalf, saying that the Disney chief called only to make sure he approved of the proposed plan. "We weren't close buddies or anything," Arledge said.
In 1978, when the men now directing the news operations at NBC and CBS, Andrew Lack and Andrew Heyward, were cubs at *60 Minutes* and WCBS (the network's New York City affiliate), respectively, David Westin, fresh from the University of Michigan Law School, was clerking at the Supreme Court for Justice Lewis Powell, whom he came to revere and whose portrait now hangs in his office. ("That's a photograph of a painting that will hang at the Supreme Court after he has died," he said, sounding oddly detached about it.) He spent the next 13 years as a corporate litigator at the elite Washington law firm of Wilmer Cutler & Pickering, longtime counsel to CapCities. He was "a star from the moment he got here," said Lloyd Cutler, former counsel to President Carter.
When Steve Weiswasser, another Wilmer graduate, named him general counsel of ABC in 1991, Westin had done little communications law, but Weiswasser, Murphy, and Burke bet on Westin's brains—as would Iger a few years later. Westin, born in Flint, Michigan, into a fundamentalist family where dancing and card-playing were forbidden, was called upon as ABC's top lawyer to pass on the use of such words as "scumbag," "prick," "asshole," and "dick" on *NYPD Blue*. (He reluctantly approved.) He earned the respect of *Primetime Live* staffers by standing behind the program's investigation of Food Lion and for standing up to the food chain's lawyers, even though he had qualms about the use of hidden cameras. *Primetime Live's* senior investigative reporter, Ira Rosen, described Westin as one of those rare people who learned in law school to say "yes" rather than "no" to reporters.
Two years later, Westin left the law to head ABC's in-house production unit, where he helped turn out such shows as the 1995 comedy *Me and the Boys* and 1994's teenage drama *My So-Called Life*. In September 1994, when Iger was named head of ABC Inc., he made Westin network president. But while his title was impressive, his job was not. Several of the divisions ostensibly under him—entertainment, sports, daytime television—began reporting directly to Iger, as Arledge was already doing, leaving him such unglamorous terrain as affiliate relations and sales. Westin was restless; Diane Sawyer fixed him up with John Calley, then head of United Artists, now president of Sony, and he chatted with former Viacom CEO Frank Biondi, now CEO of MCA, but nothing came of either contact.
Westin insists that he was not looking for a job and that there is "no glimmer of truth" to assertions that his network post had been eviscerated. (But if that were so, why is ABC in no hurry to fill it?) Around ABC, Westin confided to colleagues how difficult it was to hide his unhappiness.
Suddenly, Westin started showing up at ABC News functions. One reporter recalled seeing this pretty, classically all-American fellow walk into a party marking *World News Tonight's* fifth year in first place. "Who is this guy? He looks like a Magid weatherman," the reporter said to a friend, referring to the television headhunters famed for finding generic news personalities. Westin was newly separated from his second wife, a paralegal at Wilmer with whom he has a son, now two years old. (He has two teenage children from his first marriage, to his college sweetheart.) Westin was a much-prized single man at Barbara Walters's dinner parties, including one thrown last January for former CBS News chief Howard Stringer. That night the verdict in O.J. Simpson's civil trial ran up against the State of the Union address, and Westin was on and off the phone, juggling the coverage of the two events. "He wasn't showing off and he wasn't barking into the phone. There was something very attractive about the muted way he was on top of it," said Joan Ganz Cooney of the Children's Television Workshop, who was also at the dinner.
One person not so impressed, at least until recently, was Roone Arledge. "He's a nice guy, but he doesn't know anything about television," he used to tell associates. Few ABC staffers believed Arledge was sincere when he unveiled Westin as his successor on March 6, calling him "a tremendous addition." "I'm thinking, He's not a journalist; why is he a tremendous addition?" one eyewitness recalled. "Then he said, 'I have tremendous personal and professional affection for Paul,' and I'm thinking, *You hate his guts!"* When Forrest Sawyer asked Westin to describe his vision for the next five years, Westin largely punted.
Ever the gentleman, Peter Jennings had used the occasion to welcome Westin. But, privately, friends say Jennings was stunned, saddened, and offended that a news novice was now in charge, and at the expense of a friend—Friedman— whom Jennings considered to be the better man. Word of the changes quickly made its way to the competition, and sensing the time was right, *60 Minutes* producer Don Hewitt evidently tried once again that afternoon to lure Jennings to CBS, to no avail. "The water is warmer over here, Peter," he had said. Some thought Jennings shaky on the evening news that night when he reported Westin's appointment.
A few months earlier, a wide-eyed Westin had visited staffers at *World News Tonight*, watching them assemble a news broadcast. Suddenly he was their boss. "He struck several people as such an 'Oh, gosh!' 'Gee, whiz!' presence that there's an appalled feeling about David being in charge of us now," said one reporter.
ABC's political analyst Jeff Greenfield was sanguine. "I think his head is in the same place as ours," he said. "I didn't have the sense that 'Oh, God, they sent over a suit to impose some corporate version of the news on us.'" So is Diane Sawyer. For all Westin has to learn about the nuts and bolts of the business, she said, "he knows some big and important things about the strength of the heart that has to beat inside a great news organization."
Encountering a reporter outside ABC on the day of the appointment, Iger himself indicated some uneasiness. "What are people saying?" he asked. When the reporter replied that people found the choice interesting, Iger added, "David's very bright, a terrific manager, and I think he'll do well. And if he doesn't, we'll try something else." "I thought, Jesus, I wouldn't say that the day I made him news division chief, but I don't know . . . it's kind of a quirky place," the reporter recalled.
At one point in our discussion Arledge said to me, "I really do believe that unless you've been vilified and destroyed in the press you're almost not qualified to be the head of a news organization." If that's true, Westin quickly earned his spurs. The new news chief, who as network president had passed on the appropriateness of material in soap operas, quickly found himself embroiled in one. Co-starring was 38-year-old Sherrie Rollins, executive vice president for network communications at ABC, who, until Westin's promotion, had reported directly to him. According to friends of Ed Rollins's, his wife had secretly been seeing Westin for at least a year, during which the two couples had actually socialized together—for instance, sharing a limousine at the 1996 Academy Awards. Also during that time, Sherrie Rollins had been promoted. (In a press release issued at the time, Westin said she was "responsible for much of the way the world sees us [ABC].")
After some disingenuous off-the-record denials, Rollins's public relations colleagues at ABC privately conceded the story was true. (Curiously and a bit lamely, ABC staffers stressed that Rollins was only the third woman with whom Westin had been intimate, and the only one of the three he had not been married to.) They also let out that Iger learned of the relationship from the newspapers. Knowing and suspecting, though, are two different things, and another ABC source stated that Iger had repeatedly asked Westin whether he and Rollins were involved, and Westin had repeatedly said they weren't. But having had a couple of interoffice affairs himself—Iger was involved with an executive in the advertising department when he began dating Willow Bay, a *Good Morning America* correspondent he has since married—Iger was in a glass house, not a particularly pleasant place for Michael Eisner's lieutenant to be. For him and others in the executive suite, the publicity was mortifying. Don Imus's barbs on New York's WFAN radio and MSNBC—depicting Arledge as hanging on pathetically to his job and Westin as a sleazy philanderer—were bad enough; worse was a New York Post story which, citing the love lives of Westin, Iger, and Jennings— who used to be married to Kati Marton, a former ABC reporter, and is now engaged to Kayce Freed, an ABC producer-speculated that something in the water at ABC seemed to cause interoffice romance.
For an amply paid public relations professional, Sherrie Rollins proved particularly maladroit with the press, telling columnist Liz Smith, "I am not seeing David. But I feel very close to him. Actually, I'm in love with him. But that's neither here nor there." She and Westin would not comment about the affair to me. Privately, Westin was said to be enraged by the invasiveness and inaccuracy of the stories; publicly, he said nothing, and in an act of supreme self-discipline, he betrayed not the slightest hint of stress or vulnerability. He was calm and courteous, almost endearing, when I encountered him for the first time by the elevator at ABC News on March 18; one would never have known *The New York Post* had just reported, inaccurately, as far as I could tell, that Sherrie Rollins was carrying his child. When I pressed him for an interview, he smiled and said something about having had enough press already. But he promised to ask his public relations adviser; I presumed he did not mean Sherrie Rollins.
Around the same time, a wiseguy ABC reporter experienced Westin's coolness under fire. "What's new? Staying out of trouble?" he asked Westin.
"Not much going on," Westin replied with a straight face.
"Yeah," the reporter said. "That's what I hear."
Amazingly, Arledge told me he had never spoken to Westin about the affair, and surely never leaked anything about it, as many people, even in his own operation, suspected. "Where do people make that stuff up?" he asked. "I don't believe in a million years that he floated that rumor; that is really not his style," said Liz Smith. "But he may have been delighted secretly. It gave him a big advantage over David Westin."
After a week at Lyford Cay in the Bahamas, Arledge cut a newly invigorated figure in the office. He was still miffed over stories like the one in the *New York Daily News-*ARLEDGE BOOTED UP AT ABC—and though he normally gave few interviews, he began a public relations counteroffensive seemingly designed to show how busy he was. (Reporters were not the only ones to interpret Arledge's move as a kick upstairs. Much to Arledge's chagrin, Kathie Lee Gifford wrote him what amounted to a condolence note, seeking to assure him that retirement really wasn't so bad.)
Arledge finally re-signed Diane Sawyer and announced the creation of ABCNews. com, a 24-hour Internet news service to be run with America Online, Netscape, and Paul Allen's Starwave Corporation and headed by Jeff Gralnick. That served two purposes, for Paul Friedman refused to return to *World News Tonight* unless Gralnick was moved out from it. However the Arledge-Westin shuffle plays out, nearly everyone thinks that Friedman's return to the evening news is a boon for ABC News and World News Tonight. That includes Kathryn Christensen, who was demoted in order to let Friedman return.
Arledge bore in on *Good Morning America*, spurred by Eisner's directive that at least plans be made to replace the anchors prior to the meeting of affiliated local stations in June. But before that could happen Arledge had to make amends to *Good Morning America* staffers tired of hearing him trash the show. "It never does any good to open the morning paper and see the boss crapping all over you," said one disgruntled veteran. Under some duress, Arledge visited the *Good Morning America* set, but once there spent more time complaining about press coverage of his move than making nice.
To me Arledge expressed some regrets that he'd ever taken on the morning program. "Partly it's not my real thing— the cooking and the book interviews and the movie stars and things like that," he said. "It's a valid part of a news division, but it is not where my real heart is." He conceded that *World News Tonight* had "gotten off track a bit here and there," but said it was basically sound. He also said that he had monitored the Brinkley situation closely for a year, and that, but for what happened on Election Night, it had worked out as he'd hoped. "I was determined not to do what CBS did with Cronkite, which was to take one of the great icons of the business and just throw him off the air," he said.
Sure, stars like Barbara Walters and Diane Sawyer bump up against one another, but that, Arledge said, is a sign of strength. "Everybody would love to have these problems," he said. "If you look at NBC—some of them would take umbrage at this, but they really have one major star and two stars overall," he continued, referring to Tom Brokaw and Katie Couric. "Then they have Stone Phillips and Jane Pauley, who kind of do what they're told, and Tim Russert, who is his own little universe in Washington. If you look at CBS, they have Dan Rather and the people on *60 Minutes*, who are an independent satellite. That's really it.
"We have so many superstars…I mean, I read where we 'lost' Bryant Gumbel. We didn't 'lose' Bryant Gumbel; NBC lost Bryant Gumbel. We made a half-assed attempt, but we had no place to put him." (While he insisted he respected the guy, Arledge said that Gumbel was "not even in the same league" with ABC's stars.) One person he did chase was George Stephanopoulos, with whom he seemed to be the Arledge of old. "He comes in, full of energy, looks me straight in the eye, and says, 'Hello. We want you. How do we get you?' " recalled the former White House aide, now a regular on *This Week*. "I got the full Roone. It definitely made a difference."
I asked Arledge how certain he was that someday Westin will be the man who runs ABC News. "I don't know. I assume he will be," he said. Does Westin have the originality and vision the job requires? "I certainly hope so. I think he does." Long accustomed to divining Arledge's mood, Walters and Koppel say Arledge really wants this successor to succeed. That it took the president of the network to replace him, Koppel said, made the whole thing easier for a proud man like Arledge to swallow.
Others aren't so sure. "David thinks he'll get his way by being terminally nice to Roone in public," said another high-ranking ABC producer. "What he's missing is that Roone will accept that and keep doing things in his own way. There's no gratitude. He'll just see that as a sign of weakness." An ABC source claims that in his first few weeks on the job, Westin was already chafing under Arledge's indecisive management style, and wondering whether his own toadying was effective and how long he could stomach doing it.
On the evening of March 27 most ABC's brightest lights—Diane Sawyer, Forrest Sawyer, Peter Jennings, Ted Koppel, Sam Donaldson, Hugh Downs, and Cokie Roberts—assembled in Barbara Walters's apartment for dinner with Roone Arledge and David Westin. To underline an anchormonster theme, Walters's secretary had called a couple of novelty stores for paper masks.
Only more hideous rubber Halloween masks were available, and because it was difficult to imagine either Koppel or Jennings wearing one, the idea was scotched. (Besides, as Diane Sawyer put it, "we decided we were sufficiently monstrous without them.") On the menu was comfort food: corn soup, roast chicken, mashed potatoes. Only the wine was sophisticated, for Arledge is an oenophile. "I wasn't going to serve Manischewitz," Walters said.
ABC News's starting eight, whose collective salary rivaled that of the Yankees' starting nine, sat around a circular table, joking, commiserating, complaining. Arledge praised Westin, and Westin praised Arledge, stating in response to one question, "Well, let's see what The Boss has to say." Both waxed lyrical about the future, as did Walters in some customized doggerel. "So to Roone and David from Forrest, Barbara, Peter, Cokie, Sam, Ted, Diane and Hugh…", the poem read, " ... we raise our glasses with affection and admiration and lots of hope to you." ("Thank God for 'Hugh,'" Walters said afterward. "I wouldn't have had a [rhyme] ending.")
Roone Arledge had once more survived, and outside ABC, as well as inside, feelings are mixed. "I love competing against him because he's lost his fastball," said one prominent Figure at a rival network. "I hope they keep him there for a long time." But a couple of offices away, one heard another opinion. Sure, he'd lost a step. Sure, his attention span had shortened. Sure, the ever-changing business of television news required a youthful nimbleness Arledge no longer seemed to have. But, this person concluded, "I don't think we're ever better off with him there. He's that unique a talent."
Brit Hume put it similarly. "Even with Roone not at the top of his game, you have to ask yourself: Compared to whom?"

**"Can Anyone Dethrone Disney?" by John Horn, *Los Angeles Times*, June 1, 1997**
To appreciate The Walt Disney Company's animation monopoly, you have to travel back to 1994-months before *The Lion King* shattered Hollywood records.
Far from Los Angeles, Warner Bros. held two test screenings of *Thumbelina*, showing clips from its animated movie to gauge audience interest. The first time around, audience reaction was flat. For the next test, according to people familiar with the experiment, Warners stripped off its company logo-and slapped Disney's name on the exact same *Thumbelina* footage.
The test scores soared. (Warner Bros. declined to comment.)
*Toy Story* director John Lasseter is only half-kidding when he says, "You can have an hour and a half of blank film leader with the Disney name on it and people will go see it."
What has been equally true is that if an animated movie-no matter how brilliant and entertaining-does not sport Disney's logo, people will avoid it. It's as if the movie has rabies: The audience steers clear, the theaters become empty quarantines.
Nevertheless, some of Hollywood's biggest players-Warner Bros., 20th Century Fox, DreamWorks-are now poised to challenge Disney's animation dynasty, and their first three rival movies are nearing completion. Unlike earlier adversaries, the competing studios are committing vast sums to the campaign, erecting sprawling animation studios from scratch and organizing expansive marketing campaigns. The buildup for the animation battle has been happening for a couple of years, already dramatically changing the animation job market, but the next several months will finally see some of these competing studios' big releases.
The goal is simple: Grab a slice of Hollywood's single most lucrative franchise.
In just over a decade, Disney has turned animation from an ailing weakling into a show business steamroller, building the only real brand name in movies. The franchise is more profitable than James Bond and any cleavage you throw his way. Better than the *Die Hard* and *Lethal Weapon* series rolled into one. One animated movie alone-*The Lion King*-generated an estimated $1 billion in profits.
Not revenue. Profits. Every T-shirt. Every sing-along book. Every pair of flannel pajamas. Every ticket sold in Pago Pago and Bora Bora. Even a relatively weird offering like The Hunchback of Notre Dame added an estimated $700 million to Disney's bottom line-or a quarter of Disney's entire annual profit in a given year.
Disney executives say animation is more than twice as profitable as all of the studio's live action films combined-with a fraction of the risk and effort. In an average year, Disney may release two animation films and 60 live action titles (including Miramax films, though Disney is now spinning off most of its ownership to help the consummation of its near-simultaneous purchases of Capital Cities/ABC, Pixar Animation Studios and Lucasfilm Ltd.), and yet those two animated movies dwarf the 58 other releases. (Except for the recent special editions of the *Star Wars* Trilogy, which definitely did an extremely brisk business and further fattened Disney's coffers to a level comparable with the animated offerings.) Calculating exact profits from animation is difficult, because the movies spin off other entertainment like parades at theme parks and TV programming. Some estimates say animation and its ancillary income may account for 70% of all of Disney's profits. Warner Bros. once said that without animation Disney would trail Warners for top box office share, which is a little like saying if it weren't for Coke, Pepsi would be No. 1.
Given the loot, it's not surprising new animation studios are popping up faster than ancient rocker reunion tours. Warner Bros., DreamWorks, 20th Century Fox and Viacom are gambling more than a combined $1 billion building mammoth animation departments, and several independent producers-from Morgan Creek (*The King and I*) to Nickelodeon (*The Ren and Stimpy Moving Picture Talk-O-Rama, The Rugrats Movie*)-are quickly assembling new animated flicks. Faced with the new competition, Disney is working harder than ever before to evict the would-be claim jumpers, and has 10 animated movies in active production, and at least another five being considered for the green light.
The battlefield is cleared and the war is about to begin.
In the next 18 months, no fewer than a dozen Disney and non-Disney animated movies are set to be released, starting with Disney's *Hercules* on June 27. The first high-flying challenger to the Disney empire is the debut film from 20th Century Fox's new Arizona animation studio, director Don Bluth's $60 million *Anastasia*, due November 21. Fox's next release, *Planet Ice*, should arrive in late 1998. Warner Bros. Feature Animation is set to release its delayed (and troubled) *Quest for Camelot* in early or mid-1998, followed by *The Iron Giant* in the summer of 1999.
DreamWorks, whose Jeffrey Katzenberg helped build the Disney monarchy he's now trying to overthrow, will unveil five animated films in the next three years, starting with *Shrek*, a freewheeling and somewhat crass takedown of Disney films with Chris Farley voicing the titular character, an ogre, in August 1998. Switching tack, then comes the often dark and serious Old Testament tale *The Prince of Egypt* in the fall of 1998. In animation's version of the race to theaters between *Dante's Peak* and *Volcano* earlier this year, DreamWorks and Pixar are both making computer animated movies: *Antz* and *A Bug's Life*, respectively, both set for the fall of 1998. MTV Networks' $420 million animation investment (which includes a planned Burbank studio) will focus initially on lower-budget works. Projects include *The Stinky Cheese Man*, a *Beavis and Butt-head* sequel, the $15 million *The Ren and Stimpy Moving Picture Talk-O-Rama* for early November and set to compete directly with *Anastasia*, and the $15 million *The Rugrats Movie*, based on the TV show, which is due in the fall of 1998.
Only a handful of companies are not massing troops in the animation wars.
Sony Pictures, MGM and Universal Pictures have no public plans to launch animation units. Universal's home video division has generated more than $375 million in cassette sales from *The Land Before Time* and its direct-to-video brethren, but instead of a splashy animated feature, Universal is making two more *Land Before Time* video sequels and an animated direct-to-video film called *Hercules and Xena: The Animated Journey*. The film, based on the hit shows *Hercules: The Legendary Journeys* and *Xena: Warrior Princess*, will feature main stars Kevin Sorbo and Lucy Lawless.
As the debuts of the non-Disney animated movies draw near, the rival studios are sweating every detail. The executives are either convinced the more attention they lavish on a film the better it will do-or they are simply proving they did their best if (or when) the movie goes down in flames. In some ways, it's as though Warners, Fox and DreamWorks are learning to walk for the first time, while Disney is already sprinting. The challenge is to not fall flat on their faces-just like all the others.
GOLIATH VS. LOTS OF DAVIDS
Each of the last six Disney films has grossed more than $100 million at North American theaters. Two (*The Lion King* and *Aladdin*) have surpassed $200 million. Of the 50 non-Disney-distributed animated movies released since 1989's *The Little Mermaid*, a grand total of one surpassed $50 million-last year's *Beavis and Butt-head Do America*, according to Entertainment Data Inc. No other non-Disney animated film has grossed even $30 million in that time frame.
Of the more than $1.8 billion in animation movie tickets sold in those eight years, Disney claimed a whopping 85% of the pot. (Warner Bros.' *Space Jam* grossed $90.4 million, but the 1996 movie was a combination of live action and animation, and therefore is not counted in this study.)
"It is clearly competitive," says Chris Meledandri, president of Fox Family Films, with obvious understatement. Adds a more candid Max Howard, president of Warner Feature Animation: "Of course there is tremendous pressure."
The rival studios are studying Disney's strategy the way an NFL coach might scrutinize game films, looking for openings and lessons. For its first animated movie, DreamWorks is trying to counterprogram Disney, shooting for an audience years older than the average crowd for *Pocahontas* or *The Little Mermaid*.
Fox Filmed Entertainment Chairman Bill Mechanic, who formerly built Disney's vast home video and international theatrical businesses, is, in the words of one colleague, "doing a full Jeffrey," personally involved in almost every frame of *Anastasia* the way Katzenberg would watch over *Beauty and the Beast* or *Aladdin*. Katzenberg himself, not surprisingly, spends almost half his time in DreamWorks' animation offices and has transferred some of his Disney tricks to his new digs: Every animated movie has an "emotional beat board" that tracks with string and push-pins the presumed audience response to each scene.
Disney is a strange mixture of flattered and peeved by the imitators.
With all the activity swirling around it (both Warners' and DreamWorks' animation facilities are mere blocks from Disney), Disney has gone on a huge hiring binge, nearly doubling its animation department from 1248 employees in 1995 to 2200 this year, spread out among four studios (in Florida, Paris and two in Burbank).
To assert its dominance, Disney will launch an armada of animated movies through the millennium, starting with *Hercules*, which looks more obviously commercial than the strange *Hunchback of Notre Dame*. *Hercules* features gospel-style music and the voices of Tate Donovan in the title role, Danny DeVito as a satyr companion and James Woods as the villain Hades. Upcoming Disney titles include *Mulan* (summer 1998), Pixar's computer-animated *A Bug's Life* (fall 1998), *Tarzan* (summer 1999), *The Emperor's New Groove, Dinosaur, Wild Life, Atlantis: The Lost Empire, Treasure Planet, My Peoples* and *Fantasia 2000*.
To somewhat defray potential losses from stumbling with these films, Disney is certainly counting on George Lucas' upcoming *Star Wars* prequel trilogy, the first film in which will release in May 1999, to do extremely brisk business and break box office records.
"We're not going to simply rest on our laurels," Lasseter, who not only runs Pixar but has also helped run Disney's own animation division alongside Roy Edward Disney, nephew of Walt, says quite assuredly. "Disney has to evolve and grow in order to stay relevant. This involves not only coming up with great stories, but also not being afraid to challenge the audiences. A lot of people think Disney movies are in just a very tight box, with clearly defined boundaries. Well, that's not good enough. We should not be afraid to include more mature storytelling, to go darker if necessary, and upend certain stodgy traditions. In the end, it's the story that matters."
A CUTTHROAT JOB MARKET
The boom has revolutionized animation's job market and even touched the Immigration and Naturalization Service, as studios are looking as far as the Philippines to import drawing talent. Ponytailed art students who five years ago would spend their working hours staring at biscotti in some Melrose latte house are now commanding six-figure starting salaries. Veteran lead animators-especially those with a Disney credit or two-are banking $1 million a year, earning a share of a film's profits, collecting potentially lucrative stock options and receiving rich signing bonuses previously reserved for the NBA. When Lasseter signed his formalized Disney contract in February, the seven-year deal included a $1.25 million signing bonus and a base salary of $700,000 (with guaranteed 8% annual raises), according to securities filings.
So many people are hiring that artists who can barely draw basic body parts are getting jobs. The industry joke is 100% employment, 30% talent. Some studios are recruiting third-year students at schools such as CalArts and USC, and helping pay their tuition in exchange for job commitments.
"The animators all became quickly aware of how fast the market was changing-and it really was the day after DreamWorks was announced," says Nancy Newhouse, a lawyer whose 200 animation clients include Lasseter, Disney's *Tarzan* director Chris Buck and DreamWorks' *The Road to El Dorado* director Will Finn.
How important are the artists? Disney re-signed superstar animator Glen Keane (Ariel in *The Little Mermaid*, Beast in *Beauty and the Beast* and the title characters in *Aladdin* and *Pocahontas*) to a seven-year contract in late April. Minutes after the news hit the financial wires, Disney's already strong stock climbed to a new all-time high.
Due partially to these accelerating salaries, the budget of a big animated film now exceeds $100 million, several producers say. Five years ago, a Disney animated movie cost only $40 million. But even with the spiraling costs, animated movies have no $20 million star salaries, and unlike Stallone or Schwarzenegger, Hercules doesn't get a cut of the gross.
To gain an advantage (and build new outfits as quickly as possible), the new studios also have been hiring scores of Disney stars.
Warner Feature Animation estimates up to 80% of its staff members have a Disney pay stub in their file cabinets. Howard worked at Disney from 1986-1995. Among the other Disney alumni are Tony Fucile, who moved from *The Lion King* and *The Hunchback of Notre Dame* to Warners' *The Iron Giant*, based on the children's book by poet Ted Hughes and executive produced by Pete Townshend, the pyrotechnic, windmilling, instrument-smashing guitarist of The Who.
DreamWorks has been particularly aggressive-some say too aggressive-raiding Disney's easels. *The* *Prince of Egypt's* music is from *Pocahontas* alumni Stephen Schwartz and *The Lion King's* Hans Zimmer. The tunes for DreamWorks' *The Road to El Dorado* (a comedy set against the conquest of the Aztecs) come from *The Lion King* scorer Elton John and lyricist Tim Rice. Key DreamWorks animators include James Baxter (Quasimodo in *Hunchback*), Duncan Marjoribanks (Ratcliffe in *Pocahontas*, Sebastian in *The Little Mermaid*), Finn (Cogsworth in *Beauty and the Beast*, head of story on *Hunchback*) and Kathy Zielinski (Frollo in *Hunchback*). *Prince of Egypt* is co-directed by Brenda Chapman, head of story on *The Lion King*.
Fox's animation studios is headed by Don Bluth and Gary Goldman, who left Disney in 1979. The two have hired many overseas animators in an attempt to find fresh talent and keep costs in control, relocating its artists to Arizona. The international staff includes people from Canada, Spain, Germany, France, Ireland, England and more far-flung locales.
Bluth has been somewhat of a maverick in his oeuvre, starting with the popular arcade game *Dragon's Lair*, and then going on to create beloved animated classics such as *The Secret of NIMH, An American Tail* and *The Land Before* *Time*, where he established himself to show off incredibly technical animation, especially of human characters, and featured incredibly compelling and dark stories within.
Bluth's recent films-*Thumbelina, A Troll In Central Park, The Pebble and the Penguin* and *Rock-a-Doodle*-have all been box office disappointments. People who work with Bluth say his films' scripts have typically been weak. Fox, sources say, has labored to polish the *Anastasia* screenplay, offering the services of some of its live action screenwriters.
Bluth himself says financial problems at his previous studio distracted his focus on those earlier underachievers. "I no longer have this worry every week about the payroll," the director says. "I feel the burden greatly lightened."
The competition between animation houses is not limited to movies. As soon as established animators' movies wind down, they attract attention usually reserved for Madonna's offspring. "Our artists are getting calls every day from the other studios saying, 'When your contract comes up, give us a call and we'll give you a better deal,' " says Bluth, who claims not to do the same. Director Brad Bird says he needs to be finished with his *Iron Giant* storyboards in September "in order to pick up all the people coming off *Quest for Camelot*, " and make sure they don't sit around waiting for another job offer.
To protect its seat at the head of the table, Disney also is trying to price its emulators out of business. Disney now throws huge salaries ($3500 a week and more) at such employees as lead key cleanup artists and locks up talent for the maximum seven years. Pixar, Disney's computer animation division, offers its employees potentially lucrative Disney stock options, Lasseter says.
In response, Warners and DreamWorks are respectively offering bonuses and profit participation, but only DreamWorks has effectively matched Disney's salaries.
"You remember when Reagan was president and he said he was going to outspend Russia on defense?" says Jon Cantor, a lawyer representing some 350 animators. "And Russia said, 'OK, we'll outspend you, then.' It ended up bankrupting Russia. Well, that's what Disney will do to the competition."
With all the activity, one critical question remains:
Can anyone besides Disney make money in animation? Historically, non-Disney animated films have as short a run as Larry King's wives. So why have so many failed? *Cats Don't Dance* offers a case study.
EVERYTHING BUT THE LOGO
It took 4 1/2 years to bring the animated musical *Cats Don't Dance* to movie theaters. It took 4 1/2 hours to declare it dead on arrival.
At the film's first March matinee at a spacious Pasadena theater, a grand total of 15 people bought tickets. "It was very well done. It was a nice movie," said Michael Osborn, whose five-member family accounted for a full third of the house. "It's too bad people aren't coming to see it."
The film's collapse had little to do with what was on the screen. *Cats Don't Dance* attracted largely positive reviews from some leading critics, and some reviewers said the Warner Bros. release surpassed Disney's artistry. Missing, however, was the Disney name and the seemingly minor garnishes that increasingly determine success and failure.
There was no Danny the Cat Happy Meal at McDonald's. Soft and fluffy *Cats Don't Dance* toys were not spilling from Toys "R" Us shelves. Distributor Warner Bros. did not run a parade up New York's 42nd Street and 10 blocks of 5th Avenue (as Disney will do with *Hercules*) to elevate the film from mere movie to cultural event.
In other words, producer Turner Pictures and distributor Warner Bros. thought *Cats Don't Dance* was a movie and did not pursue tie-in deals. But successful animated movies are not movies. They are motors, and they don't go anywhere without the fuel of merchandising and the wheels of event marketing. Disney knows how to build that car better than anyone else. And they've done it so well for so long customers won't buy from another dealer.
"*Cats Don't Dance* got great reviews and great exit polls. And no one knew it was out there," says David Kirschner, the film's producer, who says he was "devastated" by the film's flameout.
He shouldn't have been surprised.
Produced by since-folded Turner Pictures, *Cats Don't Dance* was supervised by no less than eight executives in its lifetime, several of whom would have rather ironed Chris Farley's underwear than make an animated movie. "(Turner Pictures President) Amy Pascal told me, 'I don't care for animation in any way, shape or form,"' Kirschner says. "Those were her exact words." (Now the head of Columbia Pictures, Pascal says she merely was not a fan of the story of animals seeking to become movie stars in 1939 Hollywood and may well want to make an animated Columbia feature in the future. She did, however, speak highly of *Cats Don't Dance* when it was announced.)
"I asked and I asked about the merchandise campaign," Kirschner says. "And they kept saying, 'We'll get to it.' They never did."
Without studio support and concerted effort for fast food and toy tie-ins, the $45 million *Cats Don't Dance* was doomed. "When you do a film like this, you better damn well make sure you have support across the board," Kirschner says. "Launching these films takes a year and a half of planning."
Disney has practically copyrighted the book both on how to make-and, equally important, to launch-an animated movie. Children and their parents know about the next Disney film months before it comes out, and each film's popularity builds awareness for the next. Since families now collect Disney videos the way earlier generations once did books, the cassettes have become incredible sales tools. The 21 million shipped copies of the *Toy Story* video carry a *Hercules* trailer, as do the more than 10 million videocassettes of *The Hunchback of Notre Dame*.
There's no limit to Disney's merchandise efforts.
The floor-to-ceiling shelves in Lasseter's Pixar offices are jammed with *Toy Story* booty. Among Lasseter's collection is *Toy Story* lip balm, a *Toy Story* sushi lunchbox (complete with *Toy Story* chopsticks) and three Buzz Lightyear dolls that declare "To Infinity and Beyond!" in French, German and Italian. Lasseter is desperately trying to find a *Toy Story* stamp from Uganda and will soon catch the *Toy Story* ice skating spectacular. Counting its domestic, international, home video and merchandise profits, *Toy Story* has spun off $400 million in profits.
The *Toy Story* merchandise testifies to the staggering ancillary appeal of a movie Disney admitted it underestimated. The goods simultaneously reinforce name brand identification and create a thirst for more *Toy Story* experiences: Without appearing to sell anything, the toys and piggy banks and comic books turn prepubescent children into highly trained consumers. Not surprisingly, Pixar is hard at work on a *Toy Story* sequel, eager to tap the market before the attention subsides.
The merchandise tie-ins have grown so pervasive that Disney's *Hercules* actually makes fun of the practice in the movie itself. After a particularly heroic feat, people in the film start wearing "Air Herc" sandals, drinking "Herculade" thirst quencher and Hercules signs autographs outside a Disney-fied "Hercules Store" crammed with figurines.
It helps, too, that Disney's artwork and music are consistently good, and that *Beauty and the Beast* remains the only animated film nominated for a Best Picture Oscar. No one was fooled into thinking Miramax's *Arabian Knight*, a cannibalized version of Richard Williams' legendary unfinished opus *The Thief and the Cobbler*, was anything but a low-rent knockoff. Consequently, over the course of 35 animated features Disney has developed remarkable brand name loyalty.
"People will go to see a Disney movie even if it's not good," says Warner's Howard. "They have earned that-I don't have that. I have to be great."
"The word 'Disney' is like Santa Claus-you can't invoke criticism," says Bird, director of the upcoming Warners animated film *The Iron Giant*.
And Santa was never so flush.
GIRDING FOR BATTLE
How do the Disney rivals match that clout? A lot of early planning and calculation.
Morgan Creek Chairman James Robinson says he wouldn't be risking as much as $50 million challenging Disney if he didn't have a pre-sold title. "If we didn't have *The King and I,* we wouldn't be making an animated film," Robinson says. "For a non-Disney film, you can't get a better title-and we already know the music has tested well, so we're keeping it in," he says with a laugh. Morgan Creek already has been approached by several fast food chains and toy companies, even though the movie is more than a year and a half from being finished.
Producer-director Bluth can't come to the phone at the brand new Fox Animation Studios in Phoenix; he's meeting with the *Anastasia* merchandisers. Hundreds of miles away, Burger King and Galoob Toys are cranking out their *Anastasia* merchandise. Back in Los Angeles, 20th Century Fox is laboring to launch the movie with more fanfare than *Independence Day* and *Volcano* and the upcoming film spinoff of the hit TV series *The X-Files*. With only 30 minutes of the film completed, Fox has started showing the unfinished footage to the media (as Disney first did with *Beauty and the Beast*), trying to generate positive buzz and awareness.
"Any independent animated feature can't make it any more," says Bluth. "I saw *Cats Don't Dance* and thought it was really good. But nobody knew it was out there. . . .I don't think you can make an animated film by yourself. Even if it's the best animated film in history, no one will see it if there's no awareness."
Part of Bluth's *Anastasia* strategy is to get away from what is historically a tale of bloodthirsty Bolsheviks, the last Russian czar, revolution and a young woman believed by historians to have been slaughtered. In Bluth's retelling, *Anastasia* is more fairy tale, a story of a little girl who may be royalty searching for identity. As the movie puts it, "Every lonely girl hopes she's a princess." The lead voices are Meg Ryan, John Cusack, Angela Lansbury and Christopher Lloyd. The music is by *Ragtime's* Lynn Ahrens and Stephen Flaherty.
When Bluth began adapting *Anastasia*, he was mindful of creating characters that appealed to children and not coincidentally had tremendous toy potential. "(The dog) Pooka was created to give kids access to the story because it's in many ways an adult story," he says.
"What we set out to do is tell a great story-no one has the exclusivity in telling great stories in this medium," says Fox's Meledandri. "Are there marketing challenges in communicating that Fox has made a great animated film? Yes, there are great challenges. But when you step back and look at the overall risk, it's similar to the risk you take with any film. If you succeed, people will come. If you fail, people will not come."
The Disney challengers (and Disney itself) need to be careful that marketing does not get in the way of the actual film. "The amount of money spent is so astronomical and you have to make the deals so far in advance, the movie is not always the first priority," director Bird says. "You have to make sure (the merchandise) doesn't dictate what kind of entertainment we make."
DreamWorks' *The Prince of Egypt* doesn't look like the typical Disney movie, with no wisecracking sidekick and huggable furry companion (Habibi, the stubborn camel, does not speak). Among the artists the DreamWorks animators studied are French illustrator Gustave Dore, impressionist Claude Monet and director David Lean. The movie opens with the song "Deliver Us" as Moses is put in a basket in the river, and sequences include the tongue-twisting "Tzipporah Escapes" and "Hieroglyph Nightmare." With the voices of Val Kilmer, Ralph Fiennes, Michelle Pfeiffer, Helen Mirren, Jeff Goldblum and Sandra Bullock, the estimated $60 million film features two highly complicated, computer-animated scenes: the parting of the Red Sea and the Burning Bush.
Some who have viewed portions of the work say the story of faith, slavery and deliverance is not something for toddlers. The film will probably be rated PG, and is aimed at 8-year-olds and up. "I saw the first six minutes of *Prince of Egypt*, " says attorney Cantor. "It looked like an animated version of *Schindler's List*. I said to Jeffrey, 'What audience are you going for?' "
Katzenberg declined to be interviewed. But the film's two producers say the film is indeed geared to an older, more sophisticated crowd. "[The audience] expects something they can take their 3-year-old to without any problem," says the film's co-producer, Penny Cox. "This is a different film, with hard issues and hard questions."
Meanwhile, DreamWorks executives say they are agonizing over how to promote the film: A Promised Land Picnic Set would look sacrilegious, but is a Ramses coloring book irreverent? When you make *The Lion King*, everything down to (and including) promotional toilet paper seems acceptable. But how do you create a profile if you can't churn out consumer products? Will education programs offered through religious organizations turn *Prince of Egypt* into an event?
Equally important, how do you prepare an audience for a movie with no singing crab or dancing teacup? While Disney can take some liberties with the life story of Pocahontas and Fox can (and will) do the same with Anastasia, you can't really rewrite the Old Testament.
DreamWorks certainly hopes *Prince of Egypt* will be a hit, but the studio, in an unusual spin-control move, already is saying the movie's value cannot and will not be measured in ticket sales alone. It is critical, for starters, that *Prince of Egypt* proves the new studio is not trying to clone Disney movies.
"It is less about what the film grosses," Cox says. "The significance is less about the bottom line than in succeeding in making the movie we set out to make. What this movie has to do to be successful for DreamWorks is to be done well."
As *Prince of Egypt* demonstrates, the animation wars carry the promise of new animation styles. With so many people clamoring for their services, artists suddenly are empowered, free to make movies the way they want to. If a studio executive interferes too much, they simply move on. The money and the jobs are out there.
"One of the nice things at Disney now is there's a strong creative vision by the director," says Lasseter in a thinly veiled broadside at former studio chairman Katzenberg. "There's a difference when the director is the director of the picture and a studio executive is the director of the picture."
"The artists have more choices than they've ever had before," says Ron Clements, the co-director of *Hercules*. "You can make choices and work on films you want to work on."
No one knows, of course, who will triumph and who will perish-only that somebody will inevitably crash and burn. Warners' *Quest for Camelot* was started in 1993 and has had significant story problems. Its first director, Bill Kroyer (*Ferngully: The Last Rainforest*), left the film last summer, as did two lead animators and a number of people in the art department. If Warner Bros. executives are unimpressed with storyboards for *Iron Giant*, it may not go forward, immediately interrupting the studio's planned stream of titles.
"You've got to be making something," says Howard, who says *Iron Giant* will be made. "There's a danger in not making something."
"Of all the players in the ring, not everyone is going to make it," says Bluth, whose last studio, Sullivan Bluth Studios, flopped. "Somebody is going to get hurt and lose a lot of money."
"When Jeffrey was here years ago he would say, 'Guys, I want you to know I believe in monopolies,' " says John Musker, *Hercules'* other co-director. "Now, he obviously believes in at least duopolies."

**"ABC Affiliates Meeting: Largely A Lovefest," by Steve McClellan, *Broadcasting & Cable*, June 9, 1997**
*Image campaign stirs controversy; network to foot bill for decoders, which would have cost each station $150,000*
This year, ABC managed to put on a massive charm offensive at its meeting with its affiliates. "On the whole, I would describe the meeting as an absolute lovefest," quipped Ed Aiken, general manager, KSTP-TV Minneapolis.
The network did throw the affiliates one large bone last week. It agreed to pay for decoders that affiliates will need to receive ABC digital TV feeds. The price tag is estimated to be nearly $30 million, according to Preston Davis, president of broadcast operations and engineering, ABC. The average per-station cost of digital decoders will be around $150,000, Davis said. The network has issued a request for proposals by manufacturers. Affiliates would have to choose the decoder designed by the winning bidder to qualify for the reimbursement, to be paid over five years. Newly appointed ABC Network Television President Preston Padden said that he and Davis will work hard during the summer to come up with, if not a plan, "at least a collection of thoughts" on how to proceed with digital TV implementation, and then begin a dialogue with affiliates.
Most affiliates seemed content to give of ABC Entertainment President Jamie Tarses' first development season a chance to work in the fall before complaining. David Barrett, the Hearst Broadcasting executive who succeeded Cox's Andy Fisher as chairman of the ABC affiliate advisory board last week, said he came away believing "there's a renewed emphasis on product and creativity" at ABC. The network and its affiliates avoided one sore point when they decided to postpone action on program exclusivity. Affiliates of all the networks are concerned about network talent and programing showing up on network-owned cable services. Padden and company president/Disney COO and president Robert Iger will jointly spearhead the exclusivity issue for ABC and will try to come with a plan in the next 30 to 60 days. officials said. Padden promised to inform affiliates of any planned program repurposing before a general agreement on the issue is worked out.
The meeting's biggest controversy was the network's 1997-98 image campaign, a rollout across the airwaves and print and outdoor marketing entitled "TV is good," a tongue-in-cheek celebration of the couch potato. Because of affiliates' concerns, ABC promptly agreed to kill one spot in the campaign that said, "Books are overrated." At a closed meeting last Thursday, roughly half of the affiliates polled said they were concerned that they would, as one source put it. "get hammered by critics of the industry" in reaction to the spot. Another spot features a teenager watching television. The announcer reviews several alternative activities: having unsafe sex, getting a tattoo or getting body-pierced. Then the tagline appears: "TV, not such a bad thing." Another spot zooms in on an electric bug zapper. After a mosquito is zapped, a tagline reads: "TV. What would you watch without it?" Yet another says, "If TV is so bad for you, why is there one in every hospital room?"
Another spot follows a facetious "It's a beautiful day. What are you outside for?" with the tagline "Life is short. Watch TV." A thank you spot says, "You could be reading a book," or getting exercise or engaging in several other productive activities. "But you're not," the spot concludes. "You're watching TV. Thanks." Others say things like "Don't just sit there. OK, just sit there."; "Before TV, two world wars. After TV, zero."; "Wouldn't you rather be sitting on your couch?"; and "Without TV, where would you know where to put the couch?" Although station executives laughed at some of the spots, they were concerned. "If the viewer doesn't get it, the whole thing falls short," KSTP-TV's Aiken said. A network spokesperson said affiliates "overwhelmingly" supported all but the "reading is overrated" spot. The campaign was created by TWBA Chiat/Day, the network's new ad agency, which also created Apple's successful *1984* Mac commercial and is being rehired by that company to signify changes with the return of Steve Jobs. TBWA Chiat/Day also stresses that the campaign will roll out in stages of evolution, where the 1998-1999 and 1999-2000 seasons will evolve more toward "We Love TV," and become less pointed in the jabs, and stresses that "people will be gravitating more toward ABC, especially its comedies, if they think 'ABC's funny.'"
Also at the closed session, news division chairman Roone Arledge promised more major changes at struggling *Good Morning America* "soon." There were no specifics, but most believe the show will get a new executive producer (Marc Burstein currently fills that role) and probably two new hosts. Joan Lunden's departure was announced two weeks ago, and word is that Charles Gibson also wants a new gig. The network tried unsuccessfully to lure Jim Nantz from CBS for a role that would include hosting *GMA*. Nantz declined. Rumor is that Arledge also has inquired about Connie Chung's interest, now that the syndication show she had planned to do with husband Maury Povich has been scrapped. It is also known that to add to ABC's daytime arsenal, a talk show all hosted by women, under the aegis of ABC News correspondent Barbara Walters, entitled *The View*, is readying for launch in August, and many are hopeful about its chance.
Disney CEO and Chairman Michael Eisner delivered upbeat remarks at the session, saying he feels even more confident about ABC's ability to surge in ratings and viewership than he did a year ago, "And I was already extremely confident to begin with." He also told affiliates that ABC is worth more now than when Disney bought the company early last year. "I'm glad we underpaid," he quipped. Padden was well received by affiliates. "He struck just the right tone," said Barrett. "He realizes the business challenges are different at ABC than at Fox." In a speech to affiliates, Padden stressed his intention to work with them to forge a successful future. "In the past, some arrogant and uninformed critics-like me-have characterized the three older networks as 'dinosaurs,'" he said. "I did not leave a company that I loved to become curator at Jurassic Park."

**"Disney to Sell Investor Journal," *The New York Times*, July 17, 1997**
Euromoney Publications PLC said today that it had agreed to buy Institutional Investor Inc., a unit of The Walt Disney Company, for $142 million, establishing a strong presence in the United States.
The London-based publishing and conference company was one of several businesses that looked over the unit after Disney decided to sell it along with other publishing assets it acquired when it bought Capital Cities/ABC.
Institutional Investor, which publishes the magazine of the same name, is involved in information publications and the conference and newsletter business and derives 73 percent of its $74.4 million revenue from the United States.
The publication *Euromoney*, which is 63 percent-owned by the *Daily Mail* and General Trust PLC, competes directly with *Institutional Investor* for an audience of financiers and investors.
After it paid $19 billion to acquire Capital Cities/ABC last year (as well as committing over $5 billion more to purchase Pixar Animation Studios and Lucasfilm Ltd. that same year), Disney began selling its publishing units to focus on its entertainment business. Disney sold its Chilton trade publishing unit to the British-Dutch publisher Reed Elsevier PLC for $447 million.
In April, Disney sold four newspapers to Knight-Ridder Inc. for $1.65 billion and said it was exploring its options regarding the magazines. The company still has 24 farm magazines; Fairchild Publications, which publishes *Women's Wear Daily*, and Disney Publishing, with its children's magazine *Disney Adventures*, and magazines *Discover* and *Family Computing*.

**"Disney Sells Off Oregon-Based Newspapers," *Los Angeles Times*, July 29, 1997**Iowa-based Lee Enterprises Inc. will buy the Pacific Northwest Publishing Group-composed of eight Oregon newspapers-from ABC and its Burbank-based parent The Walt Disney Company for $185 million. The papers, consisting of the *Albany Democrat-Herald, Ashland Daily Tidings, The Sandy Post Lebanon Express, Cottage Grove Sentinel, The Outlook* and Newport *News-Times*, will be sold as part of Disney's continuing efforts to divest itself of print assets it inherited after purchasing Capital Cities/ABC for $19 billion. Disney had earlier sold four newspapers to Knight-Ridder, Chilton Publications to Reed Elsevier, *Institutional Investor* to *Euromoney*, and Farm Progress to an Australian firm. This was all done to help the company pay down debt incurred from the ABC purchase, as well as purchases of Pixar Animation Studios and Lucasfilm Ltd. last year. Disney is also spinning off a majority stake of its ownership of Miramax Films, both to meet antitrust concerns and pay off debt, and also sold KCAL-TV to Young Broadcasting for the same reasons. Disney sold off the Shamrock Broadcasting group, a collection of 19 radio stations, to Chancellor Broadcasting back in 1995.

**"ABC: How Not To Drain Disney's TV Cash Cow," by Steve McClellan, *Broadcasting & Cable*, September 22, 1997**
*Analysts predict further stock price soars, but warn that Disney could fumble at the endzone*
ABC's ratings increase over the past few seasons is paying dividends to the company's bottom line and has analysts urging clients to buy Disney stock. "We have been recommending Disney, and one of the reasons is ABC," says Melissa Cook, an analyst at Prudential Securities. Cook estimates that in 1997 ABC's network TV operating profits will soar 67%, to $139 million (excluding purchase price accounting benefits), on a 31% revenue gain, to just under $5.2 billion.
Tom Wolzien, video analyst for Sanford Bernstein, estimates ABC's profits will soar from $400 million-plus in 1996 to below $700 million in 1998. "They're clearly moving in the right direction," says Cook. Investors have been influenced by ABC's impressive performance, says Cook, who expects more "hot press" for the company as the new season begins. "Investors will be focused on this."
Wolzien thinks 1998 will be the telltale year where the effects of the current regime will be most evident, because it will take time for new programming chief Stu Bloomberg to make his mark. "They simply need more time to solidify." And at the same, he says, ABC is best positioned to capture the next great programming trend because it's decided to experiment and be aggressive, even with last year's results being quite impressive. "Hopefully they can tap into a public mood or interest that the others are just too conservative to find," he says.
For now, says Wolzien, the network's performance is boosting Disney. Wolzien figures that because of the ratings and viewership increases for ABC in 1997, Disney stockholders are $15 a share richer from the network alone, and the parent company's total operating profit (before purchase price accounting benefits) is 30% higher. "That's real money," he says, mentioning that is before even figuring in the effects of buying Pixar Animation Studios and Lucasfilm Ltd. as well, which is certainly substantial. And Disney's stock price is sure to really rise.
As to the coming season, Cook calls it a "very important one" for ABC. "The advertising cycle has real juice, and it's better to get the programming fixed while you're still able to be paid well for it by advertisers." But Cook's expectations for ABC are very cautious. "Just because ABC has been doing well under Disney so far doesn't mean it will stay that way. For example, Disney could really end up deciding to milk too much out of the network, overexpose a show that suddenly becomes a hit, for example. They might end up deciding to cut costs too much, including regarding series development. Or they might try to put too much Disney content on ABC's air. All of these things could really hurt the network and Disney as a whole. Hopefully, that's not the case."

**"Not So Lonely At The Top," by Lynette Rice, *Broadcasting & Cable*, September 22, 1997**
*ABC's hopes for a primetime reinvention rest on the duo of Stu Bloomberg and Jamie Tarses...and some yellow ads*
There's a foosball table in the office of ABC Entertainment Chairman Stu Bloomberg, an appropriate diversion for the man pegged by the tragically hip *Buzz* magazine as one of the 100 coolest people in Los Angeles ("it's possible to be a man of taste and a TV executive, too," it reads). Beyond that is an inviting couch, not to mention a coffee table perfect for resting one's feet. In short, this is a place where ABC Entertainment President Jamie Tarses can relax and find support-an effect not only encouraged by Bloomberg but cautiously embraced by higher-ups looking for stability in a programming department fraught with change, even if said change has been positive on the whole.
Steering attention away from the executive suites and back to programming has been a fervent goal of ABC-which despite its double-digit ratings climb and increased cash flow to corporate parent Disney, still finds itself dogged by a press corps more concerned with the corporate fate of the 33-year old Tarses (not to mention that of Disney's independent roving troubleshooter and dealmaker (and interim president) Michael Ovitz and how well he actually gets along with the actual people in charge) than her proven ability to create hit shows. The 48-year-old Bloomberg's hire tops a year's worth of program executive comings and goings that began with the hiring of Tarses from NBC, followed by the departure of Chairman Ted Harbert (to become a strategic consultant for the network instead) in January. Just when Tarses appeared to have sole control of a division continually cycling between first and second place, rumors arose that someone would be brought in above her. That happened in June, just one month after ABC publicly endorsed their young executive who had more than proved her mettle at NBC (her name is synonymous with the development of *Friends*).
Can Team Bloomberg-Tarses set the network on fire? Given the rosy projections for ABC's operating profits this year, patience is something Disney has to spare, even if admittedly it's not the strongest suit and an urge to micromanage has to be kept in check: In a *Vanity Fair* piece this month, CEO Michael Eisner said his secret dream was to "go down to the smallest ABC office somewhere, where people didn't know me, and really see what I could do."
"We have a difficult row to hoe. Nobody's denying that," says Tarses. "There's a tremendous amount to do and a tremendous amount of pressure, but my feeling about the job, my life-it's so much better since Stu has been here. You do need somebody. Calling upon yourself at the same time you're solving 100 million other problems is much more difficult. Having somebody else to do it with makes a lot more sense to me after having tried both versions of it. And having not just Stu, but the continued outside strategic advice of Brandon Stoddard and Ted Harbert to come in and help, I think we've got a really great operation that will be cooking." "I've been at this company for 19 years," Bloomberg says. "We're partners in making this work, so I feel the same churn in my stomach as Jamie or anybody else here. I feel proud of all these shows. It's absolutely no different to me now that I'm here. We're both competitive people; everybody here is. We want to succeed."
The challenge lies in launching a primetime lineup packed with 12 new shows, more than any other network this year. The ad community is hopeful: BROADCASTING & CABLE'S sixth annual survey of advertising experts has ABC running neck and neck behind NBC in the standings, and sometimes even overtaking it. The alphabet network is predicted to dominate four nights of the week, mainly on the strength of *Monday Night Football* and *20/20* on Friday. But the new shows are attracting some attention too. with *Hiller & Diller* looking to earn some $270,000 per 30-second spot, thanks to a hefty lead-in from *Home Improvement*. There's also *The Wonderful World of Disney* programming block of made-for-TV films, which is benefiting from a healthy dose of corporate synergy with Disney.
Further help, strangely enough, may be emerging from another controversy at ABC this summer: an ad campaign that makes fun of sunny days, wives and brain cells while supposedly promoting ABC. It's already managed to irk some affiliates who were afraid it would be taken too literally (the little ditty about books being overrated has since been excised from the campaign). Snide comments about the yellow and black advertisements have become common in Hollywood, although NBC may have gone too far by spoofing the campaign during its Thursday night lineup. ABC reveled in the free publicity, particularly since a 30-second spot around *Seinfeld* costs more than $500,000.
"When you're not number one consistently long, you have to take more chances," says Alan Cohen, ABC's executive vice president for marketing. "Even if you are number one, you still can't just rest on your laurels, and if we were permanently number one, we'd still be doing this. I think this campaign is going to be remembered for a long, long time. If we can create a sense for people to expect the unexpected from us, we think that's a good thing. I think people will be watching to see what we'll do next." "Our competitors may be sniping at it, and maybe if I was at a network that didn't have it, I'd be sniping at it, too," Tarses says. "Anybody would give their left arm for this kind of attention. This is what you want if you're selling television shows or cars or whatever... It's about making noise."
Still, not all are sold by the kitschy campaign. Some studio heads call it "bass-ackward" -people are talking about the campaign when they should be chatting up, say, *Cracker* or *C-16*. And some random surveys have ABC lagging behind the other three in total awareness of network shows, a dangerous sign of potential decay and halting ABC and Disney's impressive ascent. "I think there's been an enormous amount of attention by advertising and media people to something that the public is scarcely aware of." says Alan Bell, president of Freedom Broadcasting, which owns several ABC affiliates. "There are two great lies in television: that a show died because the promotional campaign was lousy, or a newscast got a low rating because the set was ugly. I'm not going to get myself into a twist if it ought to be yellow or whether it's sophisticated... The real issue is whether we have the firepower in the shows."
Also key is whether the higher-ups will allow the shows of Bloomberg and Tarses to grow before yanking them at the first sign of low ratings. They look to have an ally in ABC Inc. President and Disney COO and President Bob Iger, who thinks too much competition in television has prompted programmers to pull shows prematurely. Iger has delegated much of his continued ABC duties to the likes of Tarses and Bloomberg, as well as Steve Burke and Preston Padden, so he can focus on his Disney job of being Michael Eisner's number two and helping run the impressive empire. Still, in the meantime, Iger wouldn't mind getting his hands dirty in the primetime game again if it would pull the network to the top for longer stretches: "Any reference to my sitting on my hands, at least where ABC is concerned, should not be interpreted as lack of support," he says. "Sure, there are times when I wouldn't mind giving it a shot again, but this is the time to suggest ideas rather than force them. That is not only part of the reality of my wearing two hats. That is part of my respect for them, personally." And as far as the revenue projections are concerned? Disney "runs more than just a TV network," Iger says. "It's extremely profitable and very healthy in the present tense and future organization. While many may focus more on the Pixar and Lucasfilm deals in terms of instant returns, ABC is just as massive and important. There's growth opportunity for the various ABC divisions...the savvy investor knows that Walt Disney is about more than just network primetime programming, especially when one considers that our TV operations are far more than ABC. The Disney Channel is a prime part of our TV strategy, too, as is our syndication packages. Certainly they should not just focus on primetime ratings at the network."
That, of course, is the job of Bloomberg and Tarses-although excitement over the new schedule is beginning to overshadow last year's impressive performance. The TV critics, in fact, have been particularly complimentary about the acting on *Nothing Sacred* and the chemistry on *Dharma & Greg*, something that now also exists in the West Coast programming offices. "There's stability here. I think people know that we genuinely enjoy working together." Bloomberg says. "People say we have the same backgrounds, we both have development skills. What better place for the creative community to come but to two people who are the most respectful of the creative process?" "It's a credit to both of them that's it worked, and it's particularly a credit to Jamie," says Iger. "Her reaction has been mature and proper. And I think the results are already obvious to us. They're being effective and getting along, and indeed the furor has died down. Thank goodness."

**"Disney and Katzenberg Reach Pact On Lawsuit," by Bernard Weinraub, *The New York Times*, November 11, 1997**
The Walt Disney Company and its former studio chief, Jeffrey Katzenberg, announced an unexpected settlement today that avoids a legal battle in court but leaves open the amount Mr. Katzenberg will receive to further negotiations.
In a brief statement, the two sides said that discussions would now take place on the amount to be paid to Mr. Katzenberg, who had run the Disney studio for more than a decade. Mr. Katzenberg, now a partner at DreamWorks SKG, had sued, seeking at least $250 million from Disney, contending that the company had failed to give him his rightful share of the profits of hit films, including *Beauty and the Beast, Pretty Woman, Aladdin*, and *The Lion King*.
Specifically, Mr. Katzenberg accused Disney of reneging on an agreement to pay him a bonus of 2 percent of the profits earned by Disney films and television programs placed into production while he ran the studio.
Disney contended that Mr. Katzenberg, by leaving the company in 1994, instead of in 1996, when his contract expired, had forfeited his share of movie and television profits. Mr. Katzenberg left Disney after he was denied the company's No. 2 position following the death of Frank G. Wells, the president, in a helicopter crash.
A joint statement said that although Disney and Mr. Katzenberg had not agreed on the amount of their settlement, ''they will now engage in a further proceeding to determine the amount to be paid to Mr. Katzenberg.'' The two sides said they had also agreed to keep the terms of the settlement confidential. One Disney executive said that the company expected the matter to be resolved over the next few months.
The suit stirred enormous attention in the entertainment industry. It is highly unusual for a power broker like Mr. Katzenberg to engage another power broker like Michael D. Eisner, the CEO and chairman of Disney, in a potentially embarrassing jury trial. Such disputes are generally resolved with a handshake and the writing of a big check, out of the eyesight of the news media and company shareholders.
Moreover, a trial had the potential to open Disney's financial records, providing far greater details than in documents required by the Securities and Exchange Commission of the bookkeeping, salaries, contracts, deals and perquisites. Disney's annual revenue has soared sevenfold in a a decade, to more than $10 billion, with $1.1 billion in profit.
People involved in the case said that Mr. Katzenberg and his former boss, Mr. Eisner, who have raged at each over the last two years, privately spoke to each other several times in the last few weeks as their lawyers sought to resolve the dispute.
Mr. Eisner and Mr. Katzenberg met face-to-face in a hotel room in Los Angeles 10 days ago, these people said. At the same time, lawyers for both sides began working out a settlement, which involved a floor sum that would be paid to Mr. Katzenberg by Disney.
Also involved in reaching the settlement were two Los Angeles County Superior Court judges, Enrique Romero and Owen Lee Kwong. The final settlement will be determined by a mediating judge. One person close to Mr. Katzenberg said that the floor price reached $100 million, but a veteran Hollywood lawyer said that figure was probably too high.
Under the agreement, according to one of the people involved in the case, the final determination of how much Mr. Katzenberg receives from Disney comes with a stipulation. If the mediating judge determines that Mr. Katzenberg is owed far more than the floor figure, Disney may have to pay a lesser figure than the judge decrees.
Mr. Eisner had, until recently, refused any offers of compromise. After Mr. Katzenberg left Disney, Michael S. Ovitz, the Disney president at the time, privately worked out a deal with David Geffen, one of Mr. Katzenberg's partners at DreamWorks, to resolve the issue. But Mr. Eisner rejected the settlement.
When Mr. Ovitz left at the end of his interim period and Robert A. Iger, the head of Capital Cities/ABC prior to Disney's purchase, took on the duties of president and COO, he got Mr. Eisner to agree to begin negotiations with his former partner.
Today, both sides welcomed the agreement, but provided few details about it. A Disney statement said: ''We always prefer to resolve business differences outside of the courtroom and are pleased to have done so with this dispute. We wish Jeffrey well in all of his future endeavors.''
Mr. Katzenberg said: ''I'm pleased at the outcome and glad Michael and I were able to resolve our business dispute without going to trial. It's time to move on.''

**"Cinema: There's Tumult In Toontown," by Richard Corliss and Jeffrey Ressner, *Time*, November 17, 1997**
*FOR 60 YEARS, THE ANIMATED FEATURE WAS A DISNEY MONOPOLY. NOW RIVAL STUDIOS ARE MUSCLING IN, LED BY FOX WITH A WINSOME ANASTASIA AND AN UNREPENTANTLY FLASHY AND OBNOXIOUS CAT AND CHIHUAHUA*
It is a rite-of-passage saga fit for a cartoon classic. Plucky kids dream of breathless adventures in a rainbow kingdom. They will be animators, spin magical musical tales for children of all ages and make pots of money in video and burger tie-ins. But standing guard before the cartoon castle is the evil Cruella Di Sney. "The animated feature franchise is mine, all mine!" she thunders. "Nobody does it better, and nobody better try."
Will the daring insurgents storm the castle and free the people from the tyrant's cloying clutches? Or will they discover that, gee, the people really like Di Sney's style and don't care to be rescued?
We'll find out next week, when *Anastasia*, the winsome, often winning debut film from Fox Animation Studios, arrives on screens nationwide. Directed by Disney renegades Don Bluth and Gary Goldman (*An American Tail, The Land Before Time, All Dogs Go to Heaven*), this fanciful story about the lost princess of the Romanovs has all the elements for a cartoon hit: a girl-becomes-a-woman plot; a chipper, Alan Menkenish score by Lynn Ahrens and Stephen Flaherty (*Once on This Island, Ragtime*); and a cute, chatty bat. Close your ears to the Fox fanfare in the opening moments, and you can mistake it for a Disney film. Which is exactly what Fox hopes parents will do.
There's no mistaking Hollywood's sudden urge to outfox the Mouse. *Anastasia* is the first in a salvo of all-animated features from four deep-pocketed Disney rivals: Fox, Paramount, Warner Bros. and DreamWorks SKG. The next few years will see the biggest splurge of cartoon features ever. But after the exclamation point come the question marks. Are there ways to make popular animated films that don't slavishly follow the rules Walt and the boys made up in the 1930s? Are studios jumping on the toon trolley just as the form has shown signs of losing its commercial luster? "I'm a little uncertain," says Chuck Jones, who joined Warner's in 1935 and today, at 85, is the greatest living animation director. "There are so many films in the works now that the market may soon be oversaturated."
*Anastasia*, which cost about $53 million, is getting a blast of promotion equal to that given any Disney cartoon-and 35% more marketing support than Fox lavished on last year's smash *Independence Day*. With such a price tag, a studio boss gets to hope out loud. "I'd like it to be, at a minimum, the most successful non-Disney animated film," says Fox filmed entertainment chief Bill Mechanic, probably alluding to the $90 million earned at the box office by Warner's 1996 *Space Jam*. "But I really hope it will compete with the best Disney pictures." Best as in biggest: *The Lion King's* $313 million in North America alone, and nearly a $1 billion worldwide.
So do other studio heads, who can be stirred to animation animus when they shiver in the shadow of the cartoon colossus. Paramount is getting into the ring this very same season with *The Ren & Stimpy Moving Picture Talk-O-Rama,* a film based on the animated Nickelodeon hit show *Ren & Stimpy*, a show built on toilet humor and adult references. But it's an extremely popular show even among children, and this is what Paramount and Nickelodeon's owner, Viacom, is clearly wanting "We're rooting for *Anastasia* and *Ren & Stimpy*," says Bob Daly, Warner Bros. and Warner Music Group chairman and co-CEO. "It would be great for the entire industry if a non-Disney animated film, if not both, became a real hit."
It would also exact a little revenge on Disney, which is countering *Anastasia* and *Ren & Stimpy*, not with an animated offering, but the kid-oriented live action Robin Williams comedy *Flubber*. "Disney is throwing the kitchen sink against *Anastasia*," says Daly. "They're putting a lot on that particular movie, doing everything to kill it. And I guess if you were in their shoes you'd do the same thing." One of the men in those shoes, Disney motion pictures group chairman Richard Cook, deems it business as usual. Disney has tried-and succeeded in-undercutting most of its rivals' big animated films. "Are we going to make it easy for them?" he asks. "No. Are we going to compete? You bet! And what will be, will be."
Daly also sees a proprietary arrogance in Disney's CEO and chairman. "Michael Eisner never tried to warn us off, but obviously he tried to make our life miserable," Daly says. "He thinks animation is Disney's birthright and that nobody has the right to be in animation but them."
Birthright? Well, yes. For 60 years, since its release of the cinema's first cartoon feature, *Snow White and the Seven Dwarfs*, Disney has been the brand name for animation. Its chief rivals in the '40s and '50s, Warner Bros. and MGM, which were besting Disney in the quality and appeal of their animated shorts, never produced a feature-length cartoon. Only in the mid-'80s, when the studio taken over by Eisner and Jeffrey Katzenberg had yet to hint at a renaissance, did Disney lose its animation preeminence. *An American Tail*, produced in 1986 by Steven Spielberg's Amblin Entertainment, took in $47 million at the North American box office, equal to the grosses of both the previous Disney effort, *The Black Cauldron*, and its follower, *The Great Mouse Detective.*
Under Katzenberg, Disney animation flourished with a new visual and musical verve. Nearly every film, from *Oliver & Company* (1988) to *The Lion King* (1994), outgrossed its predecessor by 40% to 50%. *The Lion King*, which Daly calls "the Star Wars of animation," earned about the same in domestic theaters as *Forrest Gump* did the same year. But that's chump change for animation. Toss in the video market, the merchandise and CD sales, and *The Lion King* has so far generated an estimated $1 billion-in pure profits.
Video is animation's private bank. Of the all-time leaders in video sales, the top three (*The Lion King, Snow White, Aladdin*) and 13 of the top 20 are Disney cartoons. "Disney's animated machine remains the most lucrative business in the filmed entertainment mix," noted a Smith Barney report, *Filmed Entertainment: It's a Small World*, issued in July, "and virtually no live action film can replicate the profit potential of this venue." The figures that movie moguls dream of have dollar signs in front, and Disney's were enough to goad any showman into finding his inner children's market. It was time for Disney rivals to wake up and smell the cash flow.
Is animation a market that will always expand? Or was the Simba spectacular the apogee of a trend? Or a glorious fluke? Disney's last three fully animated films to hit theaters-*Pocahontas, The Hunchback of Notre Dame* and *Hercules*, all released after Katzenberg's rancorous departure from Disney and his startup of DreamWorks-have earned together just a bit more than *The Lion King*.
You needn't cry for Eisner. *Hunchback*, his personal favorite as a passionate work of cartoon artistry, added $500 million more to Disney's bottom line. And all three movies did quite well in making money. But you are free to wonder whether studios without the mouse-ears logo can count on customers that even Disney is on the verge of potentially losing, if growth continues to slow and potentially even reverse.
DreamWorks is too committed to wonder, too busy to worry, because it's coming out of the gate with three films in the animated category. In the late summer, DreamWorks' debut film, *Shrek*, will drop. Described as a deconstructive tongue-in-cheek jab at Disney's oeuvre, the film stars Chris Farley as the titular character, an ogre that goes on a quest to rescue Princess Fiona (Janeane Garofalo) alongside his reluctant companion, a talkative (slightly annoying) donkey (Eddie Murphy), and keep her out of the clutches of the loathsome and tyrannical (and diminuitive)Lord Farquaad (John Lithgow),who is also very clearly a not-so-veiled takedown of Eisner. Next November the company will release *The Prince of Egypt*, the Moses musical that DreamWorks insiders have drolly tagged *The Zion King*. To build early support for his chancy project, which has no merchandising tie-ins, Katzenberg has shown clips to religious leaders, from eminent rabbis to rabid Evangelicals like Jerry Falwell and Donald Wildmon. The real test, though, is to make *The Prince of Egypt* not like Sunday school but powerful and fun. "If you're a disbeliever," says a crew member, "you can see it as a fairy tale." DreamWorks then moves from the mountain to the anthill for a computerized comedy, *Antz*, with the voices of many Hollywood familiars (Woody, Meryl, Sharon, Sly).
Warner, which saw the part-animated Michael Jordan jape *Space Jam* earn $350 million in world theatrical release and merchandising, is preparing a fully animated feature, *The Quest for Camelot*, an Arthurian romance about a girl's search for Excalibur. The film, with songs by hitmakers David Foster and Carole Bayer Sager (at home she is Mrs. Robert Daly), has had a troubled history: it lost its director and two lead animators, and its release was bumped from this holiday season to next May. The Warner team's next project: *The Iron Giant*, from Ted Hughes' novel about a boy's friendship with a mysterious metal machine, that happens to have as executive producer none other than Pete Townshend, the mercurial and destructive guitarist of The Who. (There is no choogling, windmilling guitar-driven rock score for the film, though.)
Since 1990, Warner Bros. and Spielberg's Amblin have collaborated on the small-screen *Tiny Toon Adventures*. Ah, TV, where the real money is, and where Paramount went for its 1996 hit, *Beavis and Butt-head Do America*, which grossed (heh heh, he said "grossed") a robust $63 million. Hence why *Ren & Stimpy* is its target for this year, and says it is the best choice to do so, especially to do battle with Fox and Disney. (Next up for Paramount: a *Rugrats* feature.) "A movie can't compare financially with a successful series like *The Simpsons* on TV," says Fox's Mechanic. Says Peter Chernin, president of Fox's parent News Corporation: "We should have done a *Simpsons* movie five years ago." Simpsons creator Matt Groening and his colleagues toyed with expanding a 1993 episode, "Kamp Krusty," before deciding no. "But," notes Chernin, "we also wanted to start a traditional cel animation division and thought *Anastasia* was a compelling property to begin with."
Based on a true-life fable that was the source for Fox's 1956 film with Ingrid Bergman and Yul Brynner, the new *Anastasia* leaps from factoid to fantasy and turns pre-Leninist Russia into a fairy-tale realm. "We lived in an enchanted world," says the Czar's mother Marie (voiced by Angela Lansbury) of a land that festered with hot heads and empty bellies. The film then pins the whole Revolution on the monk Rasputin (Christopher Lloyd). Furious at being ejected from the Czar's court, he vows revenge, unleashes the forces of revolt, dies and returns, madder than ever, to chase down Anya. "We invented a lot of Rasputin's story," acknowledges Mechanic. "But parents and teachers who have seen the film feel this is a piece of history kids don't really know about, and it gets them interested in it." Right-so they can learn that it's all lies.
Well, Quasimodo wasn't alive at the end of Victor Hugo's *Hunchback*, and Pocahontas wasn't all that much of a babe (let alone probably never rescued John Smith from execution or had any romantic relationship with him), and DNA tests proved that the woman widely believed to be Anastasia was not. But animated movies aren't built for lectures; they are supposed to move, and move people. *Anastasia* comes close to doing that with its coming-of-age tale of the orphan who could be a princess.
Ten years after the Rasputinolution, Anya (Meg Ryan) is 18 and alone. She meets Dimitri (John Cusack), a onetime palace servant with a 10 million-ruble scheme: to take a suitable young woman to Paris, persuade Marie that the girl is Anastasia and pocket the reward money. The usual complications ensue-boy hates girl, boy loves girl, girl keeps tripping annoyingly over scarf, dead monk tries to kill girl-accompanied by lilting melodies.
The extensive rotoscoping (using live action scenes as the basis for the artists' sketches) lends a stiffness to some of the animation; kids may well complain, "Too many humans!" But there are lovely memory and nightmare scenes that help create a wistful, trystful, tristeful mood. These are lovers who, to win a heart, must renounce their dreams. If there are any lovelorn six-year-olds out there, this is the movie for them.
There probably aren't, so what is *Anastasia's* target audience? "We wanted our story to appeal to adults," says Mechanic, "particularly women who are most likely to take their kids to the movies." To keep Bluth from wandering too far into his trademark whimsy, the Fox creative brass kept tight reins on script and character development. They also insisted that he and Goldman give up their old-fashioned Rostrum camera and use Silicon Graphics computers in the studio Fox built for them in Phoenix. Says Goldman: "They pulled Don and me into the 21st century, kicking and screaming."
The storytelling technique, though, is pure 20th century-1937, to be exact, when a young woman, surrounded by funny dwarfs, faced up to an evil sorcerer, cheated death and found her royal destiny. Snow White was a family film, but so were most movies, and it was a musical when perhaps a third of all films had songs. Now there's only a niche family market and virtually no other films are musicals, but the format is unaltered. That was then, and *this* is then too.
In the time of the niche market, it's both presumptuous and enthralling for animators to try making a movie that touches everyone. That is the glory and the limitation of the Disney-style cartoon. "I'd like animated features to venture into adult territory," says John Canemaker, a leading historian of the form. "Why not do an animated *Sweeney Todd*? Or head in a totally different direction? Very few animated features have tried something original and unique, often with mixed results: the 1954 version of *Animal Farm*, The Beatles' *Yellow Submarine*, the X-rated *Fritz the Cat*. But most studios will probably try emulating Disney's success."
Paramount isn't doing that, at least not yet. *The Ren & Stimpy Moving Picture Talk-O-Rama* is, in many ways, an extended episode of the show, which certainly sneers at accepted children's entertainment conventions. In some ways, this is a deliberate thumb in the eye to everyone, but none more so than Disney, for having effectively created the norms that show creator and film writer and director John Kricfalusi wants to smash. That approach may not make converts out of the Disney audience, but at least it's novel. Something far more than can be said for their other competitors.
Even if Disney is able to crush the insurrection, the company has already paid-in the defection of some animators and in the hyped prices it paid to retain its top talent. About time too, since animation directors were the only industry auteurs denied the Hollywood grail of profit sharing. A few animators are millionaires now, and frantic studios are wooing youngsters right out of art school with investment banker salaries. "It's sure a novelty to have rich animators," says Jones, with the rueful laugh of a '40s ballplayer discussing today's $7 million infielders.
If the challenge to Disney is at all successful, it will at least mean a few more reliable multiplex babysitters a year for parents who fret about the lack of decent movies for their kids. It could mean more: a revitalizing of a beguiling film art that, for all the fine recent work from Disney, is in a state of genial stasis. But for that rainbow ending, animators will have to forget about beating Disney and start with an open mind, a sharp pencil and a blank sheet of paper. Is it too much to hope that someday the prince won't come or the princess won't go to Paris? Or that doing such a tactic doesn't require full-throated, nasty mockery and potentially alienating the audiences?

**"The Entertainment Glut," by Elizabeth Lesly Stevens and Ronald Grover, *BusinessWeek*, February 16, 1998**
*As entertainment companies spend more on content, the audience is fragmenting. What will it take to win?*
This is how it's supposed to work: The Walt Disney Company made *The Lion King* for $55 million in 1994. The animated movie took in $313 million in U.S. theaters and $454 million abroad, sold $520 million worth of videos, and was a main attraction on cable's Disney Channel. Fans spent $3 billion on *Lion King* merchandise. The Disney-produced soundtrack sold 11 million copies, and Disney used the film again in September 1996, to boost the ratings of its ABC network.
And *The Lion King* is still roaring. In November, the Broadway musical debuted in a new Disney-run theater in Times Square. Within days, tickets with a face value of $70 were being scalped for $1000 each, and Disney is toying with the idea of staging additional productions to meet the overwhelming demand.
Home runs like that have made entertainment an enormously alluring business. The formula for success is straightforward enough: Produce something for a fixed cost and exploit the hell out of it, selling it over and over in different markets, venues, and formats. And if enough people see it, the property becomes a cultural touchstone that can continue to draw in revenue for decades. Just look at old movies such as *Casablanca* and *Star Wars*, TV shows such as *I Love Lucy*, books such as *Gone with the Wind*, or records such as Fleetwood Mac's *Rumours*, which continue to sell well and attract new audiences long after they were created. By now, those sales are almost pure profit.
CROWDS OF GIANTS.
But something is happening to alter, and perhaps destroy, this neat paradigm. In recent years, in an effort to capture ever more revenue, entertainment and media giants have bulked up with new divisions-new record labels, new movie studios, new broadcast and cable networks, new theme parks, new online ventures. Sectors of the business once ruled by just a few big players are now crowded with perhaps a dozen or more major entities hustling to create content that will win audiences.
And they're spending huge sums to do so, believing that only the glitziest and most star-studded offerings stand a chance of drawing more than fleeting notice in this cacophonous environment. It's a brutal battle, especially as audiences fragment amid the flurry of competing choices. Notes Booz Allen & Hamilton Inc. media consultant Michael Wolf: ''There is such a tremendous glut of product out there, as well as this need to keep spending more and more to exceed the quality standards established by other producers.''
This dynamic-spending more on content as audiences splinter-is weakening margins across all segments of an industry never known for particularly fat profits. Disney, for instance, had operating margins of 25% in 1987, compared with 22% last year. That's certainly the best compared to Disney's competitors. Viacom Inc.'s 1987 operating margin was 13%, but is down to less than half that. It's the same story at both News Corporation and Time Warner Inc. ''These companies are in a race between the slower growth of their profits and their ability to restructure their balance sheets'' to weather the tougher competitive climate, says Cowen & Co. media analyst Harold L. Vogel. Consumer spending on entertainment is slowing, he adds, ''and the cost of marketing continues to soar, because that's the only way these giant brands can be maintained. It's a very tenuous situation.''
Indeed, fragmenting audiences are robbing entertainment companies of the mass scale that made their businesses so attractive in the first place. It's extremely difficult to amortize higher costs over fewer customers. Says Universal Studios Inc. Chairman Frank J. Biondi: ''If there's a way to have too many choices, that's what we have. Finding a way to bring [the consumer] to us instead of the other guy is the toughest thing we do.''
Here's a hint of the competitive frenzy of just the past few months. PolyGram, the music giant, has launched a major film studio. Fox, Tele-Communications, Cablevision Systems, and NBC pooled resources to create Fox Sports Net, which competes with Disney's ESPN. ESPN is starting a magazine to compete with Time Warner's *Sports Illustrated*. *Sports Illustrated* teamed with sister Time Warner unit CNN to launch CNN/SI, another challenger to ESPN. New studio DreamWorks SKG is busy making movies, TV shows, music, and elaborate video arcades. NBC and Time Warner are mulling the launch of a new football league. Universal and Disney are both spending billions to build new theme parks to compete with their own existing parks in Orlando. Fox and NBC each launched all-news cable channels to take on CNN. Universal and Disney acquired record labels to buttress their music divisions. Fox, DreamWorks, Warner Bros., and Paramount are spending hundreds of millions of dollars to challenge Disney's long dominion over animated films.
And all the while, a potentially limitless number of websites, some developed at great expense by these and other companies, are also claiming eyeballs, further fragmenting audiences. Sighs Biondi: ''You come into the office each morning, and you dread looking at the latest figures.''
Even broadcast television, so long the lucrative playground of a few elite players, is splintering. There are now six networks, and there soon will be eight, as former Fox chief Barry Diller and infomercial king Bud Paxson each launch new broadcast networks this year. ''These are the inevitable problems when a business has achieved a certain level of success and lots more entrants want to get in,'' says NBC CEO Robert C. Wright.
And if consumers aren't already overwhelmed, just wait a few years: A News Corp. study estimates that the total number of options available to a TV viewer will grow from about 75 now (largely made up of the average number of cable channels) to 1000 by 2010, when digital compression of TV signals makes room for hundreds of channels, and the linkage of TVs to the Internet becomes a reality.
But already, the problem isn't just that fewer people are watching each channel. With more bidders in the game, programming costs are skyrocketing. In January, stung by the loss of *Seinfeld*, NBC agreed to pay nearly $900 million to renew No. 1-rated *ER* for three years. That's a tenfold increase in the show's cost-taking a big chunk out of the network's future profits, which were about $500 million last year. And NBC is run by the most fiscally conservative executives in the industry.
It's even harder to see how the other networks, all of which are only thinly profitable or losing money, can justify the combined $17.6 billion they recently agreed to pay for eight years of football rights. Although football ratings have fallen in recent years, CBS, Fox, and ABC will now pay a combined $745 million more each year for football (excluding ESPN's cable deal), while the three networks' combined income from network operations last year was just $32 million, estimates Montgomery Securities analyst John Tinker. ''This is going to set off wide reverberations in a lot of areas,'' says Tinker, as the networks look to advertisers, affiliates, and their own employees to make up the difference.
So far, consumers have been willing to pay more for the explosion of choices, but the growth in that spending is tapering off, even in the current flush economy. Tele-Communications Inc., for example, faced with sharp increases in the rates it must pay cable networks such as ESPN, saw an alarming number of customer cancellations when it pushed through a 7.5% rate hike last year. Now, TCI President Leo J. Hindery, Jr. is trying to get the entire industry to hold off on sizable increases. But it's hard going. Programming networks are ''paying more for movies, for shows, for sports rights, and they all want me to pay more to carry their stations,'' grouses Hindery. TCI's rate increases just barely cover its higher programming costs, he says. ''We're not getting any richer off those increases, I know that.''
What will it take to survive, or even flourish, in this new, tougher world? Entertainment executives, long a corporate species apart, are finally adopting some of the basic tactics used by the rest of Corporate America. The savviest are already engaged in more rigorous cost-cutting, layoffs, more sophisticated market research, and the formation of strategic joint ventures to breathe life into weak assets. To avoid risk and boost the appearance of returns, they are taking on partners and using off-balance-sheet financing to make profits look stronger.
Some on Wall Street, weary of bankrolling media executives' excesses, are beginning to evaluate these companies by their ability to generate free cash flow or net profits, rather than just by their earnings before interest, taxes, depreciation, and amortization (EBITDA). Reporting in EBITDA drew attention away from how outright unprofitable many of these companies have been for years. Time Warner, for example, has posted a net loss for 28 of the past 31 quarters, and Viacom has done so for 13 quarters over the same period. The practice of reporting in EBITDA also perversely encouraged some to disregard what they spent to acquire assets since those costs weren't subtracted from any revenues generated. Running companies on EBITDA, acknowledges one top industry executive, ''encouraged people to spend too much money and not take into account how much money it took to invest to get earnings.''
Entertainment giants are also trying to cut out the middlemen between their products and customers. And they're spending lavishly on individual properties, such as current blockbuster *Titanic* and bombs such as *The Postman*, that they believe are capable of breaking through the clutter. At the same time, they are trying, with varying levels of success, to stop producing modestly budgeted fare that gets lost in the crush.
TITANIC DREAMS.
The endgame for the big companies is to create a product so distinctive or magical that it becomes a cultural icon, a fixture in the public's imagination. They are all trying to find ways to recreate the mass scale their products enjoyed in the more profitable past. To do that, they're creating new distribution channels that give them the opportunity to capture enough viewers or readers, in the aggregate, to pay for what they have made. That's what NBC, Disney, and Fox are doing when they put an enlarged number of their own shows on their networks' schedules, hoping to reap huge windfalls down the road as those shows are sold into syndication or, in some cases, aired on their cable channels in the U.S. and abroad. *Titanic*, a monster hit for Fox and Paramount that has already led to book tie-ins, a No. 1 soundtrack, and a $30 million sale to NBC for TV rights, appears capable of doing that. And that's what Disney has pulled off so expertly with *The Lion King*, exploiting the property again and again in different venues.
But creating a new, more profitable economic framework for entertainment will demand countless adjustments to the way each sector of the industry does business. To reduce risk in ever more costly ventures, for instance, it's increasingly common for big stars and directors to take smaller paychecks up front in exchange for a percentage of the box office revenue. Big-time author Stephen King recently struck a deal with publisher Simon & Schuster in which the author will take a smaller advance in return for a greater share of any profits. Simon & Schuster may not make as much on a King blockbuster-but it doesn't take on as much financial risk, either.
And though most entertainment companies view their rising talent costs as immutable, some are trying subtle tricks to ease the pain. Big record companies, for example, aren't taking on as many new groups, releasing only a smaller number of records that can be marketed aggressively. ''Fewer acts are being signed,'' says PolyGram music executive Danny Goldberg, formerly of Gold Mountain, the group that manages grunge stalwarts Nirvana. Studios, meanwhile, are trying to sign just one expensive big star per picture, instead of the galaxy of big names piled on in the past. Such tactics dramatically reduced the cost of such recent movies as *Jerry Maguire* and *As Good as It Gets*. And book publishers are cutting back on the number of titles they release. Simon & Schuster's trade division published 650 titles in 1996 but will publish only 550 this year.
But the lion's share of cost-cutting is occurring, literally, behind the scenes. Time Warner, for example, is in the midst of a program to trim $700 million in costs by next year. With only a handful of exceptions, gone is the private car service for employees in Manhattan before 8 PM. Cheaper paper in its annual report is saving the company $200,000 a year.
With everyone else spending so lavishly on content, though, Time Warner isn't taking an ax to its creative costs. Instead, it's pushing hard to find new places to sell its stuff. ''You cannot totally control talent costs,'' says Time Warner Chief Financial Officer Richard Bressler. ''It's a reality of the business we operate in. What it drives us to do, on all the product we make, is maximize all revenue streams.''
Bressler means that Time Warner may lose money as it makes an individual movie, creates a new cable network, or launches a magazine. But the company's ability to deploy its huge assets (26,000 TV programs, 6000 movies, a dozen well-known magazines) over dozens of distribution channels gives it many more opportunities to milk assets for a return.
ASIAN FALLOUT.
Another critical strategic push is to shorten the path between an entertainment company's products and the consumer. Profit margins are too thin to support middlemen. Disney owns its TV network, two additional movie companies (Pixar Animation Studios and Lucasfilm Ltd.) and theme parks, and has a long-term lease on the Broadway theater showing *The Lion King*, so little of that revenue leaks outside the company. When PolyGram's Goldberg predicts with absolute certainty that record sales will boom again, he's anticipating consumers' ability one day to order over the Internet whatever they want from PolyGram's huge library. That would result in huge savings in distribution costs. He also certainly points out that record companies and artists are already launching websites for which people can buy MP3s, or digital files containing audio, of songs and albums for a set price, and CD sales are already being moved to be deemphasized.
Much of this bullishness depends on the development and deployment of new technologies, from the next generation of cable boxes to digital videodisks (DVD). Yet the clutter plaguing entertainment content is also reflected on the hardware side. The players in consumer electronics now include computer companies such as Microsoft and Compaq. But the group has been unable in recent years to agree on technological standards to launch new products that would create fresh revenue streams.
Also troublesome is the slowing of revenue growth from foreign markets. Entertainment executives have been counting on surges in consumer demand in Latin America and Asia to save the day; now, financial turmoil jeopardizes those assumptions. The industry has ''lost all its growth and faces potential receivables problems,'' says Cowen analyst Vogel, if Asian buyers, with their weaker currencies, can't meet their obligations.
But even before the Asian meltdown, establishing beachheads abroad had proved far more difficult than many anticipated. From Asia to Latin America to Europe, consumers are demanding expensive-to-produce localized content that U.S. entertainment giants can hardly claim an edge in providing. That's what made Rupert Murdoch alter plans for his Star satellite service in Asia. It was originally a pan-Asian, English-language service, and it would have been cheap to produce and extraordinarily profitable-if only people had wanted to watch it. Years later, Murdoch is launching separate satellite services with costly local programming for India, the Philippines, Indonesia, China, and Japan.
With new technologies and foreign revenue so elusive, some executives are clearly nervous about how they'll cover rising costs in coming quarters. ''There was always something you could count on'' for fresh revenue, says former Fox Studio chief Strauss Zelnick, now the president of Bertelsmann's U.S. operations. ''In the '80s, there was video, cable, and the foreign markets. Today, there's nothing.''
PLATEAU?
Nor can companies look to U.S. consumers for drastic increases in the time and money they spend on entertainment. As the supply of entertainment and media offerings balloons, consumers' appetites may have hit a plateau. Investment banking and research firm Veronis Suhler & Associates Inc. reports that per capita consumer spending on media and entertainment in 1997 will be about $546. That's up a healthy 49% from 1990, but expenditures will increase by only 19% over the next three years, despite the booming economy. That's not even close to the pace at which costs have been rising.
The time crunch is even more severe. Americans already spend an average of 9 1/2 hours each day watching television, going to movies, renting videos, reading magazines, listening to music, or surfing the Web, according to Veronis Suhler. ''There are just so many hours in the day, and it looks like we've reached the saturation point,'' says President John S. Suhler. ''Now, for every winner, there has to be a loser.''
Already, the explosion in the number of entertainment choices has caused unit sales in several key sectors of the industry to shrink, or for the growth rate to slow markedly . And the scary thing, at least for the moguls in their corner offices, is that this is happening during a period of roaring prosperity in the U.S. Consumers are confident, and a lot of them have plenty of extra cash to spend on nonessentials such as tickets to *Titanic*, subscriptions to HBO, and funny hats at Disneyland.
Along with healthy consumer spending has come a booming ad market, alleviating the pain in many entertainment sectors. Ads are so strong that companies have been able to increase ad revenue even as their audiences shrink. But in ad-revenue gains, too, the networks, at least, may be hitting a limit. The cost of ad time isn't going up; ''the networks are just jamming more spots into each half-hour and hoping the TV audience won't notice,'' says Jon Mandel, the top media buyer at Grey Advertising Inc. In 1986, ABC aired an average of 6 1/2 minutes of ads per hour of primetime. Now, ABC treats viewers to an average of 9 1/2 minutes of ads.
Ironically, ad buyers are still clamoring to buy time on the networks' biggest shows. Their rationale: It's the best gambit amid the clutter. ''A broadcast network is still the only place you can get 30% of the audience in one shot,'' Mandel adds. ''But you have to wonder how much longer it's going to be like that.''
For several years, Wall Street has had doubts, too. The stocks of many big entertainment companies have badly underperformed the otherwise booming market in the past few years, though the shares of several have rallied recently. But the big institutional investors are hanging tight, convinced that the giant entertainment companies will amass the scale to eventually prevail in the years ahead. The payoff may well be years away. ''These companies decided five or six years ago that it was important for them [in the decades ahead] to have much larger distribution and production capabilities to become big global players,'' notes Gordon Crawford, an influential media investor. ''So they larded up their balance sheets. [But] most of these decisions make sense long term, and 20 years down the road, they're going to be all right.''
There will probably be some winnowing before then, as profits continue to be squeezed. Already, a few companies have jettisoned or are considering selling off major divisions, as Disney did with newspapers and Viacom may do with its Blockbuster video rental chain and part of its Simon & Schuster publishing unit. ''Eventually, someone loses enough shareholder money so that management gets thrown out,'' predicts media investor Larry Haverty at State Street Research & Management Co. ''My guess is that we're six to eight years from that happening.''
In the meantime, entertainment moguls are begging investors less philosophical than Crawford to be patient. Even Rupert Murdoch, still very much in expansionist mode, is carefully trimming expectations for News Corp. At his mid-1996 annual meeting, Murdoch promised his shareholders 20% annual earnings growth. He ended up delivering a 30% decline after taking a big publishing-related charge. By the time he addressed shareholders again, in mid-1997, a less exuberant Murdoch promised only ''satisfactory'' financial performance in the year ahead.
''Satisfactory'' is hardly what the entertainment industry has grown used to in recent years. For more than a decade, the world hasn't seemed large enough to contain the industry's potential. Anyone familiar with the success of Disney's *Lion King* knows that entertainment can be one of the sweetest businesses going. The problem is that too many players are at the table, and it's ruining everyone's hand, even if some are doing better than others.

**"The Wonderful World Of Disney.com," by Ronald Grover, *BusinessWeek*, March 2, 1998**
No one loves brand names more than Michael D. Eisner. Whether it's the *Beauty and the Beast* Broadway show that kids drag their parents to or videotapes of the *Star Wars Trilogy* Special Edition or the new ESPN store that lures sports nuts to a shopping mall in Glendale, California, the Disney chairman and CEO has long preached that the best way to draw a crowd is to give them something they'll recognize in a crowd. It should be the same on the Internet.
Certainly, that's the mantra at The Walt Disney Company's online unit, Buena Vista Internet Services. As Web usage, advertising, and E-commerce catch on, so too has Disney's interest in carving out a piece of the Internet pie. Indeed, the company has been in talks to buy the remaining two-thirds it doesn't already own of website owner and designer Starwave Corp., say insiders. Starwave, which operates the popular ESPN SportsZone and Mr. Showbiz sites, would give Disney a key property that would help tie together a collection of two dozen sites aimed at doing what Disney does best-entertainment.
PUSHING POOH GRAMS.
No major media company is more aggressively pushing to cash in on the Web than Disney, whose online expenditures were an estimated $150 million in the last year alone. As many as 25% of Netizens visit at least one of the Disney sites each month, whether to send "Pooh grams" or to look at behind the scenes material from Lucasfilm Ltd. regarding *Star Wars* or to "own" one of the 100,000 or so football, basketball, or baseball teams that compete in ESPN SportsZone's fantasy leagues.
Disney has the combination of technical savvy, brand name, and deep pockets it takes to compete. Working out of a six-floor office building in North Hollywood, many of its 300 artists, writers, and programmers create as much new Web content as any company in the industry. To get the technical expertise it lacked, Disney plunked down an estimated $80 million last April for one-third of Starwave, which was launched by Microsoft Corp. cofounder Paul Allen. "They're aggressive, and they have a lot of resources," says Scott Webb, senior vice president of Viacom Inc.'s Nickelodeon Media Works.
Disney is pulling all its strings to make a profit on its money-losing Net operations. It generates healthy distribution fees from America Online Inc., which features its ABCNEWS. com site. Its sites take in an estimated $25 million a year in ad revenues. And Disney. com sells some $8 million in trinkets. The company also boasts an estimated 70,000 members at $5.95 a month to its 10-month-old Disney's Daily Blast service for kids.
Can Disney's websites keep the rivals at bay? The kiddie sites have heavy competition from the likes of AOL, Warner Bros. and Nickelodeon. Disney's ABCNEWS. com is No. 4 in news so far. And even ESPN, which handily leads all sports sites, faces mounting competition from CNN/SI and CBS's SportsLine. Still, among the media industry's best marketers, Disney has an arsenal of promotional tools that includes its theme parks, movies, TV shows and even its Mighty Ducks hockey team and Anaheim Angels baseball team. For instance, the company slipped promotions for the Daily Blast into 8 million copies of *George of the Jungle* videocassettes, and will soon pitch the service at the Innoventions booth at Epcot Center.
Down the road, the company sees its place in the world of convergence, with ESPN offering online sports statistics for the cable channel or Disney. com offering a quick way to buy products that a kid might see in a movie on ABC's *Wonderful World of Disney*. "The companies that will win on the Internet are those who have the ability to create content, and no one does that better than we do," says Jake Winebaum, Buena Vista's president. But in the hotly competitive Web world, Disney may need some Tinker Bell dust, too.

**"Disney and Fox Iron Out Details of *Star Wars* Prequel Trilogy Distribution Deal," PRNewswire, April 2, 1998**
LOS ANGELES - Peter Chernin, President and COO of News Corporation and Chairman and CEO of the Fox Group, and Walt Disney Studios chair Joe Roth announced today that 20th Century Fox and Disney have entered into a far-reaching agreement with Lucasfilm Ltd. regarding distribution the next three *Star Wars* films, which are prequels to the original *Star Wars* trilogy, as well as tying up loose ends from 20th Century Fox's original distribution of the trilogy. As with the *Star Wars Trilogy* Special Edition, Disney will distribute the films theatrically through their Walt Disney Studios Motion Pictures division. In addition, the American Broadcasting Company has licensed the network broadcasting rights to the first of the new films, tentatively titled "Episode I." However it will then grant further repeat broadcast rights to Turner Network Television (TNT), along with the rights to the original trilogy and the two upcoming sequels to "Episode I." Fox originally had the rights, especially an owning of the original 1977 film in perpetuity, but Fox graciously waived that privilege after Disney's 1996 purchase of Lucasfilm. In addition, Fox is granting Disney and Lucasfilm the rights to use Fox studio lots to film the remaining two installments in the new trilogy.
Peter Chernin stated: "The biggest thrill of any motion picture executive is to touch greatness. At 20th Century Fox, it has been a tremendous joy to have been a part of George Lucas' groundbreaking *Star Wars Trilogy*. It is one of the privileges of my career to be involved, even indirectly, in bringing out the next installments of *Star Wars* to the world."
George Lucas stated: "I will always remain grateful to the work with Fox for the original releases of the original trilogy, and they hold a place in my heart. Even as *Star Wars* continues to expand with its new home at Disney, I hold no bad memories of working with Fox. Peter's gracious terms regarding distribution and allowing Fox lots to film the next two installments pleases me immensely."
The new films are Episodes I, II, and III of the *Star Wars* saga. Episodes IV, V, and VI - *Star Wars: A New Hope*, *The Empire Strikes Back*, and *Return of the Jedi* - were released by Fox in 1977, 1980, and 1983 respectively. In 1997, on the twentieth anniversary of *Star Wars* and one year into the acquisition, Disney released the *Star Wars* *Trilogy* Special Edition to theaters around the world.
Roth stated: "Disney and Lucasfilm created history last year with the successful release of the *Star Wars Trilogy* Special Edition. We not only achieved amazing results but moreover sparked a fervor for the *Star Wars* movies and characters."
Gordon Radley, President of Lucasfilm Ltd., stated: "Choosing the right distribution partner was a critical decision for us. Disney certainly has earned their laurels in that regard. We've enjoyed working very closely with the Walt Disney Studios Motion Pictures and Buena Vista Home Video teams and their talented colleagues on the worldwide theatrical and video releases of the Special Edition."
The original *Star Wars* trilogy told the story of Luke Skywalker, a young farmboy who became a hero in the struggle to overthrow an evil empire and had to confront one of the Empire's staunchest henchmen, his own father, Darth Vader. The new *Star Wars* trilogy will go back in time a full generation to reveal the origins of Darth Vader. In Episode I Darth Vader is a hopeful 9 year old boy named Anakin Skywalker and Obi-Wan Kenobi is a brash young Jedi Knight. This first chapter in the *Star Wars* saga follows Anakin's journey as he pursues his dreams and confronts his deepest fears in the midst of a galaxy in turmoil.
Episode I was shot in Venice, Italy; Tunisia; and Leavesden, England last summer and is currently in postproduction at Skywalker Ranch and Industrial Light & Magic in Marin County, California. The film was directed by George Lucas, written by Lucas and Lawrence Kasdan, produced by Rick McCallum and stars Liam Neeson, Ewan McGregor, Natalie Portman, and Jake Lloyd. Additional cast members include Christopher Lee, Ian McDiarmid, Samuel L. Jackson, Terrence Stamp, and Pernilla August. Episode I is scheduled to be released in the United States in May 1999.
The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise with four business segments: media networks, parks and resorts, studio entertainment and consumer products. Disney is a Dow 30 company.
20th Century Fox is a unit of Fox Filmed Entertainment, a News Corporation Company.
Lucasfilm Ltd., a Disney subsidiary, is one of the leading film and entertainment companies in the world. Lucasfilm Ltd.'s businesses include George Lucas' film and television production and distribution activities as well as the business activities of the THX Group. Lucasfilm's feature films have won 17 Oscars and received 56 Academy Award nominations, and its television projects have won 12 Emmy Awards.

**"Disney Wishes On Starwave," CNNfn website, April 30, 1998**
The Walt Disney Company Thursday exercised its option to purchase Paul Allen's remaining interest in Starwave Corp., extending the company's reach into cyberspace.
Disney acquired a third of the Seattle-based Starwave last year from billionaire investor and Microsoft Corp. cofounder Paul Allen for a reported $80 million. The company designs and runs such websites as ABC , Mr. Showbiz and ESPN SportsZone.
Financial terms of the deal were not disclosed, and officials from both companies were not available for immediate comment.
Starwave will now become part of Buena Vista Internet Group, which is responsible for Disney's Internet initiatives.
Move extends Disney's reach
"The purchase of Starwave gives us the ability to accelerate new product development activities and further expand Disney's portfolio of industry-leading Internet products," said Jake Winebaum, chairman of Buena Vista Internet Group.
"We can now deliver common navigation and services across all of our web sites and leverage a common technology platform. Our advertisers will be able to take advantage of multi-product and network advertising and e-commerce opportunities reaching our unique and rapidly expanding web audience."
As part of Buena Vista Internet Group, Starwave will continue to support the ABCNEWS. com and ESPN SportsZone sites, as well as ABC, *Star Wars*, Mr. Showbiz, CelebSite, Wall of Sound and the official websites for the NFL, NBA, NASCAR Online, WNBA and *Outside* magazine.
Disney said Starwave's Seattle office will serve as the core technology developer for the Buena Vista Internet Group.
Starwave's Mike Slade will become president of Buena Vista Internet Group, Patrick Naughton will become the company's chief technology officer and Tom Phillips will run the ESPN sports group.
Shares of Disney finished up 11/16 at 155 9/16 at Thursday's close.

**"As Gay As It Gets," by Jess Cagle and Joe Flint, *Entertainment Weekly*, May 8, 1998**
*Primetime crusader Ellen DeGeneres led TV into a new era. But at what cost to her show–and to her?*
*"What is normal?... Before* The Beverly Hillbillies *people used to think it was weird to eat dinner off a pool table. And now we know better."*
‑Ellen Morgan, February 11, 1998
She had a sinking feeling that the show would be canceled. And so before she left the building on March 11, before she walked off Disney's soundstage No. 7 for what would almost certainly be the last time, Ellen DeGeneres wanted to say a few words. She had said so much in the last year, first by shouting "Yep, I'm gay", on the cover of *Time* magazine, then, more recently, by publicly pummeling ABC executives, whom she believed had abandoned her show and betrayed her by slapping a parental advisory on it. Last month, however, she spoke quietly. "Is everybody here?" she asked crowd. *Ellen's* Jeremy Piven and Joely Fisher were standing close by, as were the show's crew, her mother, and *Ellen's* creative team. "I can't thank you all enough," she said, her voice breaking. "You've all been part of this very controversial show, and I'm sure you get a lot of s‑‑‑ from a lot of people... The fact that you've supported me through all of this means a whole lot to me. It's been a wonderful run."
It was a terribly sad moment ‑ some of the crew began crying, as did her mother, and DeGeneres was in tears by the time she had finished speaking. But it was also a very *Ellen* moment. For through it all, she was dolled up like Lucy Ricardo, in a peasant dress with an oversize pregnancy pouch underneath. And she was standing in a giant vat full of coffee beans, having just taped a segment of this season's star-cameo‑packed, hourlong *Ellen* finale airing May 13. At any other time, the sight of her climbing out of the vat might have provoked laughs. This time the crew simply applauded respectfully.
Shooting a documentary for Britain's Channel Four called *The Real Ellen Story*, codirectors Randy Barbato and Fenton Bailey followed her to the soundstage door. There they hung back and watched as Ellen DeGeneres disappeared into a shaft of afternoon light.
Thus *Ellen* ended as inauspiciously as it began five seasons ago, just one year after it made history and a few short months after DeGeneres was hailed as EW's 1997 Entertainer of the Year. On April 30 of last year, 36.2 million viewers watched its lead character, Ellen Morgan, not only come out of the closet but become the first leading gay primetime character ever, and a test case for the nation's tolerance. Denounced on the right (Jerry Falwell infamously dubbed her "Ellen DeGenerate"), embraced by the Left, and hyped to the heavens, *Ellen* also became the network's great lavender hope‑‑a show that could give it a dose of hip and turbocharge it to permanent ratings dominance.
Of course, that never happened. There were the diminishing ratings this season (the show averaged just 12.4 million viewers) despite ABC's own impressive performance, and the ever‑widening rift between DeGeneres and ABC. Though ABC promised to bring *Ellen* back after replacing it midseason with *Two Guys, a Girl and a Pizza Place*, it recently yanked the last two half‑hour episodes. (*Two Guys*, a critical dud with its own falling ratings, will stay on until *Ellen's* finale airs.) Finally, on April 23, ABC made it official: *Ellen* was no more.
Says Stuart Bloomberg, the chairman of ABC Entertainment, speaking for the first time about the *Ellen* problem: "We put the show on and truly supported it in the midst of tremendous pressure, because it was funny. But as the show became more politicized and issue oriented, it became less funny and the audience noticed."
Says DeGeneres, "I was fired basically because I'm gay."
And that, in a nutshell, is both sides of the story. What follows, with apologies to Paul Harvey, is the rest of the story.
Ellen DeGeneres, 40, and her lover of one year, actress Anne Heche, 28, hold hands even at home ‑ a newly acquired Spanish Gothic house in L.A.'s Hancock Park, an expensively unassuming *Leave It to Beaver‑*esque enclave. With their respective packs of Marlboro Lights, they sit on the patio for an interview and face the inevitable question:
Anne, is there any truth to the rumor that you slept with Vince Vaughn (*Swingers*) and dumped Ellen for him?
"Actually, everybody got that wrong," Heche says. "It was Ellen who slept with Vince. I got upset and came back to kill her."
Ellen: "And now I'm dead."
Anne: "That's it. Being married to a dead person, it's cool, it's different. We've already done the gay thing."
Anne eventually retreats to their upstairs bedroom to read some scripts that have been sent her way ‑ though not as many as one might expect. Heche's next film is this summer's *Six Days, Seven Nights*, in which she costars with Harrison Ford, and Hollywood is waiting to see if audiences will buy her as a heterosexual romantic lead.
"Over the summer I got more comfortable with who I was. I got a sense of pride for the first time in my life."
Ellen stays on the patio, talks for a few minutes about spirituality, and acknowledges that a number of people would be surprised that a gay person would talk to God every morning, as she says she does. Has she been hurt by the attacks from the Right? Not really. "If that was my only opposition," she says, "then that would be okay." The other opposition? Some members of the gay community who've been critical of her. 'We know you're a lesbian," said Elton John in *New York* magazine last year. "Shut up. Just be funny!" Even Chastity Bono\*, the spokesperson for the Gay & Lesbian Alliance Against Defamation, was quoted as saying Ellen was "too gay."
"I called her as soon as I heard that," says DeGeneres. "I said, 'What's up? What're you doing?'" She says Bono apologized and told her the comments were taken out of context. "I believe her," says DeGeneres, who's quick to add, "I think that you have to be really careful, though, if that's your job as a spokesperson, to word things in a way that someone can't misconstrue them."
Ellen's still miffed about the incident, because the allegation that the show became "too gay" irritates her on a deeply personal level. The criticism stems primarily from the Nielsens: In addition to fewer viewers this season, the show retained only 76 percent of the 18‑49‑year‑olds watching its lead‑in, *The Drew Carey Show*. The rap is that many of *Ellen's* gay‑themed storylines ‑Ellen gets a steady girlfriend, Ellen finds a plumber through the gay business directory‑ were stuff that most Americans couldn't relate to. "After a while people get tired of being educated," says Jonathan Stark, a former co-exec producer on the show. "I love watching Ellen as a comic, not a spokesperson."
"This year was magnificently written," says Tracy Newman, another ex-co-exec producer, "but she got heavy-handed. The very thing that made her the right person to do the coming out episode was missing‑the light touch." Indeed, the show fluctuated from merely poignant (Ellen visits her girlfriend in the hospital) to broadly comic (Ellen at a wake in a chicken suit). Another problem: Her supporting cast‑Piven, Fishen, Clea Lewis, and David Anthony Higgins‑were often relegated to deep background. "I was upset at times," concedes Fisher, the only supporting player who agreed to speak for this article, but "it allowed me to do other things."
Yet none of this explains why Ellen‑which could be "heavy‑handed" but was also damn funny‑crashed and burned. And the label "too gay" is too easy. It implies that audiences are turned off by gay subject matter (not according to the box office grosses of *In & Out* and *The Birdcage*), and that successful sitcoms feature characters easier to relate to‑as if we all hang out with monumentally selfish New Yorkers like the ones on *Seinfeld*.
DeGeneres blames the network and its lack of promotional support for this season's dropoff. "They advertised *Spin City, Dharma & Greg, Drew Carey,* and I would get 'followed by *Ellen*,' like anybody's gonna watch that," she says, lighting a cigarette while Trevor, her pet Lab, chases birds by the pool. "I think [ABC] got pressure from all these groups of people, and they collapsed... They basically sabotaged the show." (DeGeneres says that Disney, which owns both her show and ABC, stayed largely neutral during her fights with the network, with the exception of studio chairman Joe Roth, who definitely wanted the show axed.) She also maintains that *The Drew Carey Show*, which aired before her, at 9 PM, didn't fit well as a lead‑in. "I always compared it to having Mariah Carey and Sinéad O'Connor on the same bill," she says.
ABC counters that *Drew Carey* was the best lead‑in available (it's ABC's second‑highest‑rated sitcom after *Home Improvement*), that being an "adult" show meant it had to air at 9 PM or later (diminishing timeslot possibilities), and that *Ellen* was treated like any other sitcom.
Then again, the show *wasn't* any other sitcom. *Ellen* may not have been "too gay," but its star was. According to sociologist Alan Wolfe's acclaimed book *One Nation, After All*, while Americans' general tolerance levels are high "they have not come to accept homosexuality as normal and they intensely dislike bilingualism," he writes.
Luckily for DeGeneres, she speaks English. But the point is, her personal coming out a year ago may well have decided her show's fate. It was a bolder statement than she imagined‑and thoroughly at odds with her awkward, please‑like‑me TV persona, which ABC was counting on to carry the show. "It's hard to say what turned a lot of people off;" she says. "I assumed that people already had some idea that I was gay." Then there were her sweet (to some) but shocking (to many) public displays of affection with Heche, who landed them on front pages simply by putting her arm around Ellen at last year's White House Correspondents Dinner. "That was hard for everybody to digest," DeGeneres says candidly. "They watched me be very public in a relationship, and they'd never seen that before."
As she said in interviews surrounding the coming out episode, DeGeneres' own coming out was selfish. Created by Carol Black, Neal Marlens, and David Rosenthal as *These Friends of Mine* in 1994, her show went up and down in the ratings, changing names once, changing casts more than once, and changing writers and producers a lot more than once. Along the way, DeGeneres hasn't inspired much loyalty in employees: "We all felt underappreciated," says one of last season's staffers, none of whom returned in the fall. "We won her an Emmy [for the coming out episode], and this season she said, 'Now I have my dream writing staff.'"
"We had an amazing writing team last season," says DeGeneres, who explains that the above comment referred "to the show finally having a point of view because Ellen Morgan came out." And, in fact, DeGeneres had no intention of coming back last fall for a fifth season; by exiting the closet, she had hoped to end the series on a high note. "People made a bad deal for me when it started," says DeGeneres, who doesn't own the rights to her show and therefore won't reap big syndication bucks (*Ellen* reruns have been sold to the Lifetime cable network, which Disney partially owns). But Disney offered her a raise, to $175,000 per episode, and ABC Entertainment prez Jamie Tarses supported the unveiling of Ellen Morgan's sex life, albeit with "baby steps."
DeGeneres reluctantly agreed to return, but over the summer she changed radically. Toward the end of last season, she started getting letters, notably from gay teenagers thanking her for her courage; several wrote that they had considered suicide, and she made them feel less alone. "I got more comfortable with who I was," says DeGeneres. "I got a sense of pride for the first time in my life." By the time she returned for the 1997‑98 season, she was thinking less about "baby steps," more about fighting bigotry, in part by showing the world that monogamous gay relationships do exist.
Asked to describe the most significant change in DeGeneres over the last year, Heche says promptly, "She's become an activist." Which is one role ABC‑and, it seems, much of her audience‑never wanted Ellen to play.
Her war with ABC execs Bloomberg, Tarses, network co-president Patricia Fili-Krushel and even their boss, president and Disney president and COO Bob Iger, began with a warning: "This program contains adult content. Parental discretion is advised."
DeGeneres was at home, watching the show, when she first heard the parental advisory. She immediately called for a face‑to‑face meeting with Iger. She said she was "personally insulted" by the disclaimer. She told him about the teens who had written her, about gay bashing, and how the advisory sent a message that "gay people don't deserve equal treatment." DeGeneres says that Iger agreed to take her argument under consideration. In the meantime, he asked Ellen to stop airing her grievances in the press‑a habit that was irking her corporate bosses (she even made the impolitic move of criticizing Michael Eisner, chairman of Disney; DeGeneres complained to *TV Guide* that Eisner hadn't called to congratulate her on the Emmy).
(Iger says the following: "None of what happened to Ellen or the show came from me. I didn't make the decisions, I didn't specifically say that ABC had to drop the show or complained about the show itself. None of that came from me or Michael. Joe (Roth) probably did poke his head in there, but in effect, Disney was hands off, and I delegate much of my ABC duties today. I liked the show, I wanted it to stay. But I am still part of a team, and I have to stand by the team's decisions. If they say there were problems with how it was handling things, then I have to take their word for it. I do hope that Ellen and I can patch things up in the future, as I like her very much and think she's a tremendous woman.")
The next battle began with a kiss. For a show that would air on October 29, 1997, Lisa Darr was cast as Laurie, a single lesbian mother who would become Ellen's recurring love interest. There was some debate on the length of the first kiss between the two, which ultimately ran about two seconds, with the actresses in profile. Tim Doyle, *Ellen's* executive producer, got the go-ahead from Bloomberg to shoot it, but on the night of the show's taping, a representative from ABC's standards and practices department interrupted and insisted that the kiss be shot from another angle. "They just wanted to show the back of my head," recalls DeGeneres. Doyle and DeGeneres won that round, but the net insisted that Laurie's last line be changed: "Especially since you wanna take me like a wild animal" became "especially since I've never dated a wild animal."
"They're not gonna stop," an angry DeGeneres told Doyle. "We have to stand up to them. Any other show would've gotten away with that line. Anybody else."
The advisories kept airing, further infuriating DeGeneres. She kept on ABC suits about promotion until they stopped returning her calls. "Ellen is very thin‑skinned for someone so courageous," says Roth with more than a little disdain. On the other hand, he notes, "there are people at ABC and Disney who have an inherent dislike of the show. That kept them from embracing, creatively, what was a solid show." And he agrees with DeGeneres on something else: "There was no promotion push."
By late last February–just before *Two Guys, a Girl and a Pizza Place* replaced her‑DeGeneres sensed that this season would be her last (Disney did shop the show to other networks, with no takers). She began writing her finale, a sweeping mockumentary about groundbreaking TV with appearances by (among others) Jennifer Aniston, Kathy Najimy, and Woody Harrelson. "It's really cool," says DeGeneres. "The word we got from ABC was 'We don't get it.''' She adds, "I thought that was a compliment."
The final showdown occurred last month at Chasen's, when Bloomberg and Tarses arrived at the show's wrap party and came face‑to‑face with Heche and DeGeneres.
"It's really hard for me to throw my arms around you when you've really hurt me," DeGeneres told them. According to her, she then asked Bloomberg to discuss what had gone wrong with the show.
Bloomberg recalls that he was repeatedly called an "a‑‑hole." He says he finally threw up his hands. "Okay, I'm an a‑‑hole," he said. "I don't want to deal with this here."
Heche snapped back: "That's a copout…I haven't wanted to deal with my wife coming home every night crying."
DeGeneres will try to have the last word on‑of all places‑ABC. On May 6, she'll give her side of the story to *Primetime Live's* Diane Sawyer. ("It's a tricky situation," admits Sawyer, who plans to include counterpoint from an ABC exec or two, "but I like to think knowing both parties helps.") In the end, neither the network nor DeGeneres can claim victory, though both can say they've changed the course of television; NBC is expected to include *Will & Grace*, with a gay lead character, on its fall lineup. But where does Ellen go from here? Says Kevin Huvane, her CAA agent: "All this will cool down, and I think she'll eventually develop another TV show. In fact, Disney/ABC could easily come around to do something with her again in a few years' time, after everything has cooled down." One of her next stops will be NBC's *Mad About You*. She recently shot the May 19 season finale and was asked to appear as the Buchmans' nanny in a recurring role next season. (A *Mad* writer says DeGeneres' script notes were "annoying"; the star herself says she's not sure she wants to return.) She may not need the work, and for the moment is focusing on movies. Her next film, *Goodbye Lover*, opens at the Cannes film festival in May. In June she'll begin shooting *Ed TV*, a Ron Howard comedy, with Matthew McConaughey. She does not play a lesbian in either film.
"If I do it right," says DeGeneres, "I'm gonna have a career that will grow, and I'll look back on this as my infancy stage. I don't believe you have one moment. You have many moments."
Before we send Ellen on her way, let's return for a moment to the show's final taping. After bidding farewell to the crew, DeGeneres says she phoned Heche, who met her at the studio. Later, as they drove off the lot in separate cars, DeGeneres, still misty, turned on the radio in her Porsche. "I Melt With You," the 1983 song by Modern English, cheered her a bit. At a traffic light, she locked eyes with Heche and realized they were both singing along to the same song. So, DeGeneres says, they sang together all the way home.
"I'll stop the world and melt with you/You've seen the difference and it's getting better all the time…"

**"Disney Buys Infoseek Stake," CNNfn website, June 18, 1998**
Keeping its promise to expand its reach into cyberspace, The Walt Disney Company Thursday announced plans to purchase a 43 percent stake in Infoseek Corp.
In exchange for its share in the Web portal company, Disney will give Infoseek its ownership position in Starwave Corp. along with $70 million cash. Disney also said it will purchase warrants giving it the option to obtain a majority share in Infoseek in the future.
Infoseek hopes Disney's brand name and marketing power will give it a much-needed boost in catching up to the leading Web portal sites, while Disney gains an automatic entry into the hottest Internet segment.
"Disney gives us their tremendous promotional power. This allows us to advertise on the Disney properties in an integrated way. They give us the most popular sports site, the fastest-growing news site and integration with other properties," said Harry Motro, Infoseek's president and chief executive officer.
Analysts have estimated Starwave's value at $350 million, so, combined with the $70 million Disney is paying Infoseek, the deal is valued at around $420 million.
Appearing Thursday on *Moneyline* with Lou Dobbs, Motro said "part of the magic here is that the people who are the leaders of Disney and Starwave truly have a vision to be No. 1 on the Internet. This deal is very much focused on what you have to do to be No. 1 in five years or less," he said.
With Infoseek's market capitalization of approximately $1.08 billion, Disney's 43 percent interest is valued at $464.5 million, meaning the entertainment giant struck a pretty good bargain for Infoseek.
Hot market
Disney and Infoseek said they will offer a new Web portal service later this year combining Infoseek, Disney and Starwave content.
Starwave operates such popular sites as ABCNEWS.com, ESPN.com, StarWars.com, and the official websites for the NFL, NBA and NASCAR.
Web portals have been all the rage in the investment community over the last few weeks.
Portal sites act as gateways to the Web, featuring aggregated content and personalized services. The heavy user traffic that flows through a portal site has begun translating into advertising revenue for Internet companies that have struggled to turn a profit.
Because of the guaranteed heavy traffic, traditional media outlets see Web portals as ideal vehicles for expanding their Internet presence.
"We have made great strides as a sports, news and entertainment programmer on the Internet over the past four years. Through our association with Infoseek, we are now well-positioned to take advantage of the Internet as it evolves into commercial maturity," Michael Eisner, chairman and chief executive of The Walt Disney Company, said in a statement.
Such portal companies as Yahoo! Inc. and Excite Inc. have seen their stocks surge in recent weeks, and some of the more established Internet companies have been getting into the act.
Earlier this month, Netscape Communications Corp. announced it was revamping its Netcenter portal, and Microsoft Corp. will launch its own portal, call Microsoft Start, by the end of the year.
Traffic boost
Infoseek is counting on Disney's brand name and marketing prowess to boost traffic on its site, which trails far behind portal leaders Yahoo! and Excite.
According to RelevantKnowledge Inc., a market research firm that tracks Internet usage, Infoseek is the ninth-ranked Web property, averaging 13.5 million unique visitors per day.
That ranks far behind industry leader Yahoo!, which averages 32 million visitors a day. Infoseek also ranks last among the big five Web portal companies (Yahoo!, Netscape, Excite and Lycos are the others).
Adam Schoenfeld, senior analyst at Jupiter Communications, said the deal puts Infoseek back on par with companies such as Yahoo! and Excite.
"Infoseek really needed a big media partner," he said. "That doesn't mean they can throw out the shovel and stop digging, but it gives them parity in the portal market."
Linda Bannister, an analyst at Edward Jones, said the Disney-Infoseek deal amounts to a win-win situation for the companies.
"Infoseek gets a lot out of this deal by aligning themselves with Disney, which has deep pockets and a lot of marketing muscle behind it," she said.
"Disney gets technology from Infoseek that they don't have. They're going to introduce the new portal before the year's end, so Disney doesn't have to start from scratch."
Schoenfeld also pointed out that while Disney could have immediately aligned itself with a powerhouse like Yahoo!, the leaders in the portal market were too expensive to consider.
"It's buy low, sell high," Schoenfeld said. "Infoseek was distressed goods."
Christopher Dixon, an analyst at PaineWebber, said Disney is using the deal to leverage its push even further into cyberspace.
"This is not about Disney buying a portal," Dixon said. "Disney is adding value to Infoseek shares. You see Infoseek is up about $3 already. Now they can use Infoseek stock to go out and acquire other Internet businesses."
Disney to get remaining Starwave shares
Under terms of the deal, Disney will provide, and Infoseek will purchase, $165 million in advertising and promotional support for the new portal site.
Infoseek also will acquire the remaining 3.1 million shares of Starwave not owned by Disney in exchange for Infoseek shares.
Disney will receive 25.8 million shares of Infoseek stock and a minority position - three out of eight seats - on Infoseek's board.
Infoseek said it will take a one-time charge against earnings this year as a result of the agreement.
Last year, Disney bought one-third of Starwave from company founder and Microsoft Corp. cofounder Paul Allen. Disney exercised its option to acquire the rest of the company in April.
Starwave Chairman and Chief Executive Officer Mike Slade said the company had been in talks with Infoseek for the last several months in trying to establish some sort of partnership.
"After Disney and Starwave aligned, Jake [Winebaum, chairman of Disney's Buena Vista Internet Group] and I tried to expand Disney's reach," Slade said. "We talked to a number of companies, but secretly I was rooting for Infoseek."
With the Infoseek deal, Disney becomes the second big media firm in the last nine days to buy a minority stake in a portal site. Last week, General Electric Co.'s NBC division paid $32 million for a minority stake in Internet company CNET Inc. and its Web portal, Snap.
News of the deal sent Infoseek shares rising 5/8 to 35 1/8 Thursday while Disney shares fell 2 5/16 to 143, which is still good news as the company is going into a forthcoming 3-for-1 stock split.
Investor enthusiasm in the deal spread to several other portal companies, as shares of Lycos Inc. closed up 2 1/8 to 61 5/8, Netscape Communications Corp. gained 2 9/16 to 27 15/16 and CNET Inc. rose 2 1/8 to 58 1/8. However, shares of Excite Inc. fell 3 to 73 1/8 and Yahoo was down 2 7/8 at 127 3/4.

**“Don’t Count Out Disney,” by Sam Jaffe, *BusinessWeek*, July 13, 1998**
Just as Steven Spielberg's DreamWorks SKG may be starting to live up to its early hype, that other media giant is not resting on its laurels, and doing its damnedest to remain attractive and strong despite advancing age. If The Walt Disney Company ever had a direct competitor, it would be DreamWorks, which will be producing animated films, live action features, television programming, and running entertainment complexes. But Disney is continuing to show the kind of gumption it always has in the face of the enemy. In fact, it is only continuing to expand quite aggressively.
Disney shareholders have continuing to praise the company to the heavens, as it is now trading at an all-time high of $165 a share. Much of this has been attributed to the leadership of CEO Michael Eisner and his number two, President and COO Robert A. Iger, who also continues to hold his previous job as President and CEO of the ABC network. A string of dazzling acquisitions (ABC, Pixar Animation Studios, Lucasfilm Ltd.) and a massive surge in cash flow, revenue and profit only is lifting it higher.
Not that Disney is immune to bad fortune. Some notable films, like *Krippendorf's Tribe* and *Mr. Magoo*, performed quite badly with critics and moviegoers. But overall, its hold is quite strong and assuring. As executives hoped, this summer's one-two punch of *Mulan*, an animated movie based on a Chinese folk tale, and science-fiction thriller *Armageddon* have added considerable sparkle to Mickey's wand. *Mulan* in particular flourished because of it not veering far from the storylines of Disney’s recent animated hits, despite the Asian meltdown affecting potential box office there.
*Armageddon*, which has been victimized by poor reviews and negative buzz, will premiere over the July 4 weekend. Like Sony's early summer disappointment, *Godzilla*, *Armageddon* will have to rake in spectacular receipts just to break even. "They've already spent $150 million on it, which means they'll have to make that just in the domestic market in order to get out of the hole," says Josephthal & Co. analyst Dennis McAlpine. "That means they will have to make at least $50 million in the opening weekend, which is a daunting task. But audiences particularly loved *The Rock* (the previous film directed by *Armageddon’s*director Michael Bay), so they’ll probably come out in droves to make the movie a hit."
The other part of Disney's programming business, its television subsidiary, is going gangbusters. Except for certain problem children like post-coming out *Ellen*, ABC has gaining ratings and viewers, though not enough to necessarily make it win every sweeps moment or stay at No. 1 among the networks. The Disney Channel has been converted from a premium cable channel to a basic cable channel, and somewhat revamped its programming with new kids’ shows and lots of exciting content, though maintaining a number of holdovers, including maintaining the old version’s fondness for concert broadcasts and documentaries, though output there has still inevitably shrunk from the previous version.
The third leg of Disney's business, theme parks, reported increased revenues in the quarter ended March 31. Theme park revenues rose 3% from the comparable 1997 quarter, to $1.2 billion this year, and it definitely looks stronger than ever. But several analysts worry that the margins there will be squeezed as the company keeps spending heavily on modernizing the parks. As if Disney bosses didn't have enough to worry about, the recent forest fires in Florida have threatened the Orlando region and could hamper traffic to Disney World on the Fourth of July -- one of its busiest weekends of the year.
Disney's biggest problem that could derail its incredible ascent doesn't have to do with acts of nature, though. Rather, it's competition -- and lots of it. If Disney had bought ABC 10 years ago, it would have been considered an outright coup. But it bought the network at a time when there are already six nets instead of three. And thanks to cable TV, the barriers to entry for new contenders are lower than ever. And now, Disney is under assault by DreamWorks, which has structured itself in a similar manner to Disney.
How is Disney responding? By sticking with the tried and true. *Mulan*, for instance, doesn't stray far from the plotlines of any other animated Disney movies of recent vintage. "*Mulan* looks to me like a cross between *Pocahantas* and *Hercules*," says McAlpine. Disney is also betting big on films like Pixar’s *A Bug’s Life* and George Lucas’ first *Star Wars* prequel to really drive foot traffic in and bloom further.
Eisner and Iger certainly have a winning formula, as did Eisner and the late Frank Wells. But whether they can keep cranking it out almost without fail, that’s another question.

**"Hollywood Declares A New World Order Framework," by Elizabeth Lesly and Ronald Grover, *BusinessWeek*, July 20, 1998**
*Tinseltown's top executives redefine "friendly competition" at Sun Valley*
At this year's edition of the Allen & Co. Sun Valley conference in Idaho, all the usual major business and political players were in attendance. Barry Diller, Michael Eisner, Bob and Harvey Weinstein, Rupert Murdoch, Sumner Redstone, John Calley, David Geffen, Dick Parsons, Ted Turner, Robert Shaye, Bill Gates, Steve Jobs, Meg Whitman, Andy Heyward, Haim Saban, George Soros, Tony Blair, Michael Dell, Phil Knight, President Clinton, Alan Greenspan and so on and so forth, and featuring the traditional closing statements from Warren Buffett. But this year's edition of the conference, where big executives and leaders in the entertainment industry, Silicon Valley, Wall Street and geopolitics hobnob with each other, schmooze to lay new relationships and business deals together, and get in a little vacation time with their families over a weekend in July, may be the most consequential one in its history.
Mainly because this year, a lot of executives and studio chairs from all of Hollywood's major studios and TV networks were in attendance together, most notable Michael Eisner's number two man at The Walt Disney Company, COO and President Robert A. Iger, who is also CEO, COO and President of the ABC network. Iger was a man on a mission this year, as he decided to try and get Tinseltown to recognize an important reality: operating margins are shrinking for all of them, as the race to grab a slice of the market for every corner of entertainment is beginning to cannibalize their profits. There is a glut of choices in entertainment, with more than ever, and there will clearly only continue to be more in the years to come, especially as hundreds of new cable TV channels are created and the possibilities of entertainment on the Internet unfold.
"There's no doubt we all need to expand our reach to cover every part of entertainment," Iger said in an address delivered to the rest of the attendees. "But we can't do so without a degree of protection. Just a few years ago, Disney earned over a billion in profit-not revenue, but *profit*-on *The Lion King*, and *Titanic* is now the biggest movie in the world! But that's simply not possible these days. Now everyone's joining the race, in movies, TV, theme parks, books, press, radio, music and the Internet, and it's actually shrinking the pot. Our hands are continually getting weakened, and the slices are getting skinnier. At some point, it could be years or even decades from now, we're basically chasing a disappearing audience using tired formulas if we don't evolve."
The continued uncertainty of the world's markets because of the Asian meltdown and jitters of instability in Russia, Chile and Argentina, as well as the aftereffects of the Mexican peso crisis from earlier, also established Iger's point. "Will those profits come back? Eventually, yes, but it could take years for them to do so. Right now, we're getting hammered, and we need an alternative, we need insurance against a global contagion."
"FRENEMY MINE."
Iger decided to shock attendees by proposing a radical new framework, to redefine the meaning of "friendly competition." It means getting different studios to do profit-sharing and co-distribution deals more often, and to launch combinations that, on the face of it, don't make much sense. While not a strictly new idea (20th Century Fox and Paramount did such a deal for both *Braveheart*and *Titanic*; Universal and Sony have some projects in the offering to do likewise, Universal and Paramount and MGM have the United International Pictures partnership together, Universal distributes Miramax films overseas and vice versa, and Disney's Touchstone Pictures is actually distributing certain Paramount and Universal films overseas and vice versa), Iger wants this framework expanded radically. "The time is coming for us to really think outside of the box. Have Disney and New Line work together, Artisan and Miramax, Miramax and DreamWorks, Universal and Fox, MGM and Disney, MGM and Paramount, and any number of combinations you can think of!"
Iger stated he does not see rivalry and competition going away, and that most films will continue to be distributed by one studio alone. He also admits that the merger/conglomeration era will continue unabated, and continue to leave fewer players around as standalone entities over the decades. "But we have to really push the envelope here and really emphasize the 'friendly' part of 'friendly competition.' A rising tide should lift all boats, help the industry, help all of us, and help all of us compete with each other. Basically making us all see each other as 'frenemy mine' from now on."
Iger says he sees this happening not only in film, but TV and other ventures. "Different studios and networks continue to produce content for competitors, so let's really expand on that more. Speaking from experience, I had to convince Michael (Eisner) not to have Disney do all the programming for new series on ABC, because you don't want to narrow the net that you cast. So let's really make that a big thing." He said, for example, that The Disney Channel, Nickelodeon and Cartoon Network could easily work on producing animated series for each other, among other things.
Most notably, Iger also says licensing agreements should be very open, allowing different conglomerates' IP to be used by another on certain projects: such as making a video game series featuring not only Disney's characters, but open to featuring ones from say, Fox or Universal. "I know this is a way forward for all of us."
BUCKING THE TREND
Another point Iger brought up was regarding trends of what audiences want to experience. "If we continue as we are, one day mainstays like the romantic comedy, the sitcom, and things like that, will no longer have the drawing power they have had for decades. The genres need to evolve, all of them do. If we evolve with our audiences, organically and naturally, we'll be making more hits and thus raking in more profit."
Iger is under no illusions that duds can be avoided completely, that most movies will still fail to make money, that what people will call "brainless product" will still get released regardless, material that is unearthly awful that it fails on every level, or things that make lots of money but get no critical respect because it is merely pandering to the lowest common denominator. "That has happened throughout the industry's history, and it will still happen until the end of time. But we can ensure more bona fide classics that endure are created, and that the opinion of the industry is improving. This will help not only the big league players, but the smaller ones too. The indie and art house scene, the blockbuster and the Oscar contenders all need each other to survive, and let's make them all succeed more."
He also pointed out that all this could improve studios/conglomerates' bargaining power with cinema exhibitors and cable providers. "We can buck the trend of being continually shortchanged and get favorable terms that redress the balance."
Iger's speech actually received a thundering ovation, and already talks of new alliances between industry players are growing. Some old enmities (but not certain others, such as Disney and DreamWorks) are melting already.
TURNING OF THE TIDES?
There is certainly a lot of buzz about the gauntlet Iger has thrown down. In an age where "multiplexing" of television and a continual rollout of channels and the efforts of conglomeration leads to more concentrations of power that paradoxically shrink the pot, having a new framework to evolve with the changing times could conceivably alter the entertainment industry for the better.
"Bob Iger has found the way forward for all the industry," *Los Angeles Times*film critic Kenneth Turan says. "Linking arms like never before will bring the major players to a point where everyone is profitable, and everyone can really do one-upsmanship to a greater extent than before. The best will get even better."
Actor Michael Douglas, who is also a producer, from fare as varied as *One Flew Over the Cuckoo's Nest* and *Face/Off*, is likewise excited. "I always want the industry to continue to evolve and produce impressive works, and I think the future is very secure. We'll also see smarter projects coming out."
Cultural critic Elvis Mitchell is unconvinced. "It's just pandering pablum to make us think things will change. But the pandering will get worse, movies will become worse, indies will die, and the studios will continue to pretend to be art house producers with their 'specialty" divisions. Fool me once..."

**"Disney Completes Miramax Spinoff Process," by Army Archerd, *Variety*, August 27, 1998**
The Walt Disney Company today announced that it has completed its two-year phased spinoff of a majority stake in Miramax Films, a process that it had begun back in June 1996 to help facilitate its purchases of Pixar Animation Studios and Lucasfilm Ltd. and allay potential antitrust concerns.
Miramax, the company founded by Bob and Harvey Weinstein in 1979 and responsible for delivering art house fare to megaplex audiences, was purchased by Disney for $60 million back in 1993. Five years later, 80 percent of the company has gone back to Miramax itself, particularly to the Weinsteins, with Disney maintaining 20 percent and the home video distribution of its films.
"Today is a momentous day," Disney President and COO Bob Iger said. "We've unlocked the potential of Miramax and helped solidify Disney's position with the Pixar and Lucasfilm deals. Those deals signify the start of a very fruitful and creative partnership, and we're impressed by how far we've come. On the other hand, Disney remains proud of its association with Miramax, whose reputation for quality filmmaking is well deserved. Our hats are off to Bob and Harvey for all they have accomplished and the rich library of films they have released to the public."
Disney originally bought Miramax to help boost its production slate and establish itself for more than its usual family-friendly fare, something also achieved through its Touchstone Pictures and Hollywood Pictures imprints. Miramax and its subsidiary Dimension Films are responsible for many of the notable hit films of recent memory such as *Pulp Fiction, Clerks, Chasing Amy, Emma, Heavenly Creatures, Scream, Kids, Desperado, The English Patient* and *Good Will Hunting*. Miramax is set to unveil its latest Oscar contender, the romantic comedy-drama *Shakespeare in Love*, for Christmas.
Disney's Pixar and Lucasfilm deals are also set to bear impressive fruit with the forthcoming release of Pixar's new film *A Bug's Life* and the eagerly awaited *Star Wars: Episode I-The Phantom Menace*.

**"Disney Goes Big For Rock n' Roller Coaster Plans," *Orlando Sentinel*, August 27, 1998**
Walt Disney Imagineering announced that one of its newest and most eagerly anticipated attractions, The Rock n' Roller Coaster, has been officially adopted to be built at a gate from each of its main parks. The attraction, a high-speed coaster attraction that launches the riders from zero to 60 miles an hour to simulate a rush through heavy traffic to a major band's concert (with several inversions and a full loop included), will be launched with a different major band for every version, "to create a truly unique experience for each park."
The first to open, at Disney-MGM Studios in Walt Disney World, will feature Aerosmith, the perennial hard rockers who famously nearly destructed in a haze of booze and drugs in the '70s before coming back roaring stronger than ever in the '80s and '90s and contributed the end credits ballad "I Don't Wanna Miss A Thing" to the Michael Bay action movie *Armageddon*. It will open next spring, becoming the biggest major new attraction since The Twilight Zone Tower of Terror in 1994.
The version at the planned WESTCOT second gate at Disneyland (tentatively scheduled to open in 2002) will feature Nirvana, the iconoclastic grunge band who have found themselves at the vanguard of angsty bands appealing to Generation X. The planned second gate at Disneyland Paris, Walt Disney Studios Park, will open in 2002 with a version based around Australian funk rockers INXS, a band lately more known for the volatile personal life and failed relationships of frontman Michael Hutchence. The band for the version that will open in Tokyo Disneyland has not yet been decided.

**"*Star Wars* To Come to Fox Studios Australia," PRNewswire, November 3, 1998**
SYDNEY, AUSTRALIA - Lucasfilm Ltd. and Fox Studios Australia today announced *Star Wars* Episodes II and III would be made at Fox Studios Australia in Sydney.
The announcement was made at the studios by *Star Wars* director George Lucas, producer Rick McCallum and Fox Studios Australia chief executive Kim Williams.
George Lucas is currently writing Episode II, with shooting scheduled to begin at Fox Studios Australia in 2000.
George Lucas: "Sydney is a wonderful location for the film - it's an exciting city, with a reputation for highly professional and experienced crews and now great production facilities. We're looking forward to bringing *Star Wars* here and working with talented Australians."
Kim Williams: "Lucasfilm is one of the world's preeminent production companies, and the groundbreaking *Star Wars* saga has a firm place in the hearts of moviegoers worldwide. They are magnificent stories told by an unrivalled storyteller - George Lucas. Fox Studios Australia is delighted and privileged to be part of these next chapters of filmmaking history.
Rick McCallum: "We have long been interested in working in Australia with its incredible pool of talent. We now have that opportunity at the wonderful facilities at Fox Studios Australia, and look forward to further developing the already strong relationship we have established with Kim Williams and Fox Studios manager Rod Allan. They have been invaluable in providing support and knowledge, and have been instrumental in our decision to shoot here."
News Ltd. chief executive Lachlan Murdoch: "The next *Star Wars* chapters will introduce a whole new generation of moviegoers to this fantastic saga. To do so from the production base at Fox Studios Australia shows the care and commitment that has been taken through the studios' development."
The announcement comes after more than a year of discussions between Rick McCallum and Fox Studios Australia.
New South Wales will benefit from the hundreds of jobs created by the wide range of advanced skills required to mount a production of this complexity.
*Star Wars: A New Hope* (Episode IV) was released by Fox in 1977. It was followed by *The Empire Strikes Back* (Episode V) in 1980 and *Return of the Jedi* (Episode VI) in 1983.
A Special Edition of the trilogy released by The Walt Disney Company in 1997 marked the 20th anniversary of *Star Wars*. The films were digitally remastered and featured stunning new sequences, and the success of the Special Edition was without precedent in box office history.
*Star Wars: Episode I-The Phantom Menace* was filmed in Venice, Italy; Tunisia; and Leavesden, England last year and is now in postproduction in California. It goes back a full generation to reveal the origins of Darth Vader, and is scheduled for release in the United States on May 21, 1999.
Episodes I, II and III of the *Star Wars* films will be distributed by Disney, as well as through home video distribution.
Lucasfilm Ltd., a Disney subsidiary, is one of the leading film and entertainment companies in the world. Its businesses include George Lucas' film and television production activities, and the activities of the THX Group. Lucasfilm's feature films have won 17 Oscars and received 56 Academy Award nominations. Its television products have won 12 Emmy Awards.
Fox Studios Australia is one of the world's most sophisticated film production facilities, with six soundstages, comprehensive postproduction services and tenants drawn from some of the leading providers in the film and television industry. A 50-50 joint venture between News Corporation and Lend Lease Corporation, it officially opened in 1998 and has already been used for the two largest films made in Australia to date: *Babe: Pig in the City* and *The Matrix.*

 **“Pixar’s Ambassador To The Magic Kingdom,” by Peter Burrows, *BusinessWeek*, November 23, 1998**
For Pixar Animation Studios/Walt Disney Animation Studios creative chief John Lasseter, even commuting in rush-hour traffic can be fun. Whenever possible, he rides with Pixar animator James F. Murphy--from their homes in Sonoma, California, to the offices 55 miles away in Point Richmond--so they can get in the fast-moving carpool lane. They don cheesy toy crowns, blast rock music such as the Beatles' Revolution, and mock solo commuters in the slow lanes with cries of ''Look at you peasants!'' and ''We Rule! We Rule!'' Says a beaming Lasseter: ''We call ourselves the Diamond Kings because of the diamonds painted in the carpool lane.''
It's oh-so Lasseter to conjure a bit of whimsy out of something as mundane as commuting. The 41-year-old overgrown kid, with five sons of his own, is the creative force behind Pixar's 1995 hit *Toy Story* and the upcoming *A Bug's Life*. While animation's creme de la creme used to look down their noses at using computers, Lasseter, with two Academy Awards to his credit, has found magic in technology. Now he's earning $700,000 a year and respect from his colleagues. ''John and his crew have real genius,'' says Chuck Jones, the animation legend who created Bugs Bunny and RoadRunner for Warner Bros. Inc.
What sets Lasseter apart is his ability to come up with imaginative stories and then use computers to create believable, lovable characters. His 1988 Oscar-winning short film *Tin Toy*, for example, was a humorous look at what it's like for a small toy on its first encounter with a baby--a huge drooling monster in the eyes of the toy. That was a breakthrough in animating characters: The baby's face had 20 control points so Lasseter could, for example, raise an eyebrow with the touch of a computer mouse. ''It's easy to get carried away with action rather than acting, but John really makes these computer characters act so the audience knows what they're feeling,'' says Ollie Johnston, a retired Walt Disney Company animator who helped make *Pinocchio, Bambi*, and *Cinderella*.
Lasseter's creativity is matched only by his drive to push the limits of computer animation. Pixar animation supervisor Glenn J. McQueen remembers the first time Lasseter described the climactic scene in *A Bug's Life*, when hundreds of ants are fighting a gang of grasshoppers in a rainstorm. With so many characters moving against an ever-changing background, the scene was sure to be a technical nightmare. ''The blood just drained from our faces,'' says McQueen. Still, Lasseter insisted, and the scene was done--after more than 15 staffers worked four months to produce what became four minutes in the film.
Lasseter is a favorite of the Pixar troops. Credit his infectious enthusiasm, his easily dispensed bear hugs, and openness to others' ideas. Take the voice of Heimlich the caterpillar in *A Bug's Life*. Story artist Jorgen Klubien suggested the blubbery guy have a silly Bavarian accent--sort of like Sergeant Schultz on *Hogan's Heroes*. Writer Joe Ranft then piped up with a rendition. Lasseter not only went with it, but gave the voiceover job to Ranft instead of the actor Disney had lined up.
FAMILY MAN.
How did Lasseter become a heavyweight in Toontown? Born in Whittier, California, outside Los Angeles, the lifelong cartoon junkie decided to become an animator as a freshman in high school after reading a book on the making of *Snow White*. He was a skilled artist from the start, thanks in part to his mother, a high school art teacher for 38 years. Lasseter joined Disney after graduating from the California Institute of the Arts but quickly got disillusioned with its bureaucratic ways. He quit in 1984 and joined Pixar.
Now, 15 years later, Pixar is a new division of Disney after a $2.4 billion acquisition--because of Lasseter. Disney wanted Lasseter's skills so badly that it insisted Pixar sign him to a seven-year contract as creative head of Pixar, second co-president of Walt Disney Animation Studios, and it pays half his salary. ''He's like a member of the family,'' says Disney Studios chief Joe Roth. The Diamond King has arrived.

**"The One That Got Away: With *Doug*, Nickelodeon's Loss May Be Disney's Gain," by Claudia Eller, *Los Angeles Times*, March 9, 1999**
Viacom's hypercompetitive chairman, Sumner Redstone, wasn't happy to learn recently that The Walt Disney Company has an animated movie version of the children's animated TV series *Doug* coming out this month.
It still sticks in the media mogul's craw that Viacom's hip family label, Nickelodeon, dropped the ball three years ago and let Disney get hold of one of its top-rated programs and coveted kids' franchises, one that Nickelodeon continues to rerun incessantly.
The result is sweet vindication of sorts for Disney, whose pockets Nickelodeon had picked for years when it came to children's programming. If the movie is successful, the *Doug* franchise could be worth more than $100 million to Disney.
When Nickelodeon failed to exercise its option to order 13 new episodes of the show after the first 52, Disney snapped up the franchise in early 1996 by making a multimillion-dollar deal with the show's creator, Jim Jinkins, and his partner, David Campbell. The arrangement included buying the partners' New York-based company, Jumbo Pictures, for about $5 million in cash and signing them to five-year contracts, with stock and options, to be Disney executives.
The deal was finalized about seven months after Disney first announced plans to buy Capital Cities/ABC. In its first season, the renamed *Brand Spanking New Doug* series (since called *Disney's Doug* to differentiate it from the original Nickelodeon series) became the cornerstone and highest-rated new program on ABC's Saturday morning lineup. In its second season, it's a key contributor to making the network No. 1 in Saturday morning ratings. Of course, some fans of the Nickelodeon series do not think that highly of the Disney/ABC version, particularly the fact that Doug's original voice actor Billy West, also of *Ren & Stimpy*, did not return to reprise the character, largely due to the salary needed to secure him on Disney's part.
Although Nickelodeon retains the right to distribute the original 52 episodes it financed-which still air on Viacom's United Paramount Network and in syndication and reruns on Nickelodeon-Disney bought the *Doug* trademark and rights to all future products in all media, including publishing and merchandising.
Bill Gross, a former talent agent who is Jumbo's senior vice president and general manager, said Jumbo is building the licensing "really slowly." Disney has active licenses with Mattel for plush toys, with plans for games and puzzles. In addition, negotiations are underway with interactive game companies for "major game publishing," Gross said.
Gross also said that Jumbo has an "aggressive" publishing program with Disney's Buena Vista Publishing Group. In conjunction with *Doug's 1st Movie*-which opens in theaters March 26 for a limited run of two weeks worldwide-there will be a storybook featuring new characters and a 30-minute live stage show at the Disney-MGM Studios theme park in Florida.
Like the TV series, the movie follows the misadventures of a quirky and imaginative 12 1/2-year-old named Doug Funnie and his friends, who face real kid issues as they grow up.
In a phone interview from their production headquarters in New York City, Jinkins and Campbell talked about the origins of *Doug*, how Nickelodeon let the franchise get away and how excited they are to be executive producers of their first movie.
Since he created *Doug* in the mid-1980s, "a lot of miracles have happened," said Jinkins, explaining that the character did not originate as a TV personality but rather was the result of "me doodling and amusing myself in a very, very bad year."
That year-1984-85-his career as a graphic designer and performer "dried up," a relationship failed and he suffered a sports injury.
"This character kept reoccurring-my alter ego-and he wasn't a cute 11 1/2-year-old. . . . There were some very dark things," said Jinkins, who later would base some *Doug* adventures on his own childhood in Richmond, Virginia. Although the series "is not autobiographical, emotionally it's very accurate," he said.
It was Campbell, whom Jinkins met at church when they both moved to New York in 1979, who prompted his friend to transform Doug from doodles and cutouts into a children's book prototype.
"It was a brilliant suggestion of mine that got turned down by all the New York publishing houses," said Campbell, who began his career in theater in New York.
Jinkins, who had worked at Nickelodeon as an on-camera performer and artist on such early shows as *Pinwheel*, set up a meeting with a Nickelodeon executive named Vanessa Coffey to show his book, "Doug Got a New Pair of Shoes."
Before he could even finish his pitch, recalled Jinkins, "she looked at the cover, looked at me and ran out of the room saying, 'Hey, this guy is the real deal. I want to take him to pilot.' "
When Nickelodeon's then-president, Geraldine Laybourne, signed off on *Doug*, Jinkins and Campbell teamed up and formed Jumbo Pictures, with underwriting from the cable channel to produce the series.
The deal called for Jumbo to make 65 episodes, which Nickelodeon would pick up at its option in blocks of 13. The first half an hour aired in August 1991, and while the show was very popular, Jinkins said it was not a "runaway hit that exploded into pop culture" like Nickelodeon's other two animated shows, *Rugrats* and *Ren & Stimpy*.
After delivering 52 *Doug* episodes by 1994, with the expectation that Nickelodeon would order the additional productions, Campbell said, "it came as a real big shock to us that we weren't doing the last 13 shows." The partners said although the reasons given were somewhat vague, they were aware that "the show was expensive, and apparently there was some sort of fiscal freeze on at Nickelodeon." This "fiscal freeze" is apparently the reason why there was a three-year hiatus between new episodes of *Rugrats*.
Nickelodeon had a two-year window when it could reverse its decision. In the interim, Jinkins said, "we scrambled," developing and producing other series, including Nickelodeon's *Allegra's Window* and The Disney Channel's *PB&J Otter*.
The partners said whenever *Doug* generated interest during those two years-and there was "serious interest from ABC" (before Disney's acquisition), they would inform Nickelodeon, with hopes it would step up.
Not long after Disney announced it was buying ABC, Dean Valentine, then head of Disney TV and Disney TV Animation, met with Jinkins and Campbell in New York, then followed it up with a meeting in Los Angeles with the Jumbo partners and Disney chief Michael Eisner.
Valentine, who now works for Viacom's UPN, quipped, "If I knew how my life would turn out, I would have done things differently."
Disney offered the partners "the security of buying our company," said Jinkins, "and Michael Eisner's vision of what he wanted to accomplish for children's animation was in sync with what we wanted."
At a followup lunch with Eisner, Disney Studios chief Joe Roth offhandedly suggested that *Doug*-which was being written as a made-for-video movie-go out as a theatrical feature, but nobody paid much attention.
Then two things happened last Thanksgiving. Paramount/Nickelodeon's animated feature *The Rugrats Movie* opened to great success and went on to gross roughly $100 million in the U.S, building on the success that Paramount/Nickelodeon had had in Thanksgiving 1997 with *The Ren & Stimpy Moving Picture Talk-O-Rama*, and the live action *Good Burger* in summer 1996. And Roth took home a first-cut cassette of *Doug* to watch with his 10-year-old daughter. She loved it.
"We had been racking our brains how to generate more theatrical product out of the Disney line," Roth said. It is also noted that the movie is still predominantly a direct-to-video feature.
"This movie is definitely a direct to video movie first and foremost," Roth said. "Our main focus on the movie's performance is on the home video sales, but I know there is a market for ticket sales at the movie theaters as well, but only for two weeks. But two weeks is enough to make a splash, and it will help ensure as many thousands of screens as possible will agree to show the movie during that period, rather than having less than 2000 screens for a full theatrical release, which this movie does not have strong enough legs for, at least not at this point in the series' history. But it will help ensure and shore up Disney's box office position before the numbers come in for *Inspector Gadget, Tarzan, Toy Story 2* and *Star Wars: The Phantom Menace*."
Although *Doug* may not have the drawing power of *Rugrats*, it has the potential to be very profitable for Disney, given that it cost only $5 million to produce and will probably cost an additional $20 million to $25 million to market.
Disney expects that if the film grosses $40 million domestically and sells 4 million videocassettes, the company could stand to make a profit of $75 million or more, depending on how it performs internationally.
Meanwhile, Disney and Nickelodeon are said to be opening negotiations regarding the future of *Doug*, including having Paramount/Nickelodeon be included as profit participants in future product, sharing of each others' series on the others' networks, securing West to return as the title character, and also giving Jinkins and Campbell a nonexclusive window to let Jumbo and/or any other companies do work for other networks and studios, in addition to their Disney contract and continuing to be Disney executives. Already, Jumbo is working on another animated series for The Disney Channel, which should be ready within two years. Maybe Sumner Redstone will have a reason to be pleased after all.

**Interview with George Lucas on *60 Minutes*, aired on CBS March 28, 1999**
*George Lucas* Star Wars *movies. You've probably wondered, "How did he do that? How did he do all those special effects?" Tonight, we'll take you behind the scenes of the new* Star Wars *film, perhaps the most eagerly anticipated movie ever, to show you how he does it.*
Lucas: Why don't you take this guy, put him right over here? All right, take another one like him and stick him over here.
*In a darkened screening room, George Lucas is using a laser pointer to show the 45 computer animators working on his new* Star Wars *film, the first in 15 years, just how he wants a big battle scene to look.*
Lucas: Keep this guy here, and have him firing, instead of firing off to the right, right over here.
*Everybody here works at Industrial Light & Magic, the special effects firm Lucas created decades ago to create the first* Star Wars. *Computer technology has advanced so much since then, that the digital effects in the new episode are to the original roughly what talkies were to silent pictures.*
Lucas: It's like sketching with a pencil, and suddenly somebody gives you paint, you've got all the colors. And you've always seen what you've been painting in color, but you've never had the color to do it with. So now, finally, I've got color, and I can finally paint the way I was originally seeing things, and I like that.
*So do all the animators at Industrial Light & Magic, ILM. They don't just turn out special effects for Lucas. You name it: the dinosaurs in* Jurassic Park*, the tornadoes in* Twister*, the aliens in* Men In Black*, they all come out of the computers at ILM. Now, with* Star Wars*, Lucas is expecting ILM to set a new standard in "Wow!" The work is so complicated and meticulous that each animator is responsible for two seconds of finished film per week. Twice a week, they show their "blink of an eye" shots to the boss.*
Animator: Now this is the new Darth Maul jumping off.
Lucas: Yeah, that's a lot better, I think that works way better now.
Reporter: And it's before and...
Lucas: Yeah.
Reporter: All the changes and...
Lucas: And I'm approving the changes. Yeah, I love this. This was actually on the desert in 150 degree heat.
Reporter: Now how did you do those animals? Are they camels that you've changed?
Lucas: No, they're all cyberanimals.
*Cyberanimals? Here's a new term. Actually, it's one of the big breakthroughs in the new movie. All kinds of cyber characters completely conjured up from the computer.*
Lucas: That guy's a cyber character, he's not real, the guy that was jumping.
*The way they used to make movies, that guy would've been a stunt double. In Lucas' movies, for certain shots, stunt doubles are just created in the computer. And not just doubles, he has several computer-generated lead characters full of personality, and well, humanity. Look at this early version of a scene shot on location and covered with Lucas' editing notes.*
Watto: Republic credits? Republic credits are no good out here, I need something more real.
*Back at the computer, the guy in the hat gets deleted and replaced with a digital character. Only his voice remains.*
Lucas: It's 95 percent a digital movie. Which means that it's got digital characters or digital sets or something going on. Where most movies, it's 5 to 10 minutes at the most.
Dennis Muren: George just said, "We're going to make a digital backlot movie."
Reporter: Define that, "digital backlot movie."
Muren: We shoot a lot of the scenes with the actors on small sets and a lot of bluescreens behind them, because we're gonna enlarge it, we're gonna do something you can't do any other way. We still do a lot of practical effects and whatnot, they make of a good majority of the effects shots, miniatures and sets and whatnot, and just about every location shot has considerable physical buildings and effects right there by the actors, but the digital backlot is for scenes with a lot of scale, lot of size.
*On the digital backlot, a lightsaber fight can be shot like this, and then made to look like* this.
Lucas: Well, like that shot you saw, of the landing platform. Well, there's a whole scene that takes place on that landing platform. You couldn't build that set, there's just no way you can actually build something like that, because it's in a completely fictitious city, a completely fictitious environment.
*And when it comes to designs?*
Lucas: Basically, it starts down in the library, and then it comes up here, to conceptualize and the art department designs the stuff while I'm writing the screenplay.
*Lucas began writing more than four years ago, with assistance by Lawrence Kasdan, who helped write* The Empire Strikes Back *and* Return of the Jedi, *as well as writing and directing* The Big Chill. *Carrie Fisher, who famously played Princess Leia in the original films and who now has a budding career as a novelist and helping polish scripts for Holywood films, also chipped in, albeit uncredited in her case.*
Lucas: The auteur theory of film actually is very true, if you know directors. Because they are very much like their movies. In the case of somebody who writes and directs, it *is* my life. I mean everything I write is my life, I'm not writing some sort of hypothetical thesis on something. I'm writing a story that I have to get extremely emotionally involved in, because it's gonna take two or three years of my life to do it. So I can't just sort of say, "Oh, this will be fun," and knock it off in a week. I have to, this is like a marriage, you have to be in love with this thing, for at least four or five years, and probably for the rest of your life.
Reporter: How much of the script is by whom?
Lucas: The characters, the plot, the scenes, the structure, it's all me. Larry and Carrie basically are there to polish the dialogue, and move certain events to a different part of the movie if it's needed, but 90 percent of the script is me. I even did the final revisions and rewrites, which I finished two days before shooting began. And this is going to continue with the next two movies, especially the second one, because it's a love story, and I'm not so good at romantic dialogue and things like that.
*As the script was written, initially by Lucas alone, his team of artists, headed by Doug Chiang, started sketching and painting and modeling, working toward the Lucas seal of approval.*
Lucas: I say, "I need a bunch of creatures, give a whole bunch of different creatures." So there's a bunch of artists and they all have sort of a contest. Everybody submits stuff and I say, "I like this, but I like the head of this one and and I want to put it on the body of this one. I like this, I like that, I like these features."
*Special attention was paid to lead characters like this guy, named Jar-Jar Binks, a comic relief.*
Reporter: How did those ears come about?
Doug Chiang: When we originally came up with Jar-Jar, he had like, short dog ears. George thought he would be more funny and have more personality with these big, elephant-like ears.
*Once Lucas approved those ears, the model was sent to ILM, and actually scanned into a computer in 3D. That's when Rob Coleman and his team of animators took over.*
Rob Coleman: The whole technology had to be developed to handle the ears, so that the interaction with the cloth and the ears with his back. So that had to be invented, that wasn't here before. There was just little inklings of it.
Lucas: And clothing, nobody'd ever done real clothing before. Realistic clothing that moves.
Reporter: And he's a major character, so he has to have a real range of expressions and emotions.
Coleman: Oh yes. We have 400 little sliders that we can change everything from cheek puffs to eye blinks to muscle bends, everything that layers in to making this character as believable as the live action characters standing beside him. The bar's at the highest when you have live action right on the screen; the audience is watching Liam Neeson, and they've got Jar-Jar there. And Liam Neeson is real, real, real, real. And we have to come up and make ours as real, because if we don't, the audience will pick up on it immediately and say, "There's something about that's not, I don't believe that."
Reporter: So you're out of the movie.
Lucas: It looks like Roger Rabbit, you can't have it be like Roger Rabbit. For 90 percent of the audience, you have to make it so that they just say, "I don't know how they did it, it just was a real character."
*Some purists worry that Lucas is making his computer characters* too *real.*
Lucas: You know, people come and they say, "Oh this digital stuff, doesn't it make everything look phony? Doesn't that make it, oh, it's not true, it's not real." I say, movies aren't true, it's all fake. The story is fake, the characters are fake, the sets are fake. There is no city there, that's not New York City. If you go behind it, it's a big piece of wood with a painting on it. And all I'm doing is, I'm taking it to the next step. And now I can create digital characters. There wouldn't be any point in creating an actor.
*He says he'll never take the step of making fake humans. He prefers his digitals to be originals, not copies. Just how big of a technical milestone will the new movie be? We went to no less an authority than Steven Spielberg, one of Lucas' best friends and biggest customers.*
Spielberg: He's now not only taken images, but he's taken skies and clouds and backgrounds and atmospheres and light and shadow, and he's painted a world that would be cost-prohibitive to do the old-fashioned way.
Reporter: And it's not cost-prohibitive?
Spielberg: Well, George owns ILM, so I'm not sure what kind of break he's getting from his own company. If I made this movie, it would cost four times what it cost George to make it.
*And it's also because Spielberg's films are bankrolled by Hollywood. Lucas is paying for* Star Wars *entirely on his own, despite having sold his company, Lucasfilm Ltd., to Disney back in 1996. He did not take a single penny from Disney for the budget, so he has an almost unprecedented amount of independence and control.*
Lucas: When I make a movie, I pay attention to how much it costs, but at the same time, I get to do the things that I wanna do without somebody arbitrarily coming to me and saying, "No, you can't do that." You don't need that in the movie.
*That happened to Lucas at the beginning. Studio executives virtually ignored his first full-length film,* THX 1138, *letting it almost die, and cut five minutes from his first hit,* American Graffiti. *That put a bitter taste in his mouth about Hollywood, and it sounded to us that his resentment is as strong as ever, despite having joined forces with Disney to release the new* Star Wars *film and those that will follow.*
Lucas: The problem is the studio executives. The problem is that the studios used to be owned by people that cared about the movies, now they're corporations. They don't love movies, they don't go to movies, they don't know what a movie is. And they do focus groups to try and determine who will go see a movie.
Reporter: And Hollywood does that, all of it?
Lucas: Hollywood does that. And they try to change the story to fit what they think the polling results are, you can't do that, that's not the way you make movies.
Reporter: So why did you hook up with Disney, which is certainly as big a corporation as they come?
Lucas: Lesser of evils, so to speak. Not that they're evil, they're certainly not, but they're the studio I could stomach the most, and that fit me most. Because, and I told Michael Eisner this, I'm not changing the way I work to fit in more in Hollywood. I'm basically using Disney as a strategic partner to release the finished product, and that's it, everything else I'm doing myself, with my team. I have full creative control of the making of the movie, and then I release it to Disney's hands to put in the movie theaters, and later on, home video and then television and cable and so forth.
Reporter: And they agreed to let you do this?
Lucas: They agreed to let me do it, and I'm sure they'll do right in the future, after I'm finished with my story. But I'm being protective with my story first and foremost, to not be driven by focus groups and polling. Because it is not a business, you know? It's an art form.
*An art form Lucas controls completely. While his animators need his approval for every move they make, another group of artists need him to sign off on every sound effect in the movie. Ben Burtt is in charge of all that sound.*
Burtt: Very little of what is done on this film is truly synthesized. We record naturally existing sounds and modify them and process them. I have here my electric shaver and a salad bowl from home. I discovered one if I took the electric shaver and put it in the salad bowl, and move it around, you get an interesting resonance. Kinda like a musical instrument.
Lucas: When we see those big transports come overhead, they had that really weird sound, very disturbing.
Reporter: That's it, that's the salad bowl.
*Today, Burtt is putting sound into a sequence called "the Podrace." Think drag racers in outer space.*
Reporter: How long will you work on a scene, Ben? Like this one, with so many layers?
Burtt: I've been with this scene for three years.
*He has to build it in layers. First the dialogue, then crowd noise, then announcers, then finally all those engines. And Lucas is still trying to make every individual engine sound just the way he wants.*
Burtt: Each one has a separate pulse.
Lucas: Each one has a separate pulse, to show that they don't collide with each other.
*A few weeks later in London, Lucas gets the final layer of sound, as a 100-piece orchestra, an 88-voice choir, and composer John Williams record a rousing score.*
Lucas: I enjoy the music more than anything, because I don't have to do anything, I just let him do it. I said, "I want something very powerful, very uplifting, you know?" And he writes something brilliant.
*The musical score is the only part of the movie over which Lucas does not exercise absolute control.*
Reporter: You're really creating this as you go along, and the movie's coming out in May.
Lucas: Well, if you do it day by day and moment by moment, layer by layer. It's just like watching a painter, you just put on an array of colors, it's not done until it's done, you know? Until you put the final stroke on it.
*He says he won't apply the final stroke until about two weeks before the movie opens. That would be suicidal for most filmmakers, but Lucas has his own digital playground, so he can keep directing that battle scene over and over and over.*
Lucas: And this guy over here doesn't actually have to get killed. He can still be there.

**“The Media Business; Disney Combines a Book Unit With ABC In Reorganization,” by Doreen Carvajal, *The New York Times*, April 9, 1999**
Moving to exploit the synergy of books, entertainment and news, The Walt Disney Company restructured its publishing group yesterday by combining its adult book division, Hyperion, and any potential future imprints under Hyperion, with the ABC network.
With that step, the children's side of the publishing group, Buena Vista Publishing, will change names to become Disney Publishing Worldwide with the aim of increasing the coordination of Disney's publishing efforts in more than 100 countries, according to the company.
Robert S. Miller, who was promoted to managing director of Hyperion, said the company had decided to make Hyperion a unit of ABC to take advantage of the network's research and talent.
''It's a great opportunity for us to tap into a wealth of new writers and research and material and to work with a great group of people,'' said Mr. Miller, who added that Peter Jennings's bestselling book, *The Century*, was a superb example of what they might be able to do. The book, which was published by Doubleday, grew out of the research for a documentary series on the events of the 20th century.
''I'm hoping we'll develop a lot of material out of the wealth of research that's done for the division that never works on the air,'' Mr. Miller said.
He said Hyperion had already published other successful entertainment books such as titles by the television comedians Tim Allen and Drew Carey.
On the international side, Steven Murphy, the newly promoted managing director of Disney Publishing Worldwide, said the company's aim was to increase its global reach.
''We're consolidating under one management by which we can publish across regions globally designed products, books and magazines,'' Mr. Murphy said.

**"Disney And Viacom Reach Unprecedented Cooperative Alliance On *Doug*," by Adam Dawtrey, *Variety*, April 12, 1999**
The Walt Disney Company and Viacom have announced that they have officially sealed a special cooperative alliance regarding the hit animated series *Doug*, which originally aired for four seasons on Nickelodeon before the network suddenly cancelled the series. Disney purchased Jumbo Productions, the company founded by series creator Jim Jinkins, made him and cofounder David Campbell Disney executives with Disney stock and options, and took *Doug*, after a notable revamp, to air during the Saturday morning cartoons lineup on ABC. Just last month, *Doug's 1st Movie*, a direct to video film, was released to strong sales. It also got a limited two-week theatrical run at virtually every multiplex in the world, and the short exclusive run helped spark ticket sales. $70 million in box office and millions of videotapes sold has given Disney a $75 million profit. Jumbo has also been hard at work making programming for The Disney Channel, such as *PB&J Otter*.
Viacom, meanwhile, has had a strong position of its own to negotiate a deal. With movies based on Nickelodeon properties like *Good Burger, Ren & Stimpy*and *Rugrats* and released by Paramount Pictures making a huge box office splash in theaters, Viacom turned its attention back to the hugely popular series that got away from them and into the arms of the House of Mouse.
The new alliance will allow Disney and Viacom to share *Doug* and be equal particpants in the future of the series. The show has been renewed for a final two seasons, which will premiere on ABC, and also notably will feature the return of Billy West, who voiced both titular character Doug Funnie and his nemesis Roger Klotz in the Nickelodeon series, but was replaced in the Disney era due to concerns that he might require an expensive salary after his concurrent voice acting success in *Ren & Stimpy* and the forthcoming series *Futurama* by *Simpsons* creator Matt Groening.
Disney will be allowed to air episodes of the Nickelodeon series on ABC and The Disney Channel, and Nickelodeon will also be allowed to air the Disney series, including the forthcoming new episodes, on its own channel. In addition, an agreement for future movies, both direct to video and theatrical, has been struck. Disney will distribute the movies, but Paramount and Nickelodeon Movies will be allowed to join as profit participants. Jinkins and Jumbo will be made Disney-owned assets and executives for life, but will be allowed to make new series and movies for other networks and studios.
"This is a wonderful day for us, for me, for Jumbo, and for *Doug*," Jinkins said. "We are happy for Nickelodeon to welcome him home, and we're proud to continue our relationship with Disney, which has worked out wonderfully. The success of the movie has enabled this dream to come true. The future of the series and the character is brighter than ever, and the future of Jumbo Productions is also extremely promising, especially in view of the projects to come for Disney and other interested parties."
"Jim Jinkins and Jumbo Productions are amazing creative partners to work with," Disney CEO and Chairman Michael Eisner said. "And to give the teams at Paramount, Nickelodeon and Viacom a place at the table is a great deal. Now Doug Funnie has two loving homes, and we're committed to making them as pleasant and nurturing as possible. And Jim's amazing new series are sure to be great additions in the Disney tradition."
"It is an honor and privilege to reach this unprecedented alliance with The Walt Disney Company," Viacom CEO and Chairman Sumner Redstone said. "The day-to-day life and experiences of Doug Funnie have long been close to my heart, and the hearts of everyone at Nickelodeon. To have our place at the table and continue to be involved in his journey is a proud moment for us all."
"We are proud to rejoin the life of Doug Funnie and to welcome him home," Nickelodeon executive Vanessa Coffey said. "Nickelodeon has always been proud to have him and to marvel at his experiences. Now we are able to share in new adventures to come."

**“Disney Combining Network TV Operations Into One ABC Unit,” by Sallie Hofmeister, *Los Angeles Times*, July 9, 1999**
In a cost-cutting move aimed at streamlining the operations of the world’s second-largest media company, The Walt Disney Company is restructuring its network television operations by combining them into a single unit at ABC.
Walt Disney Television Studio, including Buena Vista Television Productions, will be merged with ABC’s primetime division to form a new unit called Disney-ABC Television Group, and which will also include operations of The Disney Channel and Disney-related programming given to syndication or other outlets.
Stuart Bloomberg, chairman of ABC Entertainment, and Lloyd Braun, chairman of Buena Vista Television, will be co-chairmen of the group, which will be overseen by Patricia Fili-Krushel, co-president of ABC, who is also in charge of other network programming and affiliate relations. Bob Iger remains co-president of ABC in addition to his duties of being Disney COO and president, and has delegated much actual responsibilities at the network to Bloomberg, Braun, Fili-Krushel and ABC Entertainment president Jamie Tarses in order to prevent spreading himself thin between two positions. Strategic advice from former ABC personnel and presidents Brandon Stoddard and Ted Harbert has also helped ensure that much of ABC’s pre-Disney stride has continued.
The move is part of Chief Executive Michael Eisner’s efforts to cut unnecessary costs at Disney and keep up the turbocharged ascent of the company. It is meant to defray soaring program costs at ABC and the fact that it has been switching back and forth between No. 1 and No. 2 on the network standings, due to the vagaries of different programs getting different ratings.
“The aim is to streamline and to get more Disney-owned product on ABC’s air,” Fili-Krushel said. In an effort to contain costs, all of the networks are trying to own more programs on their air to prevent outside suppliers from holding them up for big money in renewal negotiations, as Warner Bros. did with NBC for *ER*. Each network is also still planning to keep outside suppliers very much at arms’ length and keep receiving their product, but that having around 35 to 40 percent of in-house programs is the target that all of them are trying to reach.
Disney currently has seven shows on ABC (though five others have been made and ended in that timeframe for varying reasons), compared with the nine that Fox, the other Hollywood studio that owns a major network, produces in-house.
The Disney structure is the most radical attempt yet to fulfill the promises of “vertical integration” by bringing production and distribution under the same roof. At Fox, primetime scheduling and network production are handled by two autonomous divisions, although speculation continues that they will be brought under one banner.
At ABC, Braun said the two TV groups’ duplicative operations in marketing, public relations, business affairs, promotion, research, casting and legal will be merged, while production and development of programs will be consolidated under the presidency of ABC Entertainment, which currently is Iger and Tarses, but the latter has given signs she may resign shortly. “All the Chinese walls that have existed between the network and the studio have been eliminated,” Braun said.
Braun acknowledged that Disney will probably reduce slightly the supply of programming to other networks, although industry executives were dubious about how receptive rivals would be. He also moved to reassure worries of ABC backsliding away from Disney’s largely superb handling of the network. “We do not plan to monopolize ABC’s airtime with only Disney programs, because that would definitely come back to haunt us. We definitely need to make ABC, and The Disney Channel, have ever more programs, especially in-house, as analysts have hoped for and we’ve always hoped for, because we believe we can be a real force in creating hits that will be syndicated in due time. We’re not going to cut back the budgets for series development as part of the cost-cutting, if anything we’re going to spend more and be freer to do so with these particular cost savings. We will let outside suppliers, studios and companies continue to come to us to put product on ABC’s air, and keep up our own supply to other networks. And we’re not going to be micromanaged by Bob (Iger), Michael (Eisner) or Joe (Roth, Walt Disney Studios chairman) at all, though their advice is always welcomed.”

**"Disney Absorbs Infoseek," CNNfn website, July 12, 1999**
In a widely anticipated move, The Walt Disney Company on Monday agreed to acquire the 58 percent of Web portal Infoseek Corp. it does not already own, marking the latest step in the entertainment giant's efforts to develop a cohesive Internet strategy.
Disney Chief Executive Officer Michael Eisner refused to put a price on the deal at a New York press conference Monday, instead touting the deal's potential.
"We are trying to put together and isolate our Internet activities into GO.com," said Eisner, adding he hoped this would make the company nimble enough to deal with a changing Internet while keeping its operations under the Disney umbrella.
Under the deal, Disney will combine its Walt Disney Internet Group with Infoseek to create a single Internet unit, which will be called GO.com.
Disney currently holds about 42 percent of Infoseek's shares under terms of an agreement reached last June. The two firms jointly operate the GO. com Web portal.
Disney has been searching for a way to develop a winning strategy for its disparate Internet businesses, which include Disney.com, ABCNews.com and ESPN.com. Wall Street had been anticipating the company's move to absorb the rest of Infoseek after Disney confirmed last month that it was in negotiations to do so.
Eisner told CNNfn the deal puts the company in a better position use the Web to provide multimedia content online - such as Disney movies - as high-speed Internet access becomes more prevalent.
Disney's desire to take over the entire GO Network's operations is understandable, according to Barry Parr, Internet analyst at International Data Corp., particularly because it contains so many valuable Web properties.
"It controls the Web brands of ESPN, ABC and Disney, as well as the web brands for Pixar and *Star Wars*," said Parr. "It's not surprising that it would want to own a majority of that company."
Terms of the agreement call for Disney to hold a 72 percent stake in the new GO.com company, which will include Infoseek and the rest of Disney's Internet properties.
Disney will issue a new class of common stock to track the new company's performance, which is expected to trade on the New York Stock Exchange under the ticker symbol GO.
Infoseek shareholders not thrilled
Under terms of the deal, Infoseek holders will receive 1.15 shares of GO.com for each of their shares and will own the 28 percent of the company not owned by Disney.
Judging from the performance of Infoseek's stock Monday morning, the company's shareholders were less than wowed initially by the deal.
Shares of Infoseek fell 4 1/4 to 47 1/2 shortly before 3:30 PM ET, whereas Disney shares rose 3/16 to 156 13/16.
Infoseek President and CEO Harry Motro told CNNfn the stock's fall did not concern him.
"It's very early in the deal process. We feel very comfortable we got very good value for the Infoseek shareholder," Motro said. "The Infoseek shareholder gets to participate not only in the current assets of the Disney Company on the Internet, but the future growth of the Disney enterprise on the Internet."
Disney expects GO. com to operate at a loss for the next few years, said Steve Wadsworth, president of Disney's Walt Disney Internet Group, and said there would be a significant goodwill charge associated with the deal, though he could not specify at this point in which quarter the charge would be taken.
He also noted job cuts due to overlap were a possibility at the combined unit, which would have over 2000 employees.
Catalog to provide e-commerce
Disney plans to contribute 52.5 percent of the assets for Go.com. Those assets include disney.com, ESPN.com, The Disney Store Online and ABC.com, as well as new Web initiatives in development. Also part of the package is Disney's portion of the 10-year joint ventures it currently shares with Infoseek, including ABC News Internet Ventures and ESPN Internet Ventures.
The length of those ventures was expanded to 99 years under terms of the new deal.
The companies said their combined businesses will generate about $350 million in revenue in the current fiscal year on a pro forma basis, $200 million of which will represent Internet-related revenue.
The balance, about $150 million, will come from the inclusion of the Disney Catalog, a key part of the site's e-commerce strategy, according to Wadsworth.
"You can't compete in e-commerce without infrastructure to back it up and that's what the Disney catalog provides," said Wadsworth.
Slow takeover
In June 1998, in a deal valued at about $420 million, Disney acquired a more than 40 percent stake in Infoseek in exchange for its ownership position in Starwave Corp., an operator of online information services. At that time, Disney also said it would purchase warrants giving it the option to obtain a majority share in Infoseek in the future.
In September 1998, Disney and Infoseek teamed up to create the GO Network Web portal, which launched last January. The "Go" name replaced the Infoseek brand as the portal service.
GO Network is now one of the top five Web properties, according to Media Metrix. However, it has created little Internet buzz otherwise, according to IDC's Parr.
"The portal business is all about stealing things from the competition," said Parr. "Go hasn't done anything that anybody has stolen. Until they do something that someone wants to steal, they're just another portal."
But Jill Krutick, entertainment analyst at Salomon Smith Barney, said the deal will afford Disney the opportunity to expand its Internet business.
"The Internet is probably one of the highest-margin new business initiatives Disney has going," she said. "Ultimately, this tracking stock… gives them ready currency to do deals in the fast-paced world of the Internet, and it allows them to be a lot more flexible in changing with the Internet landscape."
Krutick added that other media companies scrambling to develop a viable Internet strategy, such as CNNfn's parent company Time Warner Inc., will likely follow Disney's lead.
Motro to step down
Infoseek's Motro said he has chosen to leave the company after a transition period following completion of the deal, which is expected to close by year's end.
"I believe in this deal and in Go.com's enormous potential for category leadership," Motro said in a statement. "As I've had the chance to reflect on Infoseek's tremendous accomplishments and growth, it has become clear that this is a perfect opportunity for me to take some time off."
Disney board and the non-Disney members of the Infoseek board unanimously approved the deal, which still requires the approval of Disney shareholders and non-Disney Infoseek shareholders.

**"Disney To Sell Fairchild Unit," Associated Press, August 24, 1999**
The Walt Disney Company said Tuesday it is selling its Fairchild Publications unit, whose magazines include *W, Jane* and *Women's Wear Daily*, to Advance Publications, parent of Conde Nast.
The sale price was not disclosed, but previous reports put the value of the deal at about $650 million. The companies said they expect to close the sale by the end of the year.
The deal will not completely sever Disney's relationship to some of Fairchild's publications. Advance will allow Disney's Buena Vista Internet Group to publish some material online from *W, Jane* and *Women's Wear Daily*, the companies said.
Disney and Advance also agreed to look into a joint Internet site designed for women using material from both companies' magazines, said Disney spokeswoman Christine Castro.
Conde Nast's publications include *Vogue, Glamour, Mademoiselle, GQ* and *The New Yorker*. Its biggest acquisition in the Disney deal is *W*, a glossy consumer fashion publication that has siphoned off apparel advertising from Conde Nast and rival Hearst Magazines.
The sale also includes about a dozen trade publications, such as *Supermarket News* and *Home Furnishings News*; a fashion textbook division; and Fairchild Urban Expositions, a trade show business that Disney co-owns.
Disney acquired Fairchild in 1995 in its purchase of Capital Cities/ABC. In 1997, Disney had announced plans to sell Fairchild, but the company quickly changed its mind.
Two years ago, Disney sold other publications, including the *Kansas City Star*and *Fort Worth Star-Telegram* and the trade publisher Chilton.
Even as its earnings and stock price continues to soar year by year, Disney has been taking steps to shore up its core businesses, its movie studio, television programming and theme parks. It also has been continually working to pay down debt incurred from the Capital Cities/ABC, Pixar Animation Studios and Lucasfilm Ltd. acquisitions, partially driving the print divestments.
"Despite Fairchild's strengths, Disney is focused on the long-term growth of our core brands and entertainment assets," said Michael Eisner, Disney chairman and chief executive officer.
Disney plans to keep *Los Angeles* magazine, a monthly city lifestyles publication.
S.I. Newhouse, Jr., chairman of Advance, reportedly had been in a bidding war with Hearst to acquire Fairchild. The deal merges two of the fashion world's most powerful publishers, potentially allowing Advance to offer advertisers package rates for buying space in several magazines at the same time.
"We are thrilled to acquire the Fairchild publications, since we have always had the highest respect for their journalistic quality and integrity," Newhouse said.

**"Bain Backing Buyout Of DIC," by Carl DiOrio, *Variety*, September 18, 2000**
The Walt Disney Company has inked an agreement in principal to sell animated kidvid producer DIC Entertainment in a management buyout led by longtime DIC topper Andy Heyward and backed by investment firms Bain Capital and Chase Capital Partners.
Pending deal is valued in the nine digits. Details were not available, but Bain and CCP would get substantial equity stakes in DIC.
Transaction is expected to close by month's end. The Endeavor talent agency facilitated the negotiations, with Allen & Co. acting as DIC's investment banker.
Second fiddle
Disney picked up a majority stake in Burbank-based DIC in its 1995 acquisition of Capital Cities/ABC. But despite Disney keeping up alliances with outside producers for ABC's programming and even with animation, the toonery has still been something of a poor stepsister to the House of Mouse's own animation operations ever since, especially since Pixar Animation Studios was purchased outright in 1996.
"It's the kind of thing where every now and then somebody says, 'Oh, do we own DIC?' " a source said.
Disney co-produced and distributed a live action movie based on DIC's animated series *Inspector Gadget* last year, and similarly partnered on its live action *Meet the Deedles* feature in 1998. DIC's other TV fare includes animated series such as *G.I. Joe, ALF, Bill & Ted's Excellent Adventures, Dennis the Menace, Alvin and the Chipmunks* (seasons 6-8), *The Real Ghostbusters, Where's Waldo?* and *Where on Earth Is Carmen Sandiego?*
Heyward acquired DIC in 1986 from French media group CLT. He retained a small minority interest in the company after CapCities/ABC acquired its stake in 1993.
Buyouts Bain's bag
Bain, best known for industrial and retail buyouts including the 1998 acquisition of Domino's Pizza, has dabbled in entertainment in recent years. The Boston-based firm's highest-profile acquisition came in 1997, when it bought video distributor Live Entertainment and transformed it into theatrical distributor Artisan Entertainment. (Bain's Geoff Rehnert and Marc Wolpow exited the firm in July 1999 to form Audax Entertainment, which acquired Bain's Artisan stake last September.)
CCP is a venture capital unit of Chase Manhattan. It has investments in entertainment companies such as music distrib Alliance Entertainment, music venues proprietor House of Blues and theme parks operator Six Flags.
"It's very difficult to come in and take a small, independent Hollywood company, turn it around and build it into something big," said analyst David Davis, a senior VP at investment firm Houlihan Lokey Howard & Zukin in Los Angeles. "But you can't argue with Bain's success with Artisan, where they've taken a small independent film and video company like Live Entertainment and turned it into a virtual mini-major."
Of the pending DIC sale, Davis added, "Disney doesn't need a competing television animation group."
Officials at companies involved in the deal declined comment.

**"Disney Announces New *Alien* Attraction," *Orlando Sentinel*, November 2, 2000**
Walt Disney World has announced that it will be closing its polarizing attraction Alien Encounter, currently housed in the Tomorrowland section of the Magic Kingdom, shall be closed after New Year's Eve. It shall be replaced by an attraction based on 20th Century Fox's *Alien* franchise, keeping the same ride mechanisms and mechanics as Alien Encounter.
Alien Encounter is a dark ride attraction utilizing binaural sound, rear-projection screens and various other effects to create a sensory experience in total darkness. The story revolves around a special presentation of teleportation technology by intergalactic conglomerate XS Tech, which ends up going wrong as an alien lifeform is accidentally pulled in and teleported to Earth. The attraction and its preshows feature the talents of Tyra Banks, Tim Curry, Jeffrey Jones, Kevin Pollack and Kathy Najimy, and was written and directed by Jerry Rees, and co-produced by Walt Disney Imagineering and George Lucas.
The attraction has been very controversial and considered far too scary and intense for small children, with parents claiming a lack of fair warning. Mature audiences have enjoyed the attraction immensely, calling it groundbreaking and thoroughly immersive with complex technological needs. Now, an attraction based on Ridley Scott's 1979 film *Alien* and James Cameron's 1986 sequel *Aliens*, which was the original planned tenant for the site, will be created, with a tentative opening date in November 2001. It is also planned to open the attraction in Disneyland, Disneyland Paris and Tokyo Disneyland, as well as any future park locations, within a very short period of time. The new attraction will also be written and directed by Jerry Rees and co-produced by Lucasfilm Ltd. and Springbok Productions alongside WDI, under a license from Fox and Brandywine Productions.
As a consolation to disappointed fans of Alien Encounter, Disney has announced that a professional film crew will capture the attraction for posterity for a special home video that will be sold online. The video will also include some new footage specially shot just for the package not present in the attraction itself, to expand the story.

**"DIC Plays New Toon," by Charles Lyons, *Variety*, November 19, 2000**
Animation magnet DIC Entertainment has hooked up with Bain Capital to buy its own assets from The Walt Disney Company in a deal worth nine figures.
DIC has been a Disney partner since the studio acquired Capital Cities/ABC in 1995.
DIC chairman and CEO Andy Heyward told *Variety* that the deal is a "complicated transaction that involved cash consideration as well as licensing other DIC properties in the future."
The move away from Disney means DIC can develop projects outside of the House of Mouse. It also offers the company a variety of distribution outlets.
DIC will continue collaborating with Disney on existing projects, including the development of a sequel to *Inspector Gadget* and work on *Sabrina, the Animated Series* for ABC's One Saturday Morning block. Also ongoing is *Madeline* for The Disney Channel and two animated direct-to-video films for distribution through Buena Vista Home Video. In addition, DIC programming will continue to include a substantial portion of the Toon Disney schedule. DIC will also keep producing new content for Disney/ABC, in addition to its newfound independence.
"Bain is a financial alliance for us," said Heyward. "Disney is a strategic partner. Bain's interest is to see us maximize the product and grow the business."
Through the buyout, DIC now independently owns the second largest library of American animation in the world, with more than 2500 half-hours of programming. Heyward will continue as chairman and CEO of the animation studio.
"DIC and The Walt Disney Company have enjoyed five exciting years together, but we desired to return to our roots as independent producers of children's content for the worldwide market," said Heyward. "While we continue to be a supplier to myriad Disney units, our independence will facilitate a more diversified slate of programming and help build upon our stature as a premiere global supplier of children's entertainment."
Joe Pretlow, managing director of Bain Capital, said: "We are excited to partner with Andy and his exceptional management team in acquiring one of the world's leading children's content companies. We believe DIC's strong library and character franchises combined with its exciting slate of new productions will provide the company with substantial growth opportunities and position it as a leading entertainment consolidator."
DIC is ramping up production to 200 half-hours per year.
Along with *Liberty's Kids*, a new series based on American history in production for PBS along with the newly launched animation division of Kurt Cobain and Charlize Theron's Springbok Productions, DIC is at work producing four other series.
At MIPCOM, DIC recently announced the relaunch of its international sales division and a newly reassembled sales force. The company unveiled a broad slate of animated programming, including its new properties *Super Duper Sumos, Salem, Action Girls* and *Gadget and the Gadgetinis*.
Headquartered in Boston with offices in New York, San Francisco and London, Bain Capital is a global private equity firm that manages several pools of capital, with over $12 billion in assets under management.

**"Disney to Discontinue Go. com Banner," by Arthur Gordon, siliconvalleyinternet.com website, January 29, 2001**
The Walt Disney Company today announced that it will discontinue the operation of its Go. com portal and convert all outstanding shares of Disney Internet Group common stock into shares of Disney common stock effective March 20. Walt Disney Internet Group will continue to operate under its current management structure as a business segment of Walt Disney Co.
"The Internet continues to be a central focus of our company's business strategy," said Michael Eisner, chairman and CEO. "We believe this action should help us gain greater competitive advantage as we leverage Disney's creative content, brands, and other assets."
"The competitive factors that initially compelled us to establish a separately traded class of common stock tied to our Internet operations have fundamentally changed," Eisner added.
Steve Bornstein, chairman of Walt Disney Internet Group, added: "This is a difficult decision, as it impacts both our employees and Go. com users. However, the Internet environment has continued to shift and change, and therefore our strategies must also change."
The closure of Go. com will affect approximately 400 employees, the majority of whom are based in Sunnyvale, California.
A streamlined version of Go. com will continue to operate for a period of time to allow for the transition of its users. The company will continue to operate and support the Infoseek search engine and associated traffic during this time.
Disney is evaluating various alternatives for the Go. com assets, including the sale of the Infoseek search engine and site traffic.
In November 1999, shareholders of Disney and Infoseek approved the creation of an additional class of Disney common stock to reflect the performance of the new Internet business called Go. com-later renamed Walt Disney Internet Group.
In accordance with the terms of the company's certificate of incorporation, each outstanding share of Disney Internet Group common stock will be converted into 0.19353 share of Disney common stock as of March 20. The conversion is expected to result in the issuance of approximately 8.1 million new shares of Disney common stock.
There are currently 2,086,258,193 shares of Disney common stock outstanding, and an additional 158,509,549 shares of Disney common stock are issuable upon exercise of outstanding options.
The decision for Disney to buy an Internet portal to compete with Yahoo!, AOL, Excite/Excite At Home, Lycos and the nascent Google ended up becoming one of the rare mistakes by CEO Eisner, under whose stewardship Disney has had an unparalleled renaissance. Apple and Pixar Animation Studios CEO and Disney board member Steve Jobs was the lone voice admonishing the Eisner and the board not to go through with the deal, but was overruled.

**"Miramax Shuts Doors, Disney Reclaims Library," by Adam Dawtrey, *Variety*, March 3, 2001**
Miramax Films officially announced today that it is shutting down all operations, due to massive operating losses in both profits and reputation that were simply insurmountable. Mass layoffs are expected to occur. Meanwhile, Miramax's former parent, The Walt Disney Company, will repurchase the Miramax name and library for the rock-bottom price of $6 million, a tenth of what Disney originally paid to buy it back in 1993. Miramax will now be folded into Disney's Touchstone Pictures banner, and its library added to Touchstone's filmography. Miramax's sub-imprint, Dimension Films, will fully retired. All new forthcoming Miramax and Dimension projects will be split either between Disney's Touchstone Pictures or Hollywood Pictures imprints, or have the option to farm out projects to be released by other studios.
"This is a sad day for Miramax and for filmmaking in general," Miramax head Daniel Battsek said. "It is simply a massive loss for all of us, and a name that represents quality, fine drama, and artistic merit, has to be lost. But we remain proud of what we at Miramax have achieved over the years, that we entertained and mentally invigorated film lovers everywhere, and we are happy and pleased that Disney will maintain great stewardship of our legacy."
"We are quite proud to have Miramax back in our corner and to officially merge it with Touchstone and Hollywood Pictures," Walt Disney Studios chair Peter Schneider said. "Miramax represents quality filmmaking, and artistic expression, and the Touchstone and Hollywood imprints have been happy to do likewise, showing that Disney is more than strictly focusing on family-friendly entertainment. The value of these films cannot be estimated, and we will make sure that audiences will continue to enjoy these films for years to come."
"I am quite happy with the results of today's news," said Michael Eisner, CEO of The Walt Disney Company. "I knew back in 1993 that Miramax represented a massive quality that added significant value to Disney, and was certainly sad by the necessity of having to let it go. Now we are back, and we will take good care of it and ensure that its legacy will endure."
Miramax Films had been founded in 1979 by Bob and Harvey Weinstein, and made a name for itself in the distribution of indie films and finding and nurturing artistic talent. The company had been buffeted by bad publicity when Harvey Weinstein's history of sexual assault had been exposed two years ago, leading to his ouster from the company and a humiliating Oscar defeat of its then-current film, *Shakespeare in Love*, to Steven Spielberg's *Saving Private Ryan*.

**"Disney Offloads Several Miramax Projects," by Adam Dawtrey, *Variety*, March 25, 2001**
Nearly three weeks after Miramax Films closed its doors and The Walt Disney Company moved its operations into its Touchstone Pictures imprint, Disney studio chair Peter Schneider announced that it was exercising its option to farm out projects to other studios, and getting rid of several already in development because, "it was felt that they did not fit the Disney brand or contain what audiences look for in Disney films."
Schneider did not announce how many projects were let go, but some sources believe it is somewhere between 12 and 20, and that they represent only a tiny fraction of of the overall total. "Miramax had literally hundreds of projects, in various stages of development, kept in warehouses full of boxes of material," says one source close to Disney. "We simply decided to get rid of a few that did not particularly fit us." The projects being offloaded are being spread among several different studios, notably Paramount Pictures and New Line Cinema.
Schneider did confirm that two major projects being released for New Line were *Below*, a thriller set in a submarine, and *Equilibrium*, a dystopian sci-fi action film in the vein of *The Matrix*. New Line will release both films some time next year. "We are quite pleased that New Line has accepted the projects and are convinced they will do amazing things with them."
Miramax Films, long known as the prestige art house arm of Disney after purchasing the company for $60 million back in 1993, had been hailed as responsible for bringing vibrant and creative indie fare to multiplex audiences. Disney spun off 80 percent of its stake from 1996 to 1998 to facilitate its purchases and integration of Capital Cities/ABC, Pixar Animation Studios and Lucasfilm Ltd., all within 1996. During the Oscar campaign for *Shakespeare in Love*, dozens of women came out alleging cofounder and studio head Harvey Weinstein of sexual assault, leading to his ouster from the company and a forthcoming criminal trial that is currently percolating.
Miramax valiantly tried to soldier on by hiring Daniel Battsek as Weinstein's replacement, but it was continually rocked by negative publicity and bad box office takes for all but a select few notable films. On March 6, Miramax announced it would be shutting down and its employees laid off, with Disney fully repurchasing the company and its film library for a mere $6 million, as well as folding it into Touchstone Pictures and retiring the Dimension Films banner. The remaining projects that Disney will release will largely be released under the Touchstone name, though the Hollywood Pictures imprint will also get some films.

**"Q&A: Michael Eisner," *Newsweek*, June 20, 2001**
Q: All elements of the company are doing so well, even elements that were initially struggling, like Disneyland Paris, ABC, and whatnot. Why has that been?
A: Well, after Frank Wells died, I admit that was I was lost for a bit. I did try to take on far too much to compensate. Thank God for Bob Iger and John Lasseter, they really helped pull us out of a rut. And me...I didn't think I'd really recover after losing the chance for Disney's America, but I've come back, better than ever. They also made me realize that a lot of the ideas I had wouldn't have worked. I'd been gung-ho for a second gate at Disneyland Paris to open by 1999, a replica of MGM Studios, but they made it clear that it would've jeopardized Disneyland Paris' newfound profits thanks to Discoveryland's Space Mountain. We will still build it, of course, but when we can actually afford to do it. Our original Anaheim second gate was to have been called California Adventure, but then they helped me realize that would've been redundant and opened up more Euro Disney mockery. So, I guess I have been humbled somewhat. But not to where I don't have ideas. In fact, we plan in the next decade to expand into Shanghai, Hong Kong, and our original Euro Disney site, Spain. We truly will now launch Mickey's Millennium!
Q: Disney just announced that Miramax will be repurchased and folded into Touchstone. How aware was Disney about the stories concerning Harvey Weinstein?
A: I never had a close relationship with Bob or Harvey, so I wouldn't be in any position to judge if I heard rumors about him, or think anything of him being other than a great eye for talent. But you do have to admit, detestable as Harvey is, Miramax made many classic films. That's a body of work that can't simply be ignored and shunted off.
Q: What are your thoughts about Kurt Cobain, Charlize Theron and Springbok Productions?
A: We are honored to have a chance to work with them. In fact, Touchstone will be the distributor of the next projects of Quentin Tarantino and Kevin Smith, which Springbok is producing. And there's bound to be room for Springbok TV projects on ABC. Maybe, if we'd known what they were going to do, we would've asked for more money regarding the Nirvana documentary's broadcast. (chuckles)
Q: What's gonna happen when Mickey enters the public domain, which will happen quite a bit sooner since the DMCA did not end up the way you wanted, and was enacted without the Copyright Term Protection Act?
A: (long pause) I just hope that people will at least recognize what Mickey is meant to be and react accordingly.

**"ABC's *Millionaire* Receives Rich Renewal Deal," by Bill Carter, *The New York Times*, November 29, 2001**
Less than two years after the ABC game show *Who Wants to Be a Millionaire?* changed the competitive face of American television, ABC executives are saying the show has been given an expansive, five-year renewal.
As a major part of ABC's primetime schedule, executives associated with the show said, it has brought considerable ratings to the network, and that little has to be changed for it to remain in good graces. Executives did admit, however, that it might soon be with a new host, not Regis Philbin, the star who led the show to prominence. Under this plan, Mr. Philbin would then take over a syndicated version of the show that is being developed to sell nationwide in the summer and fall. Or Mr. Philbin may remain in his spot and another host take the syndicated version.
The prime ratings for *Millionaire*, which only two years ago took the television industry by storm, has had a major effect in seeing a burst of reality television competition shows and imitators, all to varying success. With exception of the show that started the trend, this season reality shows on every network have met with either disappointment or disaster in the ratings. Even ABC's other reality programs have been hit hard by this.
As ABC executives made clear yesterday, those involved with *Millionaire*, including Mr. Philbin, made sure that its success was possible by making sure not to overexpose the hot property. Though ABC and its corporate parent, The Walt Disney Company, could've tried to milk every penny from it by running it five nights a week, they prudently kept it for only two, and made sure that those two nights were massive events, thanks to aggressive marketing.
The value of *Who Wants to Be a Millionaire?* to ABC has been unmatched by any show in recent television history. Executives estimated the direct profit from the show in the last year at $400 million to $600 million.
But ABC and Disney have profited in numerous other ways from *Millionaire* starting with a massive boost in the stock price for Disney in the first year of the show and including revenue from *Millionaire* theme park attractions in both Disneyland and Walt Disney World, the biggest-selling CD-ROM on record, advertising revenue from one of the most popular websites of all time, and many other forms of merchandising.
The show was also responsible for driving a large audience into the ABC show *The Practice*, leading that series to mega-hit status, and was the crucial leverage that ABC used to win a showdown with Time Warner Cable when that company removed ABC's local station from the air in New York in May 2000. Many Time Warner customers complained that they could not see the show.
Michael Davies, the executive producer of *Millionaire*, said that the show was still among the most profitable on ABC.
The success of *Millionaire* in 1999 sent others networks scurrying for comparable programming, leading to the ''reality'' craze that transformed primetime in the last two years. But that trend seems to be losing steam, with half a dozen reality shows floundering. Even the monster of the group, *Survivor*on CBS, is performing well below the 25 million to 30 million viewers it attracted last year. Even *Millionaire* is not immune to this, though the bleeding isn't anywhere as bad.
Only a year ago ABC dominated primetime television with its two weekly editions of *Millionaire*. Early in 2000, the show had about 29 million viewers, compared with about 23 million currently. This is still breakaway success, and ABC's total viewer count as a whole continues to grow, even if it's no longer No. 1 in the primetime ratings among the networks.
"The fact that both weekly editions of *Millionaire* continue to be on the top ten rated shows on television is significant," Lloyd Braun, co-chairman of ABC Entertainment (who took the spot from Jamie Tarses in 1999) said. "We've had two years under the glow of the show, and we're set to have three, which was our plan all along. So no matter what happens, we achieved what we set out to do."
Of more concern to ABC has been the aging of the audience for *Millionaire*. Once a hit among the 18-49-year-old audience group that advertisers most desire, *Millionaire* has gravitated toward an audience profile made up largely of viewers over 50 years old.
Mr. Philbin acknowledged that shift, saying, ''It's unfortunate,'' but he added, ''I don't think that the show is getting old or stale at all. If *Millionaire* is the reason why ABC is no longer No. 1 in viewers, I'll eat my hat.'' He has half-jokingly boasted that the show, and him as host by extension, "saved" ABC from the threat of eventual irrelevance. Thus, he says he is confident the five-year renewal pact is "vindication" of those facts.
No matters what happens to the primetime *Millionaire*, ABC is going ahead with a syndicated version of the show, likely to be shown in daytime. No host has been selected. Mr. Philbin said he had not even been asked yet. But he indicated an interest in doing the show if it could be worked into his schedule.
Mr. Philbin is already the most important syndicated star for ABC, which owns his morning talk show *Live With Regis and Kelly*.
Mr. Davies said being the host of the syndicated show without any change in Mr. Philbin's schedule might be impossible. And he pointed out that the syndicated show would be running on stations owned by other networks. ''They might not want the same host on their version as the one on the network show,'' he said.
That is one factor behind a plan that would move Mr. Philbin to the syndicated show, opening up the primetime host spot, or doing the reverse. The idea, an executive said, would be to make it more a comedy show in the way NBC has reconfigured its game show *Weakest Link*, which has suffered a ratings decline.
ABC said they're looking at in-house talent that might be willing to take either version of the show, like Meredith Vieira, but admitted the search might fail.
Toward that end, either as the new primetime host or the syndicated host, the network is considering such comedians as Jon Stewart, Jimmy Fallon, Jimmy Kimmel and David Spade, the executive said.
Mr. Davies would not comment on that plan, but he said: ''Jon Stewart, who would be fabulous, could not just go on and be a comic. Ultimately the show is about somebody trying to win a million dollars.''
No change in the primetime show could be made without Mr. Philbin's consent, however. He has a deal that guarantees him that host job.
accordingly.

**"Disney-ABC Television Group Announces Jetix Expansion," BusinessWire, July 14, 2002**
Burbank, CA and New York-The Disney-ABC Television Group has announced it will be restructuring its premier children's network, The Disney Channel, with a new programming block.
To take advantage of its recent acquisitions of Fox Family Worldwide and Saban Entertainment, The Disney Channel will be launching the programming block Jetix, a combination of live action content such as *Power Rangers* as well as English dubs of anime content. This will feature Saban Entertainment properties, as well as linced content from other anime dubbers and producers such as Viz Media and Ocean Productions. It is also anticipated to be another window to include television broadcasts of English dubs of Studio Ghibli projects. The Walt Disney Company is also contemplating creating its own division for English dubs of anime projects.
The channel will soft launch a test run on August 25, to determine viewership interest in the block. Meanwhile, Disney-ABC Television Group will contemplate the future of certain programming blocks, such as the Playhouse Disney block, to determine the best options for it. This will also influence decisions regarding other live action and animated programs on the channel, and forthcoming projects such as the animated TV series adaptation of *W.I.T.C.H.*
"Day one of an exciting new era for Disney-ABC Television Group is among us," Disney COO and President Robert A. Iger said. "I foresee great opportunities and opening new windows for us. The Disney Channel and ABC have cotninued to grow exponentially together since 1996, and we plan to keep the progress running."

**"Disney Postpones *Treasure Planet*," by Paul F. Duke, *Variety*, July 26, 2002**
Disney announced that its forthcoming animated film *Treasure Planet*, a space-based fantasy update of Robert Louis Stevenson's *Treasure Island*, is being postponed from its planned November 25 release date to an unspecified date next August. Disney admitted that this decision was made because November would feature stiff competition from the Springbok Productions/Don Bluth animated film adaptation of *Dragon's Lair* and the eagerly anticipated *Harry Potter and the Chamber of Secrets* from Warner Bros.
"It just wouldn't be fair to put it up against Harry Potter. We want to give *Treasure Planet* as much breathing room as possible to try and get another hit like *Lilo & Stitch*," Disney CEO Michael Eisner told the press.
Eisner also announced that Springbok was in talks to finance the ABC soap *Port Charles*, a 30-minute spinoff of *General Hospital*, to ensure its survival, but the deal was tentative and being debated by Disney-ABC Television Group head Anne Sweeney and ABC Daytime's new head Brian Frons.

**"Exploring A New Universe," by Ron Magid, *American Cinematographer*, September 2002**
George Lucas began his career as an editor and a cinematographer (he was one of several cameramen on the Rolling Stones concert film *Gimme Shelter*), but his frustration with the tools of his trade, coupled with his desire to tell stories that were galactic in scope, drove him to seek new ways to make films. Today it can be said that few have impacted the craft of filmmaking more than he has. The ultimate noodler who enjoys seeing his films come together in editing, Lucas has transformed the medium into a postproduction fantasia.
Cinema was the art form that helped define the 20th century, and Lucas is passionate in his conviction that its expression in the 21st century will be digital. The latest installment in the *Star Wars* saga, *Episode II: Attack of the Clones,*was the first major Hollywood feature to be captured digitally, on 24p high-definition video cameras. But in his determination to push the medium of cinema with new technologies and techniques, Lucas has encountered both support and skepticism. *Attack of the Clones*' extremely high profile situated him at the center of a raging debate over the merits and drawbacks of digital technology, which is seen by some as a viable alternative to traditional film-based methods, and by others as a concept that still requires a great deal of refinement.
Lucas recently discussed his impressions of the evolving technology with Ron Magid, *American Cinematographer's* visual effects editor.
*American Cinematographer*: *If there indeed is going to be a digital revolution, what will it look like?*
George Lucas: I've always [said], "This is like the film industry in 1902," so the advances are going to be huge, because what we did on *Attack of the Clones*, we did in essence by ourselves. We had to talk Sony into it, [but] they built the cameras and they tried really hard to make this work; we also had to talk Panavision into committing a lot of money to build those lenses. Both companies really went out on a limb. This was a giant experiment for everybody, and nobody knew if it was going to work or if they were pouring money down a rat hole.
Now that the whole medium is opening up, there are lots of lens manufacturers out there building lenses and lots of other camera people building cameras, so you've got competition. And once you've got competition, you're going to get a lot of people making vast improvements on the system. They've already got a 10 million-pixel camera, and that's just happened in the last year, so [the potential has] gone from 2 million to 10 million – and that's much, much higher quality than film. Any other issues out there will eventually be addressed, because a lot of cameramen are going to use the technology [and] say, 'I want it to do this or that.'
There is so much misinformation being put out there by people who have interests other than the quality of film. They're determined to slow this down or stop it, but they can't. It just won't happen. It was the same with digital editing – for the seven years that we had EditDroid [almost] nobody would use it, and even after we sold the company to Avid another two or three years passed before they got anybody to use it. All [digital technology] does is give you more to work with. It's a much more malleable medium than film, by far; you can make it do whatever you want it to do, and you can design the technology to do whatever you want to do. This whole field is really going to ramp up in the next 10 or 20 years.
*Many filmmakers have a wait-and-see attitude, which is to be expected. Some early filmmakers resented sound, and Orson Welles insisted till his dying day that a good color movie had never been made.*
Lucas: And those criticisms are valid. There is the very real issue that you are going from a photographic medium to a painterly medium, and for those who are really wedded to the photographic process, that's going to be a tough thing to get around. It's very much like going from frescoes to oils – one is very rigid, very disciplined, very definite about the way it works, and the other is much more open, offers you more options and enables you to manipulate the pictures more, and I think that bothers people. But audiences can't tell the difference. We knew that right from the beginning because we shot [parts of] *The Phantom Menace* digitally, and nobody could tell which shots were digital and which weren't.
*As* Attack of the Clones *unfolds, it seems as though a new style of filmmaking is evolving, particularly in terms of the stunt and effects sequences, which felt more believable because there was less cutting around to hide the tricks. Have digital tools allowed you to develop a different style?*
Lucas: The reality of how you're shooting and the limitations of what you have to work with sometimes determine how you shoot a scene, and now that's less of a factor with stunts. I don't know if it's a different style, but it's a very different process now. I've refined the process of working more visually; I shoot for a period of time, about 60 days or so, and then I stop and work on the film for a while. Then I come back and shoot for another 10 days or so, and then I stop and go back and work on the film, rewrite and change things, and then I come back and shoot for another week. I do it in pieces rather than in one long shoot. That way I can actually look at what I'm doing, cut it and study it. The previsualization process [allows me to] put scenes together without having to shoot them, see how they fit in the movie and then, if they work, I can cut them in and actually go out and shoot them. There's a lot of freedom and malleability that didn't exist before. It's easy to move things around in the frame, to change various visual aspects of the film, which just wasn't possible before. It's the same kind of thing that you find in still photography if you use Photoshop.
*Lesley Vanderwalt, the film's makeup artist, has said that sometimes the hi-def images were so clear that smudges and brushstrokes were visible in the actors' makeup. What strategies did you employ for makeup, costuming, props and sets to work with hi-def as opposed to film?*
Lucas: We used filters to soften the image and make it a little less sharp so we could get away with more, but you do have to be very careful [because] you can't get away with as much fudging as you used to. The sets, costumes and makeup have to be more finished. It's going to require refinement in all the crafts because the digital image is so much sharper. It's easy to degrade the image. You can hide all the little seams and imperfections that inevitably show up on props and sets and costumes simply by putting a filter on the camera so that the image is a little smudged, or you can have everybody come up a notch so you can do a really sharp close-up on somebody's face without seeing the brush marks on the makeup.
*Were there any other restrictions you had to address when working with hi-def?*
Lucas: There are certain issues with action perpendicular to the lens, when you're panning with the [actors], which created effects that we weren't completely happy with, but part of that is because I shoot in pieces. I'll shoot a person running across the screen, and then we'll put the background in, and it's really only when you get all the elements pulled together that you finally get to see what you've created. So there are certain [shots where] I wouldn't pan with people running completely perpendicular to the camera because it strobed. We also had little problems with softness on certain lenses, because these are all Beta cameras and Beta lenses, but that's been fixed.
*We've heard reports that the cameras were less efficient on location than they were in the studio, particularly during the shooting of multiple-camera exterior sequences. Is hi-def practical for extensive location work or for extremely mobile camera setups?*
Lucas: We never had a problem with the cameras, ever. We shot in very difficult locations and in 135-degree heat; we were shooting in and around the water and in the rain, and we had no breakdowns or problems at all. We were running cables because this is Beta, so everything was backed up six ways from Sunday; on location, we were running cables farther or over difficult terrain. But we were just as fast and efficient on the locations in the middle of Tunisia [as] we were in the studio.
*Did all of the cables limit the kinds of shots you wanted to achieve?*
Lucas: Not really. You can go a long way with those cameras. Obviously, if we were on location and we wanted to go a quarter mile up the road, we just unhooked the umbilical cord because we didn't need it. The cameras have recorders built in, exactly like TV cameras. But because these were the first seven cameras that were built, everybody was very nervous – I think Panavision and Sony were more nervous than we were – so we were double-backing up our recorders with two recorders. We did shoot some material without backing it up. The second unit didn't want to bother, and it worked fine.
We now own other cameras that don't have recorders in them, and we use them at ILM, where they want the cameras to be very small. They're about the size of a small book, and we do umbilical them because [the effects cinematographers] prefer to use them that way for motion-control or [to get into] very small [places].
*Why did you opt to use hi-def instead of VistaVision for miniature effects photography? We understand that this choice created some problems.*
Lucas: The only problem it created was that we had to reinvent the system. We had to get new cameras and build the system rather than just use the system we had. But I wanted *Episode II* to be consistently digital; I didn't want to have to use film. Film ultimately is very cumbersome. It's like working with the lights out – you can't see the work until the next day. Being able to look at what you're doing while you're doing it, without having to run to the lab or [hurrying] because you want to break down the setup and all that, makes hi-def a much more efficient way of shooting visual effects.
*But the visual effects cinematographers on* Attack of the Clones *said it was a struggle to get the proper depth of field on miniatures because the cameras can only capture at 24 frames per second, so they couldn't do 1-fps exposures. They said the model sets were sometimes melting because of all the light required.*
Lucas: To be honest, I never heard of a set melting. They didn't have to pump all that light in there. You can shoot at extremely low footcandles and make hi-def look excellent. And you can actually maintain the same depth of field with hi-def that you can with film. You still have a higher range than you do on film, so if you have to light it up for digital, you have to light it up twice as much for film. But regardless of whether we had to do several passes at ILM, we saved millions and millions of dollars shooting digitally.
*Was any portion of* Attack of the Clones *shot on motion picture film?*
Lucas: Yes. We took a scene in the Jedi temple out of *The Phantom Menace*, which was shot on film, and we erased all the characters and put in a new background and new actors, so it's an actual photographic set with digital characters and digital backgrounds outside the window. So in a way, we had a filmed set, but that's the only film in the movie.
*Given that you now have the ability to endlessly tweak and repurpose shots like the one you just described, is there such a thing as having too much control over your images?*
Lucas: I don't know, you should ask a painter. Having lots of options means you have to have a lot more discipline, but it's the same kind of discipline that a painter, a novelist or a composer would have. In a way, working in [digital] is much less frustrating than working in film, but it's not as though it's limitless no matter how you go. The artist will always push the art form until he bumps up against the technology – that's the nature of the artist. Because cinema is such a technological medium, there's a lot of technology to bump into, and I think as more people use digital they're going to find [it has] a lot more limitations. Some of those limitations will be [equivalent to] the limitations they had with film, and some of those limitations will just be because they've gone so far that they finally bumped into the technological ceiling.
*Because there are no set standards for digital cinema, did the* Attack of the Clones *digital film file have to be tailored to each of the digital projection systems currently in use? How do the differences among the servers affect the image quality?*
Lucas: I haven't really checked out the various digital theaters yet, but I've seen the film digitally projected on several different systems and they're comparable. You'd have to run back and forth to actually see whether there's a difference, and if there is, it would be very highly technical. But whenever you have different projectors, you're going to have differences. You have that with film – you go to one theater to see a film and it's fine, and you go to another theater and the footcandles are way down, [the image is] fuzzy and the left corner of the frame is completely out of focus. That just has to do with that particular projector and that particular theater, and you're going to have that with digital projection, too.
I don't know whether anyone has actually done any studies [comparing the various digital servers]. The important thing is that they're all compatible in terms of us doing our transfers and sending the files. You have to make several different kinds of transfers for different media, anyway, whether they're sending by satellite, disc or cable. I don't think we made many adjustments to the various versions of *Attack of the Clones* that we did for the various systems.
*Is it true that you recently assembled a forum to explore the state of the digital art with a number of directors?*
Lucas: Yes. Because there are so few of us working in the theatrical digital medium, about a half-dozen, we decided we should all come together to talk about our experiences and share information. It was a two-day conference, and there was a lot of discussion, mostly from the point of view of the director. This was before *Attack of the Clones* was released. I showed that movie, Robert Rodriguez showed part of *Spy Kids 2*, Francis Coppola showed part of the film that he's shooting, Jim Cameron showed his 3D underwater movie *(Ghosts of the* *Abyss*), and Michael Mann showed a little bit of *Ali* because parts of it had been shot [with digital cameras]. Pixar showed some [footage] digitally and on film [to demonstrate] what happens to [images] after about three weeks of being on film; you could really tell the difference between the film version and the digital version.
We invited a bunch of directors, including Ron Howard, Bob Zemeckis, Steven Spielberg, Marty Scorsese and Oliver Stone. There were a lot of skeptics, and Marty, Steven and Oliver asked very hard questions. But when you get the answers, you say, 'Oh, it's not the big boogeyman that everybody says it is.'
*James Cameron recently told* The Hollywood Reporter *that you showed him tests that led him to believe 'the Sony HD 900 series cameras are generating an image that's about equivalent to a 65mm original negative.' How can you acquire more information on HD tape than on 35mm film, given that no one else shooting HD is able to capture that much information?*
Lucas: We don't have a bias. For the short time being, the test is really *Attack of the Clones*. You [watch it] digitally projected and say either, 'It looks like s\*\*t' or 'It looks great.' If that isn't enough, then wait till *Spy Kids 2* comes out. In the end, cinematography is not about technology; it's about art, it's about taste, it's about understanding your craft, it's about lighting and composition, and anyone who gets off on technological things is missing the point. I care about good lighting and good composition. I'm not interested in an engineer who knows a lot about the technology; you get into these kind of arcane discussions about 'black curves' and things that no audience is ever going to see.
All of us [working in digital] are using different styles of photography, different kinds of conditions and different kinds of lighting. Coppola has just shot some unbelievably gorgeous material, wide shots of cities with incredible detail at magic hour and all kinds of available light material, whereas Rodriguez has lit his to be very bombastic color, really exuberant and wild. So it doesn't have to do with the technology, it has to do with the eyes of the filmmakers working in the medium and what they want to do with it.
*What happens after* Episode III?
Lucas: I'm going to do other types of projects, things that I've wanted to do for a long time, definitely a very different kind of filmmaking than what I've been engaged in for the last few years. I'm just somebody who's trying to tell stories, and in order to tell the kinds of stories I've wanted to tell I've had to push the medium. But all the directors and cameramen I know push the medium. They're always trying new things, trying to get a different look or push something a little further by using a new trick or a new technology. That's the nature of the business. Everybody does it, but I get more attention for it.

**Interview of Disney CEO Michael Eisner for *Moneyline*, aired on CNN and CNNfn October 21, 2002**
KITTY PILGRIM: The Walt Disney Company has long been on an incredible tear in terms of profit and stock price. Now, it’s down from its absolute high of $245 a share in April 2000, but it still is hovering over $200 right now. Today, there are more reports that ABC's news division and CNN are considering a partnership. Michael Eisner is the chairman and the chief executive officer of The Walt Disney Company, and he's here with us tonight.
Good to have you here.
MICHAEL EISNER, CHAIRMAN & CEO, THE WALT DISNEY COMPANY: Thank you for inviting me.
PILGRIM: The challenges facing Disney - I should point out at the outset, that the challenges facing the parent company of this network are somewhat significant as well, as it is for the media industry as a whole at this particular point in time, after the dot-com bust, 9/11, a recession, accounting scandals. Now, you’re definitely doing better than most, but you’ve never been someone to rest on your laurels or to take solace in doing fine, you’re always so proactive in scrambling at the slightest bit of trouble. But you are hit with a wide range: a rollercoaster regarding TV ratings, theme park attendance slumps, governance issues and criticism. How's Michael Eisner feeling tonight?
EISNER: Well, actually, I feel good because mostly what you referred to is somewhat in the past. We were built up for a long time and the beginning of the recession, 9/11, ratings dips at ABC, we've taken some shots. But we have very, very strong brands in the Disney brand, the ESPN brand, the Disney Channel brand, the Lucasfilm brand, the Pixar brand. I think we're differentiated. We have that competitive edge. We're relevant.
PILGRIM: The Angels brand?
EISNER: Well, the Angels are certainly a great morale boost right now. We're happy. Actually, the Angels are almost like a metaphor for the way we look at our business, which is teamwork, everybody working together, trying to get something done. If you can get the Angel kind of synergy in our movie division, which I think we have, and in our television division. I went to the game with a bunch of our ABC stars yesterday, and each one of them, whether it was John Ritter or Damon Wayans, I say, you're as important as that whole Angel group together.
PILGRIM: That sounds a bit like a hardworking CEO to me. I did happen to see you there in that bright red Angels hat, looking resplendent as you cheered on one of your assets and of course favorite teams. But in terms of ABC itself, you have got a solid Tuesday night. You've done extraordinarily well there. Your ratings have been very consistent ever since buying the network six years ago, but it’s always cycling in terms of the standings. Sometimes ABC is No. 1, sometimes it’s No. 2. It never stays in one particular position for very long. How does that feel?
EISNER: Well, our ratings are coming back well. We are in the process of rebuilding, we’re always rebuilding even when people would say “You don’t have to.” We’ve cast our net incredibly wide in terms of what our programming choices are. We have a lot of great choices of family shows, hard-hitting dramas, laugh-out-loud comedies, our stable of daytime soaps, unscripted choices and so forth. We've gone back to a strategy of family programming as a main part of our strategy, but not the be all-end all of our slate. We looked at Tuesday, Wednesday as a building block. We had unprecedented, in my opinion, success in the new comedies on Tuesday and Wednesday. We're very strong on Sunday. We're strong with our new booth on Monday. Actually, and I don't want to get too technical here, but we all sell on this 18-49 age group. And we are either number one or two today on five of the seven nights. So we're not all the way there yet.
We have some problems, too, naturally, as not everything works, and there’s a lot of promising shows that crashed and that we were quite disappointed about, although *Alias* and *Workshop* and *The Practice*and so forth are doing very well, and our newsmagazine shows. I think Susan Lyne, who has come out and worked with Lloyd Braun, two executives who have been written about quite a bit, are doing a spectacular job. So I've been there before. I was there in the '70s. And Bob Iger, who is the president of the company, was there in the '80s. And we've had to come back before. And I think the management of ABC, which is doing it with my cheerleading, and Bob's cheerleading, is doing well. We’ve also maintained a lot of the pre-Disney strides at ABC, that’s why former ABC heads like Brandon Stoddard, Ted Harbert, Jamie Tarses and Stu Bloomberg are still strategic advisers and consultants, as much as Michael Ovitz is and has been since 1995, and still helping build our programming. They really helped pick out more diamonds than rocks, really made sure to keep the funds for series development open, and talked me and Bob out of trying to monopolize our air with Disney product. It’s an amazing team effort. Just because we’ve had a lot of rotation of people and jobs over the past few years doesn’t that it’s chaotic or that no one’s got a handle on things. There’s a lot of continuity even with all that.
PILGRIM: What about *Who Wants To Be A Millionaire?*
EISNER: Oh, it’s definitely doing wonderful. OK, it’s not as unchallengingly big as it was at the beginning, but we still get over 20 million viewers per night. We’ve had three wonderful years of the show so far, and that’s because we decided to only have it two nights a week, rather than milk it all out and do four or five nights a week. But it’s going so well, the ads are coming in droves, Regis Philbin is one of the most popular game show hosts today. And our syndicated daytime version of the show, with Meredith Vieira, has sold nationwide, and is a great supplement to the broadcast version. The fact that we are holding our own with the likes of *Survivor* is truly amazing. Someday, we’ll beat it.
PILGRIM: The talks that you, Disney, wanted to dump *Nightline* to get David Letterman to move to ABC?
EISNER: There was never any serious proposals to get rid of *Nightline*, a very prominent show in ABC’s news arsenal. It’s no secret we did want David Letterman very badly, and we half-jokingly said, “We’ll do anything to get Dave, even end *Nightline*!” But it was just talking out loud, saying something facetious. That said, we’re happy Dave is happy with his renewal at CBS, and ABC has a new late night talk show lined up with Jimmy Kimmel as host. We expect it to do well, and that *Nightline* will continue to be a great and important part of our late night broadcasts.
PILGRIM: The Disney Channel?
EISNER: It’s always been a major and important part of our strategy, and we have so many wonderful shows, both live action and animated. The Jetix programming block, our anime block, is going to be a real barnburner, and will really add arrows to our quiver. Spinning off our preschool block, Playhouse Disney, as a separate channel, suits everyone best, because that way we can grow for different audiences and grow at the same time. Plus, though we’ve cut down in terms of content from the premium cable days, we still include things for older audiences, like concert broadcast specials and documentaries. For example, Disney Channel was a main producer, financer and broadcaster of the documentary *Anne Frank Remembered*, back in 1995, alongside the BBC and the theatrical release by Sony Pictures Classics. We broadcast a documentary about The Monkees back in 1997, and the *Going Home* concert series holds its own alongside *MTV Unplugged* and *VH1 Storytellers*. The 1994 episode with Jackson Browne, which was released on home video and DVD, remains our most popular episode of the series.
PILGRIM: The studio itself?
EISNER: The studio's had a terrific time. We tied for number one in the box office this summer. *Signs* was a big movie, *Lilo & Stitch*. *Star Wars: Episode II-Attack of the Clones* was a really big win for us this summer. We now have a Reese Witherspoon movie that's big out there, going to be the big movie of the fall, *Sweet Home Alabama.* The Springbok Productions co-production, *Tuck Everlasting*, it’s a modest movie that’s getting considerable traction. We have Christmas movies, *The Santa Clause II, Gangs of New York*. We’ve also recovered well from the Miramax scandal, and added considerable prestige to the Touchstone Pictures brand by establishing it as a prestige vehicle. Our dubbing and distribution deal with Studio Ghibli reflects well on us, *Spirited Away* is an amazing film. And we’ve got a lot of really exciting animated and live action projects in the works, including our next Pixar film, *Finding Nemo*. And the interactive gaming division is going great, especially with the release of *Kingdom Hearts*. We have all of the assets in place. We spent all of our capital in the last five years putting moats around our theme parks around the world, building three new theme parks, absorbing and acquiring new divisions, differentiating that Disney brand. The next five years we don't have to spend that kind of capital, watch our cash flow increase considerably. When the economy comes back and a little calmness...
PILGRIM: Are the theme parks going to be a laggard for some time, here, given the conditions?
EISNER: Can't say exactly. Obviously people are afraid to travel still. International travel is way down, 25 percent of our business, for instance, Walt Disney World is international travel. At the same time our theme parks in Japan have never done better. Of course, this weekend we did fantastic out there at Disneyland. We are in position. We have the greatest assets in this sector of the business anybody could possibly have. We don't have to put more capital in it. We have terrific management. And we just have to like let it happen.
PILGRIM: Let's talk about one of those assets, CNN, the rumors that ABC News and CNN would merge in what would be I suppose at first - at once an exercise in synergy and rationalizing and improving cost structures. What is the likelihood in your judgment that that's going to happen?
EISNER: I can't say that I know it's going to happen. I think I can say I'd like it to happen. I think the chairman of your company, CNN is part of AOL Time Warner, would like it to happen. These are two great news organizations, one in broadcast, and one in worldwide cable. And it would give the Disney Company or the ABC News department, with tremendous talent, worldwide reach and would give CNN the reach of a very strong $110 million home broadcast network.
PILGRIM: Dick Parsons, the head of AOL Time Warner, Michael Eisner, the head of Disney, want it to happen. What's to stop it?
EISNER: Well, hopefully it will move forward. But it's complicated. It's...
PILGRIM: Regulation?
EISNER: No, I think the regulation in the end won't be a problem. I think this is very pro-consumer.
PILGRIM: Financial split?
EISNER: No. I think we have to work it out. I think that, you know, you have a fantastic founder of CNN. And I look to Ted Turner as one of the major assets of CNN. And you have a great history of ABC News. And we all have to sit down at some point, and we're not sitting down yet, to figure out how this - how one and one adds up to four and not financially, but culturally.
PILGRIM: Operating control?
EISNER: Well, we haven't gotten that far. I think that ABC has...
PILGRIM: I'm just trying to help you through this.
EISNER: I'll take notes. Let's see, operating? Let's see, Disney still has to have continuing control over what goes over the ABC television. CNN obviously has to have continuing control over what goes over CNN. And we just have to work together. We have correspondents that are very highly respected, personalities, news gathering people, as does CNN. And CNN has this worldwide reach. The Walt Disney Company is a worldwide company. And I think it makes great sense. That doesn't mean it's necessarily, absolutely going to happen.
PILGRIM: Well, ABC News blessed with terrific talent and it will be interesting to see how it all works out. Let me turn quickly to the governance issues, whether it be in terms of independent board members, in terms of audit roles, in terms of greater transparency and disclosure, expensing stock options, what is your judgment about how you're going to improve things from here?
EISNER: Well, you start off with the fact that The Walt Disney Company has had no problems, zero, in transparency, in complicated business deals, in any kind of accounting, we've had zero problem, and don't anticipate any problems. In going forward, we think we were the first company of our size to separate accounting and consulting in doing business with people like that, we did it before Sarbanes-Oxley was passed. We have an excellent accounting firm in PricewaterhouseCoopers. And there has been some criticisms of some people on our board who have previous relationships with me; a fantastic woman, for instance, who is a teacher, who my son was taught by 25 years ago. But this is not be issue for our company, and it's...
PILGRIM: Does Michael Eisner plan to go to greater independence on his board, go to expensing stock options, to begin to take a look at - serious look at not only meeting the basic standards of not having problems, but setting an example for the rest of corporate America?
EISNER: I think we will exceed the standard. We've already implemented procedures in governance that exceed the New York Stock Exchange requirements. We certainly are going toward a major - a majority-plus of independent directors on our board, and that includes the few management directors. This is not a problem. We want to lead in this area as we do in many other areas. And I'm confident that we will.
PILGRIM: Michael Eisner, thanks for being here. Good to see you.
EISNER: Thank you.

**"Eisner Shocks Public With Desperate Ploy To Keep Mickey," by James Bates, *Los Angeles Times*, January 1, 2003**
Right before midnight on New Year's Eve, Michael Eisner, CEO of The Walt Disney Company, made a filing to the U.S. Copyright Office to deny the planned transfer of Mickey Mouse to the public domain, which was scheduled to take effect on the stroke of midnight. In the filing written by Eisner, it claimed that Mickey could not enter the public domain because of a loophole in which such transfers do not occur until a set period of time after the death of a work's creator. Furthermore, he claimed that Mickey was created not by Walt Disney, but by animator Ub Iwerks, who died in 1971, four and a half years after Walt.
This act completely shocked the public with its brazenness in terms of denying a lawful and agreed upon process, and for its blatant historical revisionism. It has long been a source of pride, after all, that Walt Disney created Mickey Mouse, and this type of legal gaslighting has drawn universal condemnation. Angry fan messages have flooded the Internet and the Disney corporate offices, and efforts to create a boycott of Disney's products and theme parks is being bandied around.
"Mr. Eisner's little stunt does not change history or the truth," the Copyright Office states. "Mickey Mouse was created by Walt Disney, and Mickey enters the public domain on New Year's Day, 2003, as scheduled. Entering public domain does not mean that Disney cannot still use Mickey, and much can still be done by them. What it does mean is that Disney is no longer the sole arbiter in how Mickey is used, and opens up the potential for being used for the purpose of parody and satire. Mr. Eisner cannot keep that from happening, no matter how hard he wills it."
Indeed, everyone has been left scratching their heads, wondering how Eisner, who has long been celebrated as a creative visionary for helping marshal the so-called "Disney Renaissance", could have blundered into such a decision. It represents a shocking, out of character, lapse in judgment for someone who has long prided himself in forward thinking, and working in tandem with the right partners alongside him. While Eisner has also long been lampooned as a money-driven, mercenary figure who raises ticket prices on a whim and is seeking to assume control of the entire world under Disney's hegemony, there is no denying that Eisner (in partnership with figures like the late Frank Wells, COO Robert A. Iger, Walt's nephew Roy Edward Disney, Pixar heads Steve Jobs and John Lasseter, and for a brief time, future DreamWorks cofounder Jeffrey Katzenberg) is an incredibly talented executive, and who knows the values of patience, delegation, and creative freedom. Since his tenure as CEO began in 1985, Eisner has brought Disney back from the doldrums, with a massive upswing in its film and television offerings, and an expansion into Broadway and retail, that more than offsets the recent post-9/11 softening of the theme park business. He also pulled the trigger on daring acquisitions of ABC, Pixar and Lucasfilm, which paid off handsomely.
Not every decision Eisner has made has worked out, of course. An attempted new theme park in Haymarket, Virginia, Disney's America, was shot down by historians and people worried about traffic overflows. The creation of a Disney-conceived and owned planned community in Florida, entitled Celebration, has not gone over as well as expected, with an ossified, largely white populace attempting to essentially recreate small town America in the 1950s, and property sales have always been sluggish. Disneyland Paris, originally entitled Euro Disney, struggled financially during its first few years, before stabilizing and growing, though its numbers remain under targets. And Disney's po-faced attempts to ride the dot-com bubble did not unlock the potential of the Internet like expected, and the search engine and architecture it had purchased to do so have been shut down. But Eisner's batting average has been incredibly high, mainly because of the stabilizing presence of Bob Iger to take the reins and responsibilities left vacant by Frank Wells' death, rather than Eisner attempting to take them on himself and micromanage the company. Now, with the filing, Eisner risks ruining his and the company's reputation with such a naked grab for control.
"Eisner has to be made to back down from the ledge and someone like Bob Iger has to go in and put out the fires in order for Disney to recover," an analyst for Merrill Lynch states. "It's the only way they'll be able to get out from under all of this. If they don't, Disney could very well capsize. It wouldn't happen all of a sudden, and it would drag out over several years, but it would be inevitable. Hopefully, Eisner, who has been sensible up till now, will regain his bearings and realize that."
Disney and others had previously lobbied Congress to extend the term of copyright for another 20 years, in the simply-named Copyright Term Extension Act, back in 1998. This would've moved Mickey's time to enter public domain back to 2023. The bill was surprisingly defeated, but an attempt to include similar terms for the Digital Millennium Copyright Act was made. It too failed.

**Transcript of *60 Minutes* report "Eisner's Mousetrap", aired on CBS January 31, 2003**
MIKE WALLACE: No company has been more beloved in the public eye than The Walt Disney Company, and no one character has been a better symbol and icon of the company than Mickey Mouse, the smiling and cheerful mascot of everything Disney represents. This year, Mickey celebrates his 75th birthday, but what was meant to be a cheerful festival of anniversary tribute has degenerated into a public mudslinging match between the company, and the public. On New Year's Eve, Disney CEO Michael Eisner filed a letter to the U.S. Copyright Office, stating that Mickey could not enter public domain as scheduled, because his term was not up. That term would last a decade longer, because the creator was not Walt Disney, as the public has knowing it, but Ub Iwerks, who lived for more than a decade after Walt Disney died in 1966. The outrcry has been furious, Disney's stock price has been hammered relentlessly after nearly 20 years of growth, and Michael Eisner has been the man in the eye of the hurricane.
("STEAMBOAT WILLIE" FOOTAGE, LEADING TO A MONTAGE OF MICKEY, ASSORTED ANIMATION, AND WALT DISNEY)
*In 1928, Walt Disney, a struggling cartoonist from Missouri, released the short "Steamboat Willie" introducing the world to a whimsical new character named Mickey Mouse. The public fell in love with him immediately, and gave Disney the lifeline he sought. From there, Mickey became an icon with continual, expansive adventures, along with an expanding group of friends: his girlfriend Minnie Mouse, his best friends Donald Duck and Goofy, his pet dog Pluto, Puto's nemeses Chip and Dale, and the villainous Pete. From here, Walt Disney used Mickey as a springboard for bigger and bolder successes: his Silly Symphonies shorts, creating the first cartoon in color, the first full-length animated film*, Snow White and the Seven Dwarfs, *and a stable of films and shorts to follow.*
ROY EDWARD DISNEY: Walt built an incredible portfolio of classics over the course of his life. All of that spawned from Mickey Mouse.
*Roy Edward Disney, Walt's nephew, and the only family member still involved in the company, states that the influence of Mickey on the fortunes of the company cannot be underestimated.*
ROY: If there was no Mickey, there wouldn't be *Snow White,* wouldn't be *Cinderella*, wouldn't be *Beauty and the Beast*, wouldn't be *Toy Story*, wouldn't be Disneyland or Walt Disney World.
*Walt Disney died on December 15, 1966, from lung cancer. But the company has grown exponentially in more than 35 years since then, to the point that it a stunning portfolio of popular theme parks in California, Florida, Paris and Tokyo with more to come. It has a division of incredibly successful cruise vacations. It has grown to acquire companies like Pixar Animation Studios, the makers of* Toy Story*; Lucasfilm Ltd., the maker of* Star Wars *and Indiana Jones; The Baby Einstein Company, the educational products division for young children; and the ABC network. It produces and distributes English dubs of the films of Japanese animation studio Studio Ghibli, such as Hayao Miyazaki's* Spirited Away*. It has produced successful Broadway stage transfers of its hit films* Beauty and the Beast *and* The Lion King*. Its record labels, Walt Disney Records for its standard fare and Hollywood Records for mainstream artists, have sold a considerable number of CDs to hundreds of millions of consumers. And it has a considerable reach in the field of video games, most notably the successful game* Kingdom Hearts*.*
NEAL GABLER (Author of a forthcoming biography of Walt Disney): The Walt Disney Company is an absolute behemoth today, a vastly different company than it was when Walt was alive. It has dipped its toe into just about every field in the entertainment industry, is sitting on billions of dollars of profit, and its stock price has historically been insanely high through the last decade. Its live action film division has released an incredibly diverse field of product, from action movies to period pieces to arthouse drama.
(FILE FOOTAGE OF EISNER)
*No one figure is more responsible for this incredible growth than this man, Disney's CEO, Michael Eisner. Since 1984, he has worked tirelessly to reinvent Disney and keep it relevant to new generations, keep it from being considered a laggard that could no longer sustain itself without its founder.*
MICHAEL EISNER: I'm a tireless worker. I can't really afford to slacken my grip, because I guard our gains eagerly.
WALLACE: Some might say obsessively.
EISNER: I don't think that's necessarily a bad thing, though. Sometimes you need to be obsessed in order to be successful.
*Obsessed doesn't begin to cover the record of Eisner's tenure at Disney. Through careful team building, a string of acquisitions, and extremely bold "bet the house" gambles, Disney emerged from a protracted funk into the omnipresent and beloved 800-pound corporate gorilla we know today. But now, the tables may have turned, and Michael Eisner is no longer seen as Disney's savior, but its potential destroyer. The problem is the matter of copyright, or when a product is officially under the purview of its creator, giving them the sole right to benefit financially from it. The average span of copyright protection is 75 years, and Mickey's tenure under copyright is officially over.*
GABLER: Public domain has long been a loathsome word to corporations, especially in Hollywood. Because if something isn't copyrighted or no longer under protection, if you created something, you can still use it and make money from it, but now everyone else in the world has that right, and they can't be sued for it.
WALLACE: So people can use Mickey however they want?
GABLER: Exactly. And Disney doesn't have the option to sue them.
(C-SPAN FOOTAGE OF EISNER BEFORE CONGRESS)
*Disney, or more specifically Eisner, has spent years trying to avoid this outcome. In 1998, he testified before Congress and spearheaded lobbying for the Copyright Term Extension Act, which would've added 20 years to copyright terms. This bill, expected to breeze through Congress and be signed into law, experienced surprisingly strong resistance by grassroots organizations, and the bill was defeated. Eisner tried again by moving to influence the Digital Millennium Copyright Act, and include a clause that would essentially have the CTEA inside it, but a more liberalized version was passed instead. Eisner also takes a serious hardline stance against piracy, and testified before Congress last year to support a technology move called Digital Rights Management.*
EISNER: I consider it an absolute priority, a necessity, to ensure those that make movies, make TV shows, aren't cheated out of what they are deserved, what they are owed.
WALLACE: That kind of talk is sure to get you a lot of enemies in the general public, who think you only care about money, especially at this crucial point.
EISNER: It's the principle that matters. It's the principle that matters.
*But now, in throwing down the gauntlet before the U.S. Copyright Office, Eisner has made his biggest and boldest bet yet, to deny Mickey Mouse from entering public domain. And if the press reaction is any meaningful measure, he's losing badly. A furious maelstrom of discontent has erupted, with constant picketing of the Disney studios in Burbank, California. Major news organizations like* The New York Times, The New York Post, The Wall Street Journal, The Washington Post, Time *and* Newsweek *have devoted a barrage of features and even cover stories on Eisner's bid, and condemned his actions viciously. Disney's stock price, which was at an all-time high of $245 in April 2000 and was hovering around $215 at New Year's, dropped to $140, a level it has not seen since 1999. It has moved up very slightly, to only $148 today. Shareholders who have lost money are agitating for Eisner to either back down or resign his post, threatening to launch a revolt to drive him out of the company. And on top of all this, the bid was made while Eisner has been in talks with AOL Time Warner to get them to agree to a merger of CNN with ABC News.*
ROY: It was a terrible, terrible mistake on Michael's part to do all of this. He has threatened to undo Disney's goodwill and standing with the public, all to prove a point. Especially when he is saying something thoroughly untrue to do it.
WALLACE: Your uncle was the true creator of Mickey Mouse?
ROY: Yes, and everyone knows that, and Michael knows that. But my uncle would be deeply ashamed of what is happening now. He wouldn't want launch a campaign like this just to hold onto Mickey. It wouldn't be worth all the trouble.
(FILE FOOTAGE OF KURT COBAIN, CHARLIZE THERON, NIRVANA)
*The controversy reached a fever pitch when Eisner received a letter from Kurt Cobain, frontman of Nirvana, and his wife, actress Charlize Theron, whose production company, Springbok Productions, had contracts to work with Disney and ABC on film and television projects as well as consult on the building of new theme parks and attractions. The letter threatened that they would walk out unless Eisner dropped his ownership bid.*
KURT COBAIN: I specifically said that I couldn't sit working with Disney on my conscience while it was pursuing a path of shameless corporate greed, and I told her (Charlize) "I can't go along with this, this obvious deception to profit over a man's death."
CHARLIZE THERON: And I said to Kurt, "You beat me to the punch. I feel physically sick about this thing. If Michael's going to pursue this, we can't stick around."
WALLACE: And how did that feel for you?
COBAIN: It was heartbreaking, because I grew up drawing Disney characters. I loved to draw Mickey and Donald Duck, I wanted to be a Disney animator at one point. But the fact is that I've always been against corporate hacks, and they're acting like corporate hacks now.
THERON: It wasn't a decision we took lightly, because we want to work with everyone in the business.
*If Cobain and Theron hoped that their letter would convince Eisner to stop, they were soon disappointed. Eisner sent off a venomous letter of his own, ordering them to honor their contracts and threatening to sue them.*
THERON: It was completely unhinged, utterly nasty, a side of Michael we'd never seen before. I didn't know whether to laugh or cry, so I did both.
*Eisner, for his part, is unrepentant*.
EISNER: At the end of the day, these are people I thought were working with us in good faith, that we'd have a great partnership with. To drag an unrelated situation into their employment, and say "we're going to go to Universal," that is deeply unprofessional, deeply deceptive on their part.
WALLACE: Why do you say "deceptive?"
EISNER: Because it shows they aren't taking their resposibilities seriously or fairly, they want to basically blackmail me, and probably if I do, they'll also want a bigger payoff, too.
*We showed Eisner a series of documents and reports given to us by Disney archivist Dave Smith, as well as copies of pages from various biographies of Walt Disney. All of which clearly demonstrate him as the creator of Mickey Mouse, not Ub Iwerks. When Shown the pages, Eisner gave no coherent explanation.*
EISNER: Here's the bottom line. I'm doing what is right for Mickey, as a character, as a symbol.
*Meanwhile, the bandied about CNN-ABC News merger, the talks of which have cooled considerably due to problems at AOL Time Warner and a clash of cultures, seems permanently scuppered, as ABC News has been facing controversy regarding how it has reported on Disney's actions, reigniting complaints that Disney muzzles dissident voices at the network and spins ABC's news reporting in its favor.*
EISNER: We do not muzzle ABC's news coverage. That is categorically false. We said from 1995 onward that we wouldn't interfere, and we have kept that promise.
GABLER: I'm sorry, but Disney absolutely has its fingers on the scale regarding what ABC can report on. There's a good reason why *Good Morning America*spends so much time promoting Disney movies, why *The View* spends a lot of time interviewing stars of Disney movies and ABC shows. And to fair, AOL Time Warner has had similar problems, not so much with CNN but with *Time* magazine, promoting Warner Bros. films. So, the CNN-ABC News deal was already shaky to begin with and never going to happen, just from those standpoints alone. That's before you get into the organizational breakdown, the culture clash, the anchors' personalities, the budgets and inevitable layoffs. It could be a mighty newsgathering powerhouse, but it could easily be a massive headache. After all, AOL Time Warner looked so promising when that merger happened, and it's devolved so rapidly.
WALLACE: And this Mickey thing is what, the cherry on top of this dysfunction sundae?
GABLER: I'm afraid so. They cancel each other out.
*Meanwhile, as of this date, Michael Eisner continues to press on, battling against the current. While the U.S. Copyright Office says, "Mickey Mouse is in the public domain. Full stop."*

**"Eisner Drops Mickey Ownership Bid," by James Bates, *Los Angeles Times*, February 5, 2003**
Yesterday, Disney CEO Michael Eisner officially announced that he is dropping his and the company's bid to retain copyright ownership of Mickey Mouse. He stated that he would not contest the action any further and also apologized to Nirvana frontman Kurt Cobain and his wife, actress Charlize Theron, whose company, Springbok Productions, has several projects with Disney in the works, but didn't let that stop them from criticizing Eisner's bid. His message states that "I will behave sensibly and they should feel welcome to work with Disney from this point forwards."
Eisner's actions had drawn the ire of the public, and he had responded to it quite venomously and horribly, especially in the case of Springbok. They had delivered a message threatening to nix their contract for film and television projects still owed, blatantly even saying they would shop them over to Universal Pictures. Eisner responded a threat of legal action if Springbok didn't "stay in line" and fulfill the contract. Both Springbok principals responded to the letter by sitting down for an interview with *60 Minutes*, in which they continued to excoriate Eisner's behavior. Cobain in particular seemed pained, since by his admission, he has been a longtime Disney fan and learned to draw by drawing Mickey and Donald Duck. Eisner responded by sitting down for his own interview, which did not go over well, as various letters, memos and files copied and provided for the newsmagazine by archivist Dave Smith, proved that the main contention of the filing, that it was Ub Iwerks and not Walt Disney who created Mickey, was demonstrably false. Clearly seeing the writing on the wall, Eisner backed down.
"Michael Eisner needs to recede to background, at least for a while, in order for his reputation to recover, and for Disney to find its footing again," an analyst for UBS PaineWebber says. "Thankfully, he's not a zealot, and he got out of the way in time for Disney's projects slate to still do well. But the negative buzz could still be hard to overcome, and it could choke the life of them anyways. And at the end of the day, Disney may decide they don't need Michael Eisner to stay afloat. It remains up to him."

**Press release statement by ABC News head David Westin, February 6, 2003**
Regarding the last month, ABC News would like to make things clear to the public. There has been no pressure from The Walt Disney Company to suppress reporting about the actions of Michael Eisner. Rather, it was a conscious decision on our part not to call attention to the story. This is not from a desire to placate corporate offices, but to focus on what is most important right now. Our buying of the Brett Morgen documentary *Michael Jackson: Man in the Music* was important and an event night for us, and we did not want to complicate matters while bidding for it. The loss of Space Shuttle *Columbia* and her crew also took precedence in our reporting. As the specter of war with Iraq looms ever closer, ABC News has been focusing intently on covering each development, and analyzing it as it comes. If you’ll notice, our reporting for *Good Morning America, World News Tonight, This Week, Primetime, 20/20* and *Nightline* has been all about Iraq for the past few months. Indeed, at this very moment, ABC News is urgently waiting to focus on Secretary of State Colin Powell’s address to the United Nations to analyze intently, Brian Ross is preparing a report about Saddam Hussein’s son Uday for *20/20* that will air on Valentine’s Day, and *Nightline* will do a report about the psychological profile of Saddam Hussein the following night. We did not move to disrupt our plans and scheduling for these and other related reports, especially for items that are not particularly important on the world stage. ABC News will focus on the stories that matter most, and nothing matters more right now than the possibility of war with Iraq. In time, that will change, and so will our focus.

**"Merger Deal Off for CNN and ABC News," by Elizabeth Jensen, *Los Angeles Times*, February 14, 2003**
AOL Time Warner Inc. pulled the plug Thursday on a proposed merger between its CNN news network and The Walt Disney Company's ABC News, formally ending months of discussions about how to make such a complicated combination work.
A merger could have resulted in tens of millions of dollars in savings for both sides and a chance to combine two powerful brands into a dominant newsgathering organization. But it also presented major hurdles, including figuring out how control would be divided.
Some within both companies continue to hold out hope that a deal might be struck down the road. But the prospect of an agreement had become increasingly problematic, with both companies gearing up to cover a possible war with Iraq and critics attacking media consolidation in light of the Federal Communications Commission's upcoming revision of ownership rules.
In the end, the deal appears to have been just too much for AOL Time Warner, in particular, to take on at a time of management turnover and problems at its core AOL online service. It also became too much of a problem to deal with in the aftermath of Disney Chairman and CEO Michael Eisner's recent unpopular gambit to prevent Mickey Mouse from entering public domain, and ABC received considerable criticism for how it was reporting (or not) on the actions of its corporate parent.
The two sides, which started talking seriously in late summer, hadn't held formal talks since late November, as AOL Time Warner also grappled with other issues, including the resignations of Chairman Steve Case and Vice Chairman Ted Turner, CNN's founder, who recently broke his public silence to say he was against the merger. Turner's decision to relinquish his executive role at the company had been a hopeful sign for some CNN insiders who favored a deal.
Word that the merger was officially off emerged after a daylong meeting of AOL Time Warner's top executives, who were gathered in New York to discuss corporate strategy.
In a short statement, the company said: "After careful review, it was determined that although there are great merits and possibilities to a merger of ABC and CNN news, for us, the potential problems associated with the completion of such a transaction and the integration of these two distinct and great cultures was more than we want to pursue at this time."
Disney spokeswoman Zenia Mucha eulogized the failed concept - an indication, some thought, that talks possibly could be revived later.
"ABC is a preeminent news organization," Mucha said. "This would have been a venture that would have benefited both sides, but circumstances have prevented it from moving forward."
Mucha did announce that the failure of the talks did have one positive impact: that ABC News would officially be joining the likes of CNN, Fox News and MSNBC into joining the 24-hour cable news race. ABC News Network, as it will be called, will launch next year, and also have full independence in its reporting, without Disney promoting "corporate synergies" with its other properties and saying that the cable news network would be free to report on Disney extremely negatively, when warranted. Furthermore, a 24-hour digital Internet news service would also be available, and also containing live TV updates from both ABC News and ABC News Network.
"This is a prospect that ABC has had for many years, and tried several times, but could never get off the ground," Mucha said. "Now its time has come, and the CNN merger talks indirectly led to it being revived. ABC News Network will be a true standout in cable news, and further the reach of journalism and discourse."
CNN has talked about a merger with both Viacom Inc.'s CBS News and ABC News in the last two years, but the discussions with ABC turned serious in August. The ABC-CNN merger plan called for CNN to own 70% and ABC to own 30% of the venture. Disney would continue to own ABC itself.
Disney executives wanted to make the merger happen. In October, during an appearance on CNN's *Moneyline*, Eisner embraced the concept.
"I think it makes great sense," Eisner said, although he cautioned that negotiations were complicated and the two sides still were sorting through the sticky issues of operating control and financial splits.
Even after months of talks, executives from each side espoused separate theories of how it would be controlled and decisions made.
Getting employees on board was going to be a daunting task as well, as ABC and CNN have markedly different styles, driven by the different amounts of airtime they have to fill. CNN is more focused on live events, and ABC's forte is analysis.
Even the news that the two companies had considered joining forces sent employees into a state of anxiety as they worried, prematurely, about which jobs would be eliminated. Tensions were further fueled when it was learned that the companies were expecting to generate $200 million in cuts out of their combined newsgathering budgets.
News that the merger is off may not mean that employees can breathe easy, however, because many of the same financial pressures that were driving the merger still exist.
While ABC News has been profitable and earning good ratings compared to NBC and CBS, it certainly has been left behind by cable news, and the Mickey flap was a definite hit to their credibility, renewing criticism of Disney censoring the network, especially when Disney itself is the story. The cable news network revival could be either a standout idea of immense growth for ABC, or an immense flop where it could easily get steamrolled by its competitors like CNN, and such a failure could drag ABC down with it. Though CNN still is turning out a healthy operating profit of about $200 million, it had flat results in 2002. And CNN's main U.S. network last year slipped to second behind the aggressive Fox News Channel in the ratings.

**"Iger Seeks To Right The Good Ship Disney," by Sallie Hofmeister, *Los Angeles Times*, February 17, 2003**
Robert A. Iger, COO of The Walt Disney Company, standing in for beleaguered CEO Michael Eisner, made a serious of announcements today to help the company overcome the wave of negative publicity caused by Eisner's attempts to prevent Mickey Mouse from entering the public domain. With Eisner on a long, indeterminate leave of absence, Iger is now the man in charge, and is hitting the ground running to help stir up fan fervor once more.
First off, he announced a new promotional campaign referred to as "The Swashbuckling Summer of Pirates," focused on its upcoming newest animated feature *Treasure Planet*, aimed to release in June after being moved from its original November 2002 release date, as well as the live action *Pirates of the Caribbean: The Curse of the Black Pearl*, releasing in August and produced by prolific Disney partner Jerry Bruckheimer. There will a flurry of promotion by Disney's retail operation as well as in the theme parks, including parades and special junkets with the casts of both films, and moving the characters of both films to already be featured as "cast members" in the theme parks. The actual Pirates of the Caribbean ride will also undergo a minor facelift to correspond with the movie.
He also announced that the Submarine Voyage, a popular attraction that was retired, will return to both Walt Disney World and Disneyland, rethemed to tie in with the 2001 animated film *Atlantis: The Lost Empire*, and confirmed that Disney's America, a planned theme park in Virginia that was called off due to fierce criticism, will be revived, instead as a new fifth gate in Walt Disney World, and stressed that it would be done in tandem with the work of leading historians in order to make a rich, authentic and tasteful experience, while also being respectful and honest about touchy subjects like slavery and the Civil War.
The news certainly gives the public and investors reasons to be hopeful. Disney's stock price, which had been on a violent downswing during the Mickey ownership bid, has risen significantly thanks to Iger's announcement. Market tracking studies indicate incredible advance buzz for Disney's upcoming films this year, and even the sluggish theme park business, which has struggled since 9/11 to regain its former momentum, is already showing signs of recovery as the new publicity campaign has led to a surge in Disney reservations.
"If Bob Iger pulls this off, he is the company's hero," Ralph Pellechia of Fitch's says. "He will have completely erased this black mark from their history, and he'll be seen in a new light, which should be worry Michael Eisner. After all, Iger will steal his thunder as the indispensable man, and his own days at Disney could very well be numbered. By going on hiatus and handing the reins to Iger, he may have signed his own death warrant."
This theory is certainly gaining traction throughout Wall Street and Hollywood, that Eisner's strategic blunder may be enough to have virtually erased his long and storied career at the House of Mouse, and that Iger will soon take more than the power, but the title of chief executive as well. "I don't foresee Michael Eisner remaining at The Walt Disney Company much longer," Army Archerd of *Variety* says. "This mistake will have completely made him persona non grata in Burbank, and he should already also be focusing on his golden parachute and his retirement."
However, others say that it would be premature to write Eisner's obituary. "Let's not forget, Michael Eisner saved Disney when it was badly needed," film critic Kenneth Turan says. "He made it into one of the major studios, on par with Paramount, Warners, 20th Century Fox and Universal. He helped make them a colossus with daring and farsighted acquisitions, particularly of Pixar and Lucasfilm. It's very likely that he'll return to the company a much humbled man and work more in tandem with Bob Iger as a partnership and give him more of the day-to-day duties."

**"Disney Joins Digital Film Download Service," *The Sydney Morning-Herald*, July 25, 2003**
US entertainment giant The Walt Disney Company has joined a growing list of top Hollywood studios to make their films available online, despite fears over Internet film piracy, the company said.
The move by Disney, unveiled on Wednesday, made it the sixth major studio to join the Movielink digital distribution service and left only one still holding out: 20th Century Fox.
The deal is seen as a milestone for Movielink, which has been battling the threat of online piracy for its right to survive amid a raft of US legal cases involving illegal downloads of copyrighted music and films.
Disney had been holding out from joining the controversial system while working with Fox to develop its own service, an initiative that collapsed a few months ago.
The company founded by Mickey Mouse's creator has also been strongly lobbying for Congressional initiatives aimed at thwarting piracy as the company wrangled over the dangers of digital film delivery.
Disney is to put 50 of its titles on Movielink, including Touchstone film releases *Chicago* - which won this year's Best Picture Oscar - *Gangs of New York, The Recruit, The 25th Hour, Frida* and *The Jungle Book 2*.
Older titles that form part of Disney's library such as *Monsters, Inc., The Rookie*and *In the Bedroom* will also be available.
The addition of the Disney titles boosts Movielink's film catalogue to around 400 films, compared to just 175 when it launched eight months ago.
"This deal illustrates the belief in the internet as a new and potentially vibrant channel of film distribution by another major studio," said Movielink executive Jessica Algazi.
She said Disney's membership highlighted Movielink's "interest in doing deals with all content providers to help open up this channel of distribution even further".
"Our relationship with Movielink opens the door to exciting new territory," said Dan Cohen, of Buena Vista Pay TV, a Disney unit instrumental in the deal.
The entertainment industry press said Movielink was still pursuing negotiations with Fox and hoped to seal a digital distribution deal with the last holdout studio.

**"Eisner Says He Will Not Leave Disney," by James Bates, *Los Angeles Times*, November 1, 2003**
Disney CEO Michael Eisner stated today, "as Mark Twain once said, reports of my demise have been greatly exaggerated. Despite a lot of rumors to the contrary, I am not leaving The Walt Disney Company for quite some time yet, and there has been no effort or revolt to oust me. In fact, the board and I have had a very cordial, productive meeting, and we have planned out a lot for the future. My current contract with Disney will not expire until 2008, so that is the earliest date I will leave. And I also have no problems or difficulties with Bob Iger. On the contrary, I am grateful for him, and I applaud the way he has held down the fort while I've been away. I know he is also a great and capable choice as the point man, the daily administrator, to do the jobs that I cannot. We look forward to what is to come in the years ahead."
After Eisner's ill-advised attempt to deny the moving of Mickey Mouse to the public domain and Iger's temporary stewardship, the word around town was that Eisner was effectively dead meat. However, those reports apparently are not coming to pass, especially as Disney's board members went on the record to state their full faith and support of the CEO. He has, however, been relieved of his duties as chairman, giving them to Iger.
During the last nine months, Iger has completely restored confidence and support of Disney, with his "Swashbuckling Summer of Pirates" campaign making the animated *Treasure Planet* and the live action *Pirates of the Caribbean: The Curse of the Black Pearl* massive blockbuster successes at the box office and in critical reception, and Disney's theme park business has shaken off its post-9/11 slump to be bustling and hectic once more.
"This is a turnaround on par with the one Eisner himself achieved," an analyst for Lehman Brothers says. "Bob Iger has a promising future with Disney."

**"ABC News Network, A 24-Hour Cable Network Version, Launches Today," by Milt Freudenheim, *The New York Times*, January 10, 2004**
The Disney-owned network ABC has officially launched a brand new expansion for its news division. ABC News Network, a 24-hour cable news network modeled after CNN and available to be watched by viewers worldwide, officially premieres today.
The idea for ABC to create such a news network is not a new one; it had been considered as far back as the time The Walt Disney Company announced the purchase of ABC back in 1995; however it was decided that creating a website for ABC News would make far more economic sense. Indeed, the website has received considerable traffic since then.
However, there has long been criticism of how much influence Disney apparently has on ABC's news reporting, particularly when Disney itself is in the stories being reported. It has also been a common practice for shows like *Good Morning America* to be used to utilize "corporate synergies", as in using the shows to promote the releases of Disney's film, television and Broadway releases. Last year, during the height of the controversy over CEO Michael Eisner's attempt to deny the moving of Mickey Mouse to public domain, ABC was clearly caught in the horns of a dilemma on how to report on it. The controversy made the network decide to revive the cable news network as a way to ensure greater independence in the news division.
While the parent network will continue to have news programs and the notable talents of anchors like Diane Sawyer, Martha Raddatz, Peter Jennings, Charles Gibson, Barbara Walters, Jonathan Karl and George Stephanopoulous and will continue the process of synergies, ABC News Network will be a completely different animal. It will have no promotions of Disney product, stick solely to news reports, including being completely uncensored and hard-hitting against Disney when needed, and consist entirely of prime talent in news reporting with strong journalistic ethics. (One notable parent anchor who will be involved, at least to some extent, with the new cable network is anchor Brian Ross.) It will include expanded, rawer renditions of prominent news magazines like *20/20*, *Nightline* and *Primetime Live*; as well as resurrecting former parent network programming like *Day One*, *Viewpoint* and *Turning Point*. The worldwide reach of this version will thus also include an array of news talent from many different countries to be involved. ABC Radio Networks will also be integrated into this group, and it too will be free to not follow Disney's line.
"We expect that the ABC News Network will be an incredible success," Disney COO, President and Chairman Bob Iger told the press. "The fact that ABC News and ABC Radio Networks will be able to ensure full independence in this manner shows that a great concern for the integrity of media is being weighed thoroughly. We also expect this to help launch a sea change that CNN, MSNBC, CNBC et al will be able to follow and only improve with."
Indeed, CNN has announced particular changes to help rededicate itself in its vision, even with a proliferation of new news hubs but remaining firmly in place in Atlanta. In addition, the network has also announced that it has negotiated stronger package deals for the financial markets-only channel, CNNfn, to be carried at favorable rates by all the cable suppliers and even to be part of basic public access. CNNfn will also shepherd its Web presence to merge with *Money* magazine to make its website be renamed CNN Money.

**"A Battle Disney May Never Forget; For *The Alamo*, A Long and Bumpy Road From Conception to Release," by Sharon Waxman, *The New York Times*, March 24, 2004**
When the dust finally settles, The Walt Disney Company may not want to remember *The Alamo*.
An updated epic about the historic last stand at the Texas fort, the big-budget feature was meant to be Disney's prestigious, star-studded showpiece for Christmas 2003, the culmination of a banner year for Walt Disney Studios, capping off the massive success of that year's "Swashbuckling Summer of Pirates" campaign and the success of Pixar's *Finding Nemo* as well as successful mature films like *Kill Bill, Volume 1* and *Monster*.
Instead it is turning into an unintended emblem of the media company's troubles from earlier last year, when CEO Michael D. Eisner made an ill-advised attempt to deny Mickey Mouse's transition to the public domain, troubles it has moved long and hard to put in its rearview mirror. The movie, over budget and extensively recut, will finally be released on April 9, laboring under the taint of skeptical industry talk. Starring Dennis Quaid as Sam Houston, Billy Bob Thornton as Davy Crockett and Jason Patric as Jim Bowie, *The Alamo* may ultimately find a broad audience. But its journey, from conception to release, has been a bumpy one.
The film was originally slated to be directed by Ron Howard in 2002, just after his Best Picture Oscar for *A Beautiful Mind*, and to star Russell Crowe. The budget was to be about $125 million, and the movie was to have an R rating for violence. Instead Disney switched gears to opt for a lower budget and a less experienced director, John Lee Hancock, who was to make the film for $75 million and a tamer PG-13 rating, to draw a wider audience.
But after a false start and recuts, *The Alamo* has ended up costing about $107 million and has gone from a 3-hour version to one about 2 hours 15 minutes, the filmmakers say. The role of General Houston, originally intended for Mr. Crowe and played by Mr. Quaid, has been reduced, said Mark Johnson, the movie's producer.
The film, screened this week for a *Times* reporter, is heavy on history and sweeping shots of the reconstructed Texas monument, but short on action and drama, instead being a dry and ponderous, overly talky chronicle that has no particular reason to justify its existence.
Part of the problem with the movie, Mr. Johnson acknowledged in December, was the lack of a central hero. ''There's no one lead,'' he said during the re-editing process, when three editors were reworking on sections of the film. ''We've got to keep six characters alive, which is proving really difficult. We may have attempted to do too much.'' Last week Mr. Johnson and the director, Mr. Hancock, said they were happy with the final version. ''I feel really good about it,'' Mr. Hancock said. ''The scenes are shorter. If any character suffered from this, it's secondary'' to the story.
Films that are pulled from release schedules for further editing are often labeled troubled in Hollywood, and *The Alamo* is no exception. Its fate has been fodder for Texas newspapers and Internet movie sites. And though script changes, delays and inflated budgets are not uncommon, the attention on the troubles of *The Alamo* could hardly come at a more embarrassing time for Disney. While last year the company was able to overcome the bad publicity from Mr. Eisner's stunt and make an astonishing recovery in every sector, this year the movie studio already has one pricey disappointment in *Hidalgo*, an estimated $140 million production (Disney officials would not confirm the figure) that so far has taken in only $48.5 million at the box office.
*The Alamo* has poor advance word according to market research. The worst case scenario has it failing to make more than $25 million at the box office, which when judged against the budget and the P&A costs, would hand Disney embarrassing losses of $145 million, which would make it the biggest flop in the company's entire history.
Dick Cook, chairman of Disney Studios, said he was confident that the delayed film would be worth the wait. ''I'm thrilled'' with the new version, Mr. Cook said in an interview on Monday. ''We all felt we've got something really great, really special. We made an epic.''
In May 2002 Disney proudly announced its intention to remake the classic tale of *The Alamo*, with Mr. Eisner saying the film would ''capture the post-September 11 surge in patriotism.'' Disney said it would take care to give context to the Mexican side of the battle and also be far more historically accurate than other tellings, leading to observations in the press that the film would be a politically correct version of the tale. This especially comes since Disney itself was one of the main proponents of Alamo mythology with the film *Davy Crockett* starring Fess Parker in 1955.
The latest of many screen versions, *The Alamo* was to be based on the 1836 story of about 200 defenders - mostly Texians (Anglo immigrants to Texas, then a part of Mexico) and a few Tejanos (people of Mexican descent living in Texas) - who held the fort for 13 days before it fell to Mexican troops led by Gen. Antonio López de Santa Anna.
The Alamo heroes included Col. William Travis (Patrick Wilson), Bowie (Mr. Patric) and Crockett (Mr. Thornton), whose last stand passed into history and became a rallying cry for General Houston to win the war for Texas independence.
Mr. Howard had spent a year developing the script with the writer John Sayles (*Lone Star,* 1996). The Oscar-winning writer Steven Gaghan (*Traffic*, 2000) had been hired to polish the story, and vast sets had begun to rise on a plain near Austin when in July 2002 Disney said Mr. Howard would not be the director.
At the time Disney executives explained that the budget was too high, since an estimated $30 million would go to Mr. Howard, Mr. Crowe and Mr. Howard's producing partner, Brian Grazer. Mr. Grazer said Mr. Eisner mainly pulled the plug over the R rating, which was the only way Mr. Howard saw to direct the film.
''We finally found the right filter through which the story was worth retelling,'' Mr. Grazer said. ''The only way it really made sense was within the psyche of the three guys'' inside the Alamo fort.
Mr. Grazer said that he and Mr. Howard felt they had had Disney's commitment to make an R-rated movie, which the studio ultimately rejected, and were upset because they had used their influence to get Mr. Crowe, much in demand at the time, to star. Ethan Hawke had also signed on for a supporting role, and Sean Penn was close to taking the Bowie role, Mr. Grazer said. (Mr. Grazer and Mr. Howard's company, Imagine Entertainment, remains credited as producers, as well as the men themselves.)
Disney instead hired Mr. Hancock, whose first film, *The Rookie*, had become a modest hit. Mr. Hancock, a Texas native, said he had spent five weeks deciding to take the job, agreeing to a lower budget and a PG-13 rating.
''I always looked at it as a character drama on a historic stage,'' said Mr. Hancock, 46, about undertaking the shoot. ''I was frightened. I'd never done anything like this before. Some days we had 12 cameras going, at once. Sometimes it was like directing the 'Monday Night Football' game from the booth. It's big.''
Shooting, scheduled for November 2002, got under way in January 2003, with a budget that had soared to $95 million. The studio erected what the producers say was the largest set built in North America, a 50-acre swath recreating the Alamo fort and the 19th century town of San Antonio in Dripping Springs, 75 miles outside of modern-day Austin. ''You could shoot 360 degrees around safely without seeing anything but the entire town of San Antonio as it existed in 1836,'' Mr. Johnson said.
Mr. Hancock ended up with one million feet of film, and just a few months to trim it into shape, in time to be the centerpiece of Disney's Oscar season, Christmas films. Ultimately the director was not happy with the cut he had completed by October. The movie was tested at a length of 3 hours, and again at a length of 2 hours 25 minutes. ''Neither one was the right movie,'' Mr. Johnson said.
The essential problem was that the movie broke into three sections, with the fall of the Alamo happening at the end of the second section, and the third act involving Houston taking revenge for the fall of the fort. The director was grappling with getting to the siege and battle more quickly.
On October 29, with some billboard advertising already in place and the trailer mailed to the news media, Mr. Cook, chairman of Disney Studios, agreed to pull *The Alamo* from its schedule, just eight weeks ahead of its planned release date.
''Ultimately the end product is more important than the need to meet arbitrary deadlines for awards, etc.,'' Mr. Cook said at the time.
The epic was trimmed to two hours, then tested. Two weeks ago another 15 minutes was reinserted into the film. The filmmakers said that Mr. Quaid's role had shrunk considerably and that other roles had been cut entirely.
For Mr. Hancock, the director, it has been an agonizing process. Last week he was near tears, Mr. Johnson said, when he called an actor to tell him his role had to be eliminated.
Despite the delay Disney has put significant marketing muscle behind the film, spending an estimated extra $35 million on advertising, including during the Super Bowl. The studio has planned a star-studded, blowout premiere in San Antonio on Saturday night, and a three-day media junket.

**"Disney Names New Studio Head, Eisner Defines Succession," by James Bates and Richard Verrier, *Los Angeles Times*, July 11, 2004**
Disney CEO Michael Eisner announced today that he has named former Miramax development head Meryl Poster to the position of chair of The Walt Disney Studios. Currently operating studio head Richard W. Cook, who has had the chairman position since 2002, will continue to remain in place and be Poster's equal and co-chair, where they both are the superiors of the heads of the various studio divisions of Walt Disney Pictures, Walt Disney Animation Studios, Pixar Animation Studios, Touchstone Pictures, Hollywood Pictures and Lucasfilm Ltd.
"Meryl has proven herself quite formidable and talented in her own regard, and she was the only person who could buck trends at Miramax and not suffer for it. Her instincts are very much welcomed, and we expect her to lead the studio for many, many years to come," Eisner said in the statement to the press. Indeed, as the statement says, she became known as the only woman able to say no to Harvey Weinstein, who in turn was able to go along with suggestions that she made regarding projects in development.
"I am really quite excited to be joining the talented heads and people at Disney," Poster said. "For nearly 20 years, Michael Eisner has helped redefine The Walt Disney Company as an impressive force in family-friendly entertainment, and also encouraged its organic evolution into more mature territory and brave new creative endeavors. And Dick Cook is an absolute wonderful figure to be co-chair with, I am honored to be working with him."
"I welcome Meryl to the chair, and to Disney as a whole," Cook replied. "Together we will help blaze new trails for Disney, and make amazing projects that will be enjoyed for generations to come."
In addition to this, Eisner announced that rumors of his contemplating retirement in the future are true, and that he has announced that he will leave Disney in 2008, and selected Disney COO Robert A. Iger as his successor. Iger has been head of ABC Entertainment since just before Disney's purchase of the network, and COO of Disney since 1996. Iger also has experience helping fill in for Eisner, as after an ill-advised attempt to prevent Mickey Mouse from entering the public domain in early 2003, the results of which caused massive negative press for the company, Eisner went on a months-long sabbatical and Iger held down the fort, completely turning the PR battle around with the amazing "Swashbuckling Summer of Pirates" marketing blitz to promote *Pirates of the Caribbean: The Curse of the Black Pearl* and *Treasure Planet* simultaneously that year, helping lead to massive box office success and critical raves for both films. Indeed, since Eisner has been back, Iger has been taking on more and more duties that used to be the CEO's domain, helping the company continue its amazing run of success that it has had for the last 15 years, even after John Lee Hancock's dry, ponderous drama *The Alamo*became the largest box office flop in Disney's history after it was released back in April.
"Bob has shown that he has what it takes to get the job done, and he's definitely been proven to be effective in a crisis situation. In my remaining years here at Disney, I will naturally be giving Bob more and more power, little by little, while working to get my creativity on overdrive. I know that the next few years will be important for The Walt Disney Company, and I'm going to ensure it's done right," Eisner explained in his statement. Shares of Disney stock rose $15.27 in response to the news.

**"Disney and Springbok's *Tarzan* Will Have No Tryout," by Ernio Hernandez, *Playbill*, December 19, 2004**
Walt Disney Theatrical and Springbok Productions' upcoming stage transfer of Disney's 1999 animated film *Tarzan*, which had a reading earlier this year, will not have an out-of-town tryout before it opens on Broadway in the near future.
Disney Theatrical head Thomas Schumacher says there are several simple reasons for this decision, which goes against the standard practice done for Disney's adaptations of *Beauty and the Beast* and *The Lion King*, its original production *Aida*, or having *The Hunchback of Notre Dame* open first in Berlin, Germany, in 1999.
"Very little has tended to change from tryout to initial previews with our musicals, with the exception of *Aida*, and this is bound to be a smoother process, creatively speaking, than that, so there is not particularly much of a point for a tryout. Besides, as a friend once said, 'I like the preview audiences being the New York audiences. They're right there, telling you what to fix, there's no BS about it...' And we're planning a great physical production with impressive, highly exciting acrobatic stunts in the vein of a Cirque du Soleil show to recreate the full effect of Tarzan's incredible agility as shown in the movie. We're not just having actors swing like a pendulum on a harness, back and forth, we're going for something far more impressive and profound. A lot of theaters that we would have had a tryout in aren't equipped to handle what we have in mind, so we need to start in New York."
Schumacher says that the adaptation of the movie, itself based on Edgar Rice Burroughs' novels, focusing on a man who had been orphaned and raised by apes in West Africa, will not just be a straight transfer. "Phil Collins is coming up with great new songs to add to the ones he wrote for the original movie, and we couldn't be more excited. David Henry Hwang, a great writer, came up with an impressive first draft of the book, and we knew he would be a great fit after his rewrite work on *Aida*. David Ives has come on to do his usual 'cut two-thirds and extract the essence' to help make the production tighter and sharpen things considerably. And Springbok are wonderful creative partners."
Schumacher isn't going in without a safety net, however. "That said, we're going to have several more readings and a few workshop productions all across the country to help ensure the book is finely-tuned in the meantime. Expect to see as many as six such occurrences throughout 2005."

**"Rudin Leaving Paramount to Join Disney," by Laura M. Holson, *International Herald Tribune*, April 21, 2005**
Scott Rudin, a veteran producer whose films last year ranged from a failed remake of *The Stepford Wives* to a well-received adaptation of Broadway's *Closer*, said he would end his longstanding deal with Paramount Pictures and begin making movies for Walt Disney Studios when his contract expires in 2006.
Rudin is the first major producer to leave Paramount since the former talent manager Brad Grey joined the company as chief executive last month in a management shakeup. It had been widely expected that Rudin would leave the studio, where his 15-year tenure was rooted in a close relationship with the departing chairwoman, Sherry Lansing.
In agreeing to make movies for Disney, Rudin said he hoped to channel projects to all of the company's divisions; including Walt Disney Pictures, Hollywood Pictures, and especially Touchstone Pictures, which is especially moving to pick up the slots left behind by Disney's shuttering of Miramax Films four years ago after the exposure of Harvey Weinstein's history of criminal sexual behavior.
Rudin is likely to fill a gap by providing the sort of high-quality, offbeat art films that Disney has historically struggled to create on its own. While no stranger to commercial bets like *The School of Rock* (with Springbok Productions), Rudin is known for adapting novels and plays into more sophisticated fare like Closer and *The Hours*. Last year was not one of his best years, being marked by disappointments that included *The Stepford Wives* and *The Manchurian Candidate*, both made for Paramount.
Reached in London, where he was attending a premiere for the Touchstone release *Hitchhiker's Guide to the Galaxy*, the Disney studios co-chair Richard Cook cautioned that Disney's anticipated deal with Rudin was not complete. "We don't expect hitches, but it is not done," he said.
Rudin said that a clause in his Paramount contract allowed him to move projects to another studio. A Paramount representative would not comment on the assertion, but the studio said in a statement that it had been informed of Rudin's intention to leave.
Paramount executives - who asked not to be identified for fear of disrupting continuing relations with Rudin - said they had spent Tuesday reviewing his contract. The deal was reported in *The Los Angeles Times* on Tuesday.
Yet to be resolved are whether Rudin will leave Paramount earlier than 2006 and whether he will get the hefty payouts the studio afforded him, including 7.5 percent of the company's receipts from the box office for his films. Rudin would not discuss the terms except to say Disney was "close" to paying him what he got at Paramount, which is a unit of Viacom.
Looking back on his years at Paramount, Rudin described the experience as uneven. "Paramount has been a moving target," he said. "That has been a hard thing for producer."
With Rudin, Disney is adding one of the film industry's more temperamental personalities to its roster.
"I hope there is some friction," Cook said. "It means something is getting done."
Rudin conceded that he was tempestuous at times. "Do I fight for the movies? Yeah," he said. "Do I circumvent the process? Yeah." But he added, "I want what is best for the movies."

**"Life After Darth," by Steve Silberman, *Wired*, May 1, 2005**
George Lucas is daydreaming again at his desk.
He looks out the window of the 19th century house in Northern California he bought 30 years ago, when he was still a young man slaving over a script inspired by the mental image of a dogfight in space. Art and history books line the walls of the room he designed as a personal sanctuary, and there's an editing bay next door networked to servers a few miles away at Skywalker Ranch, the Victorian headquarters of his filmmaking empire. The father of digital cinema is willing to employ technology to serve his own artistic ends, but he does not use email, nor does he surf the thousands of fan sites devoted to the output of his prodigious imagination. The whole rollicking galaxy of *Star Wars* was originally rendered in longhand with a No. 2 pencil.
On May 19, *Revenge of the Sith*, the final installment of that six-part saga, will open on thousands of screens from Chicago to Shanghai after premiering days earlier at the Cannes Film Festival. The epic that has defined Lucas' career is finished, and the director finds himself at a crossroads.
Lucas and his contemporaries came of age in the 1960s vowing to explode the complacency of the old Hollywood by abandoning traditional formulas for a new kind of filmmaking based on handheld cinematography and radically expressive use of graphics, animation, and sound. But Lucas veered into commercial moviemaking, turning himself into the most financially successful director in history by marketing the ultimate popcorn fodder.
Now he has returned to the most private place in his universe to reinvent himself. He could spend the rest of his life capitalizing on *Star Wars*' legacy. (His current distributors, Disney, which bought Lucasfilm back in 1996, practically have fallen over themselves to assure the public they plan to continue in some form down the line.) Instead he's trying to dream up a second chance to be the rebel filmmaker he aspired to become a long time ago.
"I like *Star Wars*, but I certainly never expected it would take over my life," Lucas says in a conversation at Skywalker Ranch. He estimates that he gave two decades of solid work to *Star Wars*, not including a hiatus to raise three adopted kids as a single father. Now 60, the once-lanky wunderkind in aviator glasses has grown bearish, with a snowy, close-clipped beard and a sardonic wit that doesn't come through in the making of documentaries. He says he's relieved that the longest chapter of his career is over.
"Normally at this time, I'd be under a lot of pressure to get the script done for the next movie. There wouldn't be any break from the stress and creative demands. So it's great to be able to kick back."
Those who have seen advance screenings of *Revenge of the Sith* say that the new film - which focuses on the transformation of the petulant and ambitious Anakin Skywalker into the malignant Darth Vader - is more emotionally engaging than the last two prequels, *The Phantom Menace* and *Attack of the Clones*. Lucas' friends observe that while he certainly is proud of what he did with the first two prequels, he seems happier with this film, which he's been showing off proudly for months in rough cut form at the ranch. The invitation-only audiences have included many illustrious peers from his film school days, including the directors Steven Spielberg and Matthew Robbins, writer-producer Hal Barwood, and Walter Murch, winner of two Academy Awards in 1997 for film editing and sound on *The English Patient*.
But Lucas won't be kicking back for long. Even as he plans a creative reboot, he faces a backlog of dozens of projects awaiting his supervision as head of Lucasfilm. First is executive producing *Red Tails*, a movie about a group of African-American fighter pilots known as the Tuskegee Airmen, who were excluded from the US Army Air Corps until 1940 and then flew 1500 missions in World War II without losing a single plane. A fourth episode of the *Indiana Jones* story will move forward as soon as Lucas, director Spielberg, and returning hero Harrison Ford sign off on a script.
And Lucas isn't quite done fiddling with *Star Wars*. Two more TV spinoffs are in the works - one a live action series, the other in the vein of the Disney Channel series *Tales from Clone Wars* - plus he's overseeing yet another rerelease of all six films, this time digitally remastered in 3D. Then there's Lucasfilm's animation unit, which is incubating ideas for its first full-length feature. A documentary team is producing shorts on the lives of historical figures to accompany the DVD release of the TV series *The Young Indiana Jones Chronicles*. Lucas is also developing two new TV series: "one about the future, and one about media," he says, adding that they'll be "controversial and hard to get on the air." And Lucasfilm, through Disney, will be continuing to make *Star Wars* films without Lucas, as the deal he made with the Mouse basically has the clause built in.
Even if Lucas' personal imprimatur turns out not to be enough to put these shows on TV, he has little reason to worry about keeping his empire in the black. With an infusion of Sith tie-ins from Lego, Topps, Cingular, and Hasbro, and of course, having Disney's resources at his disposal, Lucas' digital domain is poised to survive long after General Grievous Pez dispensers are collecting dust under beds from here to Coruscant.
Now Lucas says he is determined to leverage that security to make the kinds of movies that no one expects from him. He claims to have a stack of ideas piling up on his desk for "highly abstract, esoteric" films even more daring than his 1971 debut, *THX 1138*. An expansion of one of Lucas' student projects at the University of Southern California, *THX* anticipated the cyberpunk aesthetic of William Gibson's *Neuromancer* and Ridley Scott's *Blade Runner*, depicting a pharmaceutically numbed society of the future under constant video surveillance. After Lucas spent a year digitally restoring the film for its theatrical rerelease and DVD debut in 2004, a longtime employee observed: "I've never seen George so excited by any other project at the company." Lucas says the restored *THX* was just a preview of even edgier films to come that he will finance and direct himself.
"I've earned the right to just make things that I find provocative in my own way," he says. "I've earned the right to fail, which means making what I think are really great movies that no one wants to see."
If earning the right to make movies no one wants to see seems like a dour forecast for the next phase of his career, it may be because Lucas has never felt at ease with his own mainstream success. For the past couple of years, he's been telling interviewers that the breakout popularity of American Graffiti in 1973 "derailed" him into the business of mass-market filmmaking and that his career was "sidetracked" by Star Wars.
His ambivalence about presiding over a commercial empire has even led him to identify with his archvillain, Darth Vader. In the career retrospective included with the 2004 *Star Wars* DVD set, Lucas declares: "I'm not happy that corporations have taken over the film industry, but now I find myself being the head of a corporation, so there's a certain irony there. I have become the very thing that I was trying to avoid. That is Darth Vader - he becomes the very thing he was trying to protect himself against."
Though Lucas says he's looking forward to "a whole new adventure" as a director of "very out-there" films, he admits that he faced this crossroads at least once before and chose to go down the more familiar route of embellishing Darth Vader's backstory. Now he'll have to tap his inner Luke again - the searcher eager to leap into the unknown. But if the father of *Star Wars* isn't the real George Lucas, who's the man behind the mask?
The popular myth of Lucas' life is that he grew up as the son of a conservative businessman in Modesto, California, and became obsessed with car racing until his teenage dreams of being a professional driver were cut short in 1962 by a near-fatal accident. With little interest in cinema beyond *Flash Gordon* serials and *Adventure Theater* reruns on TV, he went off to film school, emerging after *American Graffiti* as the architect of the Blockbuster That Ate Hollywood.
Lucas himself has been the primary author of this version of events. "When I went to USC, I didn't know anything about movies," he told a Canadian film crew in 2002. "I watched television. I wasn't that interested in movies."
While this kind of talk suits Lucas' image as an ordinary billionaire in a flannel shirt who wanted to upgrade the old-fashioned cliff-hanger so generations of kids could learn to dream again, it obscures the crucial part of his life when he first glimpsed his own destiny. Understanding these early years not only casts light on Lucas' current yearning to make experimental films, it reveals the frustrations that drove a self-proclaimed Luddite to finance the creation of digital tools that forever changed the craft of moviemaking.
Like the journey of Luke Skywalker, the journey of Lucas the filmmaker began with a cryptic transmission that hinted at the existence of a universe more vast than the one he grew up in. While he was zipping his souped-up Fiat through the dusty Central Valley flatlands that provided the model for Luke's home planet of Tatooine, another kind of momentum was building to the north in San Francisco, where poets and painters were picking up Army surplus handheld 16-mm cameras to launch the first wave of independent cinema on the West Coast.
A filmmaker named Bruce Baillie tacked up a bedsheet in his backyard in 1960 to screen the work of indie pioneers like Jordan Belson, who crafted footage of exploding galaxies in his North Beach studio, saying that he made films so life on Earth could be seen through the eyes of a god. Filmmakers Stan Brakhage and Bruce Conner had equally transcendent ambitions for the emerging medium: Brakhage painted directly on film and juxtaposed images of childbirth and solar flares, while Conner made mashups of stock footage to produce slapstick visions of the apocalypse. For the next few years, Baillie's series, dubbed Canyon Cinema, toured local coffeehouses, where art films shared the stage with folksingers and stand-up comedians.
These events became a magnet for the teenage Lucas and his boyhood friend John Plummer. As their peers cruised Modesto's Tenth Street in the rites of passage immortalized in *American Graffiti*, the 19-year-olds began slipping away to San Francisco to hang out in jazz clubs and find news of Canyon Cinema screenings in flyers at the City Lights bookstore. Already a promising photographer, Lucas embraced these films with the enthusiasm of a suburban goth discovering the Velvet Underground.
"That's when George really started exploring," Plummer recalls. "We went to a theater on Union Street that showed art movies, we drove up to San Francisco State for a film festival, and there was an old beatnik coffeehouse in Cow Hollow with shorts that were really out there." It was a season of awakening for Lucas, who had been a D-plus slacker in high school. A creative writing teacher at junior college in Modesto opened his eyes to the pleasures of reading, which led him to the writings of Joseph Campbell, a decisive influence on *Star Wars*.
Then Lucas and Plummer migrated south, where they discovered another filmmaking revolution in progress. They made pilgrimages to the New Art Cinema in Santa Monica to take in Jean-Luc Godard's *Breathless*, Franéois Truffaut's *Jules et Jim*, and Federico Fellini's *8é* - movies that used handheld cinematography and in-your-face editing to deliver life unfiltered through the stale conventions of the Hollywood studios.
At an autocross track, Lucas met his first mentor in the film industry - famed cinematographer Haskell Wexler, a fellow aficionado of sleek racing machines. Wexler was impressed by the way the shy teenager handled a camera, cradling it low on his hips to get better angles. "George had a very good eye, and he thought visually," he recalls.
By the time Lucas entered film school in 1964, he was already on his way to becoming the director who would combine the visceral excitement of *Flash Gordon* with the visual language of transcendence.
At USC, Lucas joined the first generation of film students who were influenced more by the explosion of world cinema than by the silver screen canon. One of his classmates, John Milius, the future co-writer of *Apocalypse Now* and director of *Red Dawn*, introduced him to the epics of Akira Kurosawa, whose depictions of Japanese feudal society were a key influence on *Star Wars*.
Lucas' sense of his own mission crystallized in animation classes and in a course called Filmic Expression, which focused on the non-narrative aspects of filmmaking - telling stories without words by using light, space, motion, and color. The professors screened animated shorts and documentaries sponsored by the National Film Board of Canada, which has been funding cinematic exploration since the 1940s.
The work of three Canadian directors in particular excited Lucas about the potential of experimenting with the tools of filmmaking. An animator named Norman McLaren explored novel ways of creating images and sounds with every film he made, mixing human actors, animation, and special effects as Lucas would do digitally 20 years later. Lucas was also impressed by the documentaries of Claude Jutra, who used the artistic strategies of Godard and Truffaut to tell real-life stories. One of the reasons the first *Star Wars* film seemed so vivid compared with previous sci-fi fare, Lucas explains, was that he shot it like a Jutra documentary, covering the scenes with multiple cameras and staging them loosely on purpose so they would unfold with an edge of spontaneity. (Another reason was the salty insouciance of Harrison Ford and Carrie Fisher, blissfully unaware that they were about to become action figures.)
The film that made the most profound impression on Lucas, however, was a short called *21-87* by a director named Arthur Lipsett, who made visual poetry out of film that others threw away. Working as an editor at the National Film Board, he scavenged scraps of other people's documentaries from trash bins, intercutting shots of trapeze artists and runway models with his own footage of careworn faces passing on the streets of New York and Montreal. What intrigued Lucas most was Lipsett's subversive manipulation of images and sound, as when a shot of teenagers dancing was scored with labored breathing that might be someone dying or having an orgasm. The sounds neither tracked the images nor ignored them - they rubbed up against them. Even with no plot or character development, *21-87* evoked richly nuanced emotions, from grief to a tenacious kind of hope - all in less than 10 minutes.
Lucas threaded the film through the projector over and over, watching it more than two dozen times. In 2003, he told directors Amelia Does and Dennis Mohr, who are making a documentary on Lipsett, "*21-87* had a very powerful effect on me. It was very much the kind of thing that I wanted to do. I was extremely influenced by that particular movie." Deciding that his destiny was to become an editor of documentaries who, like Lipsett, would make avant-garde films on the side, Lucas worked in the USC editing room for 12 hours at a stretch, living on Coca-Cola and candy bars, deep in the zone.
"When George saw *21-87*, a lightbulb went off," says Walter Murch, who created the densely layered soundscapes in *THX 1138* and collaborated with Lucas on American Graffiti. "One of the things we clearly wanted to do in *THX*was to make a film where the sound and the pictures were free-floating. Occasionally, they would link up in a literal way, but there would also be long sections where the two of them would wander off, and it would stretch the audience's mind to try to figure out the connection."
To simulate a realistic society of the future on a shoestring budget for THX, Lucas and Murch pushed that audiovisual disconnect as far as they could. A scene in which the hero (played by a young Robert Duvall) is tortured is made more horrific by the banal shoptalk of his offscreen tormentors; the chatter of unidentified voices throughout the film reinforces the idea that in a world of ubiquitous surveillance, you are never alone.
"Walter and I were working simultaneously, so I could react to his sounds and recut the film according to what he was doing," Lucas says. "We were inspiring each other as we went, rather than just doing the picture and attaching sounds to it. That's the way I've worked since then." While he was writing the first *Star Wars* script, Lucas hired USC student Ben Burtt to make the Imperial Star Destroyers sound more ominous by adding the subliminal rumble of an air conditioner; a barely perceptible jingle of spurs was slipped under Boba Fett's entrance in *The Empire Strikes Back*.
Lucas never met the young Canadian who influenced him so deeply; Lipsett committed suicide in 1986 after battling poverty and mental illness for years. But like a programmer sneaking Tolkien lines into his code, Lucas has planted stealth references to *21-87* throughout his films. The events in the student-film version of *THX* took place in the year 2187, and the numerical title itself was an homage. In the feature-length version, Duvall's character makes his run from a subterranean city when he learns that the love of his life was murdered by the authorities on the date "21/87." And in the first *Star Wars*, when Luke and Han Solo blast into the detention center to rescue Princess Leia, they discover that the stormtroopers are holding her as a prisoner in cell 2187.
The rabbit hole goes even deeper: One of the audio sources Lipsett sampled for *21-87* was a conversation between artificial intelligence pioneer Warren S. McCulloch and Roman Kroitor, a cinematographer who went on to develop IMAX. In the face of McCulloch's arguments that living beings are nothing but highly complex machines, Kroitor insists that there is something more: "Many people feel that in the contemplation of nature and in communication with other living things, they become aware of some kind of force, or something, behind this apparent mask which we see in front of us, and they call it God."
When asked if this was the source of "the Force," Lucas confirms that his use of the term in *Star Wars* was "an echo of that phrase in *21-87*." The idea behind it, however, was universal: "Similar phrases have been used extensively by many different people for the last 13,000 years to describe the 'life force,'" he says.
The lessons Lucas learned from filmmakers like Lipsett, McLaren, Jutra, and Kurosawa helped shape the creation of all of his later work. "My films operate like silent movies," he explains in an unused portion of an interview for a documentary on editing called Edgecodes. com. "The music and the visuals are where the story's being told. It's one of the reasons the films can be understood by such a wide range of age groups and cultural groups. I started out doing visual films - tone poems - and I move very much in that direction. I still have the actors doing their bit, and there's still dialog giving you key information. But if you don't have that information, it still works."
After Lucas' assault on Hollywood in 1971 with *THX 1138*, the Empire struck back.
Convinced that the stark, stylish film had no commercial potential, a team of Warner Bros. executives snatched control of *THX* from Lucas, recut it, and hung it out to dry in a handful of B-list theaters. The studio then backed out of its deal with Francis Ford Coppola's independent production company, American Zoetrope, which had financed the film, nearly putting Coppola out of business. In 1973, when Universal threatened not to release Lucas' *American Graffiti* - which became one of the biggest moneymakers in film history - Lucas vowed to build his own rebel base far from Hollywood.
Armed with the success of the first two *Star Wars* movies, Lucas built his ranch in Marin County and launched a massive R&D blitz to extend a director's editorial control over not just a film's pacing and choice of shots, but every element inside the frame as well.
"If you want to know what editing was like before George came along, visualize that warehouse at the end of *Raiders of the Lost Ark*," says Michael Rubin, author of *Droidmaker: George Lucas and the Digital Revolution*, which will be published this fall. "If you shot a movie like Star Wars, you had 300,000 feet of film and sound rolls that had to be code-numbered and matched by hand. If you wanted to cut the scene where Luke was doing this and Han Solo was doing that, some poor schmuck had to find those pieces so you could fit them together with tape. It was like the Library of Congress with no librarian."
EditDroid, the digital editing system that Lucas' team of engineers invented in the 1980s, replaced this Sisyphean task with film scanners, a searchable archive, and a drag-and-drop interface. Sold to Avid, it has become the core of the technology used to edit most major studio releases and nearly all primetime TV programs today. Meanwhile, the brainstorming of his computer division produced the 3D rendering software that spun off into Pixar Animation Studios. Lucas' effects house, Industrial Light & Magic, made computer graphics the centerpiece of big-budget moviemaking with *Jurassic Park* and *Terminator 2*. And the improvements in audio clarity and theatrical sound pioneered for *Star Wars* (including a set of standards known as THX Certification and the eventual creation of the THX sound system) resulted in massive sonic upgrades not only at the local mall, but in surround sound systems at home.
The result of these efforts gave Lucas just what he'd been looking for back at USC. He could flood the screen with color as Brakhage did, mix real and animated elements like a McLaren, manipulate shape and scale with the fluidity of a Belson, and make montages of any image and sound that he could imagine. Reincarnated as a cluster of menu items, the avant-garde techniques that inspired Lucas to become a director are now available to any filmmaker.
"Everything George has done has been to reduce the distance between what's in his skull and the pixels on the screen," Rubin observes. "He's really a painter."
Among the new generation of filmmakers who use the tools developed at Lucasfilm is Peter Jackson, the director of his own epic trilogy. "I was obsessed by visual effects, and in the year prior to *Star Wars*, *Logan's Run* and the 1976 *King Kong* remake had come out," he says. "The world of those films was the one I thought I would have to work in - a world in which your imagination was limited by the technology. Then *Star Wars* came out in 1977 and blew my mind. Quite apart from being the 16-year-old kid standing and cheering at the end, I knew that if I was ever to achieve my filmmaking aspirations, I no longer had to be limited by technology."
Jackson finally met his hero when the production schedules of *The Lord of the Rings* and *Attack of the Clones* overlapped in Sydney. As a fellow techie, he was blown away by the size of Lucas' monitors: "I was used to peering at my little 12-inch screen to watch our shooting, and George had two 42-inch plasmas. The thing I remember most was us discussing 'Where to from here?' in cinema technology. That's a true visionary - someone who is always thinking about what's next and making it happen."
By the time Lucas got around to making *The Phantom Menace* and *Attack of the Clones*, however, even certain longtime fans and colleagues started asking if his focus on technology had become, as Thoreau put it, an improved means to an unimproved end. While the original film had the scruffy vitality of a garage band making its big break, the recent episodes can seem like a whirlwind tour of Industrial Light & Magic's interplanetary showroom.
"For me, those films pummel you into submission," Murch says. "You say, OK, OK, there are 20,000 robots walking across the field. If you told me a 14-year-old had done them on his home computer, I would get very excited, but if you tell me it's George Lucas - with all of the resources available to him - I know it's amazing, but I don't *feel* it's amazing. I think if George were here and we could wrestle him onto the carpet, he'd say, 'Yeah, I've gotten into that box, and now I want to get out of that box.'"
The side of Lucas that wants to get out of the box has more allies than he may realize. Film critic Roger Ebert is already intrigued by the possibility of the director of *Star Wars* maturing beyond his well-worn role of being a dreamweaver for kids. "Lucas is obviously great at science fiction, and he could combine his indie origins with his natural inclinations in smaller-scale sci-fi films," he says. "There's a lot of mind-bending speculative fiction by Robert Heinlein and Isaac Asimov that has never been filmed. A movie like *Eternal Sunshine of the Spotless Mind* is science fiction, though it was never described that way."
While Lucas promises that his new films will tackle philosophical issues ranging from theology to slavery in contemporary society, he says they'll be "short projects, like normal people do. You shoot a few months, they're finished in a year, and if you want to do another one, you still have time off."
Given a powerful enough vision, as Yoda might say, size matters not. A 32-year-old former coder named Shane Carruth walked away with the Sundance festival's coveted Grand Jury Prize last year for a knotty thriller on the subject of time travel called *Primer.* Total cost of production: $7000.
One hurdle to Lucas' thinking small, however, is it isn't easy to downscale your ambitions when you believe that you not only inadvertently financed the multiplexing of America but that you're also indirectly responsible for the popular successes of indie films like *Lost in Translation* and *Amélie*.
"After *Star Wars, Jurassic Park, The Godfather, Terminator 2, Titanic* and *The Exorcist* - all the giant blockbusters - half of the money went to the theaters, and we went from about 15,000 screens to about 35,000 screens," Lucas says. "The crux of the movie business is the crux of any business - shelf space." With all those new screens, he believes, "hundreds of esoteric art films" are now being financed by companies reaching to take the place of the shuttered Miramax Films, like Disney's Touchstone Pictures division or Time Warner's New Line Cinema, and reaching audiences that would never have seen them before: "You end up with a much more varied group of films being available to you than in the '60s."
He's right that the post-*Jaws* blockbusters, including his own, financed the morphing of the neighborhood movie palace into the corporate googolplex. But he's wrong about what's playing there, says Dade Hayes, author of *Open Wide: How Hollywood Box Office Became a National Obsession*. "It's true that a certain tier of art house product would never have seen the light of day a generation ago. That's supercool if you're living in L.A., Boston, or New York, but in most of the big-grossing complexes, you're just going to get more showtimes of *Shrek 2*."
Fortunately for indie filmmakers, there's a counterforce: the marriage of the DVD and the Internet. Companies like Film Movement, CineClix, and Blockbuster are boosting sales of independent films by offering choices and targeting online ads to users likely to rent niche fare. More people saw Niki Caro's *Whale Rider* on DVD and VHS than in theaters, adding $13 million in rentals to the film's US box office of $21 million - serious money for a movie by a first-time director. Blockbuster alone generated 530,000 of these rentals by promoting *Whale Rider* to its 2.5 million members based on user recommendations.
While Lucas has been predicting for years that online distribution would finally free filmmakers from the death grip of Fox and Paramount, now - at the moment of its emergence - he still seems firmly attached to the old theatrical model and a Hollywood sense of scale, especially because of his decision to sell Lucasfilm to Disney.
"With film, if you get a million people to see your movie on the first weekend, you've made about $5 million. That basically will not end up on the top 10 chart," he told me. "You have to get 10 million people on the first weekend. And if you don't do it in two days, you're basically out of the theaters and into the DVD market. There's just an ecology there. If you're a mouse, don't expect to kill a lion, because it ain't gonna happen. If you want to have that kind of power, it's better to be a lion, because the mice are fine - you can have a life and everything - but the lions are the ones out there prowling and scaring the hell out of everybody."
That's the voice of his inner Vader - never wanting to be seen as less than a lion and keeping him busy with everything but the films he says he truly wants to make. Reinvention in midcareer is not a luxury that most directors can afford. Lucas' hard-won and cautiously managed prosperity not only earns him the right to fail, it gives him a chance to succeed in ways that his role models were denied. For the old pros who taught Lucas his craft at film school, a return to a more personal style of filmmaking by one of their most prestigious alumni would be greeted as an artistic homecoming.
"I'm proud of George, but I'm worried about him," says Lucas' former cinematography instructor, USC professor emeritus Woody Omens. "He was trying to speak a different cinematic language at an early point in his career, and he's still trying to get to that. If he wanted me to mentor him again 40 years later, I would say, 'Let go. Do something that explores the non-narrative side of human expression from the perspective of a master and a veteran. Go and make the movie of your life.'"
The myth of Luke Skywalker hinges on courageous acts of liberation. In our conversation at the ranch, Lucas sums up the central theme of his films from *THX 1138* to *Revenge of the Sith*: "How do you personally get to the point where you wake up out of your stupor and take charge of your life and do dangerous and scary things?"
Now that Lucas' personal odyssey in the land of droids and Wookiees is over and he's content to let Disney do all the work of any future films, he has an opportunity to tap the bravery of the younger self who mapped out a universe at his desk with a No. 2 pencil. The masters of independent cinema and the digital rebel alliance have assembled outside the gates of Skywalker Ranch to deliver a message: "Lucas, trust your feelings."
Under the Influence
*Four groundbreaking independent films that shaped the vision of George Lucas.*
*Neighbours* [1952], by Norman McLaren-Canada
An intoxicating flower sprouts on the property line between two houses, and chaos ensues. By animating human actors and real objects with a technique he called "pixillation," McLaren created a world in which the laws of gravity and physics were suspended, proving to Lucas that the only limit in cinema was in the filmmaker's imagination.
*21-87* [1963] by Arthur Lipsett-Canada
Lipsett elevated the cinematic mashup to an art by manipulating found footage and audio, inspiring Lucas to become an editor and director. Visual compositions similar to Lipsett's appear in Lucas' first feature, *THX 1138*, and *21-87's* use of sound was a profound influence on *American Graffiti* and *Star Wars* - as well as the secret source of "the Force."
*Allures* [1961] by Jordan Belson-USA
A student of Buddhism and yoga, Belson "could extract 10 tons of poetry from the reflections off the hood of a 1949 truck," says *THX 1138* collaborator Walter Murch. The reclusive director screened his images of swirling starbursts on the dome of San Francisco's Morrison Planetarium in the late 1950s and later created visual effects for *The Right Stuff*. Lucas had abstractions like Belson's in mind when he designed the closeups of clashing lightsaber beams for the Anakin/Dooku showdown in *Attack of the Clones*.
*The Hidden Fortress* [1958] by Akira Kurosawa-Japan
Lucas credits the bumbling sidekicks in this film with inspiring the droids C-3PO and R2-D2, but that's just the most obvious influence. There's also a stoical princess (think Padme Amidala) and a rousing chase on horseback (see *Return of the Jedi's* speeder bikes). Kurosawa's visual sensibility proved that a director could create what Lucas calls "immaculate reality" on an epic scale, and Lucas repaid the debt by helping Kurosawa finance his later masterpiece *Kagemusha*.

**"Exclusive Q&A: George Lucas on *Star Wars, Fahrenheit 9/11*, And His Own Legacy," by Steve Silberman, *Wired*, May 1, 2005**
*WIRED*: *You've been working on* Star Wars *for almost 30 years and now it's finished, at least for you. Do you feel a sense of release?*
LUCAS: Yes. I've enjoyed *Star Wars* enormously, but it's great to be able to look forward to projects that I've wanted to do for a long time. I get to go back to what I was doing before this big thing happened, and I think the series is great hands for Disney to fully take over and do future works without me.
W*hat are you doing to reconnect with who you are, apart from being the guy who made* Star Wars*?*
I try to stay in touch with that part of myself, especially when I'm writing. Unfortunately, when I was supposed to be writing *Star Wars*, I would end up doing more reading and thinking than writing. When you're writing for three or four months, you go places where ordinary human beings wouldn't care to go, unless you were a Tibetan monk. Most writers spend a lot of time trying to avoid that, so you make excuses as to why you should read this or that book. Usually I come up with lots of ideas for films that I really want to do.
None of the films I've done was designed for a mass audience, except for *Indiana Jones*. Nobody in their right mind thought *American Graffiti* or *Star Wars* would work.
*But the second trilogy certainly had a built-in audience.*
Yeah, everyone says the second trilogy was a slam dunk. But there was a a bit of controversy around here about the fact that I wasn't doing the obvious - I wasn't doing the commercial version of what people expected. People expected *Episode III*, which is where Anakin turns into Darth Vader, to be *Episode I*. And then they expected *Episodes II* and *III* to be Darth Vader going around cutting people's heads off and terrorizing the universe. But how did he get to *be* Darth Vader? You have to explore him in relationships, and you have to see where he started. He was a sweet kid, helpful, just like most people imagine themselves to be. Most people said, "This guy must have been a horrible little brat - a demon child." But the point is, he wasn't born that way - he became that way and thought he was doing the right thing. He eventually realizes he's going down the dark path, but he thinks it's justifiable. The idea is to see how a democracy becomes a dictatorship, and how a good person goes bad - and still, in the end, thinks he's doing the right thing.
*It's common these days to talk about good and evil in terms of gray areas, but in your films, good and evil are more strictly defined.*
It's the more old-fashioned version of good and evil - the version that those of us who grew up in the '40s and '50s had, when there was a strong sense of good and evil because of World War II. That's one of the few times in history when the bad guys were very clearly delineated for us. There really was a fight for survival going on between pretty clearly good guys and bad guys.
The story being told in *Star Wars* is a classic one. Every few hundred years, the story is retold because we have a tendency to do the same things over and over again. Power corrupts, and when you're in charge, you start doing things that you think are right, but they're actually not.
*Did you always intend to make a second trilogy?*
The original story is really the first three films. I never thought I would get to tell the backstory, because I had to design *Star Wars* in a very limited way to fit it into the technology I had at the time. I did the same thing with *THX 1138* - I had to create a futuristic world without special effects and without sets. With each film, I pushed the envelope of technology. For *Star Wars* I had to develop a whole new idea about special effects to give it the kind of kinetic energy I was looking for. I did it with motion-control photography. I had a lot of experience with animation, so it was a matter of taking the technology of animation and moving it into effects. For *The Empire Strikes Back*, I had to create an actor who could do a believable performance and still only be two-and-a-half feet high. I had the whole center of the film resting on us being able to pull that idea off and not have Yoda look like Kermit. If I had failed at any one of those things, the films would have died a horrible death. I had to make it all believable somehow, even though it was completely ridiculous. I had to say, "This is real. We fly around in spaceships with Wookiees - this is all real stuff, real people." That was the hardest part.
After *Return of the Jedi*, I said to myself, "Now I'm going to take some time off and raise my kids, and later on, I'll come back and do my personal films, because that's really what I want to do."
*So why did you come back to* Star Wars *instead of making "personal films"?*
15 years later, we had made such advances at Industrial Light & Magic, especially with *Jurassic Park*. That was the watershed of being able to create realistic characters using digital technology. So I thought about it again. I could do cities like Coruscant, I could do a Podrace, I could do other things that up to that point had been impossible. The defining factor was the *Star Wars Special Edition*, where the thing was to create a real Jabba the Hutt. Not a big rubber thing, but a digital actual character. I figured if I could do that, then I could do everything else. When we brought out the Special Edition, we didn't really expect it to bring in much of an audience. We had a sense that we hadn't sold very many VHS tapes of the original releases- I think about 300,000 - which is nothing compared to the 11 million that *E.T.* did. So I said that this would be an experiment, and hopefully we'll get our money back.
The success of that re-release not only told me that I could create these creatures and build better sets and towns than I could before, but that the *Star Wars* audience was still alive - it hadn't completely disappeared after 15 years. I decided that if I didn't do the backstory then, I never would. So I committed to it, and here I am finished. So now I'm going to do what I thought I was going to do back then.
*In addition to the experimental films that you say you want to make now, you've expressed an interest in making historical films.*
Yes, but I don't want to get into situations where people say, "That's not historically correct." History is fiction, but people seem to think otherwise. History is different from facts or truth. The thing I like about fantasy and science fiction is that you can take issues, pull them out of their cultural straitjackets, and talk about them without bringing in folk artifacts that make people get closed-minded.
*Give me an example of what you mean by a folk artifact.*
*Fahrenheit 9/11*. People went nuts. The folk aspects of that film were George Bush or Iraq or 9/11 or - intense emotional issues that made people put up their blinders and say, "I have an opinion about this, and I'm not going to accept anything else." If you could look at these issues more open-mindedly - at what's going on with the human mind behind all this, on all sides - you could have a more interesting conversation, without people screaming, plugging their ears, and walking out of the room like kids do.
*And you do that by -*
By making the film "about" something other than what it's really about. Which is what mythology is, and what storytelling has always been about. Art is about communicating with people emotionally without the intellectual artifacts of the current situation, and dealing with very emotional issues.
*Life and death.*
Life and death, or "I really want to kill my father and have sex with my mother." It's hard to talk about that kind of thing in a family situation without somebody getting upset. But in art, you can deal with those issues. You begin to realize that other people have had the same experience or go down those same paths deep in their minds. Most stories are really told for adolescents, which is why *Star Wars* was aimed at adolescents. Societies have a whole series of stories to bring adolescents into adulthood by saying, "Don't worry, everybody thinks that way. You're just part of the community. We don't quite talk about it, but if you act on some of your notions, here's what will happen: Zeus will reach down and smash you flat like a bug or the entire Greek army will come and crush your city and burn everybody inside of it, including your heroes." These lessons are continually handed down from generation to generation. I love history, so I create an environment - in the past, present, or future - that allows me to tell the story, but in a way that's not incendiary.
*A film like* Casablanca *was an instructive fable designed for adults, and there were lessons in it about choices and love that I couldn't possibly have understood as an adolescent. Do you aspire to make films that do the same things for adults that* Star Wars *has done for adolescents?*
Once people get out of college, they're set in their worldview. With a film like *Fahrenheit 9/11*, you can affect people who already believe that way, and they can say "Right on," but you can't affect people who have made up their minds the other way. I'm caught in this world where I'm an entertainer. A movie is a big deal. You either have to have unlimited resources or you have to make movies for an audience.
The movies that are the most interesting don't even make a million dollars. A million dollars means what? That maybe a couple of hundred thousand people saw it.
*A film like* Being John Malkovich *was fairly experimental, but was able to reach -*
Yeah, I like those movies. They're inspired, and they did fairly well. I mean, I come from San Francisco. Stan Brakhage is esoteric. *Being John Malkovich*was sort of unusual. *Eraserhead* was esoteric.
*What other films have you liked in recent years?*
*Amelie* was great. But the best thing that's happened since *Fahrenheit 9/11* is that now we can actually get documentaries in theaters. I have a little documentary unit now that's doing stuff for *The Young Indiana Jones Chronicles*, but we're not going to stop there.
*When the Biography Channel makes its documentary about you in 2050, how do you want to be remembered?*
I'll be remembered as a filmmaker. The technological problems that I solved will be forgotten by then, but hopefully some of the stories I told will still be relevant. I'm hoping that *Star Wars* doesn't become too dated, because I think its themes are timeless. If you've raised children, you know you have to explain things to them, and if you don't, they end up learning the hard way. In the end, somebody's got to say, "Don't touch that hot skillet." So the old stories have to be reiterated again in a form that's acceptable to each new generation. I don't think I'm ever going to go much beyond the old stories, because I think they still need to be told.

**"Disney Announces Theme Park Overhaul," by Diana B. Henriques, *The New York Times*, June 27, 2005**
A week before the new Disney's America theme park opens as the fifth gate of Walt Disney World Resort in Florida, CEO Michael D. Eisner has announced that one of its older parks, Disney's Hollywood Studios (formerly Disney-MGM Studios) will be shut down in September for a major overhaul and retheming, expected to last until March of 2008.
"We're going to redesign the park and have it align closer with a vision Walt himself would have been proud of," Mr. Eisner said. "The saying of Disney's Hollywood Studios has always been that it is 'the Hollywood that never was and always will be.' Our ambitious retheming will bring the park more in line with that tagline. We expect that it will be quite an undertaking that all park visitors will appreciate immensely."
The current Disney's Hollywood Studios is a disparate collection of attractions based on various well-known movie and television properties, both owned by Disney and those licensed from other owners. The most popular attraction, The Twilight Zone Tower of Terror, is based on the famed CBS anthology series. After Disney purchased ABC in 1996, the network was also integrated to be part of the park, with the ABC Commissary, and hosting conventions with the stars of ABC's daytime soap operas such as *General Hospital*. Now, Mr. Eisner says that for the most part, the new park will largely be stripped of intellectual property tie-ins, in favor of "creative alternatives."
The forthcoming new park, Disney's America, a theme park devoted to American history, was previously planned to be opened in Haymarket, Virginia, for 1997. However, a grassroots movement against the park led by ordinary citizens complaining about the potential for traffic overflows and historians objecting to the "commodification and commercialization of history", succeeded in killing the proposal. In 2003, Disney COO, President and Chairman Bob Iger announced that the park would be revived and opened as the fifth gate in Florida, thanks to the efforts of and consultation of Kurt Cobain and Charlize Theron's Springbok Productions, as well as enlisting the support and expertise of historians, many of whom opposed the original Virginia park. The park was announced to open for the 4th of July celebrations this year.

**"Former Presidents Confirmed As Invites For New Disney Park," CNN website, June 29, 2005**
A spokesperson for Walt Disney Imagineering has confirmed rumors that the living former Presidents and their families would be attending the opening of the new Disney's America theme park at Walt Disney World on the 4th of July.
On hand for the opening ceremony in Florida are former Presidents Gerald Ford, Jimmy Carter, George H.W. Bush and Bill Clinton, as well as their families. The former Presidents are all expected to have a few words each to speak at the ceremony.
Former First Lady Nancy Reagan, whose husband, former President Ronald Reagan, died last summer, will also be attending the ceremony.
The guest list also has a number of guests associated with former Presidents. Senator Edward M. Kennedy and assorted members of the Kennedy family will attend the proceedings, as will Vice President Al Gore.
The WDI spokesperson also further clarified the planned overhaul of Disney's Hollywood Studios, which will begin in September, when the current park closes down. "Everything but The Twilight Zone Tower of Terror and the McDonald's Fairfax Fries stand on Sunset Boulevard is going to be completely revamped and rethemed. It will all be changed considerably. So, if you want to experience everything as it is now, before it's gone, better hurry while you can!"

**"Disney, McDonald's Renegotiate Strategic Alliance," by Rachel Abramowitz, *Los Angeles Times*, May 8, 2006**
For the past 10 years, Mickey Mouse and Ronald McDonald have been joined together in an exclusive cross-promotional pact that set up Disney's properties to be promoted by Happy Meal toys and also called for McDonald's to set up shop and sell its fare at Disney parks worldwide, including freestanding limited-menu tie-ins in the individual parks of Walt Disney World and Disneyland, two-full service ones in the Florida resort proper (one near the discount All-Star Resorts, another in Downtown Disney), and one at the Disney Village in Disneyland Paris. The deal had McDonald's pay $100 million in royalties and do 11 promotions every year, a deal that Disney values at around $1 billion. The deal has turned out quite well for both parties, especially as Disney has continued its impressive renaissance and turnaround since 1985, seeing the company fully entrenched in all corners of the entertainment industry. So it is natural that both parties would want to keep the gravy, or rather Secret Sauce, train rolling...with a change or two.
Disney and McDonald's renegotiated their strategic alliance so that the exclusivity component, keeping McDonald's only allowed to do promotion for Disney's films, TV shows and video games, has been done away with, allowing the Golden Arches to make promotional deals with competitors like DreamWorks, and in fact they announced a two-year pact with DreamWorks Animation on the same day as announcing that the Disney deal had been renewed "in perpetuity." It also announced a ramping up in having freestanding limited-menu McDonald's branded locations in every single park, including ones yet to be built, carrying on after one was allowed at the recently-opened Disney's America at Walt Disney World; it also announced that during Disney's massive overhaul and retheming of Disney's Hollywood Studios which will be completed in a year and a half, only The Twilight Zone Tower of Terror and the freestanding limited-menu McDonald's vendor Fairfax Fries would be carried over from the original park. There will be freestanding vendors in Disneyland Paris, Disney Studios Paris, Tokyo Disneyland, Tokyo DisneySea, Shanghai Disneyland and Hong Kong Disneyland; as well as any potential further new gates at Walt Disney World, should a potential plan to buy more land to add to the property be approved. However, the second full-service McDonald's at Florida's Downtown Disney will close, and Miami Subs Pizza & Grill will move from its original smaller location into this property, while the original smaller location will be taken over by rival hot sandwich franchise The Earl of Sandwich.
While Disney has certainly continued to reach massive new heights over the years, McDonald's is also continuing to grow exponentially as well, not just with its own menu and franchise, but also its massive investment and stakes of the Donatos Pizza and Chipotle Mexican Grill franchises, the latter of which Kurt Cobain and Charlize Theron recently became equity investors of to complement their investments in Miami Subs, Planet Hollywood, Roadhouse Grill, Bubba Gump Shrimp Company, Barneys New York, Blackstone Restaurant Group (the restaurant properties of NBA superstar Michael Jordan) and Dan Marino's Town Tavern. McDonald's recently sold large chunks of their stakes in Donatos and Chipotle for massive profit, and Chipotle had a successful IPO earlier this year, but they still own 30 percent of both franchises, the largest, and therefore, controlling stake in both companies. (They had a combined $650 million investment in both chains, and have taken out nearly $2 billion.) However, their ownership of Boston Market, the rotisserie chicken franchise, has not turned out so well and continues to suffer weak performance, and McDonald's is looking for buyers for it. McDonald's has also continued to flourish in all respects because of following the trends that Cobain and Theron have done with the companies they are invested in and which McDonald's and its competitors have been working eagerly to follow; a push for expansion of the menus to include organic, vegetarian, vegan and gluten-free options galore; elimination of trans fats by switching fried foods to be done in sunflower oil and canola oil; helping push the trend for lab-grown meat substitutes that look and taste convincingly like meat and are also considerably healthier; and mass reform of the livestock and meatpacking industries and the "factory farm" and "fish farming systems" to be done "cruelty-free" and to massively reduce the methane emissions of cows and the carbon emissions of meat plants, so that consumption of regular beef, pork, fish and chicken can be done in an environmentally friendly manner.
Of course, moves like this are not without some criticism, particularly as McDonald's and fast food in general has been targeted for its role in an apparent upswing of obesity in America, alongside lack of healthy options in school cafeteria lunches and easy access to soda vending machines by schoolchildren. Author Eric Schlosser in particular focused his ire at McDonald's and their ilk in his book, *Fast Food Nation*, putting the blame on them for not just obesity, but also labor violations and foodborne illnesses. Filmmaker Morgan Spurlock did an irreverent documentary, *Super Size Me*, for which he ate nothing but McDonald's for 30 days, during which he gained 25 pounds and suffered obvious health problems as well. The attention given to the movie made McDonald's remove the Super Size portion option from its menus and a massive focus on improving their salads as well as greater flexibility for Happy Meals, so that children wouldn't only have an entree, fries and soda.
While McDonald's is actively moving to do food and toy tie-ins with Disney's competitors, Disney is not planning to launch promotional deals with McDonald's' competitors, seeking instead to find other methods to help promote its product to children. "Fast food has been a very important promotional partner in promoting films to children," said industry analyst Lowell Singer of Cowen and Co. "As the animated marketplace gets more competition over the next few years, Disney will need to be much more aggressive and creative in reaching children though other promotional outlets."

**"Disney Shuts Down Hollywood Pictures," *Deadline Hollywood*, April 25, 2007**
Walt Disney Studios chairs Meryl Poster and Dick Cook announced today that the long-running Hollywood Pictures imprint, which along with Touchstone Pictures and the defunct art house group Miramax Films, was used to release mature content in theaters, will be officially shut down as of today. It was announced as part of a reorganization moving Disney's focus on releases by Walt Disney Pictures, Walt Disney Animation Studios, Pixar Animation Studios, Touchstone, Lucasfilm Ltd., ABC and ESPN.
"While we remain proud of the library of Hollywood Pictures, it is simply no longer part of our core strategy," Poster and Cook stated. "Furthermore, decreasing dividends made it no longer viable as a releasing imprint. We will, however, honor the remaining commitments made under the label and release them in theaters."
Hollywood Pictures' first release was *Arachnophobia* in 1990. Since then, it became known for releases such as *The Hand That Rocks The Cradle, Medicine Man, Super Mario Bros., Color of Night, Encino Man, Terminal Velocity, The Joy Luck Club, The Air Up There, Tombstone, Quiz Show, Crimson Tide, Dangerous Minds, Judge Dredd, Dead Presidents, The Scarlet Letter, Mr. Holland's Opus, The Rock, Spy Hard, Jack, Nixon, Evita, Gone Fishin', G.I. Jane, Dead Rising* and *The Sixth Sense*. In recent years, it had become known for low-budget genre films such as the slasher film *Stay Alive*.

**"Disney Channel, ABC Rerun Spinoff Channels Debut," *TV Guide*, December 7, 2007**
Today, the Disney-ABC Television Group officially debuted two new spinoff channels, both of which are already available on basic cable packages without the need for premium upgrades. ABC Classic and Disney Channel Classic are rerun-centric channels dedicated to continuous airing of vintage programming throughout the parent channels' history. This includes long-dormant programming and programs from The Disney Channel's original period as as a premium cable channel prior to 1996.
These spinoff channels join the Playhouse Disney preschool-centric spinoff channel, ABC Family, and SOAPNet, the soap opera-centered spinoff that continually airs reruns of not just ABC Daytime programming but even licenses other shows in the genre for reruns, as major corresponding, available to all spinoffs standing besides ABC, The Disney Channel and ESPN and ESPN2. Disney-ABC also has ownership stakes of Lifetime and A&E Networks, the latter of which includes A&E and The History Channel.
"This is a great day for longtime viewers of what the Disney-ABC Television Group has to offer," outgoing CEO Michael Eisner (leaving in July to make way for heir apparent Bob Iger) declared to the press. "We give the viewers more flexibility and freedom of choice, and the ability to enjoy the best programming, past and present."

**"The Walt Disney Studios Enters Long-Term Distribution Agreement With DreamWorks Studios," BusinessWire, February 11, 2009**
Burbank, CA— The Walt Disney Studios has formally agreed to enter into a nonexclusive long-term distribution arrangement with filmmaker and DreamWorks Studios co-founder Steven Spielberg, and partner Stacey Snider, chief executive officer of DreamWorks, to distribute 30 upcoming live action motion pictures produced by DreamWorks under their partnership with Reliance BIG Entertainment, part of The Reliance Anil Dhirubhai Ambani Group, it was announced today by Meryl Poster, chairman of The Walt Disney Studios.
Under the terms of this arrangement, Disney will handle distribution and marketing for approximately six to eight DreamWorks films each year. Furthermore, Springbok Productions will take on a massive stake in the venture by co-producing several of the films, and helping pay budgetary and marketing costs. The first DreamWorks motion picture to be released under the Touchstone Pictures banner is scheduled to hit theaters in 2011.
DreamWorks principals Spielberg and Snider partnered with Reliance BIG Entertainment last fall to form a new motion picture company. In addition to being a partner in DreamWorks, Reliance will also distribute the new company's projects in India.
Commenting on the announcement, Poster said, "We're both thrilled and honored to be marketing and distributing DreamWorks' signature upcoming live action motion pictures, and to begin a new relationship with such respected colleagues as Steven, Stacey, and their creative team at DreamWorks, as well as the people at Springbok. Steven has made some of the biggest and most loved films of all-time, and continues to be one of the great icons of our industry. Stacey has an impeccable reputation and a phenomenal track record for making a wide variety of quality films. Springbok also is a success story like no other, and represent a great fusion of artistic freedom and box office gold. Together, their motion pictures will be the perfect complement to the already robust slate of Disney and Touchstone films being made by Oren Aviv and his team."
Bob Iger, president and CEO, The Walt Disney Company, added, "We are tremendously pleased to join forces with Steven Spielberg, whose artistic vision and commitment to quality filmmaking are legendary. DreamWorks has had a great creative and commercial track record under the leadership of Steven and Stacey Snider and I am delighted they're now associated with Disney. Furthering our relationship with Springbok is also a plus!"
Steven Spielberg said, "Disney is the birthplace of imagination and has always been as close to the worldwide audience as any company ever has. I am so pleased that industry leaders like Bob Iger and Meryl Poster reached out to become our distribution partner, and that Kurt Cobain, Charlize Theron, Jennifer Todd and the Springbok Production team also saw fit to join in. This is a major step forward for us and Reliance."
Stacey Snider added, "Under Bob Iger and Meryl Poster's leadership, The Walt Disney Company represents the highest standard of quality in our industry. You can also say much the same about Springbok. Everyone at DreamWorks is thrilled to be embarking upon this new and exciting partnership and we look forward to our future with their great teams."
Jennifer Todd added, "Steven Spielberg is one of the true creative giants of Hollywood, Disney represents an amazing degree of quality, and it is an honor to be involved in this amazing new venture."
About The Walt Disney Studios
The Walt Disney Studios is a unit of The Walt Disney Company (NYSE: DIS) and produces and distributes motion pictures under the following banners: Walt Disney Pictures(which include live-action movies, animated feature films from Walt Disney Animation Studios and Pixar Animation Studios) as well as Lucasfilm Ltd. and Touchstone Pictures as well as former divisions Hollywood Pictures and Miramax Films. Walt Disney Studios Motion Pictures serves as the Studio's international distribution arm. Buena Vista Home Entertainment/Walt Disney Studios Home Entertainment distributes Disney and other film titles to the rental and sell-through home entertainment markets. Disney Theatrical Group is among the world's most successful commercial theatre enterprises producing or licensing live entertainment events that reach a global annual audience of more than 20 million people in more than 40 countries, and the Disney Music Group distributes original music and motion picture soundtracks under its three record labels: Walt Disney Records, Hollywood Records and Lyric Street Records.
About DreamWorks Studios
Steven Spielberg and Stacey Snider and The Reliance Anil Dhirubhai Ambani Group announced the formation of a new motion picture company which will be led by Spielberg and Snider. The new company is a continuation of DreamWorks Studios which was formed in 1994 by Steven Spielberg, Jeffrey Katzenberg, and David Geffen. The company won three Best Picture Academy Awards with *Saving Private Ryan* (co-produced by Paramount), *Gladiator*, and *A Beautiful Mind* (both co-produced with Universal). Among the company's other successes have been such films as *American Beauty*, *The Ring*, *Minority Report* (co-produced with 20th Century Fox), *War of the Worlds*, *Dreamgirls*, and *Transformers* (all co-produced with Paramount). Snider joined DreamWorks Studios in 2006 as Co-Chairman and CEO. Snider has overseen the company's business strategy as well as the creative and financial aspects of all film development and production.
About Reliance BIG Entertainment
Reliance BIG Entertainment Ltd. (RBEL) is the flagship media and entertainment arm of Indian conglomerate, Reliance Anil Dhirubhai Ambani Group (R-ADAG), with significant presence in film entertainment (film production, distribution, and exhibition), broadcasting and new media ventures. With investments over USD 1 billion in its Filmed Entertainment business RBEL's motion picture brand BIG Pictures has built a formidable film production slate in Hindi, English & other Indian languages, which it markets & distributes worldwide. In Hollywood, BIG Pictures has development silos with Nicolas Cage's Saturn Productions, Jim Carrey's JC 23 Entertainment, George Clooney's Smokehouse Productions, Chris Columbus' 1492 Pictures, Tom Hanks' Playtone Productions, Brad Pitt's Plan B Entertainment, Jay Roach's Everyman Pictures, Brett Ratner's Rat Entertainment and Julia Roberts' Red Om Films.

**Q&A with Walt Disney Studios co-chair Meryl Poster on *Entertainment Tonight*, July 17, 2009**
Q: What would you say is your real secret for success in managing Disney's studio and various divisions.
The key to our success depends very much on cooperation and dialogue. I may technically be subservient only to the other board members and superior to the different division heads, but I treat everyone like we're part of a team. I also give everyone plenty of rope and trust their judgment, knowing that they know best regarding their own little kingdoms. Michael Eisner and I had a great relationship, and I'm quite on great terms with Dick Cook, Bob Iger, John Lasseter, our new live action films head Sean Bailey, George Lucas, Rick McCallum, the folks at Disney-ABC Television Group, and now Kevin Feige and Jeph Loeb.
Q: You recently announced that Touchstone Pictures will be used to distribute films by DreamWorks. Will it continue to release PG-13/R-rated projects outside of that?
Of course. Touchstone is just as important a division to Disney as everything else. Remember, it was founded to ensure that Walt Disney Pictures would only release G-rated films, back in 1982, with the intention to handle everything else. Since our cultural standards have liberalized, so have we, with Disney handling PG and PG-13 films directly now, but Touchstone still holds onto most in that area. Even though some of our latest, non-Springbok releases through that division didn't succeed as much as we hoped, and if we ever did a mega-merger with another big studio, Touchstone would still get plenty of work, because Disney has just as much right to do mature films as the others. We do it with this, and we did it with Miramax and Hollywood Pictures, back when they existed.
Q: When Disney absorbed Miramax fully in 2001, after it was shuttered, the Touchstone name has been placed at the beginning of the DVDs of those films. And two years ago, you shuttered the Hollywood Pictures imprint. Care to explain?
It was not my decision to officially scrub Miramax's name from re-releases of its film library, and replace it with Touchstone, since it was repurchased and folded in, but I will respect that decision. I'm not someone who works to undermine and discredit my predecessors. Of course, you may wonder why we kept the Weinsteins credited in those films. Because, even with what Harvey did and how Bob failed to act decisively enough, they still had incredible taste in films and finding talent. And I learned a lot when I worked at Miramax, especially to the point that I was the only woman Harvey would listen to. As for Hollywood Pictures, that division served its purpose. It was intended to be just as serious for projects as Touchstone, and there were some definite hits: *Arachnophobia, Evita, Mr. Holland's Opus, Crimson Tide, Tombstone* and *The Rock*. But in practice, it became a toxic waste dump for really stupid films, like *Encino Man, Super Mario Bros*, and *Judge Dredd*, much like Sony had with Revolution Studios. So there's really no purpose to keeping Hollywood Pictures around, when we have something with a better proven track record.

**"Disney Buys 3000 Additional Acres In Florida," *Orlando Sentinel*, July 24, 2009**
After months of negotiations and a town hall to assuage potential worries regarding environmental impact, the Walt Disney World Resort received permission to purchase an additional 3000 acres of Central Florida land to add to the complex. The resort plans to make four additional gates to add to the five preexisting ones inside the extant 27,000 acres: the Magic Kingdom, Epcot, Disney's Hollywood Studios (having reopened last year after a massive refurbishing), Disney's Animal Kingdom and Disney's America, along with the various hotel resorts and the Downtown Disney complex.
Among the newly planned additions for the four new gates are a Pixar-themed resort, a Star Wars-themed land, and, rumors are to be believed, a Marvel Comics-themed land, following a proposed purchase of Marvel Entertainment by Disney. The proposed ninth gate has yet to have a specific theme. These will all be built and opened within the next decade, and like the already existing five gates, will have limited-menu freestanding McDonald's vendors to go along with the full-service massive McDonald's location near the All-Star Resorts, as part of the renewed Disney-McDonald's strategic alliance in place since 1996.

**"Disney To Acquire Marvel Entertainment," BusinessWire, August 31, 2009**
Burbank, CA and New York, NY —Building on its strategy of delivering quality branded content to people around the world, The Walt Disney Company (NYSE: DIS) has agreed to acquire Marvel Entertainment, Inc. (NYSE:MVL) in a stock and cash transaction, the companies announced today.
Under the terms of the agreement and based on the closing price of Disney on August 28, 2009, Marvel shareholders would receive a total of $30 per share in cash plus approximately 0.745 Disney shares for each Marvel share they own. At closing, the amount of cash and stock will be adjusted if necessary so that the total value of the Disney stock issued as merger consideration based on its trading value at that time is not less than 40% of the total merger consideration.
Based on the closing price of Disney stock on Friday, August 28, the transaction value is $50 per Marvel share or approximately $4 billion.
"This transaction combines Marvel's strong global brand and world-renowned library of characters including Iron Man, Spider-Man, X-Men, Captain America, Fantastic Four and Thor with Disney's creative skills, unparalleled global portfolio of entertainment properties, and a business structure that maximizes the value of creative properties across multiple platforms and territories," said Robert A. Iger, President and Chief Executive Officer of The Walt Disney Company. "Ike Perlmutter and his team have done an impressive job of nurturing these properties and have created significant value. We are pleased to bring this talent and these great assets to Disney."
"We believe that adding Marvel to Disney's unique portfolio of brands provides significant opportunities for long-term growth and value creation," Iger said.
"Disney is the perfect home for Marvel's fantastic library of characters given its proven ability to expand content creation and licensing businesses," said Ike Perlmutter, Marvel's Chief Executive Officer. "This is an unparalleled opportunity for Marvel to build upon its vibrant brand and character properties by accessing Disney's tremendous global organization and infrastructure around the world."
Under the deal, Disney will acquire ownership of Marvel including its more than 5000 Marvel characters. Mr. Perlmutter will oversee the Marvel properties directly as remaining head of Marvel Comics. However, the company shall be split into three different divisions. Besides Mr. Perlmutter's domain, there will be Marvel Studios, headed by Kevin Feige, which is Marvel's film production company and oversees the so-called Marvel Cinematic Universe. Marvel Television, headed by Jeph Loeb, will officially begin operations in 2012, and will be another separate division, part of the Disney-ABC Television Group. Marvel's preexisting licensing deal with Universal's Islands of Adventure resort shall be annulled, freeing Disney to create a new, massive theme park based on the Marvel characters as part of the newly announced expansion of Walt Disney World Resort.
The Boards of Directors of Disney and Marvel have each approved the transaction, which is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act, certain non-United States merger control regulations, effectiveness of a registration statement with respect to Disney shares issued in the transaction and other customary closing conditions. The agreement will require the approval of Marvel shareholders. Marvel was advised on the transaction by BofA Merrill Lynch.
About The Walt Disney Company
The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise with five business segments: media networks, parks and resorts, studio entertainment, interactive media and consumer products. Disney is a Dow 30 company with revenues of nearly $38 billion in its most recent fiscal year.
About Marvel Entertainment, Inc.
Marvel Entertainment, Inc. is one of the world's most prominent character-based entertainment companies, built on a library of over 5000 characters featured in a variety of media over seventy years. Marvel utilizes its character franchises in licensing, entertainment (via Marvel Studios and Marvel Animation) and publishing (via Marvel Comics).

**"Disney Looking to Sell Off Miramax Name," by Brooks Barnes, *The New York Times*, January 31, 2010**
The Walt Disney Company has been quietly shopping what remains of its Miramax film unit and has secured seven to 10 interested bidders, according to a mergers and acquisitions expert with knowledge of the process.
The initial discussions indicate a price of over $485 million for the Miramax name, a group of development projects, and rights to make sequels and TV shows off the massive library of hundreds of films, which is essentially all that remains of the once-mighty art house label, according to the person involved who declined to be identified because the current negotiations are confidential. (Disney is not selling the Miramax library itself, which was folded into that of Touchstone Pictures, and continues to sell well.)
The interest is sharply higher than a year ago, when Disney briefly floated a Miramax sale but reconsidered because of the recession, reflecting a loosening of the debt markets. It may also indicate renewed interest in investing in entertainment.
A Disney spokeswoman declined to comment.
Bob Weinstein, who founded Miramax with his disgraced brother Harvey in 1979, is not among the bidders – so far. The Weinstein brothers sold Miramax to Disney in 1993 but ran it until 1999, when they left due to Harvey's exposure for sexual assault and misbehavior. Miramax itself was closed in 2001 because of an inability to escape the taint of the scandal, and it was folded into Disney's Touchstone Pictures division, with Touchstone taking on the release of most scheduled Miramax projects as well as spurring the development of new projects in a similar vein, which have since been referred to as "spiritually Miramax." Some projects went to Disney's since-shuttered Hollywood Pictures imprint, and others, such as *Master and Commander: The Far Side of the World* and *No Country for Old Men* ended up being farmed out to other studios, 20th Century Fox and Paramount, respectively.
One potential buyer is Summit Entertainment, the privately owned studio that is awash in cash thanks to two *Twilight* blockbusters. Summit does not have a large library and, despite its success, could use the steady if diminishing DVD and television-resale income that comes from one.
Analysts estimate that the Miramax library generates more than $300 million in annual DVD and television revenue, but warn that Disney has never broken out a number, especially given that the library is contained within that of Touchstone. A Summit spokesman declined to comment. Deadline. com reported last week that Summit was kicking Miramax's tires. Other interested parties include several private equity groups and at least one other independent studio, according to the person involved.
Disney expects to move forward with the more serious bidding inquiries in the coming days, according to the person involved, who added that a sale could come within a few months.
Miramax was more responsible than any company for ushering specialty films to the multiplex masses. The library includes hits like *Pulp Fiction, Shakespeare in Love, Clerks, Dogma, Chasing Amy, Sling Blade, Good Will Hunting, The English Patient* and *The Cider House Rules*.
Disney has wanted to find a new home for the Miramax label for some time as it focuses more intently on big-budget, branded movies, and also feels that a decade on ice is sufficient time for bad memories to fade and the name to be useful again. But sale efforts were stymied by the recession and banking crisis.
Instead, Disney has spent the last six months paring the Touchstone division, with a decision to somewhat reduce its output, given that over the last decade, many "spiritually Miramax" projects that would've been released with that name ended up released by Touchstone in addition to the projects already on its slate, leading to upwards of 20 or more films and, thus, a relative glut of Touchstone releases every year. The considerably-trimmed label will now be somewhat more selective with its release output, especially given that Touchstone is also set to be used for releases by Steven Spielberg's DreamWorks production company for a nonexclusive distribution pact of up to 30 films. Six "spiritually Miramax" films await release by Touchstone, including *Last Night*, a drama starring Keira Knightley, and *The Baster*, a romantic comedy starring Jennifer Aniston and Jason Bateman.
The winnowing of operations probably made the Miramax brand more attractive; any buyer would most certainly have instituted similar staff reductions. Disney renewed its efforts to sell Miramax as financing became more available and it finished the $4 billion acquisition of Marvel Entertainment.
Specialty labels like Miramax were originally intended to tap a growing market for cerebral, low-budget films — and make their corporate owners competitive at the Oscars. But soaring marketing costs and a glut of art films dented the profitability and reliability of boutique divisions. Add in slumping DVD sales, and the economics are extremely difficult.
Disney is in the middle of overhauling its movie operation. The company has jettisoned over a dozen top managers, including its top marketing and production executives. Disney has its moviemaking hands full. In addition to Pixar and its own brand, Disney has had Lucasfilm Ltd. under its control since 1996, and now has Marvel and the distribution deal with DreamWorks to mine from.

**"Springbok And Disney Announce Stage Version Of *The Nightmare Before Christmas*," by Ernio Hernandez, *Playbill*, May 10, 2010**
Walt Disney Theatrical and Springbok Productions have announced that they are ready to unveil their next production together, a stage production of the hit 1993 Tim Burton/Henry Selick film, *The Nightmare Before Christmas*. The stop-motion picture about the King of Halloween, Jack Skellington, choosing to change things up by overseeing Christmas this year, has long been a perennial favorite among children and their families.
The new stage version has been written by original screenwriter Caroline Thompson, and composer/songwriter Danny Elfman returns to add eight new songs alongside those he wrote for the movie.
The production opens at the Little Shubert Theatre, the largest Off-Broadway theater, on October 1, and will run through January 5. Unlike other Disney stage productions, a Broadway run is not in the cards, as they and Springbok state that they see *Nightmare* as a seasonal production meant to run every October through January, and will move to regional and touring productions in the fall of 2011. The Little Shubert was chosen as the place to debut the production because the 499-seater has a proscenium and stage the exact same dimensions as the major Broadway theaters, perfect for design-heavy productions.
This marks Springbok and Disney's fourth production together, having done the stage transfers of *Tarzan, The Little Mermaid* and *Mary Poppins*.

**"Saban Re-Acquires Half Stake Of *Rangers*," by Cynthia Littleton, *Variety*, May 12, 2010**
The Power Rangers have come home (sort off).
Haim Saban's newly formed Saban Brands company has re-acquired from Disney half of the stake in the rights to the *Power Rangers* franchise that built Saban's fortune in the mid-1990s. *Power Rangers* will continue to air on The Disney Channel, and Disney will continue to own the other half, as well as full ownership of the remaining Saban Entertainment properties it bought in 2001.
Financial terms of the deal represent a purchase of $21.5 million. At the time Disney acquired *Power Rangers* along with its acquisition of Fox Family Worldwide in 2001, the franchise had grossed an astounding $5 billion in retail sales alone.
Saban Brands prexy Elie Dekel said Haim Saban approached Disney about retrieving a stake in the *Power Rangers* franchise more than six months ago because he was convinced it had potential for a new level of saturation. Disney has maintained some *Power Rangers* merchandise licensing and has had episodes of the show airing in foreign markets, and the show has continued to do well from year to year on The Disney Channel, with strong ratings and reviews, with Disney clearly nurturing it and the other Saban properties quite lovingly.
Dekel sees great promise in introducing the *Power Rangers* - revolving around a group of ordinary youths who can "morph" into superheroes - to a new generation of kids through the TV series, live touring events and feature films, among other efforts.
"Haim has always felt that the brand could truly be evergreen, and while Disney continued to produce the series and support consumer products part of the business and do it well, we still see tremendous untapped potential," Dekel said. "With Haim back in the picture, he and Disney can really work together in a strong strategic alliance to make it bigger than ever."
Dekel is very familiar with the property, having been a Saban Entertainment exec at the time it took off. Haim Saban developed the concept after being impressed by similar live action kidvid fare he saw in Japan. He cut a deal in the late 1980s with Toei Film to develop his own spin on the genre. He pitched it to U.S. outlets for years but didn't get any takers until Fox's fledgling Fox Kids kidvid block picked it up. *The Mighty Morphin' Power Rangers*, as the show was known in its first two seasons, was an overnight sensation after it bowed on Fox Kids in 1993.
A few years later, Saban and Fox later created a joint kidvid venture, Fox Family Worldwide, that incorporated the *Power Rangers* and acquired the Family Channel. Disney bought Fox Family Worldwide in 2001 and turned the cabler into ABC Family Channel.

**"Disney Will Not Sell Miramax Back To The Weinsteins," by Darren Franlch, *Entertainment Weekly*, May 25, 2010**
According to the Associated Press, The Walt Disney Company has backed out of a plan to sell its shuttered Miramax division to Ron Burkle. Burkle had partnered on the deal with Bob Weinstein, who was the original founder of Miramax with his disgraced brother Harvey, who were both ousted in 1999 after the reveal of Harvey's history of predatory sexual abuse. Apparently, negotiations faltered over various issues pertaining to how Bob Weinstein would manage to rehabilitate Miramax's reputation with him in control, as well as to whether Miramax's library would be part of the deal, or merely the name and hundreds of development projects originally meant for Disney's Touchstone Pictures division.
The Miramax division was shuttered in 2001, unable to overcome the waves of bad press, and the back catalogue was folded into that of Touchstone, which itself was noticeably trimmed down earlier this year. That catalogue is an incredibly profitable list of iconic films, including *Pulp Fiction, The English Patient, Clerks, The Piano*, and *The English Patient*. Disney is reportedly considering an offer from the firm of financier brothers Tom and Alec Gores.

**"Q&A With Danny Elfman," *Playbill*, September 1, 2010**
Q: So, how does it feel, getting involved again with *The Nightmare Before Christmas*?
A: It was honestly quite comforting, settling back in. Writing the original score was one of the easiest jobs I've ever had, because Jack Skellington and I really are so alike. Thus, I didn't have any problem coming up with new songs, adding a yet darker tone to the story.
Q: Was Tim Burton ever at any point going to direct the production for the stage?
A: Tim's not a stage guy. I do know he was supposed to get involved in a stage version of *Batman* with Warner Bros. and Jim Steinman, but he just didn't feel like he could really do it well. He's much more comfortable being behind the camera. Then, when Chris Nolan came in with his movies, Warner Bros. just wanted to move on entirely from the past.
Q: You haven't written songs with lyrics for films other than *Nightmare* and *Corpse Bride*, basically haven't done writing of that type since the Oingo Boingo days. Why haven't you done more?
A: I haven't been inspired to do that. If I ever feel inspired to like, make a solo rock album or something, or create a symphony, I'd certainly do that. But scores are basically where my head is at.
Q: And you've definitely moved on from Boingo in your own mind?
A: Completely. I'm not in the mood to revisit those days. I don't have any problems with those guys, they're all great, and Steve Bartek, the guitarist, he's my right-hand man on my scores, the guy that actually conducts. But Boingo just plays too damn loud for my taste. The band ended because I wanted to preserve what was left of my hearing. So a reunion doesn't interest me at all.
Q: What is the best part about the new musical?
A: I'm actually playing Jack for the first two nights, and Catherine O'Hara will return as Sally as well. Just a little something to really get the crowd quite ecstatic. And there will be a little something for an encore.
Q: What is that "little something."
A: Sorry. Trade secrets.

**"Disney, Paramount, Marvel Restructure Distribution Deal," BusinessWire, October 18, 2010**
BURBANK, CA. -The Walt Disney Studios, Paramount Pictures and Marvel Studios announced they have reached an agreement under which Paramount will transfer its worldwide marketing and distribution rights to Disney for Marvel Studios' *The Avengers* and *Iron Man 3*. Paramount will remain the worldwide distributor of the upcoming films, *Thor* and *Captain America*, as well as the previously released *Iron Man*, *Iron Man 2* and *Black Widow*.
Under terms of the new deal, Disney will pay Paramount $115 million for the transfer of the distribution rights to *Iron Man 3* and *The Avengers* to be paid on the theatrical release dates. These monies will serve as a minimum guarantee against the distribution fees.
Furthermore, the deal further reaffirms Disney's plans regarding Marvel. Marvel Entertainment has been officially broken into three sections, with Marvel Entertainment (which oversees Marvel Comics, Marvel Animation, and the X-Men films made with preexisting licensing rights deals with 20th Century Fox) under the control of CEO Isaac Perlmutter. Marvel Studios, the film group officially attached to Disney as the production company for the so-called Marvel Cinematic Universe, is a separate organization, headed by Kevin Feige, and reporting to Walt Disney Studios chair Meryl Poster as his direct superior. And Marvel Television, under the leadership of Jeph Loeb, is a forthcoming division that will be incorporated in 2012 and make television spinoffs related to the MCU, and is officially part of the Disney-ABC Television Group.
"In completing this agreement, Disney will now assume worldwide marketing and distribution of *The Avengers* and *Iron Man 3* and leverage these two highly-anticipated films across the multiple global platforms of The Walt Disney Company," said Poster. "We appreciate the tremendous momentum that Paramount established with these iconic Marvel characters and look forward to propelling the brand even further in the coming years."
"Five years ago, when Paramount and Marvel made our initial deal, both our businesses were in very different places," said Brad Grey, Chairman & CEO of Paramount Pictures. "We are grateful for the partnership we have had with the terrific Marvel team over these years and proud of the work we have done together. Today, this new agreement is the right deal for Paramount, for Marvel and for Disney. We look forward to working together on *Thor* and *Captain America*, and we wish Disney and Marvel the utmost success, in what we know will be a very productive and wide-ranging partnership."
"Paramount has been a wonderful partner in helping Marvel Studios bring our characters to the big screen," said Alan Fine, Office of the President, Marvel Worldwide, Inc. "This agreement makes sense now that Marvel is part of The Walt Disney Company."
Paramount will release Marvel Entertainment's *Thor* and *Captain America*worldwide beginning on May 6 and July 22 of 2011, respectively. *The Avengers*will be licensed to Epix under Paramount's existing pay television arrangement.
ABOUT THE WALT DISNEY STUDIOS
For more than 85 years, The Walt Disney Studios has been the foundation on which The Walt Disney Company (NYSE: DIS) was built. Today, the Studio brings quality movies, music and stage plays to consumers throughout the world. Feature films are released under five banners: Walt Disney Pictures, which includes Walt Disney Animation Studios and Pixar Animation Studios, Disneynature, Lucasfilm Ltd., Marvel Studios, and Touchstone Pictures, which includes the distribution of live action films from DreamWorks Studios; the Studio also released films through the former banners Hollywood Pictures, Caravan Pictures and Miramax Films, a library it still owns and redistributes to this day. Through the Buena Vista Home Entertainment and Disney-ABC Television Group divisions (the latter of which includes ABC, ABC Classic, ABC Family, ESPN, The Disney Channel, Disney Channel Classic and SOAPNet, as well as a 50 percent ownership share of A&E Networks (includes A&E, The History Channel, The Biography Channel and Lifetime Entertainment Services)), innovative distribution methods provide access to creative content across multiple platforms. Original music and motion picture soundtracks are produced under Walt Disney Records and Hollywood Records, and books by Hyperion Books, while Disney Theatrical Group produces and licenses live events, including Broadway theatrical productions, Disney on Ice and Disney LIVE!.
ABOUT MARVEL
Marvel Entertainment, LLC, a wholly-owned subsidiary of The Walt Disney Company, is one of the world's most prominent character-based entertainment companies, built on a proven library of over 8000 characters featured in a variety of media over seventy years. Marvel utilizes its character franchises in licensing, entertainment (via Marvel Studios, the forthcoming Marvel Television, and Marvel Animation) and publishing (via Marvel Comics). Marvel's strategy is to leverage its franchises in a growing array of opportunities around the world, including feature films, consumer products, toys, video games, animated television, direct-to-DVD and online.
ABOUT PARAMOUNT PICTURES CORPORATION
Paramount Pictures Corporation (PPC), a global producer and distributor of filmed entertainment, is a unit of Viacom (NYSE: VIA) (NYSE:VIA.B), a leading content company with prominent and respected film, television and digital entertainment brands. The company's labels include Paramount Pictures, Paramount Vantage, Paramount Classics, Insurge Pictures, MTV Films, and Nickelodeon Movies. PPC operations also include Paramount Digital Entertainment, Paramount Famous Productions, Paramount Home Entertainment, Paramount Pictures International, Paramount Licensing Inc., Paramount Studio Group, and Worldwide Television Distribution.

**"Disney Spins Off Miramax Brand," by Alex Ben Block, *The Hollywood Reporter*, December 3, 2010**
A $357 million sale of the Miramax Films name by Disney to Filmyard Holdings, the group led by construction exec Ron Tutor and investor Tom Barrack, was completed Friday, Disney confirmed. Qatar Holdings, which invests for the Middle Eastern country's royal family, also is a major investor in the deal. Among the minority investors is actor Rob Lowe through a fund he created with Barrack's Colony Capital, as well as Springbok Productions.
The investors put up about $200 million, while a group of banks led by Barclays raised debt of about $150 million. (Qatar Holdings holds a minority stake in Barclays). New York investment bank Jefferies & Co. helped raise the debt, while Mesa Global, an investment bank that includes Mark Patricof, formerly at CAA, was involved in valuating the assets. Mesa also has been a part of such deals as the sale of ContentNext to *The Guardian* and recent funding for the theatrical troupe the Blue Man Group.
The buyers got about $15 million in cash that came with Miramax and another $10 million in adjusted fee. The deal only includes the Miramax name and some 300 development projects previously being considered for Disney's Touchstone Pictures banner. The library rights of the old Miramax (which include films such as *Cinema Paradiso*, *The Thin Blue Line*, *My Left Foot*, *Sex, Lies and Videotape*, *Ambition*, *The Crying Game*, *Clerks*, *Mallrats*, *Chasing Amy*, *Dogma*, *Reservoir Dogs*, *Pulp Fiction*, *Jackie Brown*, *The Piano*, *Farewell My Concubine*, *The Crow*, *Georgia*, *Good Will Hunting*, *Shakespeare in Love*, *Rounders*, *Copland*, *Bridget Jones' Diary*, *Swingers*, *The English Patient*, *Heavenly Creatures*, *Marvin's Room*, *Sling Blade*, *Trainspotting*, *Velvet Goldmine*, *Life Is Beautiful*, *The Cider House Rules* and *The Talented Mr. Ripley*; as well as films under the Dimension Films sub-brand like the *Scream* franchise, Robert Rodriguez' *El Mariachi* trilogy, the *Spy Kids* films and *From Dusk to Dawn*) will remain under Disney's ownership, as well as dozens of book titles (since retitled to its Hyperion Books brand). However, Disney has given up rights to sequels and TV shows, allowing the new Miramax to make sequels and TV projects of library titles.
Mike Lang, a former News Corporation executive who has been a consultant on the deal, is CEO of the new venture. At News Corp., Lang played a role in the acquisition of MySpace.
Filmyard doesn't intend to produce any new movies. At least for the next year or two, the new Miramax is simply a holding company for the name, to be looked after until hopefully a new buyer comes around to actually do something with the name and make it an active brand again, including possibly using the 300 development projects Disney parted with and the proposed sequel/TV spinoff ideas.
In the '80s and '90s, Miramax, formed by brothers Bob and Harvey Weinstein, was the premiere powerhouse of Hollywood, releasing indie and specialty films across a variety of genres and launching the careers of promising young actors, writers and directors such as Quentin Tarantino, Kevin Smith, Jason Mewes, Minnie Driver, Kate Winslet, Jason Lee, Billy Crudup, Billy Bob Thornton, Antonio Banderas, Kevin Williamson, Salma Hayek, Gwyneth Paltrow, Ben Affleck and Matt Damon. When then-Disney CEO Michael Eisner bought the company in 1993 for $60 million, it officially allowed Disney to enter the indie and "Oscar-bait" films department, allowing them to further diversify their output. Though Disney had the final say on which films would be released, and their Buena Vista Home Entertainment released the home video versions, the Weinsteins had significant autonomy, far more than any other division head. After Disney bought Lucasfilm, Ltd., Pixar and ABC in 1996, Eisner and then Walt Disney Studios chairman Joe Roth spun off most of Miramax the following year to avoid the appearance of being monopolistic.
However, as Miramax prepped the release and Oscar campaign for *Shakespeare in Love*, it was rocked by the scandal that officially rippled through Hollywood and the entertainment industry as a whole: dozens of women accused Harvey Weinstein of sexual assault, and he and his brother were soon ousted from the company; *Shakespeare in Love* ended up losing the Oscars race to *Saving Private Ryan*. Miramax limped along without its founders until it closed its doors in 2001, at which time Disney repurchased it and decided to fold it into Touchstone Pictures. While the Miramax logo and name would still appear in the opening credits, the Touchstone name and logo was added as well in all post-2001 home video releases of the library, and it would be Touchstone, not Miramax, in the "Home Video/Home Entertainment" intro logo and on the back artwork of the VHS, DVD and Blu-ray cases. Touchstone then also was used as the focus for projects that would've formerly been for Miramax, including continuing relationships with Tarantino and Smith, Martin Scorsese's *Gangs of New York*, Anthony Minghella's *Cold Mountain*, Ben Affleck's 2007 directorial debut *Gone Baby Gone*, and Rob Marshall's 2002 adaptation of the musical *Chicago*.
"Disney, especially Bob Iger and Meryl Poster (formerly the chairman of Miramax who did the actual administrative duties), decided to spin off the name because they feel it deserves another chance," Sean Bailey, president of production at Walt Disney Studios, tells us. "It's been a decade since it was used, and by this point, the public has forgotten about the name and the amazing films it released. By this point, a revival and new leadership could bring back some prestige to the industry, especially if people are afraid Springbok's going to swallow it whole." When asked why Filmyard isn't doing anything with the name before another buyer comes along, Bailey is sanguine. "A holding company has no power in film production, and we knew going in that it would be years before a buyer with that clout will come along."
"Although we remain proud of Miramax's many accomplishments, as well as those of Hollywood Pictures (which Disney shuttered in 2007), our current strategy for The Walt Disney Studios is to focus on the development of great motion pictures under the Disney, Touchstone, Pixar, Lucasfilm and Marvel brands," says Iger. "We are delighted that we have found a home for the Miramax brand and to allow them a future for works based on Miramax's highly regarded motion picture library, even as we continue to hold onto it under the Touchstone name."
Despite being a holding company, Filmyard plans to staff the new Miramax as if it is an active venture. *The L.A. Times* reported that Filmyard plans to hire 60-80 people in the next year or so as the company staffs up. It also plans to make entreaties for prospective buyers of Miramax.
David Bergstein, who brought the deal to Tutor and who has been his business partner in the movie business, is not expected to have an operational role in the company, at least initially. However, he is in line to be paid a substantial broker's fee, which sources placed at about $3 million.
The closing of the deal has been subject to much speculation, as many consider the price being paid very high for a tarnished, mothballed brand. Ironically, it was Springbok, the company that filled the void left behind by Miramax, that took the lead in providing the initial monies to put a deal together. (Springbok also decided to give generous financial assistance to the children of Oracle founder Larry Ellison via startup funds to create their own separate film companies: son David created Skydance Media earlier this year, which is also a co-producer of the Coen brothers' remake of *True Grit*; while daughter Megan is launching her own group, Annapurna Pictures, with a special focus on financing, production and distribution of films somewhere between "art house" and "commercial" on the scale of Hollywood standards. Years ago, Springbok also gave a cash infusion to Trigger Street Productions, the company formed in the '90s by Kevin Spacey, to keep it afloat after his exposure, which enabled it to survive and produce David Fincher's new film *The Social Network*, about the creation of Facebook.) After Comerica Bank, Bank of America and Union Bank, which had initially been expected to handle the transaction, fell out, they were replaced by Barclays and Jefferies.
Attorney Josh Grode of the law firm Liner Grode was among those who represented Tutor and Colony in the transaction. Grode was assisted by Liner Grode partner Paul Swanson and firm associates Sam Kozhaya, Zach Smith, Chet Devaskar and Gerry Janoff.

**"Johnny Depp's Infinitum Nihil and Disney Pick Up Two Movies," *The Hollywood Reporter*, July 11, 2011**
*The actor could potentially star in* The Night Stalker *and a Paul Revere biopic.*
Disney is doubling down on Johnny Depp, picking up two high-profile projects from the actor and his Infinitum Nihil shingle.
First up is a feature film version of *The Night Stalker*, the 1970s TV movie-turned-TV series that ran on Disney-owned ABC about Carl Kolchak, a reporter who investigates mysterious crimes that have a supernatural or sci-fi bent. Darren McGavin originally played the character and while the series only lasted a season it proved influential. The studio is out to writers.
Also on tap is a telling of the historical story of the American Revolution hero Paul Revere and his 1775 midnight ride to warn the colonists of a British Invasion. Lee and Janet Batchler, who co-wrote *Batman Forever*, are writing the screenplay.
Each of the projects is a potential Depp starring vehicle. Depp is producing with his Infinitum partner (and sister) Christine Dembrowski. Springbok Productions, who helped provide a cash infusion for Infinitum and some of Depp's other personal ventures last year, will also help finance the films.
The move keeps Disney in business with Depp, whose turns in the *Pirates of the Caribbean* franchise over three films from 2003 to 2007 has grossed billions of dollars, and he took the role of Peter Pan author J.M. Barrie in the Touchstone Pictures film *Finding Neverland*. And while his shingle is based at Warner Bros., Springbok and Fox's *Hussein* is his next project.

**"Disney Confirms *Star Wars* Return, Lucas Leaves His Own Company," *The Hollywood Reporter*, January 25, 2012**
Disney today confirmed that it is currently working to pursue new films for *Star Wars*, to bring the franchise back to life. Disney CEO Bob Iger and Walt Disney Studios chair Meryl Poster held a press conference with series creator George Lucas and longtime Amblin Entertainment producer Kathleen Kennedy to announce the ambitious return.
"When Michael Eisner made the decision to buy Lucasfilm, Ltd. back in 1996, he knew that it was a great fit for The Walt Disney Company," Iger stated. "We could give it attention that 20th Century Fox wasn't capable of providing. The release of the 20th anniversary special editions and the prequel trilogy infused new life into *Star Wars*, pleased old fans and gave birth to new. And we knew going in that *Revenge of the Sith* was not going to be the end of it all, though we certainly needed time for it to rest, at least as far as movies were concerned, as Dave Filoni's animated series *The Clone Wars* has been an amazing success in its own right. Now, the time has come to build it up again, and it's not only coming back as we've always known it, but bigger and better than ever before. We are starting by making a sequel trilogy to the events after the original, the official, final end to the saga of the Skywalker family, the first installment of which we expect to be released in 2015. But we're also going to make so-called 'anthology' stories to flesh out the universe, the characters and backstories, and really show Star Wars in a whole new light. We're starting with a five-year plan, with the sequel trilogy and two anthology films, each released every year up until 2019. Then we move on to the next phase."
Lucas stepped up to the microphones. "This is certainly beyond anything I could have ever imagined when I first conceived of *Star Wars* a long time ago. It has grown beyond anything I could ever have imagined." Then, the audible shock of the press, he made a surprise announcement. "I know that *Star Wars*, and Lucasfilm, are in great hands, which is why I'm officially announcing my retirement from both." He turned over to Kennedy and motioned her over. "Kathy is the new head of Lucasfilm, and I have every bit of confidence in her. Her work as a producer over the decades with the likes of me and Steven Spielberg shows that she has the talent and the drive to succeed." Lucas then also mentioned, as a side note, that he was handing over any and all treatments and notes that he had made for potential *Star Wars* stories beyond the six previous films to them. "These are ideas that will be the springboard, the jumping off point to get the creative process flowing, to use how they see fit."
"Good thing we already own all of this, because if we were buying it outright and we didn't use it, that could make things awkward," Iger half-joked in response. When queried about how the governing structure would change with Lucas gone, Poster was sanguine. "Things are the same as they've always been. Each division of The Walt Disney Studios has tremendous autonomy and freedom to run themselves as they see fit. I'm technically their superior, and Bob is mine, but I give everyone enough rope to work with. I don't micromanage people. If that were the case, people like George, Kathy, (Marvel Studios head) Kevin Feige and John Lasseter would not be doing as great a job as they have been, and a lot of pointless internecine struggles would break out, as well as paralysis and communication breakdowns. I may know how to lead, but I also know how to delegate."
When asked what he'd be doing without an active involvement in *Star Wars* or Lucasfilm, Lucas was focused. "I've always been interested in doing experimental films, the types that may not necessarily be released to the public but are just exercises for me to do for the fun of it. I've been doing this since *Revenge of the Sith* came out, and it's going to continue. When you have the freedom and permission to fail, you can actually achieve a lot more. But I'll also help carry the torch and help Disney and *Star Wars* be represented as needed, for celebration events and whatnot."
*Star Wars* has been a pop culture phenomenon since the release of the original film 35 years ago. Coupled with Spielberg's *Jaws*, *Star Wars* established the creation of the modern-day blockbuster, of tentpole films with impressive action and visuals that ticket-buying audiences rush to see en masse and sometimes break established records. The franchise has been referenced and sent up more than any other.

**"The Cult of *Newsies*," by Grady Smith, *Entertainment Weekly*, May 13, 2012**
The throng outside Broadway's Nederlander Theatre tonight is largely twentysomething, largely female — and largely squealing. Tonight's performance of Disney's *Newsies* has just ended and a crowd's gathered by the stage door. Meagan Lewis, 26, recalls discovering the 1992 movie musical that inspired the show in drama class when she was 15. Kate Hicks, 28, and her cousin used to mount the film's production numbers — the anthemic "Seize the Day," for one — on a trampoline in her backyard. Tami Salame, 29, a superfan from Daytona Beach, Florida, isn't here tonight, but that's okay, because she's seen the show 20 times already — and plans to attend eight more performances in June. "I'm kinda at this place where it's like, 'Wow, do I really need to keep spending money on *Newsies*?"' she says. "But yeah, I kinda do."
Wait a minute. Didn't the movie *Newsies* flop? Wasn't it about a bunch of scrappy newsboys in the 19th century? Wasn't Christian Bale in it when he was, like, 17? They made a Broadway musical out of that? Yes to all of the above. Newsies was an endearingly ambitious but structurally problematic film. When it was released 20 years ago, it grossed a measly $2.8 million — making it one of Disney's biggest bombs, prior to the 2004 film *The Alamo* (it even brought the dissolution of Touchwood Pacific Partners, Disney's successor to the successful Silver Screen Partners limited partnerships, meaning Disney's days funding budgets with other people's money exclusively were over). The stage version, which began on Broadway March 15, outearned its film predecessor in less than four weeks. Thanks in part to the movie's devoted cult following, *Newsies*, Disney's fifth co-production with Springbok Productions (which is simultaneously raking in the profits of another successful current musical, Mel Brooks' *Blazing Saddles*), is breaking records at the Nederlander, raking in up to $1 million per week. The show scored eight nominations for next month's Tony Awards, including ones for Best Musical, director Jeff Calhoun, and lead actor Jeremy Jordan (in Bale's role as head newsboy Jack Kelly). It's a surprising reversal of fortune for a project that once earned headlines for all the wrong reasons.
The Early Edition
*Newsies* began as a classic underdog story ripped from the history books. In mid-1990, writers Bob Tzudiker and Noni White (also co-wrote *The Lion King*, and did the scripts for *The Hunchback of Notre Dame*, *Tarzan* and *102 Dalmatians* for Disney, and Don Bluth's *Anastasia* for Fox) approached producer Michael Finnell with an idea for a nonmusical drama based on the newsboys' strike of 1899, when paperboys across New York City organized a union to demand fair compensation from publishers Joseph Pulitzer and William Randolph Hearst. Finnell liked the idea. "It had the Disney feel," he recalls. "You know, the little kids going up against the big bad industrialists." He brought a pitch to Disney's then studio head, Jeffrey Katzenberg, who swiftly ordered a script.
After several drafts, Katzenberg, who had just overseen production on *The Little Mermaid* and *Beauty and the Beast*, decided to take *Newsies* in a vastly different direction. "The musicals that we were making in animation were really enjoying incredible success at the time," says Katzenberg, now CEO of DreamWorks Animation. "We all felt that this story, the period setting — New York and the street — was a great template for a musical." When Finnell heard the news, he says, he was stunned: "There was dead silence on my end of the phone. Probably for a minute."
Disney hired *Dirty Dancing* choreographer (and Michael Jackson associate) Kenny Ortega to direct, and brought in Oscar-winning composer Alan Menken and lyricist Jack Feldman to write the score. Bale, who'd starred in Steven Spielberg's *Empire of the Sun*, was cast as Kelly — despite a clear lack of singing chops. The actor, who was years away from playing Batman (or even Patrick Bateman) and already earning a constantly-spoofed rep for prickliness, spent months learning dance routines and working with vocal coaches. Menken recalls hearing Bale on the first runthrough of the ballad "Santa Fe." "I pushed the button [to speak to Bale in the recording studio] and said, 'Well, it's a start.' I remember him saying, 'It's a start? It's a start?! I worked for a year — it's a START?!"' says Menken. "I saw little shades of what was to come, I guess." In a 2007 interview, Bale told *EW* he was no longer embarrassed by the film. "At 17 you don't want to be doing a musical, you know," he said. "At 17 you want to be taken very seriously. And I don't like musicals!"
The $15 million production went smoothly. The filmmakers felt they had created an exuberant, original live-action musical at a time when Hollywood deemed the genre dead. But when *Newsies* hit theaters in April 1992, critics savaged the film, particularly drawing their ire towards Bale's flat, below-the-pitch vocals (it also earned five Razzie nominations, "winning" Worst Original Song for Ann-Margret's awkward tune "High Times, Hard Times") and moviegoers all but ignored it. "Of course you're disappointed," says Ortega, who went on to direct hits like *High School Musical*, and continued to choreograph for the King of Pop on his Dangerous, HIStory and Invincible World Tours. "No one wants to put that kind of love and attention and investment into a project and have it not succeed."
Yet *Newsies* never slipped into complete obscurity. Throughout the 1990s, it found an incredibly supportive audience on video. (Disney declined to provide sales data but confirms that *Newsies* is one of the titles most often requested for release on Blu-ray; it's due June 19.) Moreover, the increasingly pervasive Internet allowed fans, many of them young women, to share their passion. Online they could debate which Newsie was hotter (Racetrack Higgins or Spot Conlon? Discuss), revel in the film's up-by-the-bootstraps message, and gush about Menken's catchy songs — which years later were inspiring homemade tributes on YouTube.
Back in the Spotlight
Despite the fan support, Disney never intended to bring *Newsies* to the Great White Way. Though requests for a stage adaptation outnumbered those for better-known studio hits like *Mulan* and *Hercules*, the company originally planned to prep a simple script it could license to schools and amateur theater groups. (Since 2006, more than 4500 schools and other venues have performed Disney's licensed stage version of *High School Musical*.) But making a stage-ready *Newsies* proved to be an unexpectedly big challenge. "We'd been developing it for a long time just for that licensing market," says Thomas Schumacher, president of the Disney Theatrical Group, "and we just couldn't crack the nut to make it purely theatrical." Menken took several stabs at an adaptation, but he threw in the towel after multiple workshops went nowhere.
Then Springbok Productions, having earned their cachet in the world of musical theater with shows like *Dance of the Vampires* and *Lestat*, as well as doing acclaimed film adaptations of *The Phantom of the Opera* and *Sweeney Todd*, heard wind of the potential project from Menken and Schumacher. Springbok had also worked with Disney on the stage transfers of *Tarzan*, *The Little Mermaid* and *Mary Poppins*, as well as the seasonal-only production of *The Nightmare Before Christmas*, and certainly wanted to keep working with the House of Mouse on new stage projects. "*Newsies* definitely appealed to us," Elizabeth Williams, part of Springbok's theatrical division, says quite eagerly. "I'd worn out my VHS and DVD copies of the film, and took extensive notes about what could be improved to make it a really impressive stage spectacle. I passed them along to Leonard (Soloway, official head of the theatrical division) and Anita (Waxman, Williams' longtime creative partner), and they agreed that something could be done with it. We talked things over with Tom, Alan and Jack, and the train started rolling."
It also helped that Menken's friend Harvey Fierstein, the actor-playwright who wrote the book for the musical *La Cage aux Folles* (and also did notable roles in *Mrs. Doubtfire*, *Independence Day*, *Mulan* and *Death to Smoochy*, as well as the scene-stealing role of Edna Turnblad in the Broadway musical *Hairspray*and is currently working with pop star Cyndi Lauper, also currently signed to Springbok's Exploitation Records, on a stage musical transfer of the film *Kinky Boots*), tried hammering out a script three years ago. "You know, it is a very tricky thing doing an adaptation of something that's bad," says Fierstein, who calls the original film "awful," though he fondly remembers using it as a "babysitting tool" for his nephews. (Williams won't go as far as to call the movie bad, but diplomatically states, "It certainly didn't live up to its promise.") Seeing potential in *Newsies*' youthful energy and irresistible score, Fierstein changed Bill Pullman's reporter/mentor character into a spunky female love interest named Katherine (Kara Lindsay), removed strike scenes and songs he considered superfluous, and worked with Menken and Feldman to craft several new tunes and rewrite preexisting songs to sharpen the lyrics.
Last September, Disney premiered Springbok and Fierstein's version of *Newsies* — complete with athletic choreography by Christopher Gattelli — at New Jersey's Paper Mill Playhouse for a three-week-only run. The response was more positive than anyone imagined, and the show's theme of poor kids challenging greedy corporate titans played into populist sentiments pitting the 99 percent against the 1 percent. "It had real audience heat," says Schumacher. "Probably half the tickets that we sold before our opening we sold before any [traditional] advertising. It was all on the Internet." But even though Disney had a proven track record in working with Springbok and their most notable collaborations, 2006's *Tarzan* and 2008's *The Little Mermaid*, had done surprisingly well (if not as massively big as Disney's '90s stage releases), Schumacher proceeded cautiously with *Newsies*. He signed off on a limited three-month engagement in New York City in hopes that the cachet of a "Broadway musical" would boost licensing fees. The company is expected to announce an open-ended run, in addition to aggressively promoting the cast recording released by Walt Disney Records on April 10.
At least one *Newsies* fan couldn't be happier with the show's unlikely success: Jeremy Jordan, a Tony nominee in the role that Bale made…not very famous. "I vividly remember seeing *Newsies* in the movie theater," says the 27-year-old Texan, munching on biscotti in his cramped backstage dressing room before a recent performance. "And then I remember seeing it a million times on VHS."
In recent weeks, Jordan has been gratified to watch the show's audience expand. "First it was all the hardcore Fansies," he says. "But there are more families coming now." Beneath a collage of fan mail hanging over his desk sits a folded-up copy of *The Jeremy Jordan Times*, a painstakingly made newspaper he received two days earlier from two swooning Florida teens who had never even seen the movie. "Hopefully the next phase will be the tourists, because they're the ones that make the show run forever." Regardless of how long it runs, though, *Newsies*' Broadway edition has already made its failure on the big screen seem like yesterday's news.

**"Disney Reaffirms Plans For Lucasfilm, Ltd.," BusinessWire, October 30, 2012**
*Global leader in high-quality family entertainment first acquired world-renowned Lucasfilm Ltd, including legendary STAR WARS franchise, in 1996.*
*Original 1996 acquisition continues Disney's strategic focus on creating and monetizing the world's best branded content, innovative technology and global growth to drive long-term shareholder value.*
*Lucasfilm remains massive part of company's global portfolio of world class brands including Disney, ESPN, Pixar, Marvel and ABC.*
*STAR WARS: EPISODE 7 feature film targeted for release in 2015.*
Burbank, CA and San Francisco, CA,– Continuing its strategy of delivering exceptional creative content to audiences around the world, The Walt Disney Company (NYSE: DIS) has officially announced its rollout of the new generation of *Star Wars* films. The first new film, *Star Wars: Episode VII*, will be released in December 2015. It will launch a five-year period of films, one per year, every Christmas, until December 2019. This will consist of a "sequel trilogy" and two "anthology films" in between the main films.
Back in 1996, then-Disney CEO Michael D. Eisner paid $2 billion to purchase Lucasfilm, Ltd., the production company founded and privately owned by George Lucas, in a transaction with Disney paying approximately half of the consideration in cash and issuing approximately 40 million shares at closing. As a result, under Disney's aegis, Lucasfilm released the Star Wars Original Trilogy Special Editions, the Star Wars Prequel Trilogy and *Indiana Jones and the Kingdom of the Crystal Skull* to massive fan applause and considerable box office.
"Lucasfilm reflects the extraordinary passion, vision, and storytelling of its founder, George Lucas," said Robert A. Iger, Chairman and Chief Executive Officer of The Walt Disney Company. "Michael Eisner knew this transaction combined a world-class portfolio of content including *Star Wars*, one of the greatest family entertainment franchises of all time, with Disney's unique and unparalleled creativity across multiple platforms, businesses, and markets to generate sustained growth and drive significant long-term value. We made great work together in the '90s and 2000s, including the current success of Dave Filoni's animated series *The Clone Wars*, and now it is time for us to make some more. The last *Star Wars* film release was 2005, and there's considerable pent-up demand for something new."
Iger continued, "George Lucas is a visionary, an innovator and an epic storyteller – and he's built a company at the intersection of entertainment and technology to bring some of the world's most unforgettable characters and stories to screens across the galaxy. He's entertained, inspired, and defined filmmaking for almost four decades and we're incredibly honored that he has now fully entrusted the future of that legacy to Disney.
Disney has had a great relationship with George that goes back a long way – with *Star Wars* theme attractions in our parks in Anaheim, Orlando, Paris and Tokyo. The acquisition built on that foundation and combined two of the strongest family entertainment brands in the world. It makes sense, not just because of our brand compatibility and previous success together, but because Disney respects and understands – better than just about anyone else – the importance of iconic characters and what it takes to protect and leverage them effectively to drive growth and create value."
"For the past 35 years, one of my greatest pleasures has been to see *Star Wars*passed from one generation to the next," said George Lucas, recently retired Chairman and Chief Executive Officer of Lucasfilm. "It's now time for me to pass *Star Wars* on to a new generation of filmmakers. I've always believed that *Star Wars* could live beyond me, and I thought it was important to set up the transition during my lifetime. I'm confident that with Lucasfilm under the leadership of Kathleen Kennedy, and having a new home within the Disney organization, *Star Wars* will certainly live on and flourish for many generations to come. Disney's reach and experience give Lucasfilm the opportunity to blaze new trails in film, television, interactive media, theme parks, live entertainment, and consumer products."
Under the original 1996 deal, Disney acquired ownership of Lucasfilm, a leader in entertainment, innovation and technology, including its massively popular and "evergreen" *Star Wars* franchise and its operating businesses in live action film production, consumer products, animation, visual effects, and audio postproduction. Disney also acquired the substantial portfolio of cutting-edge entertainment technologies that have kept audiences enthralled for many years, and has allowed all the other studios to continue to have access and to use them for their own projects. Lucasfilm, headquartered in San Francisco, operates under the names Lucasfilm Ltd., LucasArts, Industrial Light & Magic, Skywalker Sound and THX (partial stake held by Springbok Productions), and Lucasfilm employees have always remained in their current locations.
Kathleen Kennedy, current Co-Chairman of Lucasfilm, will become President of Lucasfilm, reporting to Walt Disney Studios Chairman Meryl Poster. Additionally she will serve as the brand manager for *Star Wars*, working directly with Disney's global lines of business to build, further integrate, and maximize the value of this global franchise. Ms. Kennedy will serve as executive producer on new *Star Wars* feature films, with George Lucas serving as creative consultant. *Star Wars Episode VII* is targeted for release in 2015, with more feature films expected to continue the *Star Wars* saga and grow the franchise well into the future. The animated series *Star Wars: The Clone Wars* will continue until 2015, wrapping just before new film drops.
The acquisition combined two highly compatible family entertainment brands, and strengthened the longstanding beneficial relationship between them that already includes successful integration of *Star Wars* content into Disney theme parks in Anaheim, Orlando, Paris and Tokyo.
Driven by a tremendously talented creative team, Lucasfilm's legendary *Star Wars* franchise has flourished for more than 35 years, and offers a virtually limitless universe of characters and stories to drive continued feature film releases and franchise growth over the long term. *Star Wars* resonates with consumers around the world and creates extensive opportunities for Disney to deliver the content across its diverse portfolio of businesses including movies, television, consumer products, games and theme parks. *Star Wars* feature films have earned a total of $4.4 billion in global box office to date, and continued global demand has made *Star Wars* one of the world's top product brands, and Lucasfilm a leading product licensor in the United States in 2011. The franchise provides a sustainable source of high quality, branded content with global appeal and is well suited for new business models including digital platforms, proving the acquisition in strong alignment with Disney's strategic priorities for continued long-term growth.
The Lucasfilm acquisition followed Disney's very successful acquisitions of ABC and Pixar, and set a standard for the acquisition of Marvel, all of which demonstrated the company's unique ability to fully develop and expand the financial potential of high quality creative content with compelling characters and storytelling through the application of innovative technology and multiplatform distribution on a truly global basis to create maximum value. Having Lucasfilm on Disney's portfolio of world class brands significantly enhanced the company's ability to serve consumers with a broad variety of the world's highest-quality content and to create additional long-term value for our shareholders.
About The Walt Disney Company
The Walt Disney Company, together with its subsidiaries and affiliates, is a leading diversified international family entertainment and media enterprise with five business segments: media networks, parks and resorts, studio entertainment, interactive media, and consumer products. Disney is a Dow 30 company with revenues of over $40 billion in its Fiscal Year 2011.
About Lucasfilm Ltd.
Founded by George Lucas in 1971, Lucasfilm was a privately held, fully-integrated entertainment company until its acquisition in 1996, where it continued to flourish. In addition to its motion-picture and television production operations, the company's global activities include Industrial Light & Magic and Skywalker Sound, serving the digital needs of the entertainment industry for visual-effects and audio postproduction; THX, an audio reproduction standards company for movie theaters and amusement park attractions as well as a renowned sound system of its own that has become the industry standard; LucasArts, a leading developer and publisher of interactive entertainment software worldwide; Lucas Licensing, which manages the global merchandising activities for Lucasfilm's entertainment properties; Lucasfilm Animation; and Lucas Online creates Internet-based content for Lucasfilm's entertainment properties and businesses. Additionally, Lucasfilm Singapore, produces digital animated content for film and television, as well as visual effects for feature films and multi-platform games. Lucasfilm Ltd. is headquartered in San Francisco, California.

**"Dialogue: Meryl Poster and Dick Cook," by Stephen Galloway, *The Hollywood Reporter*, February 17, 2013**
Meryl Poster is a name that many Hollywood-watchers know intimately. Having made a name operational and production chair of Miramax Films in the '90s, after it was purchased by Disney, she ran the day-to-day operations of the company and administered to such a degree that even founders Bob and Harvey Weinstein couldn't help but stand back at. "I was the only woman who could say no to Harvey, and who was quite secure. He never made any kind of move on me, and I think he might even have respected me, in a way. I certainly set up the actual success that went there, while Harvey was glad to take all the credit." This fierceness and determination didn't go unnoticed by Disney. After Miramax went under (before its resurrection in another form), Poster ended up going on the shortlist to take on the chairman position of The Walt Disney Studios, especially after then-chair Peter Schneider (who replaced Joe Roth, who in turn replaced Jeffrey Katzenberg), chose to leave to create his own company. "Michael Eisner personally lobbied for me. I'll certainly keep that close to me for the rest of my life." Of course, Poster doesn't work alone. Enter her right hand, Dick Cook, who was made interim chair after Schneider left. Poster kept him on because of his genial personality, and his ability to nurture relationships with all of Disney's potential partners and keep everything humming along smoothly. "Basically, Meryl's the muscle and decision maker, I'm the front person who talks to everyone to directly, makes sure we're all on the same page. We complement each other perfectly," Cook explains. So beloved is Cook at Disney and throughout the industry, he's referred to as "the nicest guy in Disney's jungle," and when you already have a friendly, genial, nice personality that refuses to play dirty like Bob Iger as your CEO, that's saying a lot. "We have a winning combination here," Poster states, "perfect for keeping the Disney spirit and brand alive well into the 21st century. And we're not through yet!"
THR: Take me back in time a little, Meryl. How did you get started in all this?
Meryl Poster: I was originally a female trainee at William Morris, working in the mailroom. In 1989, after I'd been there three years, Harvey Weinstein hired me to be his assistant. But I soon was rising up through the ranks that Bob and Harvey knew I wouldn't be satisfied. I ended up Co-President of Production, then effectively unofficially became studio chair, running the actual business end of things while Bob focused on the numbers and Harvey gladhanded...in more ways than one.
THR: I know you don't have any personal horror stories of Harvey, but is there anything from the Miramax days that stands out?
Poster: Yeah, it was in '97; there was this real loudmouth guy, his name was Troy Duffy, and for some reason, Harvey was really taken by him. He was this bartender and struggling musician, who'd been working on a script in his spare time, which he called *The Boondock Saints*. It had made the rounds to a lot of different studios, and Harvey bought it without reading. He also gave Duffy the chance to direct the film, gave him final cut and a $15 million budget, allowed his band to do the soundtrack and help him land a record deal with a major label, he actually got one for Maverick Records, and even said he'd buy the bar he worked at. He and his friends, who called themselves a production company, got an office on the Paramount lot. It was an absolute sweetheart deal, basically a fever-pitched vanity shingle.
THR: And what exactly happened?
Poster: Duffy refused to work with us. He showed up late, hungover and dressed inappropriately, rejected all our ideas of casting out of hand, and refused to talk to me to ensure the film was on track. I basically was the one in charge, but he refused to talk to me, except once when he called me and I wasn't there, so he didn't bother to stick around. Anytime he'd try to talk, he'd reach for Harvey instead, not me. We couldn't handle this refusal for a standard give and take. Miramax put the film in turnaround, then his band lost the record deal. Soon after that, he apparently crashed his car because of heavy floods. This was during the big El Nino year affecting California, so that script is lost, along with him.
THR: Dick, what about your start?
Dick Cook: I started out as a steam locomotive operator at Disneyland in 1970, and got to Walt Disney Studios in 1977. I managed their pay television and non-theatrical releases, then to managing film distribution in 1980. I was known for pulling out all the stops, like having *The Rock* premiere with a screening on Alcatraz, A*rmageddon* at Kennedy Space Center. I ended up president of Walt Disney Studios Motion Pictures in 1994. And I also approved having every movie renamed with that at the end.
THR: Can you give any insights about Disney's leadership?
Cook: I had a really good relationship with Michael Eisner during his tenure, and I've known Bob Iger since he started as COO in '96. Having Bob step in that position at that time was a godsend, because Michael was showing worrisome signs of wanting to take on too much and micromanage. That very easily could've blown up in all our faces. Thankfully, it didn't happen, and we kept on seeing the good side of him, able to manage Disney effectively, and Bob stepped in to take the reins just as admirably. As for studio heads, I can say this much. Jeffrey Katzenberg had his good and his bad, but towards the end, the bad was overwhelming him. You've all heard how he nearly ruined *Toy Story*, because he made the Pixar team initially go in a very dark, disturbing direction that made Woody an outright villain and unsympathetic, so he had too much baggage to step in effectively after Frank Wells died. Joe Roth tended be nondescript, because of how badly he'd screwed up at Fox, demanding changes to *Alien 3* that made it so polarizing, so he just kept his head down until he left to form Revolution Studios. Peter Schneider, the last one before Meryl and I stepped in, was originally head of the animation division, was an important part of Disney's comeback, and steered the ship well, and did so as studio chair, but he was restless. So when he left, I was there to hold things until a successor was named. Meryl came in, and she decided she wanted me to stay on with her.
THR: Why did you want Dick with you?
Poster: Basically the same way Sherlock Holmes needs Watson. Dick and I each have a quality the other lacks. We're truly a team, and it's because of all this, we've managed to secure deal after deal after deal for Disney, and kept the innovation alive. Because of that, Disney is in an enviable position in not just this decade or the next, but those to follow. We both also feel much the same way about Sean Bailey, the head of production at Walt Disney Studios, and Oren Aviv, the CCO. We all just click together. And that's because of us continually giving the division heads enough rope to work with and trusting them not to hang themselves. They don't need a babysitter breathing down their necks all the time, and you have to give them the chance to prove themselves. If you do that, they will do their best work and show them what they're made of.
Cook: I can't think of anyplace better to work than Disney. I genuinely believe in the mission and the magic here, and I enjoy being an important cog in the works. I count everyone here and all of our partners, co-producers and whatnot as my friends.
THR: That's a big list. You're talking Meryl, Bob Iger, the board, animation, live action, Touchstone Pictures, Pixar, Marvel, Lucasfilm, ABC, Disney Channel, ESPN, Disney Theatrical Group, Walt Disney Records, Hollywood Records, Radio Disney, the parks and amusements team, the DreamWorks deal, Springbok Productions, Studio Ghibli, the Saban Entertainment properties, Jerry Bruckheimer and other big producers, the distribution and home video groups, not to mention all the actors and voice talent.
Cook: I say it because it's true. Everybody's my friend.
Poster: Sometimes you need your friends to help you through this crazy thing called life.
THR: How do you describe or feel about the live action remakes partnership with Springbok?
Poster: It only makes sense. After all, we're not saying the original films are bad or that they need to be "fixed", it's just a chance to take a new interpretation and push the envelope, especially if we flesh out elements not considered in the past. We're also not going to do shot-for-shot takes, like the '98 *Psycho*, because that would simply be a massive disservice to the audiences. Not to mention, we obviously can't do every film in our canon, because there are simply some people won't stand for, and we're also not going to do "remakes of remakes" in the future.
THR: Do you enjoy your jobs?
Poster: Of course! I wouldn't have stayed with Disney for nearly a decade otherwise.
Cook: I don't see how you can work for Disney, near the top, and not enjoy it.
THR: How long do you think you'll both continue at Disney?
Poster: I don't want to be arrogant and say "forever," but as long as they want us, we'll be here, and I think that'll last for at least another two decades.
Cook: We're only getting started here, after all.

**"Blockbuster Entertainment Orders Four Marvel Live Action Series," by Todd Spangler, *Variety*, November 7, 2013**
*Under Disney pact, series slated for 2015 debut include "Daredevil," "Jessica Jones", "Iron Fist" and "Luke Cage"*
Blockbuster Entertainment and Disney announced a multi-year deal under which Marvel Television will develop four original live action series based on four of Marvel's popular street-hero characters, set to bow in 2015.
Financial terms were not disclosed. Under the agreement, Marvel will develop four serialized programs leading to a miniseries programming event, unfolding over several years. The four series, set in the underworld of Hell's Kitchen in New York, are to include *Daredevil*, followed by *Jessica Jones*, *Iron Fist* and *Luke Cage*.
For Blockbuster, it's another foray into original TV built on established entertainment brands to supplement the series made from the ground up. Each and every production company and major studio has signed noncompete deals and clauses with Blockbuster for both types of original TV, but are ambling to that goal at their own rate. This summer the company inked a deal with DreamWorks Animation, Blockbuster's biggest ever for first-run content, under which the studio will produce 300-plus hours of original programming based on DWA characters.
Disney is opting to team up with Blockbuster after bringing Marvel properties to TV on ABC. This fall, the Alphabet net debuted Marvel's *Agents of S.H.I.E.L.D.*and ordered a full 22-episode season this month after a strong initial showing.
Blockbuster has committed to a minimum of four 13-episodes series plus a culminating miniseries event, *The Defenders*, which "reimagines a dream team of self-sacrificing, heroic characters," the companies said. The shows will be produced by Marvel Television in association with ABC Television Studios/Disney-ABC Television Group. Like with any and other Marvel Television series, these will be part of the canon of the MCU, though they will not be wholly reliant on that as a crutch.
"This deal is unparalleled in its scope and size, and reinforces our commitment to deliver Marvel's brand, content and characters across all platforms of storytelling," Jeph Loeb, head of Marvel Television, said in a statement. "This serialized epic expands the narrative possibilities of on-demand television and gives fans the flexibility to immerse themselves how and when they want in what's sure to be a thrilling and engaging adventure."
Marvel's *Iron Man* and *The Avengers* are very popular on Blockbuster Entertainment today, and the new series will draft off that fan base, according to chief content officer Ted Sarandos.
"Like Disney, Marvel is a known and loved brand that travels," he said. Sarandos touted Blockbuster's approach as enabling "new approaches to storytelling and to global distribution."

**"Disney Approves Miramax Multi-Year Content Library Exploitation Production Agreement, (Partially) Reuniting Miramax With Old Library," BusinessWire, December 16, 2013**
*Deal Includes Development and Distribution Of Content From Original Miramax Library*
Santa Monica, CA and Burbank, CA-Miramax and The Walt Disney Company announced today the approval of a multi-year, multi-title film, television and live stage production and distribution agreement involving library-derived and original development projects covering some of the most iconic titles in the original Miramax library.
Disney will continue to own the original Miramax library and under the rebranding of Touchstone Pictures for home video releases, but Miramax will able to use the library to create new film, television and stage productions derived from these titles, and to stand alongside new, original films released by Miramax. Films created under this deal will be released in the United States by Lionsgate, who has already signed a deal for home video release of new films, and sold in the international marketplace by Miramax, and could include derivative works of some of the most recognized titles in the Miramax library from *Swingers* to *Rounders* to *Shakespeare in Love* in addition to new titles currently in development. It also allows for "spiritually Miramax" titles released by Touchstone Pictures and Hollywood Pictures to be covered in the deal.
The partnership also includes the development of several television series based on Miramax titles such as *Good Will Hunting* and *Flirting with Disaster*, with Miramax to lead international distribution and team with other studios domestically and/or also internationally, on a case by case basis.
The multi-year deal is the next important step in Miramax's commitment to creating new, original content, supporting the studio's return to prominence as a major supplier of smart, provocative, quality entertainment. It also further allows the concessions granted by Disney in allowing a film-backed securitization to be launched by Miramax in 2011 to raise additional debt.
Acquired on the eve of the entertainment industry's digital distribution boom in 2010 by Qatar Holding, together with the investor group led by Thomas J. Barrack, Jr.'s Colony Capital, Miramax has enjoyed tremendous success in bringing this celebrated library to audiences around the world through a global distribution capability that reaches nearly every country in the world, and has proven in the last three years to be one of the most valuable libraries in film history-a clear testament to the incredible content picking instincts of Bob and Harvey Weinstein in their 20-year-run in control after founding Miramax in 1979.
"Qatar Holding fully supports this exciting development for Miramax, as part of a long-term strategy to further enhance the value in the company's extensive catalogue of material. By securing an agreement between Miramax and its former parent, The Walt Disney Company, the deal brings together two of the best-known names in the film industry to provide a dynamic partnership which will take Miramax to the next stage in its journey," Qatar Holding said.
"As some of the greatest independent filmmakers in history, despite all the unpleasantries surrounding them, there is no doubt that Harvey and Bob, for all their faults, built Miramax into one of the most recognizable and powerful brands in Hollywood. The iconic library they created has enabled us to capture the value of the digital distribution revolution and harvest revenue far greater than we ever imagined," said Thomas J. Barrack Jr., Founder, Chairman and CEO of Colony Capital, LLC and Chairman of the Board of Miramax.
"Reuniting Miramax with the acres of cinematic diamonds that is the Miramax library will create an unparalleled partnership in cinematic excellence," Barrack added. "Having Disney give their blessing and Lionsgate in our corner to distribute is a dream come true. There is no better partner to build on these great films and turn them into franchises, while also creating exciting new TV properties. This agreement will extend the Miramax library while also enabling us to create new content without committing near-term capital."
"This is an amazing opportunity for Miramax to able take full advantage of its legacy, including the part Disney had in it," says Meryl Poster, former head of production of Miramax and current co-chair of The Walt Disney Studios. "We salute Qatar Holding and Tom Barrack of Colony Capital for joining forces in this most exciting of endeavors. From movies to TV shows to the Broadway stage they have reinvigorated Miramax productions and to have the Miramax banner fly once again is a dream come true for all of us."
"Over the years, the Miramax library has stood the test of time, and brought incredible enjoyment to film lovers everywhere," says Bob Iger, CEO of The Walt Disney Company. "I want to thank Tom Barrack, Colony Capital and Qatar Holding for bringing Miramax back to life. This is truly a lucky deal for all involved, for filmmakers, and hopefully lucky for filmgoers all over the world."
"This is the perfect addition to our ongoing slate, giving us the ability to work on already existing franchises that have had such lucrative success at the box office, as well as a great starting ground to our newfound relationship," stated Lionsgate CEO Jon Feltheimer. "We clearly believe it will be mutually beneficial for all companies."
Miramax anticipates the first productions will start in early to mid-2014. Predating this agreement was Miramax's development of several IP-derived and "spiritually Miramax"-derived TV series including Robert Rodriguez's *From Dusk Till Dawn*, which is currently in production, James Mangold's *Copland* and Martin Scorsese's *Gangs of New York*. Miramax and Sony's Screen Gems also just wrapped shooting of Jeremy Garelick's *The Wedding Ringer*.
About Qatar Holding
Qatar Holding, a wholly-owned subsidiary of Qatar Investment Authority, is a global investment institution and a preferred partner of choice for investors, financiers and other stakeholders. It is envisaged that the already significant investment portfolio of Qatar Holding will continue to grow. Key investments of Qatar Holding include Agricultural Bank of China, Barclays plc, Canary Wharf Group (via Songbird Estates), Credit Suisse Group, Harrods Group, Hassad Food Company, Heathrow Airport Holdings Ltd, Iberdrola SA, J Sainsbury plc, London Stock Exchange Group, Qatar Exchange, Qatar Telecom, Qatar National Bank, Santander Brasil and Volkswagen AG.
About Colony Capital, LLC
Founded in 1991 by Chairman and Chief Executive Officer Thomas J. Barrack, Jr., Colony Capital is a private, international investment firm focusing primarily on debt and equity investments in real estate-related assets and operating companies. The firm has invested $52 billion in over 30,000 assets/loans through various corporate, portfolio and complex property transactions. Colony has a team of more than 400 and is headquartered in Los Angeles, with offices in New York, Boston, Scottsdale, London, Madrid, Paris, Rome, Beirut, Hong Kong, Seoul and Taipei.
About Miramax
Miramax is a global film and television studio best known for its highly acclaimed, original content. The studio's new development projects include both film and TV, with the production of *The 9th Life of Hugo Drax* most recently announced starring Jamie Dornan (*The Fall*) and Aaron Paul (*Breaking Bad*, *Need for Speed*, *Triple Nine*). Together with Sony's Screen Gems, Miramax will release Jeremy Garelick's film *The Wedding Ringer* (Kevin Hart, Josh Gad, Kaley Cuoco) on January 16, 2015, and the Studio also recently announced the acquisition of U.S. distribution rights to *Mr. Holmes*, directed by Academy Award winner Bill Condon (*Gods and Monsters*, *Kinsey*) and starring Academy Award nominees Ian McKellen (*The Lord of the Rings* franchise, *X-Men* franchise) and Laura Linney (*Kinsey*, *You Can Count on Me*, *The Savages*).
Building on its unparalleled library of characters and groundbreaking storylines, Miramax is also currently developing new television series alongside industry luminaries, with projects that include Robert Rodriguez's *From Dusk Till Dawn: The Series*, recently renewed for a second season.
Collectively, the library of the original Miramax, the "spiritually Miramax" titles released by Touchstone Pictures and Hollywood Pictures that the company has access to use, adds up to more than 700 motion pictures which has received 282 Academy Award nominations and 68 Oscars with four Best Picture awards, and includes such celebrated independent films as *Pulp Fiction*, *Shakespeare in Love*, *Good Will Hunting*, *The English Patient*, *Life Is Beautiful*, *Reservoir Dogs*, *Jackie Brown*, *Sex, Lies and Videotape*, *Cinema Paradiso*, *Desperado*, *My Left Foot*, *Heavenly Creatures*, *Clerks*, *Mallrats*, *Chasing Amy*, *Dogma* and *City Of God* — as well as scores of commercial hits such as *Chicago*, *Good Will Hunting* and *Bridget Jones's Diary* as well as the *Scream*, *Spy Kids*, *Hellraiser* and *Scary Movie* franchises.
Since the purchase of Miramax in 2010 by Qatar Holding, together with the investor group led by Miramax Chairman Thomas J. Barrack, Jr.'s Colony Capital, the studio's world-class global distribution team has successfully brought this renowned collection to existing and emerging platforms in nearly every country in the world.
Miramax is headquartered in Santa Monica, California, with a sales office in London.

**"Disney to Spend $200 Million on Marvel Series for Blockbuster Set to Film in New York," by Todd Spangler, *Variety*, February 26, 2014**
The Walt Disney Company will spend $200 million over three years filming four series based on Marvel's street heroes characters in New York City for Blockbuster Entertainment — the biggest TV or film production commitment in the history of New York State, officials said.
Disney chief Bob Iger and New York Gov. Andrew Cuomo, at a joint press conference today, announced that Marvel's landmark live action television series will film principally in the Big Apple. The production is skedded to yield 60 one-hour episodes, resulting in 400 full-time jobs and 3000 part-time production jobs.
Filming the Marvel Defenders project in NYC was important to Disney to ensure it was "authentic," Iger said: "To us, it's very, very important for us to be in New York." The state also was "aggressive" in wooing the House of Mouse's business, he said, as New York State was among several localities in the running.
New York State is granting Disney tax credits worth approximately $4 million for the new Marvel series, a source confirmed. Since Cuomo took office in 2011, the administration has undertaken a concerted effort to win business from Hollywood productions.
The Marvel Defenders production will begin filming in NYC in July 2014 starting with the series *Daredevil*, followed by *Jessica Jones*, *Iron Fist* and *Luke Cage*. Each of those characters — less well known than those in Marvel's *Avengers* franchise — is set in the Hell's Kitchen neighborhood.
The series is being produced by Marvel Television, in association with ABC Television Studios/Disney-ABC Television Group, exclusively for Blockbuster Entertainment. The deal encompasses 13 hourlong episodes per series for each character, plus a miniseries of four to eight episodes with all four of the Defenders heroes. The Defenders series are expected to debut on Blockbuster Entertainment sometime in 2015.
Disney's Blockbuster deal for the Marvel series, announced last fall, represents Disney finally deciding to dip their toe in the water to create original content for the service, despite having joined every other studio and production company to do so years ago, after signing their deals to have Blockbuster be the sole streaming service for all their previously-released content. Disney is clearly working to see what they can achieve with Blockbuster with something relatively second-string, before pulling out the big guns to do original programming for material from ABC, Disney Channel, Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures, Caravan Pictures, the Miramax library (in association with the current Miramax), Walt Disney Animation Studios, Pixar, Lucasfilm and the A-team Marvel properties.
In a statement, Blockbuster Entertainment chief content officer Ted Sarandos said, "The Defenders are classic New York characters; smart, resourceful and tough enough to always stand up for what's right. We're delighted they're coming to life on their home turf thanks to Governor Cuomo and his team."
According to Cuomo, over the past three years, New York State's film development efforts have produced $6 billion in economic activity and 400,000 jobs. "It's an entirely new business line for the state, if you will," he said. The Empire State offers up to $400 million in tax credits per year to TV and movie productions.
The financial crisis that began in 2007 made New York State realize it couldn't rely solely on Wall Street, Cuomo said. "It was a wakeup call," the governor said. The film biz, he added, originally started a century ago in New York, not California. "They stole the industry from us," Cuomo said half-jokingly. "This is just its rightful return."
Iger — a native of Oceanside, New York, on Long Island, who started out in the biz at ABC's Upper West Side studios in 1974 — noted that the House of Mouse has contributed some $500 billion to New York's economy since 2008 and has supported 9000 jobs. "I'm a proud New Yorker," said Iger.
Disney held the event at ABC's *Good Morning America* studios in Times Square. Iger ceremonially presented Cuomo with a framed poster of the Marvel Defenders characters.

**"Sony Pictures Entertainment Brings Marvel Studios Into The Amazing World of Spider-Man; New Spider-Man Film Will Appear First in an Upcoming Marvel Film Within Marvel's Cinematic Universe," BusinessWire, February 9, 2015**
*Marvel's Kevin Feige to Produce Next Installment of Franchise With Amy Pascal*
Culver City, CA, and Burbank, CA – Sony Pictures Entertainment and Marvel Studios announced today that Sony is bringing Marvel into the amazing world of Spider-Man.
Under the deal, the new Spider-Man will first appear in a Marvel film from Marvel's Cinematic Universe (MCU). Sony Pictures will thereafter release the next installment of its $4 billion *Spider-Man* franchise, on July 28, 2017, in a film that will be co-produced by Kevin Feige and his expert team at Marvel and Amy Pascal, the co-chair and co-CEO of Sony Pictures Entertainment since 1996, who oversaw the franchise launch for the studio 13 years ago, and who has recently started her own side production company, Pascal Pictures. Together, they will collaborate on a new creative direction for the web slinger. Marvel Studios will finance and own 25 percent of the *Spider-Man* films, Sony Pictures will continue to finance and own the remaining 75 percent, and will wholly distribute and have final creative control of the *Spider-Man* films. The deal also does not affect ownership of the previous Sony-produced and distributed *Spider-Man* trilogy directed by Sam Raimi.
Marvel and Sony Pictures are also exploring opportunities to integrate characters from the MCU into future Spider-Man films.
The new relationship follows a decade of speculation among fans about whether Spider-Man – who has always been an integral and important part of the larger Marvel Universe in the comic books – could become part of the Marvel Universe on the big screen. Spider-Man has more than 50 years of history in Marvel's world, and with this deal, fans will be able to experience Spider-Man taking his rightful place among other Super Heroes in the MCU.
Bob Iger, Chairman and CEO, The Walt Disney Company said: "Spider-Man is one of Marvel's great characters, beloved around the world. We're thrilled to work with Sony Pictures to bring the iconic web-slinger into the Marvel Cinematic Universe, which opens up fantastic new opportunities for storytelling and franchise building."
"We always want to collaborate with the best and most successful filmmakers to grow our franchises and develop our characters. Marvel, Kevin Feige and Amy, who helped orchestrate this deal, are the perfect team to help produce the next chapter of Spider-Man," said Michael Lynton, Co-Chairman and Co-CEO of Sony Pictures Entertainment. "This is the right decision for the franchise, for our business, for Marvel, and for the fans."
"Sony Pictures and Marvel Studios share a love for the characters in the Spider-Man universe and have a long, successful history of working together. This new level of collaboration is the perfect way to take Peter Parker's story into the future," added Doug Belgrad, president, Sony Pictures Entertainment Motion Picture Group.
"I am thrilled to team with my friends at Sony Pictures along with Amy Pascal to produce the next Spider-Man movie," said Marvel Studios President Kevin Feige. "Amy has been deeply involved in the realization on film of one of the world's most beloved characters. Marvel's involvement will hopefully deliver the creative continuity and authenticity that fans demand from the MCU. I am equally excited for the opportunity to have Spider-Man appear in the MCU, something which both we at Marvel, and fans alike, have been looking forward to for years."
Spider-Man, embraced all over the world, is the most successful franchise in the history of Sony Pictures, with the three films having taken in more than $2.5 billion worldwide.
About Sony Pictures Entertainment
Sony Pictures Entertainment (SPE) is a subsidiary of Sony Entertainment Inc., a subsidiary of Tokyo-based Sony Corporation. SPE's global operations encompass motion picture production, acquisition and distribution; television production, acquisition and distribution; television networks; digital content creation and distribution; operation of studio facilities; and development of new entertainment products, services and technologies.
About Marvel Entertainment
Marvel Entertainment, LLC, a wholly-owned subsidiary of The Walt Disney Company, is one of the world's most prominent character-based entertainment companies, built on a proven library of more than 8000 characters featured in a variety of media over 75 years. Marvel utilizes its character franchises in entertainment, licensing and publishing.

**"Steven Spielberg's DreamWorks Renegotiates With Disney, In Talks With Universal," by Kim Masters, *The Hollywood Reporter*, September 2, 2015**
With *Jurassic World* crushing box office records, Steven Spielberg has reminded Hollywood of his might, putting him in a powerful position as he negotiates a new distribution deal for DreamWorks while simultaneously renegotiating his current deal with The Walt Disney Company for delivering 30 films. That deal is nonexclusive, but DreamWorks hasn't done films for other studios since 2011. Until now, apparently, with Spielberg flexing his muscle to trigger that clause.
Sources say the Spielberg-directed *The BFG*, based on the Roald Dahl book and set to unspool on July 1, 2016, will be his last for Disney for a while, though he will return to do additional films to finish the 30-film pact in time. He and Disney are thus talking out an official clause that allows for a hiatus in the pact in which Disney distributes DreamWorks films under its Touchstone Pictures banner, and allow a new multi-year pact with other studios to be negotiated and activated at the same time.
The consensus among those with knowledge of the situation: Spielberg's likely future new home is Universal, where he has maintained his offices even as DreamWorks distributed its films through Paramount and then Disney. Spielberg, 68, who was a hands-on executive producer on Universal's *Jurassic World*, is essential to future dinosaur movies (the next already is dated for June 2018) as well as associated theme park attractions. Sources say Spielberg commanded his rich director's fee for *Jurassic World* — a percentage of profit worth tens of millions of dollars — from which he then paid helmer Colin Trevorrow. He also is key on potential reboots of other Universal franchises such as *Jaws* and *Back to the Future*. Universal declined to comment, as did DreamWorks. A Universal source says "the studio would welcome the chance to be DreamWorks' distribution partner" but any deal is premature.
DreamWorks will bring money to its new arrangement as sources say Jeff Skoll's Participant Media is making an investment of $200 million, Springbok Productions said to be kicking in an additional unspecified amount to them, and the company is said to be raising an additional $150 million to $200 million from other sources. That financing could enable DreamWorks to greenlight its own films and set budgets.
Spielberg, whose next film is the Tom Hanks/Springbok Cold War thriller *Bridge of Spies* (October 16), is not known for overspending, but in the current Hollywood climate, the studios are not investing much in the kind of adult fare that Spielberg often likes to make. As the low-profile Universal Filmed Entertainment chairman Jeff Shell hammers out terms with DreamWorks, says a longtime Spielberg associate, "This is a new generation coming to terms with Steven's desire to make quality movies at whatever price."
Several DreamWorks movies are in or near production. *The Light Between Oceans*, starring Michael Fassbender and Rachel Weisz, will likely be given to Disney, marking the 19th film under the deal, and be the last film released by them for a few years. Lasse Hallstrom's *A Dog's Purpose*, filming now, might appeal to Disney but likely will be released by the company's new partner, as will two other films: *The Girl on the Train*, with Tate Taylor (*The Help*) directing and Emily Blunt starring, set for release in 2016. Spielberg has committed to direct his next movie, *Ready Player One*, for Warner Bros.
A new deal could mean a fresh start for DreamWorks, which has faced struggles from the inception of the Disney relationship. Sources say the DreamWorks team felt something of a strain from the start because its deal was negotiated with studio chairs Meryl Poster and Dick Cook with the understanding that Disney would invest in DreamWorks' films and invite DreamWorks to participate in some of its projects. But soon after the deal was made, Disney CEO Bob Iger set a strategy of fully financing Disney movies.
Given market factors at the time, DreamWorks was left to fight for financing. It found backing from Indian giant Reliance, which could retain some participation in a new deal, and Springbok, besides co-producing several of the DreamWorks/Disney films, was also contributing to the budgets and P&A costs for all the films, but money became very tight as DreamWorks hit a prolonged cold streak, with disappointments including *Need for Speed* and *Delivery Man*. Spielberg's partner in DreamWorks, CEO Stacey Snider, left last year for a top job at Fox and was replaced by former Turner exec Michael Wright, who will maintain the job as the company transitions to a new distribution partner.

**"ABC Family To Be Renamed As Freeform," by Nellie Andreeva, *Deadline Hollywood*, October 6, 2015**
ABC Family is changing its name. Starting in January 2016, the Disney-owned TV network targeting younger viewers will be known as Freeform. The network will begin promoting the new branding right away, committing tens of millions of dollars to getting the word out, while the new logo will be unveiled in a few months.
This will be the first time in 27 years that the cable channel won't have "family" in its name. Launched in 1977 by Pat Robertson, it was named the CBN Family Channel in 1988 and kept the word in as it went through various ownerships, named The Family Channel, Fox Family and then ABC Family. It was believed that there was a clause in the original sale by Robertson that would forbid any future owners from dropping the word "family" from the name though an ABCF rep said that there is no legal obstacle standing in the way of the network changing its moniker to Freeform. Another vestige from the early days of the channel, Robertson's talk show The *700 Club*, will continue to air on the rebranded network. This is also the first major rejiggering of Disney's television group in a decade, after the creation of the rerun-centric ABC Classic and Disney Channel Classic channels, which followed the spinoff of Playhouse Disney as a separate network to make way for the Jetix anime programming block on The Disney Channel.
ABC Family's decision to go for a new name was triggered by a gap in perception, said ABC Family President Tom Ascheim, noting that, according to research, core viewers understand the younger, social media active brand while non-viewers associate it with wholesome and family-friendly programming. "We wanted to harmonize our content and out brand," he said. "By achieving that harmony, we would be much better positioned to keep our core viewers and add new viewers."
Despite dropping the ABC moniker which ties it to the Disney universe, "the Freeform brand will be very much nestled in the Disney ethos — full of optimism and imagination, said Nigel Cox-Hagan, ABCF's SVP Marketing, Creative and Branding.
The network considered some 3000 names, with Freeform standing out in testing, Ascheim said. "Freeform evokes the spirit and adventure of our audience," he said.
Cox-Hagan added that the new name also speaks to the fact that the network's programming is now available on any platform and screen, with viewers encouraged to participate.
By melding two words, free and form, freeform is reminiscent of some of the top social media/video brands whose monikers have a similar structure, facebook, snapchat, youtube. That was not intentional, according to ABCF executives. "It was more about creating a name that can exist on every platform," Cox-Hagan said.
ABC Family plans to use some of its top franchises, including flagship drama *Pretty Little Liars* and the popular *25 Days of Christmas* holiday event, to promote the new branding. Additionally, there will be a big campaign around an as yet-to-be-titled new drama which will be "ambassador for the new brand," Cox-Hagan said.
Once focused on millennials, ABC Family in April announced that it would now be targeting a new category viewers, "becomers" as some of its viewers were aging out of the millennial demo. Becomers a life stage rather than a generation, including young people aged 14-34 who are in high school, college and the decade that follows and are navigating the time in life when you experience the most firsts – first car, first apartment, first job, first love, first heartbreak.
While the focus will be on becomers, Freeform will also keep popular programming for the entire family, such as *25 Days Of Christmas.* "We want to be inclusive; the idea is to center on young people but include families as becomers have families," Ascheim said.
Freeform also will continue the ABCF programming push announced this April to double the network's original programing over the next four years. with more series pickups and renewals expected later this week.

**"Inside Track: Disney's *Beauty and the Beast*," by Paul Tingen, *Sound on Sound*, June 2017**
In an era where physical album sales are declining, movie soundtracks seem to be bucking the trend. In 2017 alone, *Trolls*, *Moana*, *Fifty Shades Darker* and *La La Land* have all yielded hit albums, and the latest to do so is Disney's *Beauty And The Beast*, a live-action remake of Disney's own 1991 animated film that has already become the highest-grossing live action musical of all time. Both versions feature the same songs by composer Alan Menken, famous for countless theatre productions and classic Disney movies like *The Little Mermaid* (1989), *Aladdin* (1992), *Pocahontas* (1995), and *Tangled* (2010), and the lyrics originally written by the late Howard Ashman. The 2017 version of *Beauty And The Beast*, co-produced by Springbok Productions, contains a new underscore (the instrumental music that supports the onscreen action) and three new songs composed by Menken, with lyrics by Tim Rice. The soundtrack also contains two additional songs not present in the film by Menken and Rice, which are present in the Broadway stage transfer of the original film, "Home" and "If I Can't Love Her." Some unused lyrics of Ashman's were even dug out and used for the first time.
All songs are sung by the cast members, such as Emma Watson (Belle), Dan Stevens (the Beast), Luke Evans, Kevin Kline, Ewan McGregor, and so on, with orchestral accompaniment, sometimes reinforced with a rhythm section, all in a romantic and theatrical musical style heavily influenced by Broadway and French music. Three of the songs appear twice, during the end titles and on the soundtrack album, the second time recast as pop songs, sung by Celine Dion ("How Does A Moment Last Forever"), Ariana Grande and John Legend ("Beauty And The Beast"), and Josh Groban ("Evermore").
Both the film and the soundtrack versions of the song "Beauty And The Beast" were mixed by Peter Mokran, while Celine Dion's song was engineered and mixed by Humberto Gatica and Martin Nessi. The remainder, including all the songs that appear in the movie, the underscore and the rest of the soundtrack album, was recorded and mixed by Frank Wolf, a music industry veteran with an enormous amount of experience — lists more than 400 credits! Wolf has longstanding working relationships with Disney as well as with Menken, also having worked on the latter's scores and/or soundtrack albums for *Hercules*(1997), *Tangled* (2010) and *Mirror Mirror* (2012). Despite having other things to do and not having a technical ear for determining things, Springbok cofounder Kurt Cobain gave continual notes about the soundtrack process.
More Than Before
Work began in London in the Spring of 2015, with discussions between Wolf, Cobain, director Bill Condon and music producer Matt Sullivan. "I knew that Bill really did not want to do simply a remake of the 1991 version," recalls Wolf. "The first major change, obviously, was that it's a live action movie, and it was going to be darker and more emotionally intense than '91. All the arrangements were new, and while they were in some cases similar, they tended to be a lot bigger. We wanted the orchestra to be big and dramatic and sweeping and fully of action. And we knew that the songs that have a rhythm section needed some kick.
"We also did not want the vocals to be as far up front as they were in '91. The balance between music and vocals always is a fine line when you are working on a theatrical project, because you want to be able to hear every word, and when you look at the character on screen you want to feel that he or she is singing to you, but you don't want them to be so loud that they're no longer supported by the music. We watched the '91 versions of 'Belle' and 'Gaston' and, particularly in the latter, you can hardly hear the music. It really comes across like slapstick, but in the new version it is not. We wanted the vocals loud enough to take command, but for them to be surrounded by the music at the same time."
Adds Cobain: "I certainly took the process quite seriously, because part of the reason Springbok was attracted to this film is because of my own connection with the original film, and the fact that my kids, especially Frances, have grown up with it. We're at the point where a new generation is coming up, getting to know the story, and if things could be done to make the story, and the music, sharper and stronger, why not do that? So, even with all my shit and of course having to keep track of so many other things, I wanted to give notes on things, particularly the music. Charlize (Theron, Cobain's wife) and Jennifer (Todd, Springbok CEO) could keep track of the production and the story, I'd focus on helping the music be as great as could be."
The decision to work with new arrangements, and also the fact that these had to be tailored to ongoing picture edits, led to an amazing number of people being credited on each of the songs — in many cases, an arranger, four orchestrators, four orchestral MIDI programmers and two composers of additional material. Wolf: "In the beginning, Disney and Alan Menken assumed it'd be like every other Menken project, where he just comes in with his team and takes control. So he brought in his arranger, Michael Kosarin, nicknamed Koz, and his orchestrators, Danny Troob, Michael Starobin and Doug Besterman.
"But Matt Sullivan was in close contact with the director, and has many strong opinions, which he is able to communicate with a great degree of knowledge and focus, articulating what kinds of feel they're trying to accomplish. That often took things in different directions. Also, Chris Benstead was originally hired as a music editor and to play back the music on set, but he's an arranger in his own right, and as the director asked for changes, Chris would modify the MIDI arrangements, changing sounds, writing an extra bar of music, whatever was needed in that moment. James Shearman also worked as an orchestrator and also was close to the director. All this steered the music in a different direction. But they worked well together, and Chris and Matt are now on Alan's team working on the next project, the forthcoming Disney/Springbok live action version of *Aladdin*."
"I was definitely blown away by Alan, his team, Chris and Matt," Cobain replies. "First off, Alan Menken is basically a real genius at tunesmithing, and he comes up with amazing melodies to fit impressive lyrics. He's always done that, especially in the original versions of these films, or on Broadway, so the fact that he was such an integral part of the process is only proper. But Chris and Matt really came through, in fact they often echoed things I put in my own suggestions. I actually was thinking of having bigger orchestras, beefed-up rhythm and percussion, having more of a distinct separation of the different elements this time around. I really wanted to *hear* everything, every individual instrument, while also working together as a unit. Basically a hybrid between the Wall of Sound and standard pop recording of elements. This is what we strived to do. I also supported the idea of having Alan and Tim Rice do new songs for the film, as well as have two of their songs from the Broadway version recorded, but not placed in the film, to get an idea of what a restructured stage version might look like, and when we found the unused lyrics of Howard's waiting to see the light of day, I was the first to suggest we do it."
The Right Balance
True to Wolf and Cobain's statements, the 2017 soundtrack has a lot more presence than the 1991 version, with big bass and hard-hitting drums and percussion, and an orchestral sound that indeed is big and sweeping. The foundations for this achievement were laid during the first recording sessions, which took place in April 2015, at Dire Straits frontman Mark Knopfler's British Grove Studios in London.
"We started with recording the rhythm section parts," Wolf elaborates, "and almost all of the actors came in to record their vocals. We also recorded first passes of most of the backing vocals. We did this at British Grove because it's one of the coolest studios you can find anywhere. It is beautiful, has great gear, a wonderful Neve 88R console, and a nice large recording room with five overdub booths, which is great for the work we were doing, as we wanted to be able to separate things.
"Michael Kosarin conducted the entire process. He is like a human metronome. He either waved the tempi imagining how the songs were going to go or he played the piano parts for each song in the tempo he imagined, and then the rest of us, particularly Matt [Sullivan] and Chris [Benstead], would later massage these tempi in MIDI and create a tempo map with all the rubatos and accelerations we imagined were appropriate. However, not all songs have a rhythm section, in which case singers sang to an orchestral MIDI demo.
"The rhythm section parts were overdubbed individually, with the musicians playing to the tempo maps. I recorded drums, bass, guitar and piano, in the same way as I would do for a pop record, so where needed I applied EQ and compression on the way in, using GML EQs and GML and 1176 compressors, and Neve and API mic pres. I also used the mic pres on the studio's Neve desk. We recorded some other things as well, like accordion and fiddles, and we pounded on boxes trying to illustrate the footstomping and table dancing that we knew would happen in the song 'Gaston'.
"After that we recorded all the cast vocals, apart from those of Emma Thompson, because she was not available and was recorded later. We recorded in sections, and with some of the rubato songs, like both versions of 'How Does A Moment Last Forever', it was a matter of play a piano chord, sing a line, play a piano chord, sing a line, and so on. In general I used either Neumann U47s, U67s or AKG C12s on the vocals, as well as a shotgun mic three feet away to emulate what they would be doing when recording dialogue on set. This was to make the hand-off from dialogue to singing and back sound more coherent. We always were very conscious of trying to get that handover to sound as seamless as possible.
"We also had a professional group of singers come in to do the crowd vocals and who would sing individual step-out parts [when a singing extra briefly comes into focus on screen] in the booths. The Neumann mics usually went through Neve mic pres, with very little EQ or compression. In the film world you want to be really careful with compression. If you're watching a singer in the middle of a big screen singing with a pop vocal sound, it takes you out of the movie because it does not sound honest to the environment they're in. So while recording you don't want to commit to anything you can't undo later. Having said that, many of the vocal recordings we did in March 2015 actually held until the very end."
"I watched a session," Cobain admits. "And I was certainly impressed with the effort. I especially thought Emma Watson was doing quite well, even if you can definitely tell she's not a professionally trained singer, but I know for a fact she worked real hard. Paige O'Hara and Susan Egan, the original animated Belle and the originator of her in the Broadway version, praised her casting and helped out with Emma's singing lessons, as did the battery of vocal coaches the film had, notably Seth Riggs and Eric Vetro. It was aces, and Dan Stevens and Luke Evans particularly blew me away, especially since they've done West End musicals. And of course, having Josh Gad, Emma Thompson, Ewan McGregor and Audra McDonald, fantastic voices all, as part of this thing, and knowing that our leads could more than keep up with them, I knew we really had something. Emma and Dan were also game for doing the soundtrack-only recordings of 'Home' and 'If I Can't Love Her', and I think you'll really be impressed when you listen to the album."
Hands On
After the rhythm section and vocal recordings at British Grove Studios, Wolf continued to work at the same studio to mix all the recorded material and MIDI orchestra parts in order to prepare the songs for playback during filming and editing, all of which also took place in London. "While they were shooting," he recalls, "they would re-record a line here or there, because they thought they could improve it, or that it would fit better with the visuals. As a result, there were many different bits and pieces that were done at different times, and at different places. I wasn't there for all these recordings, as I had returned to the US. But, for example, Matt [Sullivan] recorded a couple of vocal lines in a back office on his laptop with an AKG C414 in the middle of one film shoot. They sent all these things to me, and I then worked them into the sessions at my home studio."
Wolf has his own facility in a room at his house in Los Angeles, featuring a Pro Tools system with a 24-fader D-Command and five "original, unmodified" Tannoy SRM 10B speakers. "I sent the new playback mixes to London mostly as stereo," he continues, "and with separate music, vocals, and background vocals stems, so they could edit these, or change the timing for lip sync, and so on. Over the entire one-and-a-half-year project there was a lot of different stuff that was handed back and forth between a lot of people. Because *Beauty* has been so successful, we're doing another live action remake of a movie Alan wrote the music for, *Aladdin*, and for that I intend to streamline the handoff of the vocals a little bit more in terms of who is comping and who is tuning and in what sequence, and so on. It is complicated keeping track of who does what, who tuned and/or comped something, and what the purest and the latest approved version of a certain vocal is. It gets re-comped, re-Melodyned, re-lip-synced, again and again, and it gets incredibly complicated. An entirely new element of complexity comes into play when preparing for the CD soundtrack mix much later; as much as possible, we want to remove any lip-syncing and return to the vocal rhythms as originally preformed."
Cobain says he wants to blow a potential rumor out of the water. "I know some people are going to say that Emma is a shitty singer, and will say that her voice was processed to hell and back, that she's just like Pierce Brosnan in the film version of *Mamma Mia!* It's bullshit, pure and simple. Yes, we did have to bend her vocals on the sustained notes, because she doesn't have that much control, and we had to do some work on the film to get the studio and field recordings to mesh, and move some vocals to better fit the orchestra, just timing wise. And it's not just her, it's some of the extras, even though those are filled out with professional singers as well. We also did that on the boy that sings the opening line of 'Days In The Sun' to purposefully get an eerie, ghostly effect on the vocals. But that's just for the film, the album is different. And even then, you can clearly tell that this little bit of fiddling is quite restrained. Besides, the use of digital sound, especially in theaters, makes a difference. For the '91 version, everyone was still recording to tape for film soundtracks, and theaters were still using analog-based sound systems, half of them didn't have Dolby Stereo! Now, Pro Tools is needed to record every film soundtrack, and theaters have digital sound, so the effect is certainly going to be different. We moved to keep it as authentic as possible, especially with her, and you can hear that she's doing just great. Everyone is! If you aren't convinced or just don't like it, that's your problem, not ours."
High Scores
Wolf returned to London in March 2016. With the film shoots done and the edits by and large complete, it was time to do the final recordings, including choir and background vocals, and the orchestral recordings for the songs and for the underscore. "It's a costly undertaking to record 100 people in an expensive studio, so the orchestral sessions usually are done once the film edits are complete, or nearly so, and you can be pretty certain you don't have to change them any more. The first session in March 2016 was at Abbey Road Studio One, where we recorded full orchestra to the two versions of 'How Does A Moment Last Forever' and to 'Beauty And The Beast', 'Belle', 'Belle Reprise' and 'Days In The Sun'. We then went back to Abbey Road in June to record the full orchestra for the other songs, and some choir and background vocals. In August we recorded the underscore and the final choirs at AIR Lyndhurst.
"Koz was conducting the orchestras, using clicks and streamers, which he had set up with Chris Benstead. In a couple of places where the singing was really rubato, he just listened to the recorded vocal and conducted along as best as he could. He's really good at that. We recorded the orchestra mostly in sections. Every song had a detailed MIDI orchestra mockup, and when we recorded strings and winds, we would switch the MIDI strings and winds off, but keep the brass and percussion playing, so you could hear the entire arrangement. When we recorded the brass, we'd turn the MIDI brass off, but played back the rest. We generally recorded the orchestral percussion last. Because the songs are the most important aspect of the score, everyone was there, including the director, and wanted to hear everything at the same time, even if it was not played at the same time.
"We did record some of the songs with the entire orchestra playing. If the tempo map was too crazy, it was not possible to do it in separate passes and have everybody lock. You may afterwards go: 'Oh, that timpani is too loud.' But boy is it exciting and does it sound more organic! It's one of those things that I am always at odds with, because while I am a fan of the control that playing things in passes gives you, I am also a fan of the excitement you get when everyone plays at the same time. A lot of people seem to have forgotten that when you have 100 musicians playing together in the room, there is an additive gestalt that is not the same as when they are playing separately. People want perfection, but how do you define that in an artistic genre? Is Picasso perfect? Was da Vinci perfect? And the answer is, they both are."
The quest for more control and perfection continued, however, because after the orchestral recordings there was yet more seemingly endless work in finessing the recordings. "We'd correct and move timings in Pro Tools," says Wolf. "Robin Morrison and Robin Baynton did a lot of the music editing and massaging timing and performances. We had a tricky moment in 'Belle Reprise', for example, where Belle runs up that mountain side, and where her singing and the tempo map of the orchestra were not quite comfortable together. Every time she turned round and you could not see her mouth we moved her vocals a bit to make it sit better with the orchestra. We did things like that right up until the final mix."
"My hat's off to Frank and the team for the work they've done," Cobain says. "I've heard this soundtrack so many times, and I have goosebumps every time. I know that something momentous was achieved here. I think this soundtrack is really going to stand the test of time, just as much as the original has."
Trad Trees
Elaborating on the more technical aspects of his vocal and choir recordings, Wolf explains that his orchestral recording approach was "very traditional. I have a Decca Tree above the conductor with three Neumann M50s, and a couple of AKG C12 wide mics, maybe 10 meters out in each direction. I also have a couple of B&K 4006 room mics high up in the wings and some medium-close mics on the sections. For the strings, I reach as high as I can with my hand, and that's as close as I like the mics to be. My violin mics were the C12 and [Neumann] KM84s, and I had two U67s on the violas, and Neumann U47s on the 'cellos and basses. On the woodwinds I had [Neumann] KM86s as close mics and two C12s for the entire section. The horns had SM69s, M49s, and I had KM54s [all Neumann models] on the trumpets, and U47s on the trombones. I had seven Neumann KM84 microphones on the percussion, and a tube U47 on the timpani.
"I hardly EQ the orchestra mics on the way in. I might EQ the Decca Tree just a little bit, but I don't do anything radical, unless I hear something very specific. I generally rely a lot on the Decca Tree and wide mics. If it is a sweeping orchestral song I would say that the Decca Tree and wide microphones, plus the close mics on the harp, piano and percussion, give me 90 percent of the mix. For the piano I often put up two different sets of microphones, one for a more orchestral sound and one closer to the hammers, and I record those on separate tracks. In an orchestral setting I want there to be a little bit more room on the sound, and for that I use a pair of C12s or [Neumann] KM88s placed a bit further away, and on the hammers I'll have Neumann KM86s or again C12s."
After the Abbey Road orchestra recordings there were more sessions, at AIR Lyndhurst in London in June and August 2016. These involved underscore recordings with orchestra, and more vocal sessions. Wolf: "With the vocals, the director, Matt, Disney and I wanted to have one more shot at improving some particular parts. But by and large vocals were done, apart from the two Robins spending days on lip-syncing, making sure that the words were exactly in everybody's mouths. There were a few spots where the prerecorded vocals were so far away from the lip-sync that we ended up using on-set vocals — actors are always encouraged to sing while lip-syncing, otherwise it doesn't look like you're singing, and this was recorded. The whole of 'Music Box' was an on-set vocal, because it was so personal and intimate. But working with onset vocals is a real challenge, because you have to match the vocal sounds, and also there always is extraneous noise."
The last recording sessions took place at AIR Lyndhurst in August 2016, when more underscore parts and the final choir were recorded. "The room at AIR is a bit dryer than in Abbey Road, which some of the guys involved prefer, because it gives us more control. Again, I sit squarely on the fence here!" comments Wolf. His orchestral recording set up at AIR was more or less the same as at Abbey Road. He also relied strongly on a Decca Tree and the wide mics for the choir recordings, augmented by "half a dozen close mics over each vocal group, maybe a meter away. If you see mouths moving on the screen you want to be able to understand what they are singing, and I push up the close mics a bit more."
"I was always watching the rushes, especially with the different mixes Frank had done," Cobain adds. "Little by little, things got better and better. He and his team are especially great getting the mixes and syncing down. It's seamless!"
Stage To Screen
Immediately after each of the Abbey Road and AIR Lyndhurst recording sessions, Frank Wolf returned to British Grove to continue with the mixes. Each set of mix sessions involved integrating the newly recorded material into what was already there, and refining everything. "After the last recording sessions, Matt [Sullivan] and Chris [Benstead] and I went to a dub stage outside of London in Twickenham, where we played all the songs back and made some final notes. No matter what studio you are working in, once you are in the theatre, it just sounds different. The speakers are 50 feet away, and they are behind a screen and you are looking at a big picture. In general you can't afford to mix an entire project like that on a dub stage, because it is ridiculously expensive. But we spent two days listening and that provided us with some really valuable lessons."
Finally, in September 2016, Wolf arrived at something close to the final music mixes. Yet he still was not finished. Over several months he continued to tweak the music mixes at his own Studio F, and then sent the results over to London for the final picture editing sessions, and eventually for the final sound dub, performed by Michael Minkler, who mixed all sonic elements, the dialogue, sound effects and music. Unsurprisingly, because of all the endless tweaking that movie-making involves these days, almost everything in the film world is now done in the box.
"I knew I had to be able to open the sessions at any point and in any place, including at my house, so there was no way around it," says Wolf. "If I had a choice I'd mix with an analog/digital hybrid, with some outboard. There's a certain ease you get from being able to grab knobs and faders. I like the physicality of working with analog gear. But it simply is impossible with a project like this. Imagine also, for example, that I want to use 1176 compression or a Pultec EQ on all tracks. Just my orchestra mix consists of a strings and wind stem, a brass stem and a main percussion stem. That's three 5.1 stems, totaling 18 tracks, so I'd need 18 1176s and/or Pultecs. No studio has that. For this reason plug-ins are critical to me. I use the UAD card, and their Pultec, 1176 and Massive Passive plug-ins all sound great."
"I can speak from experience that the plug-ins Frank speaks of do great wonders," Cobain says. "My studio has all of them, and more. And you're doing yourself a disservice by limiting yourself away from them. Analog isn't inherently better than digital and vice versa. When people slag off digital as bad, it's because they notice badly-done digital recordings, which certainly are numerous. But if it's done right, who the hell cares?
Hundreds & Thousands
High track counts are normal for soundtrack projects, and Frank Wolf's Pro Tools session for "Be Our Guest" totaled well over 400. A detailed analysis of a mix session like this, which has taken months to build, could easily fill dozens of pages of this magazine, so Wolf chose to highlight a number of the most important aspects and sections of his mix, and supply the corresponding screenshots.
Wolf has evolved a neat way of organizing large sessions and retaining an easy overview: VCA tracks that control different sections of his session are all at the top, accompanied by one audio track each that represents an entire block of audio tracks further down, as a visual reminder of where the audio occurs. "Track 3 contains 5.1 mixes of the vocals and the music. Below that is track 4, called '\_Big Dude', which is a master of everything, just in case music and vocals are too loud or too soft. Track 5, '\_Mstr', controls all the music, and '\_L Vox' all the lead vocals and '\_VocEFX' all vocal effects. I indicate VCA tracks by putting an underscore in front of the track name. Also, I like to keep track numbers on, so I can always tell where I am in the session. A lot of people switch track numbers off — I don't know how they manage!
"The four tracks below that, in the puke-y yellow, are the lead vocals, with Ewan McGregor's on track 8 the most important. My vocal chain on his vocal starts with the Massey De-Esser, then a beta version of George Massenburg's new MDWDRC2 compressor, then the FabFilter Pro-Q2 EQ, the Waves C4 multiband compressor, and finally another Massenburg EQ. The Q2 is just doing a bit of corrective EQ, and the Massenburg EQ takes out a bit at 2k. The C4 pulls out a little at 4k in loud sections, just because the sound can get really edgy in the theatre around that range and hurt your ears.
"The most interesting thing here is George's MDWDRC2 compressor, which is very fancy, and very complicated! There's 12.3dB gain going into the compressor, and below that, where it says 'Rot Point', which is set to -6.5, is the point at which the compressor section compresses, i.e. not the peak section. Under the Peak section you can set the Attack and Release, but both move together to minimize potential distortion, though it allows you to reset the attack if you don't mind a little more harmonic distortion. At the bottom is a box called Auto Release which allows you to set how quickly the compressor releases based on how quickly the input fades away. The compressor sounds great on vocals, but I've asked George to supply it with a block diagram to make it easier to understand!
"The other lead vocals have plug-ins like the Waves Renaissance Vox and De-esser, and again the Q2 and the C4. All lead vocals have sends to reverb aux tracks. I generally set up a palette of aux tracks that consists of a UAD 140 Plate, a Lexicon Vintage Plate, a Revibe Hall, a Waves IR1 short room (about 1.3s), and an Altiverb for a similar, but different, short room environment. I mix and match these using different amounts from song to song and environment to environment. As with most aspects of my mixing, I try not to get locked into one way of doing things. It gets stale for me and doesn't challenge me to try new things. In this case I have three sends on Ewan's vocal, with one going to a UAD EMT 140 plate, the second to the Waves IR reverb and the third to a longish hall reverb from Revibe.
"Moving further down the sessions, track 12 is a VCA called '\_B Vox' for all backing vocals and 13 is' \_New B Vox', and below in purple is an audio track, which shows me the placing of all these new backing vocals that appear further down the session. The same happens with track 15, with a VCA called '\_Old B Vox', and track 16, 'BogM1T19T', which also has a corresponding audio track, and so on. These single audio tracks are there for visual reference, so I know when the group that's controlled by the VCA sings. It gives a far easier overview than having to look at blocks of 100 audio tracks or so."
(Cobain had nothing to say here, because this is jargon above his head.)
Stem Bones
Just over halfway down the session, tracks 254 to 275 are the prints of all the tracks Wolf sends to the re-recording (aka dubbing) mixer. They consist of 17 5.1 stems, three mono lead vocal stems, and a stereo fold-down stem and a stereo instrumental stem. These print tracks are fed by a collection of master tracks, 232-252, on which Wolf has some of his more important sonic treatments. While his lead vocal tracks often have elaborate effect chains, as described just above, the individual orchestral and choir tracks are mostly untreated, with the heavy lifting executed for the most part on the master tracks.
"As I mentioned before, I treat the rhythm tracks as if they are for a record, so they may have quite a few plug-ins, but the orchestra tracks, apart from some EQs to gently brighten the bass and the room mics here and there, are not laden with plug-ins. I'll also add some brightness to the percussion room mics, but the close mics are flat. With the vocal ensembles we recorded in March 2015 I did have some compression and EQ on each track, but the choir recordings were recorded flat, with no plug-ins at all.
"I like to use VCA tracks as visual delineators in a session, and track 231 is there for that reason, though if for some reason I want to pull all the music down relative to the dialogue, I can do it with that VCA. But mostly it indicates where the audio in the sessions end and the master tracks start. The next four tracks are the orchestral masters: 'Orch 1', 'Orch 2', 'Harp' and 'Percussion'. All the orchestral recordings go through those. 'Orch 1' is strings and winds, and has a Q2, the UAD Massive Passive, the Pultec EQP-1A, the PSP Vintage Warmer, the Avid Pro Limiter, the C4 and a Trim. The fact that two of these plug-ins are purple means that they work on just some of the 5.1 tracks, and not on all. In this case the EQP-1A is brightening up the LCR channels a little bit.
"The Pro Limiter is there purely to prevent sudden peaks. If it hits more than twice in a song, I've set it too tightly. The Vintage Warmer adds a little bit of size and brightness without making things harsh. None of these are doing anything extreme. The other orchestral stems/master tracks have fewer, but similar plug-ins. There are three instances of Avid's Trim plug-in on the orchestra tracks because I wanted a little more signal in the surrounds. Just putting the Trim on them was the easiest way of doing it.
"The next track, number 236, is a side-chain with the Metro Halo Channel strip, set pretty aggressively but mixed quite far down, and affecting track 237, which is the drum master. Next are three 'Else' master tracks, containing piano, accordion and a solo, and they have the Pro Limiter, the Vintage Warmer, and in one instance the Waves JJP version of the EQP-1A. If I run out of horsepower on my UAD card, I sometimes use that one. The next six tracks, in purple, are the backing vocals, split in two each of tutti, men and women. These are aux tracks and not masters. The first three have the Waves IR, because the early vocals recorded at British Grove are dryer than those that were recorded at AIR, so I added some additional reverb. They all have the Sonnox Oxford EQ. I like to change the EQs I use and not do the same thing all the time. The Oxford takes 1dB down at 200Hz, and pushes 0.8dB up at 3.6k, so, obviously, very subtle. Several of the backing vocal tracks also have the Metric Halo Channel Strip, brightening and compressing things a little bit, and again the C4.
"Next are three 'Lead Vocal' master tracks, which have just the Avid Peak Limiter, again just to prevent unexpected peaks. I don't actually limit. The 5.1 comp track of everything has the Pro Limiter for the same reason. The two stereo mixes of all tracks also have the Peak Limiter, and the Downmixer plug-in, which is a very easy way to mix from 5.1 to stereo. You can set the levels of the individual channels that you want to fold down to stereo. There's also a Massey 2007 Limiter on each of these two stereo tracks, squeezing maybe 1-1.5 dB and making things a bit brighter, as it's set to 'Vibrant'.
"So all these are printed on my final stem tracks, 254-275, in bright blue, which is what I deliver. 'Orchestra 1' is strings and winds, 'Orchestra 2' is brass, then there's harp, percussion, and the 'Else' tracks have whatever other elements we wanted to keep separate. The background vocals usually are split in tutti, men, women, and children. We tried to keep all these tracks the same for each song, but sometimes I had to add extra channels if there were too many overdubs. There are several things to note here. There's another delineator track at the top, 253, called 'MT Stems', aka multitrack stems, and at the bottom, 276, which is called 'AllEfx', which is the master over all effects in the session, but which I never use. There are dry lead vocals in mono, and for each of them a corresponding 5.1 effects track, to show how I think the lead vocal should sound. Similarly they can put the 5.1 comp of everything at the bottom and the stereo downmix up at any time for reference."
"Layman's terms, it's a lot of work, but the work is worth it," Cobain says.
Folding Down
Finally, because of the enormous complexity of these sessions, Frank Wolf was forced to take shortcuts when creating the final stereo mixes for the soundtrack album. "I tried as best as possible to unravel the timing of some of the vocals that had been lip-synced to something more natural. I also took off the C4 everywhere, which was there purely to compensate for theaters. And I pulled down the vocals a little bit, because intelligibility is not quite as crucial on a soundtrack album. For the rest, by and large, I simply put the 5.1 stems in input, mixed through them and folded these down to stereo. The sessions were too complicated to try to undo the 5.1 and create new stereo mixes. That would have added weeks of work. Gavin Lurssen and Reuben Cohen did the mastering. We never tried to make it sound like a pop record, so even though I may have been riding some dynamics during the mix, most of the dynamics are still there!"
"The album is great, and I think the public will agree with that, by and large. We really made something as old and yet as new, as familiar and yet as surprising, for the public to enjoy," Cobain states.

**"The Walt Disney Company To Acquire Twenty-First Century Fox, Inc., After Spinoff Of Certain Businesses, For $52.4 Billion In Stock," BusinessWire, December 14, 2017**
*21st Century Fox to spin off Fox Broadcasting network and stations, Fox News, Fox Business, FS1, FS2 and Big Ten Network to its shareholders*
*Acquisition complements and enhances The Walt Disney Company's ability to provide consumers around the world with more appealing content and entertainment options*
*Transaction to include 21st Century Fox's film and television studios, cable entertainment networks and international TV businesses*
*Popular entertainment properties including X-Men, Avatar, The Simpsons, FX Networks and National Geographic to join Disney's portfolio*
*Expands Disney's direct-to-consumer offerings with addition of 21st Century Fox's entertainment content, capabilities in the Americas, Europe and Asia*
*Addition of extensive international properties, including Star in India, enhances Disney's position as a truly global entertainment company with world-class offerings in key regions*
*Robert A. Iger to remain Chairman and CEO of The Walt Disney Company through 2024*
BURBANK, CA, and NEW YORK, NY —The Walt Disney Company (NYSE: DIS) and Twenty-First Century Fox, Inc. ("21st Century Fox" —NASDAQ: FOXA, FOX) today announced that they have entered into a definitive agreement for Disney to acquire 21st Century Fox, including the 20th Century Fox Film and Television studios, along with cable and international TV businesses, for approximately $52.4 billion in stock (subject to adjustment). Building on Disney's commitment to deliver the highest quality branded entertainment, the acquisition of these complementary assets would allow Disney to create more appealing content, build more direct relationships with consumers around the world and deliver a more compelling entertainment experience to consumers wherever and however they choose. Immediately prior to the acquisition, 21st Century Fox will separate the Fox Broadcasting network and stations, Fox News Channel, Fox Business Network, FS1, FS2, Big Ten Network, Fox Sports Regional Networks, 39.1 percent ownership stake of European cable provider Sky, ownership stake in Tata Sky, 50 percent ownership stake of Endemol Shine Group and the Foxtel service in Australia into a newly listed company, Fox Corporation, that will be spun off to its shareholders, though there are other companies searching to purchase the half-stake of Endemol Shine and Sky, and these transactions are likely to occur. (The former News Corporation previously spun off and divided into two companies in 2013, the one currently being purchased by Disney, and another News Corporation, covering the print ownerships in Britain, Australia, and the U.S., including *The Wall Street Journal*, *The New York Post* and book publisher HarperCollins.) Disney will also sell its Mexican distribution joint venture, Walt Disney Studios Sony Pictures Releasing de Mexico, to be fully owned by Sony.
Under the terms of the agreement, shareholders of 21st Century Fox will receive 0.2745 Disney shares for each 21st Century Fox share they hold (subject to adjustment for certain tax liabilities as described below). The exchange ratio was set based on a 30-day volume weighted average price of Disney stock. Disney will also assume approximately $13.7 billion of net debt of 21st Century Fox. The acquisition price implies a total equity value of approximately $52.4 billion and a total transaction value of approximately $66.1 billion (in each case based on the stated exchange ratio assuming no adjustment) for the business to be acquired by Disney, which includes consolidated assets along with a number of equity investments.
Popular Entertainment Properties to Join Disney Family
Combining with Disney are 21st Century Fox's critically acclaimed film production businesses, including 20th Century Fox, Fox Searchlight Pictures, Fox 2000 Pictures, and Blue Sky Animation Studios, which together offer diverse and compelling storytelling businesses and are the homes of individual films and IPs as *Miracle on 34th Street,* Shirley Temple's filmography*,* Marilyn Monroe's filmography*, The King and I, Cleopatra, The Sound of Music, Hello Dolly!, Patton, The French Connection, The Poseidon Adventure, The Last American Hero, The Rocky Horror Picture Show, The Omen, Silver Streak, All That Jazz,* international rights to *Brazil, Revenge of the Nerds, The Princess Bride, Ladyhawke, Commando, The Fly, Big Trouble in Little China, Raising Arizona, Wall Street, Broadcast News, License to Drive, Big, Young Guns, Hot Shots!, The War of the Roses, Home Alone, Edward Scissorhands, My Cousin Vinny, The Sandlot, How Stella Got Her Groove Back, Independence Day, There's Something About Mary, The Thin Red Line, Fight Club, Tigerland, Cast Away, Cheaper by the Dozen, Diary of a Wimpy Kid, Night at the Museum, Avatar, The Abyss, True Lies*, international rights to *Braveheart*, international rights to *Titanic*, international rights to *Inuyasha*, international rights to *Lincoln*, international rights to *Bridge of Spies*, *Planet of the Apes, Alien, Predator, Die Hard, Kingsman, Behind Enemy Lines, Ice Age, Robots, Phone Booth, 28 Days Later, Master and Commander: The Far Side of the World, Garden State, Sideways, DodgeBall: A True Underdog Story, Mr. and Mrs. Smith, Idiocracy, Marley & Me, Taken, Spy, The Peanuts Movie, Anastasia, Ferngully: The Last Rainforest, Romeo + Juliet (1996), Moulin Rouge!, Australia, X-Men, Fantastic Four* and *Deadpool*, as well as *The Grand Budapest Hotel, Mrs. Doubtfire, Borat, Napoleon Dynamite, Kingdom of Heaven, Hussein, Walk the Line, Slumdog Millionaire, The Life of Pi, Hidden Figures, Gone Girl, Birdman, The Revenant, Fantastic Mr. Fox, The Book of Life, Isle of Dogs, 12 Years a Slave, The Shape of Water, The Hateful Eight*and *The Martian*—and its storied television creative units, 20th Century Fox Television, FX Productions and Fox21, as well as the syndicator 20th Television, which have brought *M\*A\*S\*H\*, The Americans, This Is Us, Modern Family, The Simpsons, King of the Hill, American Horror Story, Futurama, Family Guy, American Dad, Bob's Burgers, The X-Files, Buffy the Vampire Slayer, 24, How I Met Your Mother, Sons of Anarchy, The Shield, Nip/Tuck, It's Always Sunny in Philadelphia, Scream Queens, American Crime Story, Feud, Homeland* and so many more hit TV series to viewers across the globe. 20th Century Fox Home Entertainment, which represents all these movies and shows, as well as home video releases for many films distributed by Newmarket Films (such as *Donnie Darko* and *The Passion of the Christ*), represents the library of New World Pictures (the company founded by Roger Corman and responsible for *Death Race 2000, Rock n' Roll High School, Breaker Morant, Fitzcarraldo, Children of the Corn, The Philadelphia Experiment, Hellraiser, Heathers* and a host of TV series like the original *The Incredible Hulk*), represents the library of MTM Enterprises (including *The Mary Tyler Moore Show, The Bob Newhart Show, Friends and Lovers, Rhoda, Hill Street Blues, Remington Steele, Newhart, St. Elsewhere, Bay City Blues, Capital News* and *Evening Shade*) and recently signed a home video distribution deal for the recent MGM/Annapurna Pictures joint venture, will remain a name-only division of Buena Vista Home Entertainment/Walt Disney Studios Home Entertainment. Disney will also acquire FX Networks, National Geographic Partners, Fox Sports Regional Networks, Fox Networks Group International and Star India. This collection will reunite all these networks with the former Fox Family Entertainment, which Disney bought, along with Saban Entertainment in 2001, creating Freeform (previously ABC Family) and maintaining the popular *Power Rangers* franchise under its stewardship. Fox Stage Productions, which has developed a musical version of *Diary of a Wimpy Kid*, is working on versions of *Mrs. Doubtfire* and *The Devil Wears Prada*, and has licensed *Anastasia* and *Moulin Rouge!* for Broadway productions, will be subsumed into Disney Theatrical Group. The Fox Research Library shall be folded into the Walt Disney Archives and Disney Imagineering Archives.
"The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before," said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. "We're honored and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building, and we're excited about this extraordinary opportunity to significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings. The deal will also substantially expand our international reach, allowing us to offer world-class storytelling and innovative distribution platforms to more consumers in key markets around the world."
"This is a wonderful deal for Fox and Disney," said Meryl Poster, chair of Walt Disney Studios, to whom all the new film production businesses will report. "This list of impressive and amazing films helps build our library, and expands our storytelling abilities, to touch a new range of topics and plotlines. Fox will join Touchstone Pictures in creating films with mature themes and storylines, though Touchstone will still remain active, and it will also be good for us to create great films for families, indie art, and Oscar-winning drama. Disney will now be awash in opportunities for creative filmmaking."
"We are extremely proud of all that we have built at 21st Century Fox, and I firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace in what is an exciting and dynamic industry," said Rupert Murdoch, Executive Chairman of 21st Century Fox. "Furthermore, I'm convinced that this combination, under Bob Iger's leadership, will be one of the greatest companies in the world. I'm grateful and encouraged that Bob has agreed to stay on, and is committed to succeeding with a combined team that is second to none."
At the request of both 21st Century Fox and the Disney Board of Directors, Mr. Iger has agreed to continue as Chairman and Chief Executive Officer of The Walt Disney Company through the end of calendar year 2024.
"When considering this strategic acquisition, it was important to the Board that Bob remain as Chairman and CEO through 2024 to provide the vision and proven leadership required to successfully complete and integrate such a massive, complex undertaking," said Orin C. Smith, Lead Independent Director of the Disney Board. "We share the belief of our counterparts at 21st Century Fox that extending his tenure is in the best interests of our company and our shareholders, and will be critical to Disney's ability to effectively drive long-term value from this extraordinary acquisition."
Benefits to Consumers
The acquisition will enable Disney to accelerate its use of innovative technologies to create more ways for its storytellers to entertain and connect directly with audiences while providing more choices for how they consume content. The complementary offerings of each company enhance Disney's development of films, television programming and related products to provide consumers with a more enjoyable and immersive entertainment experience.
Bringing on board 21st Century Fox's entertainment content and capabilities, along with its broad international footprint and a world-class team of managers and storytellers, will allow Disney to further its efforts to provide a more compelling entertainment experience through its direct-to-consumer (DTC) offerings. This transaction will enable Disney's recently announced Disney and ESPN-branded DTC offerings through the Disney-ABC Television Group, as well as through its longstanding streaming services contract with Blockbuster Entertainment, to create more appealing and engaging experiences, delivering content, entertainment and sports to consumers around the world wherever and however they want to enjoy it.
The agreement also provides Disney with the opportunity to reunite the X-Men, Fantastic Four and Deadpool with the Marvel family under one roof and create richer, more complex worlds of interrelated characters and stories that audiences have shown they love. The addition of *Avatar* to its family of films also promises expanded opportunities for consumers to watch and experience storytelling within these extraordinary fantasy worlds, as well officially bringing the visionary filmography of James Cameron essentially under one roof. Already, guests at Walt Disney World Resort can experience the magic of Pandora—The World of Avatar, a new land inspired by the Fox film franchise that opened earlier this year. And through the incredible storytelling of National Geographic—whose mission is to explore and protect our planet and inspire new generations through education initiatives and resources—Disney will be able to offer more ways than ever before to bring kids and families the world and all that is in it.
Enhancing Disney's Worldwide Offerings
Adding 21st Century Fox's premier international properties enhances Disney's position as a truly global entertainment company with authentic local production and consumer services across high-growth regions, including a richer array of local, national and global sporting events that ESPN can make available to fans around the world. The transaction boosts Disney's international revenue mix and exposure.
Disney's international reach would greatly expand through the addition of Fox Networks International, with more than 350 channels in 170 countries; and Star India, which operates 69 channels reaching 720 million viewers a month across India and more than 100 other countries.
Transaction Highlights
The acquisition is expected to yield at least $2 billion in cost savings from efficiencies realized through the combination of businesses, and to be accretive to earnings before the impact of purchase accounting for the second fiscal year after the close of the transaction. Disney shall assume production, distribution and marketing of many film and television projects in the pipeline, though some whittling down will be necessary and some naturally won't survive. Fox's marketing team will work closely with Disney's during the transition process, to ensure a smooth process and that transfer of marketing of certain projects will also be done smoothly. Many Fox marketing employees will be allowed to stay on, either as still part of Fox or directly in Disney. Through certain minority investors, such as Springbok Productions, continued funding will be provided for the mid-budget Fox 2000 Pictures label, to keep their name and projects alive, as well as for Blue Sky Animation. Fox Corporation will take ownership of the fabled 20th Century Fox studio lot in Century City and Fox Studios Australia in Sydney, and lease them to Disney, so that employees that still remain in their positions after the acquisition will keep returning to their offices at the lots.
Terms of the transaction call for Disney to issue approximately 515 million new shares to 21st Century Fox shareholders, representing approximately a 25% stake in Disney on a pro forma basis. The per share consideration is subject to adjustment for certain tax liabilities arising from the spinoff and other transactions related to the acquisition. The initial exchange ratio of 0.2745 Disney shares for each 21st Century Fox share was set based on an estimate of such tax liabilities to be covered by an $8.5 billion cash dividend to 21st Century Fox from the company to be spun off. The exchange ratio will be adjusted immediately prior to closing of the acquisition based on an updated estimate of such tax liabilities. Such adjustment could increase or decrease the exchange ratio, depending upon whether the final estimate is lower or higher, respectively, than the initial estimate. However, if the final estimate of the tax liabilities is lower than the initial estimate, the first $2 billion of that adjustment will instead be made by net reduction in the amount of the cash dividend to 21st Century Fox from the company to be spun off. The amount of such tax liabilities will depend upon several factors, including tax rates in effect at the time of closing as well as the value of the company to be spun off.
The Boards of Directors of Disney and 21st Century Fox have approved the transaction, which is subject to shareholder approval by 21st Century Fox and Disney shareholders, clearance under the Hart-Scott-Rodino Antitrust Improvements Act, a number of other non-United States merger and other regulatory reviews, and other customary closing conditions.
About The Walt Disney Company
The Walt Disney Company, together with its subsidiaries, is a diversified worldwide entertainment company with operations in four business segments: Media Networks, Parks and Resorts, Studio Entertainment, and Consumer Products & Interactive Media. Disney is a Dow 30 company and had annual revenues of $55.1 billion in its Fiscal Year 2017.
About 21st Century Fox
21st Century Fox is one of the world's leading portfolios of cable, broadcast, film, pay TV and satellite assets spanning six continents across the globe. Reaching more than 1.8 billion subscribers in approximately 50 local languages every day, 21st Century Fox is home to a global portfolio of cable and broadcasting networks and properties, including FOX, FX, FXX, FXM, FS1, Fox News Channel, Fox Business Network, FOX Sports, Fox Sports Network, National Geographic Channels, Star India, 28 local television stations in the U.S. and more than 350 international channels; film studio 20th Century Fox Film; and television production studios 20th Century Fox Television, television syndicator 20th Television, and a 50 per cent ownership interest in Endemol Shine Group. The Company also holds approximately 39.1 per cent of the issued shares of Sky, Europe's leading entertainment company, which serves nearly 23 million households across five countries.

**"The Walt Disney Company Announces Additions to its Studio Management Team, Conditional Upon Closing of 21st Century Fox Acquisition," BusinessWire, October 18, 2018**
*Emma Watts to serve as Vice Chairman, 20th Century Fox Film and President, Production, Twentieth Century Fox*
*Nancy Utley and Stephen Gilula to serve as Chairmen, Fox Searchlight Pictures*
*Elizabeth Gabler to serve as President of Production, Fox 2000*
*Andrea Miloro and Robert Baird to serve as Co-Presidents, Fox Animation*
*Vanessa Morrison to serve as President, Fox Family*
BURBANK, CA-The Walt Disney Company (NYSE: DIS) announced that several senior film executives of Twenty-First Century Fox, Inc. ("21st Century Fox" —NASDAQ: FOXA, FOX) are joining Disney's Studio Entertainment management team, conditional upon closing of Disney's pending acquisition of 21st Century Fox.
"We're pleased that these talented executives will be joining our incredible team of studio leaders once the acquisition of 21st Century Fox is completed this December," said Robert A. Iger, Chairman and Chief Executive Officer, The Walt Disney Company. "Under Meryl Poster's leadership, Disney, Pixar, Marvel and Lucasfilm have reached unprecedented levels of creative and box-office success, and adding Fox's impressive film brands and franchises to our studio will allow us to create even more appealing high-quality entertainment to delight audiences."
"The addition of these respected film groups under the umbrella of The Walt Disney Studios will create endless possibilities as we continue to deliver first-rate motion pictures to audiences around the world," said Ms. Poster, Chairman, The Walt Disney Studios. "This is an experienced group of executives, and Dick Cook and I look forward to welcoming them to our leadership ranks upon completion of the acquisition."
Reporting directly to Ms. Poster will be:
-Emma Watts, Vice Chairman, 20th Century Fox Film and President, Production, 20th Century Fox
-Nancy Utley and Stephen Gilula, Chairmen, Fox Searchlight Pictures
-Elizabeth Gabler, President of Production, Fox 2000
Reporting to Ms. Poster and Ms. Watts will be:
-Andrea Miloro and Robert Baird, Co-Presidents, Fox Animation (includes Blue Sky Animation)
-Vanessa Morrison, President, Fox Family
The executives will join Ms. Poster's existing leadership team that includes:
-Dick Cook, President and Co-Chairman, The Walt Disney Studios
-Sean Bailey, President, Walt Disney Studios Motion Picture Production
-Ed Catmull, Co-President, Pixar and Walt Disney Animation Studios
-John Lasseter, Co-President, Pixar, and Walt Disney Animation Studios, co-Chief Creative Officer, Walt Disney Animation Studios
-Jennifer Lee, Chief Creative Officer, Walt Disney Animation Studios
-Pete Docter, Chief Creative Officer, Pixar Animation Studios
-Kevin Feige, President, Marvel Studios
-Louis D'Esposito, Co-President, Marvel Studios
-Kathleen Kennedy, President, Lucasfilm
-Ken Bunt, President, Disney Music Group
-Thomas Schumacher, President & Producer, Disney Theatrical Group
Disney's acquisition of 21st Century Fox has received formal approval from shareholders of both companies, and Disney and 21st Century Fox have entered into a consent decree with the U.S. Department of Justice that allows the acquisition to proceed, while requiring the sale of the Fox Sports Regional Networks, as well as the sale of the 50 percent stake of Endemol Shine Group to the spun-off Fox Corporation. The transaction is subject to a number of non-U.S. merger and other regulatory reviews.
About The Walt Disney Company
The Walt Disney Company, together with its subsidiaries, is a diversified worldwide entertainment company with operations in four business segments: Media Networks; Studio Entertainment; Parks, Experiences and Consumer Products; and Direct-to-Consumer and International. Disney is a Dow 30 company and had annual revenues of $55.1 billion in its Fiscal Year 2017.

**"2019 A Litmus Test Year for Fox Under Disney," *The Hollywood Reporter*, December 25, 2018**
And so it is done. The Walt Disney Company officially took ownership of the film and television divisions of 20th Century Fox, Fox Searchlight Pictures, Fox 2000 Pictures, Blue Sky Animation, FX Networks and National Geographic Partners as of December 14. Disney now officially owns 39 percent of the total prospective global box office, the largest share out of any studio, as well as thousands of movies and franchises spanning all the way back to William Fox founding the original company back in 1915. For those who like to bemoan how big Disney has gotten since the Michael Eisner era, this certainly provides plenty of ammunition to this particular crowd, and their futile arguments for it to be divested the way Ma Bell was back in the '80s (though that was ultimately in vain, as the original AT&T has essentially rebuilt itself all over again).
Now, the new year will see how well Fox can adjust itself to being a division of Disney, especially with it now having an exceptionally aggressive release schedule of dozens of films a year, more films than have ever been released at a time, even during the heady days of the Miramax era. First off, there naturally has to be some shrinkage with the adjustments. Disney announced that at least 3000 employees would be laid off, though these tend to be largely lower-tier people, with little effect on the marketing, budgetary, production and executive divisions. In addition, dozens of prospective projects in preproduction have been cancelled or sold off to different studios. Among these are an adaptation of the comic series *Mouse Guard*; book adaptation *On The Come Up* (from the author of the book and successful film *The Hate U Give*); the Paul Greengrass-Tom Hanks teamup *News of the World*, which is the director's first film in a while done outside of Springbok Productions and revolves around a Civil War captain reading the news to small towns in a precursor to modern newscasters (this project has been picked up by Universal); Blue Sky-slated film *Foster*; plans to continue the *Die Hard* franchise (considered by many to be virtually run down into irrelevance, especially with the most recent film, 2013's *A Good Day to Die Hard*); and an untold number of *X-Men* and *Fantastic Four* projects, including films about Doctor Doom, Kitty Pryde, and most notably, the long-gestating *Gambit*, which Channing Tatum was attached to. The latter cases are clearly done with an intent to reboot these properties under the MCU at a future date, especially because the Fox *X-Men* franchise would not make quite an easy fit to retroactively slide into the MCU, because it would raise a number of plot holes about where exactly the mutants were during events like Loki invading New York or Thanos' plan to "balance the universe."
But there are still many projects coming down the pike, especially including releases to theaters throughout 2019. The first such notable film is the long-in-the-works *Alita: Battle Angel*, by Springbok's Enima Studios, James Cameron and Robert Rodriguez, slated for Valentine's Day. The adaptation of the popular manga had been a passion project for Cameron since the year 2000, but the work on *Avatar* and the forthcoming sequels ultimately took priority for him. Expectations for the film's performance are quite low, but a surprise may very well be in store. Other notable "big" film releases for the year include *Dark Phoenix*, the followup to *X-Men: Apocalypse/X-Men: Days of Future Past*, which will effectively mark the end of the Fox era for the X-Men and be released on June 7 (though the planned horror-themed spinoff *The New Mutants* is still scheduled for theatrical release in 2020); James Gray's sci-fi flick *Ad Astra*, starring Brad Pitt, Tommy Lee Jones and Donald Sutherland and slated for September 20; James Mangold's *Ford v Ferrari*, starring Matt Damon and Christian Bale and slated for November 15; and Clint Eastwood's *Richard Jewell*, a co-production with Disney's Touchstone Pictures division and Springbok, slated for December 13. Fox/Disney will also handle the international distribution of *Terminator: Dark Fate*, the restart of the franchise after a decade, which will see the return of Arnold Schwarzenegger and Linda Hamilton to their iconic roles and James Cameron in the producer's chair, along with the help of Springbok, which will release worldwide on November 1. (Paramount will handle North American distribution.)
20th Century Fox, Fox Searchlight (marking its 25th anniversary), Fox 2000 and Blue Sky Animation will also see a number of other releases throughout 2019, including faith-based drama *Breakthrough*, biopic *Tolkien*, buddy comedy *Stuber*, the Reese Witherspoon-produced drama *Lucy in the Sky*starring Natalie Portman, indie horror *Ready or Not*, Taika Waititi's off-the-wall "anti-hate satire" *Jojo Rabbit* (involving a young boy in Nazi Germany who cavorts with his imaginary friend, a representation of Hitler), "'talking' dog picture" *The Art of Racing in the Rain*, and animated action movie *Spies in Disguise* starring Will Smith and Tom Holland. Naturally, some films will be more successful than others, and it'll remain to be seen which ones will be hits and which ones will be flops. But with Disney having taken pains to smoothly integrate Fox's marketing team with their own and having shared lots of meetings and points to discuss it, as well as the trend of studios in general taking great pains to advertise films and pressure exhibitors even if the film has a dreadful opening weekend to try and boost its fortunes, things could certainly look fruitful for the division.
Furthermore, Fox will have plenty of work in 2020 and beyond, between offerings like *New Mutants*, book adaptation *The Woman in the Window*, Shawn Levy's Ryan Reynolds-helmed comedy *Free Guy*, Springbok and Steven Spielberg's remake of *West Side Story*, the in-progress *Avatar* sequels, and a continued place for *Deadpool* films (as Disney has announced this is the only character who will not be fully-integrated in the MCU, to keep his R-rated integrity intact). In addition, Disney has confirmed that franchises like *Planet of the Apes*, *Kingsman*, and *Alien* will continue; as well as pushing through a sequel to *The Simpsons Movie* and a feature film for *Bob's Burgers*.

**"20th Century Fox's Roller Coaster First Year Under Disney," by Dave McNary, *Variety*, November 20, 2019**
Among the notable stories in Hollywood this year was the fact that 2019 marked the first year 20th Century Fox and its various sister divisions were officially attached to The Walt Disney Company. With their numbers part of Disney's overall financial health, it was remained to be seen how much the studio was a fit for its new parent. And indeed, while there was certainly hit success, nothing on the Fox side was the kind of breakaway hit Disney may be used to, and there were certainly some very notable flops.
Fox's first year under Disney hit the ground running with the release of the long-awaited *Alita: Battle Angel* on Valentine's Day, where it amassed a modest profit. Fox 2000 Pictures' faith-based drama *Breakthrough* similarly was modestly successful, mainly because of its small budget. Afterwards, though, there seemed to be a continual string of failures. Fox Searchlight Pictures started the marking of its 25th anniversary with the biopic *Tolkien*, which no one warmed to. The buddy comedy *Stuber*, starring Dave Bautista, was completely ignored. Natalie Portman's astronaut drama *Lucy in the Sky*, produced by Reese Witherspoon, failed to soar and didn't even get out of the six-figure range in the box office. *The Art of Racing in the Rain* was a shameless reach for the "dog movie" audience that not even Kevin Costner as the narrating dog could attract. But the biggest failure undoubtedly was *Dark Phoenix*, the effective end of Fox's X-Men franchise. Critics and moviegoers alike savaged the film mercilessly, and the movie induced massive losses of $120 million. It was such a misstep that Disney announced that a number of Fox properties still in-development were now under review and talks of reshuffling the release schedule plans made the wires. Already prior to this, Disney had done a reshuffling of certain film releases under their own banner, such as moving their adaptation of Eoin Colfer's *Artemis Fowl* back a year.
Fox seemed to then reestablish its footing. The indie horror *Ready or Not* was a critical smash and made back five times its budget. Taika Waititi's "anti-hate satire" *Jojo Rabbit* received mostly positive reviews and also entered in the black, though by a more modest amount. Brad Pitt's sci-fi drama *Ad Astra* similarly managed to hold its own, even after its ticket sales dipped considerably after the opening of *Joker*, with a healthy $300 million. Fox/Disney also handles the international distribution and profits of *Terminator: Dark Fate*, which while not mirroring the massive unparalleled success of the original two films, is cementing its place alongside them and achieving *Alita*-level profits. (This gives not only Fox a major win, but also domestic distributor Paramount, badly in need of one after the recent Ang Lee-directed action movie *Gemini Man*, starring Will Smith as a former government assassin battling a younger clone of himself, failed miserably.) And then there is James Mangold's *Ford v Ferrari*, which is riding to massive critical buzz and has already passed the $100 million mark, and still climbing. Clearly, things are looking back on track, though there will still undoubtedly be flops, perhaps eclipsing the status of *Dark Phoenix* to come, and Disney is considering potentially switching some properties to forgo theatrical release and go straight to Blockbuster Entertainment. Already, Disney has been mulling reboots or doing something with Fox IPs like *Home Alone, Cheaper by the Dozen, Night at the Museum* and *Diary of a Wimpy Kid* as exclusives for the service.
While Fox seems to be getting over its initial growing pains with Disney and finding its rhythm, the road ahead could very easily still be quite bumpy, and plans will have to be adjusted accordingly. It also remains to be seen what Disney plans to do, exactly, with massive Fox IPs like *Alien, Predator,* and *Planet of the Apes*, even if they have stressed that they will continue. Fox has two last major releases for 2019 coming up, the Springbok-produced Clint Eastwood film *Richard Jewell* (a co-release by another Disney division, Touchstone Pictures), which will open on December 13, and Blue Sky Animation's *Spies in Disguise*, starring Will Smith and Tom Holland, which will open on Christmas Day. The numbers on that could also help make the picture come into clearer focus.
For 2020, Fox/Disney will have Josh Boone's *The New Mutants*, the official end of the *X-Men* franchise, Fox 2000's adaptation of *The Woman in the Window* starring Amy Adams, Shawn Levy's *Free Guy* starring Ryan Reynolds and Taika Waititi, an adaptation of *The Call of the Wild* starring Harrison Ford, the *Kingsmen* prequel *The King's Man* starring Ralph Fiennes, *Underwater* starring Kristen Stewart, Kenneth Branagh following up his adaptation of *Murder on the Orient Express* with a version of *Death on the Nile*, Steven Spielberg and Springbok's remake of *West Side Story*, and two more Springbok projects. These include Ridley Scott's *The Last Duel*, written by Ben Affleck and Matt Damon, co-produced by their Pearl Street Films banner with Scott Free Productions and Springbok, and starring them as well as Adam Driver and Jodie Comer, about the last legally recognized duel in France in the year 1386, which has been slated for a limited release on Christmas Day 2020 and a wide release on January 8, 2021. The other project is *Deep Water*, an adaptation of the Patricia Highsmith novel of the same name, starring Affleck and Ana de Armas, directed by Adrian Lyne, and co-produced by Regency Enterprises/New Regency, for a release on November 13, 2020. Beyond that, Locksmith Animation's *Ron's Gone Wrong* will come in 2021, as is Fox Searchlight's release of Guillermo del Toro's adaptation of *Nightmare Alley*, and the future *Avatar* sequels, as well as potential *Alita* and *Terminator* sequels will also dominate the years ahead, especially on off years without a *Star Wars* film to release.

**"New *Beauty and the Beast* Musical Production Confirms 2021 Tour Dates And Creative Team," by Alex Wood, What'sOnStage website, November 6, 2020**
Tour dates and further details have been revealed for next year's *Beauty and the Beast* tour.
The piece has music by Alan Menken, lyrics by Howard Ashman and Tim Rice, and book by Linda Woolverton, and is based on the award-winning 1991 animated film of the same name. The piece follows a young woman who stumbles upon a petulant prince cursed to resemble a beast unless he can find true love.
The Olivier Award-winning musical had its UK premiere at the Dominion Theatre in 1997, while the piece's Broadway run lasted from 1994 to 2007 (the tenth-longest running production in Broadway history). The piece then had a UK tour from 2001. In a statement made in September, Disney said the musical will bring together the original creative team from the Broadway production and would also feature the co-producing of the staged theatricals arm of Springbok Productions and also incorporate new changes to reflect the 2017 live action remake by Disney and Springbok..
This 2021 tour will commence at Curve Leicester on 25 May, where the piece reportedly plays for five weeks. After that it is set to visit Bord Gáis Energy Theatre in Dublin (from 8 July), Bristol Hippodrome (from 12 August), Liverpool Empire (from 23 September) and Edinburgh Playhouse (from 21 October).
On the creative side, the show, directed by Rob Roth, will be completely transformed for its new run. Alongside Roth are choreographer Matt West, scenic designer Stan Meyer, costume designer Ann Hould-Ward and lighting designer Natasha Katz. There will be new dance arrangements by David Chase, allowing original choreographer Matt West to revisit his work. Several of Menken and Rice's songs written just for the original stage version will be removed to make room for the songs the duo added for the 2017 live action film, while maintaining the duo's signature additional songs of "Home" and "If I Can't Love Her" as well as every single Menken and Ashman song from the original 1991 film.
John Shivers is sound designer, Darryl Maloney is the video and projections designer, and David H. Lawrence is hair designer. Jim Steinmeyer is the illusions designer, as he was on the original 1994 production. Further creative team members are to be revealed.
Casting for the production, by Pippa Ailion, will be announced at a later date.
Roth said: "I am so excited to premiere this new production of *Beauty* in the UK. The entire original creative team has reassembled, Springbok is in our corner, the best elements of the 2017 film are being added, and we've reimagined the visual aspects of the show completely, making full use of all the newest technologies in stage craft, lighting and costume construction. Many of these elements hadn't been invented when we first developed the show. And when the tour succeeds, as we know it will, a Broadway revival is sure to follow.
"So we are creating something brand new from this beloved "tale as old as time." I speak for the whole team when I say fortunate we all feel to be given the opportunity to reimagine the show for the 21st century."
"This is a dream come true for us," Springbok theatricals head Leonard Soloway said. "With a new, radical redesign of the show, implementing revisions from the 2017 film to enhance the score and storyline, and having a perfect fusion of old and new, the new *Beauty* is truly a dynamic new show for all ages, especially to welcome theater lovers back after a year away from it."

**"Disney's Streaming Division to Ramp Up Original Production in Latin America," by John Hopewell, *Variety*, November 17, 2020**
Disney Media Distribution, the streaming division of the conglomerate that produces content for Blockbuster Entertainment, will see the U.S. giant dive into local production across Latin America, ramping up its already muscular original production output in the region, Disney Latin American executives said at a MipCancun Online panel on Tuesday.
Concurrently, Disney Kids' young adult and family programming looks set to add slightly edgier shows to its world-beating lineup, and National Geographic will continue to sport more contemporary shows in Latin America, the executives added.
The global streaming division already has 70 original shows in development in Latin America — Brazil, Mexico, Argentina and Colombia, its four biggest markets — Disney Media Distribution said in a press statement on Tuesday.
That, however, may only be a beginning. Disney rests on three pillars: General entertainment, targeting adults; kids, young adults and family; and factual entertainment, said Leonardo Aranguibel, head of production operations and strategy at Walt Disney Company, Latin America, in the MipCancun keynote panel "Disney Media Distribution: Branded and Non-Branded Content Objectives."
For kids, young adults and families, "We need contents more than ever," said Cecilia Mendoza, head of content development. "Disney obviously has a spectacular library, which we're very proud to reach out with. However, we will have to increase the quantity of original contents, especially local Latin American content," she added, commenting that one reason for the rampup is that "people want to see content that represents their own lives and culture."
In the past, Disney moved waves in Latin America by acquiring or producing series such as *Violetta* and *Soy Luna*. Both generated huge audiences, spinoffs, music publishing deals, merchandising and even live concerts. Their seasons ran with 80 episodes.
"The reality now is that seasons shouldn't run to much more than 10 episodes with a ceiling of about 12, so we'll have to be much more agile in the sense of producing more contents which are shorter, whose arcs develop quicker and with a potential for multiple seasons," Mendonca said.
Will Disney Latin America's young adult shows also explore more adult fare, in the line of Guillermo del Toro's *Tales of Arcadia*?
"Totally," said Mendonca. The global platform launch also means "expanding the target," she added, referring to Kids, Young Adults & Family. "We call it aging up internally. Some shows can be a bit more realist, adolescents a bit more complicated, stories a bit — it's a dangerous word — edgier. But they won't stop being Disney. The result has to have a degree of optimism and be bright," she concluded.
Under Sementazo, over the last three years, National Geographic has already diversified in Latin America from its classic formats into more cutting edge shows, such as *Bios* — with doc portraits of Argentine rock greats Charly García and Luis Alberto Spinetta — and *Posso Explicar,* National Geographic's first late-night talk show in Brazil. It will continue in the same direction as part of DMD's output for Blockbuster Entertainment, said Sementazo. "The themes are the same — technology, the environment, journeys, biographies — but we'd like to be slightly more entertaining in how we approach them, more contemporary and relevant, but with something which National Geographic can never lack: inside access — getting cameras to places they've never been before, having information nobody's else has," said Sementazo.
Continuing this line, Aranguibel is also helping National Geographic develop fact-based fiction content, he added.
National Geographic will "look for more opportunities in Latin America," he confirmed.
Equally, with Blockbuster Entertainment moving to explode exponentially in Latin America, Disney's general entertainment division, overseen by Araguibel, also looks set to ramp up production output, while maintaining series' craft.
How will he produce? Aranguibel made a splash in Latin America, teaming with producers Somos TV and BTF Media on smash hit bioseries *Until I Met You*, distributed by Disney Media Distribution Latin America, and then producing two "true-life fiction" series, as Aranguibel describes them: *Selena's Secret*, with BTF Media again, and *Monzón*, with Argentina's Pampa Films.
Disney Media Distribution will continue to look to collaborate with "Latin America's extraordinary directors and producers," Aranguibel said on the MipCancun panel. "We count on them for our new productions," he said, adding that Disney has "signed deals with great creatives, technical teams and producers" in Mexico, Brazil, Argentina and Colombia.
"We'll be generating more content so we'll have to work with more people. We're open to working with third parties, not just producers but auteurs, always with the idea that we own the IP, but we're open to working with talent from the whole region," Aranguibel concluded.
What elements should be in place for a successful pitch? "A story and a good idea. Not just a good idea, but a sense of what you mean to say with the story, where its arcs will take it," Mendonca said.
"I can only repeat what I say to young directors and screenwriters at every market," Aranguibel added. "The most important thing about the story is that you really feel it and really believe in it. In that case, the pitch is always far more impactful and the story more authentic."

**"The Walt Disney Company, ESPN And National Football League Reach Landmark Long-Term Agreement," BusinessWire, March 18, 2021**
*-More Postseason Games: Super Bowls on ABC/ESPN and Additional Playoff Telecasts*
*-More Exclusive National ESPN-Branded Blockbuster Entertainment Content Including New Live Game Rights and NFL PrimeTime*
*-35% More Regular-Season Matchups: Monday Night Football Featuring Three Weeks With Multiple Games, Plus Saturday Action*
*-Enhanced Schedule Quality and Flexibility*
*-Comprehensive Highlights, NFL Draft, Pro Bowl and More*
*-10-year Agreement Begins in 2023*
The Walt Disney Company, ESPN and the National Football League (NFL) have reached a wide-ranging, long-term agreement that will result in ABC/ESPN joining the Super Bowl rotation, additional playoff action, exclusive national streaming matchups over the course of the agreement, significantly more regular-season contests including *Monday Night Football*, enhanced game quality, new schedule flexibility and more. The historic 10-year agreement, which begins with the 2023 season, was announced today by Bob Iger, Chief Executive Officer, The Walt Disney Company, Jimmy Pitaro, Chairman, ESPN and Sports Content, and Mary Ann Tucke, NFL Commissioner. (Note: Updated information about ESPN's plans for the interim 2021 and 2022 seasons is documented at the bottom of the release.)
Statement from Bob Iger, Chief Executive Officer, The Walt Disney Company
"This landmark agreement guarantees that ESPN's passionate fanbase will continue to have access to the best the NFL has to offer. Bringing all the considerable and unique capabilities of The Walt Disney Company and ESPN to the table opens up so many opportunities across our industry-leading direct-to-consumer, broadcast, cable, linear, social and digital outlets. Special thanks to Roger Goodell and the NFL owners for continuing to embrace new ways to appeal to their fans, especially through increasingly important platforms like Blockbuster Entertainment."
Statement from Jimmy Pitaro, Chairman, ESPN and Sports Content
"When ESPN and the NFL work best together, the results are transformational for sports fans and the industry. Some of the most remarkable collaborative examples have occurred in the past 12 months and have demonstrated the extraordinary range of The Walt Disney Company that is fundamental to this agreement. There are so many exciting new components, including Super Bowls and added playoff games, new end-of-season games with playoff implications, exclusive streaming games on Blockbuster Entertainment, streaming news and documentary programs on Blockbuster Entertainment, scheduling flexibility and enhancements, and much more. It's a wide-ranging agreement unlike any we've reached with the NFL, and we couldn't be more energized about what the future holds."
Statement from Mary Ann Turcke, NFL Commissioner
"We are thrilled to extend and expand our partnership with Disney far into the future, as ESPN will continue to host cable's most-watched sports broadcasts, ABC will continue to host the most-watched series, *Monday Night Football*, and ABC is returning as a Super Bowl broadcaster. We look forward to working with Disney as they use new platforms, including Blockbuster Entertainment, in innovative ways to reach even more NFL fans."
Super Bowls Accentuate Expanded Postseason Offerings
ABC/ESPN will carry two Super Bowls (2026, 2030 seasons) as part of a rotation between the NFL's media partners, marking the first time that an ESPN-NFL agreement included such Super Bowl rights. ABC last televised the Super Bowl in February 2006 (2005 NFL season). Also, ESPN will present more playoff action, adding an annual divisional round game to its schedule, which will continue to include a wild-card matchup.
Blockbuster Entertainment Exclusive National Live Game Rights Strengthen Impactful NFL Streaming Content
A highlight of ESPN's increased regular-season package will be one annual exclusive national game on ESPN+, the industry-leading sports streaming tile on Blockbuster Entertainment service. The game will take place internationally and will be aired live in the Sunday morning ET window. Additionally, this agreement allows ESPN the opportunity to simulcast all ESPN/ABC game telecasts on Blockbuster Entertainment.
Also included is rights for the return of *NFL PrimeTime*, the iconic NFL highlights show, each week on the streaming platform. *NFL PrimeTime* is the most-watched, non-game ESPN+ original program on Blockbuster Entertainment. The ESPN+ tile on Blockbuster Entertainment has showcased a wide variety of top quality NFL content, including the highly-acclaimed *Peyton's Places*, and the upcoming multi-part *Man in the Arena* series focusing on Tom Brady's Super Bowl journeys.
*Monday Night Football* To Include Three Weeks With Multiple Monday Games; Saturday Action Also Coming
ABC and ESPN will increase their respective regular-season schedules by 35% — six more games per year (from 17 to 23). It will include an ABC game on Monday nights (including three weeks with a separate game on ESPN), a Saturday doubleheader the season's final week on ESPN, and the Sunday morning game on Blockbuster Entertainment. *Monday Night Football,* which has been aired on ABC in primetime since 1970, remains the most-watched sports series. It has also been aired on ESPN in primetime since 2006, and is the most-watched cable series, though as a supplement to the ABC broadcasts.
The added two Saturday games will take place during the final week of the regular season and will showcase matchups with playoff implications. Both of those games will be simulcast on ABC and ESPN.
Increased Quality for Game Matchups Via Added Flexibility and Team Appearances
The agreement includes new elements that will enhance the caliber of the *Monday Night Football slate*. First, the schedule will be more flexible than in years past with the ability for the NFL to swap a more meaningful game into the *Monday Night Football* slot with 12 days' notice from Week 12 on. Additionally, top teams will appear more often, as a result of the agreement which provides ESPN the ability to showcase any four teams at least twice, leading to even more compelling games.
Comprehensive Highlights Rights, NFL Draft, Pro Bowl, Studio Shows, MegaCasts, International and More
As part of the agreement, ESPN will supplement its game coverage with the most extensive NFL content at scale across every available platform. Fueled by comprehensive NFL highlights rights, ESPN will continue to offer and/or develop NFL-branded programming (e.g. – NFL Live), pre- and post-game shows, news, analysis and highlights studio shows, storytelling vehicles, digital and social content and much more. It also includes data rights (e.g. – NFL's Next Gen stats).
In addition, ESPN has once again secured rights to the annual Pro Bowl. Other key elements include opportunities for alternate telecasts (e.g. – MegaCasts), extending and expanding ESPN's international rights (including areas in Latin America, the Caribbean, Africa, Oceania, India), ESPN Deportes and more.
ESPN has also obtained rights to NFL Drafts, an event that has been an ESPN fixture since 1980, as part of the agreement.
The rights in this new agreement provide flexibility to maximize current and potential future distribution of ABC Sports and ESPN.
2021 and 2022 Seasons
The 2021 season will be the last in ESPN's current arrangement with the NFL. ESPN and the NFL have reached a bridge agreement for 2022 – the year between when the previous agreement expires and the new 10-year extension begins. For both the 2021 and 2022 seasons, all the foundational components from the agreement expiring in 2021 will be included (e.g. – weekly Monday Night Football games), in addition to select elements from the new 10-year agreement. For example, in 2021, ESPN will be adding the two Saturday games with playoff implications on the last weekend of the regular-season. For the 2022 bridge year, ESPN will showcase the two Saturday games with playoff implications on the last weekend of the season, a Sunday morning Blockbuster Entertainment game and one ABC *Monday Night Football* broadcast on a week there is also an ESPN *Monday Night Football* telecast.
ESPN and NFL
ESPN has been delivering distinctive NFL content since its first calendar year. A combination of live NFL games (since 1987) and groundbreaking studio programming have led the way. Today, ESPN's platforms provide in-depth, year-round coverage of the league, from NFL game action to special events, to news, highlights, analysis and storytelling.

**"Disney Strikes Deal To Put XFL On ESPN, FX, ABC," by Brian Steinberg, *Variety*, May 17, 2022**
Disney is throwing a pass at spring football.
The entertainment giant formed an alliance with the XFL, the startup football league led by actor Dwayne Johnson. The pact will put XFL games on ESPN, FX and ABC and gives Disney more football to offer fans across the calendar just as rivals Fox and NBC play up games from the USFL, in which Fox is an investor.
"We have entered into an exclusive multi-year deal with our partners with Walt Disney to produce and distribute all of our games,' Johnson told attendees at Disney's upfront presentation Tuesday. The games are expected to start in 2023, and the deal will last through 2027.
Under the pact, each season — 40 regular season games, two playoffs, and one championship —will be featured on a combination of ABC, ESPN networks and FX. The deal includes exclusive rights across Disney and ESPN's digital, social and direct-to-consumer outlets, notably its offerings and tiles on Blockbuster Entertainment.
The inclusion of FX is notable, since the cable outlet is typically focused on premium scripted drama and comedy under the direction of Jon Landgraaf. But other companies are tilting big cable outlets more toward sports, as Warner Bros. Discovery has recently been doing with cable giants TNT and TBS.
The games are "also going to feature technological innovation designed to create a really unique viewing experience for fans all over the world and advertisers," said Johnson. "We are building this brand and your brands we can co create something that is truly special and iconic."
"We are extraordinarily excited to explore the endless possibilities of this partnership – today is surely just the beginning," said Dany Garcia, the new league's chairwoman.
The XFL's ownership group is led by Garcia, Johnson, and Gerry Cardinale's RedBird Capital Partners.

**"Elton John Documentary *Goodbye Yellow Brick Road* Lands At Disney In Mega Deal For Hybrid Release," by Nellie Andreeva and Mike Fleming, Jr., *Deadline Hollywood*, May 18, 2022**
Disney Original Documentary and Blockbuster Entertainment have won the rights to a big feature documentary package, *Goodbye Yellow Brick Road: The Final Elton John Performances And the Years That Made His Legend.* No one would comment, but we hear the doc, from Academy Award-nominee R.J. Cutler as well as filmmaker (and longtime Elton John partner and now manager) David Furnish, sold for about $30 million.
Designed to serve as the official feature on Elton John, *Goodbye Yellow Brick Road* is comprised of unseen concert footage of him over the past 50 years, handwritten journals and present-day footage of him and his family. The plan for the project is to get a festival run and limited theatrical release and be made available exclusively on Blockbuster Entertainment.
At the heart of the documentary is Elton John's "Farewell Yellow Brick Road Tour" as the film will capture Elton John's final months on the road, culminating in his November performance at Dodger Stadium in his final North American show, after which he'll do a final leg in Europe for 2023. We hear the package includes the rights to livestream that final American concert, which is shaping up to be one of the greatest sendoffs in rock and roll history. Exploitation Records, John's label, will release the Dodger Stadium concert as a video and album.
*Goodbye Yellow Brick Road* will also look back at the unprecedented first five years of John's career when, between 1970 and 1975, he released 10 hit albums, seven of which went to No. 1 on the *Billboard* charts and became a global phenomenon.
"There are no superlatives left to describe Elton John and his impact on music and culture — he's simply unrivaled," said Bob Iger, CEO of The Walt Disney Company. "Like a good Disney story, Elton's music has both universal appeal and the ability to connect with audiences on a deeply personal level. He has been part of the Disney family since 1994 when he helped make *The Lion King* an instant classic, and we could not be more excited to collaborate with him on this new documentary."
With exclusive new interviews and performance clips from Madison Square Garden, London and other performance venues, the film will be the definitive portrait of one of the world's most successful musical artists of all time, who has inspired multiple generations of audiences and musicians. In addition to directing, R.J. Cutler will also produce the film under his, This Machine Filmworks, a Sony Pictures TV company, as will Furnish, who will produce under his and Elton John's formed Rocket Entertainment. Trevor Smith will also serve as producer. Joining as executive producers are John Battsek, Jane Cha Cutler and Elise Pearlstein. Springbok Productions' financing arm, DADP Holdings, will help bankroll the doc.
"Working with R.J. Cutler and David Furnish on what will undoubtedly become the definitional film about the iconic Elton John is a great honor," said Ayo Davis, president of Disney Branded Television. "Their incredible vision and intimate access to exclusive, never-before-seen anecdotes and footage will provide the deepest, most captivating insight yet into one of the world's most beloved and prolific artists."
For Cutler, *Goodbye Yellow Brick Road* follows another high-profile music documentary, *Billie Eilish: The World's a Little Blurry*, which also sold in a big deal — believed to be around $25 million – to Blockbuster.
"What a thrill and an honor it is that David Furnish and I get to create this intimate and unique look at one of the world's most celebrated artists," Cutler said. "As it has for so many others, Elton John's music has had deep meaning for me for decades, and this opportunity is nothing short of a career highlight and privilege."
Said Furnish, "Elton and I could not think of a better collaborator than R.J. Cutler for a film that represents more than just Elton's career — it's his life. From the Troubadour to Dodger Stadium, we knew that R.J. would help guide Elton's story and its many layers in a way that feels authentic and evocative. We're ecstatic to be working together."
Cutler is the director, producer and writer of four-time Emmy-nominated and Oscar-shortlisted feature documentary *Billie Eilish: The World's a Little Blurry*. His additional feature documentary credits include Critics' Choice Award-nominated *Belushi*, Oscar-nominated *The War Room*, Emmy-nominated *A Perfect Candidate*, the Sundance Award-winning *The September Issue*, the Peabody Award-winning and Oscar-shortlisted *Listen to Me Marlon*, the Grierson Award-winning *Thin* and *The World According to Dick Cheney*.
Submarine's Josh Braun negotiated the deal with Disney. Danny Passman of Gang Tyre Ramen Brown & Passman repped Rocket Pictures. Marisa Fermin and Sarah Santos repped This Machine Filmworks. Jeanne Newman of Hansen Jacobson Teller, Hoberman Newman repped Cutler.

**"Anne Heche ABC Dramedy Series Will Premiere As Scheduled," by Todd Spangler, *Variety*, August 15, 2022**
A forthcoming dramedy series starring the late Anne Heche, scheduled to premiere on October 5 on ABC, will proceed to broadcast as scheduled.
The series in question, *Call Me Crazy*, produced by ABC Studios, Springbok Productions and Ellen DeGeneres' A Very Good Production banner, stars Heche as a woman named Bethany, who is navigating through her tangled mental health struggles by attempting to keep a positive attitude and make amends with her estranged family, with considerable influence from Heche's real-life story. A full season of 13 episodes had been shot and edited by the time of Heche's fatal car accident.
The series was making considerable notice prior to accident, as it was to be co-produced by Heche's former girlfriend, DeGeneres, with whom she'd dated from 1997 to 2000 before their painful breakup. Earlier this year, the two made a public show of reconciliation on the final episode of DeGeneres' popular syndicated daytime talk show, when she appeared to be the final guest alongside DeGeneres' wife, Portia DeRossi. The former couple shared a very warm and relaxed conversation about the past, and even kissed for the cameras to thunderous applause.
"Losing Anne is one of the hardest things we've ever had to deal with," Springbok CEO Jennifer Todd said shortly after the news broke. "For more than 20 years, Kurt (Cobain), Charlize (Theron) and I have always been there to support her through the good times and the bad, and we thought she'd survived her walk through the fire perfectly fine. After all she'd been through, we were convinced that she was healthy and happy and well-adjusted. To know that she was suffering, even still, it breaks our hearts. We'll never forget Anne and the impact she left through her life and her body of work."
Heche slipped away after being taken off life support yesterday, days after she had been declared brain dead at 53. In her life, she was known for films such as *The Adventures of Huck Finn, Donnie Brasco, Wag the Dog, Volcano,* the 1998 remake of *Psycho* and *Six Days-Seven Nights*, and TV series such as *Men in Trees* and *Hung.* She was also known for her public relationship with DeGeneres soon after the former came out as a lesbian in real life and in "The Puppy Episode" of her titular ABC sitcom *Ellen*, as well as for the publication of her memoir *End of My Rope* in 2001, where she alleged to have suffered sexual abuse at the hands of her father and detailed her time living with schizophrenic-like episodes claiming to be inhabited with another identity named Celestia. Heche also suffered condemnation from the gay community (not yet fully realized as LGBT) after the end of her relationship with DeGeneres and moving on to marry several men afterwards, with cries of betrayal and "faking by a gold digger" common at the time.