How Eisner Saved Disney--And Himself

This is a guy with a bum heart? Michael Eisner, chairman of the Walt Disney Co., clinched his bid for ABC in eight days. And what about the California Angels, No. 1 in the American League West? Eisner took even less time to buy a stake in them. "He sat there and said 'yes,' 'no,' 'yes,' 'no,' and at the end of three hours we had a deal," said one awed negotiator. Three hours? Eisner, these days, seems to have become a demon dealmaker. "ABC isn't the last shoe to drop," he told NEWSWEEK late last week. What could be next? Maybe buying Rockefeller Center in New York, according to various reports. Or bringing a National Football League team to Los Angeles. "Oh, I don't know," says Eisner. "I have a lot of things on my mind."

Little more than a year ago, Eisner had other things on his mind--none very promising. The hoopla over ABC marked an eerie anniversary. Twelve months earlier, at the same retreat in Sun Valley, Idaho, where he negotiated the ABC deal, Eisner was seized with chest pains and carted off to a hospital for quadruple-bypass surgery. A few months before that, his best friend and alter ego at Disney. Frank Wells, died in a hell-skiing accident, throwing the company into turmoil. There was an exodus of high-profile execs, coupled with some serious business headaches. The giant Euro Disney thence park was heinorrhaging money. There was a spate of live-action-movie duds. Every week seemed to bring some new bit of gossip gleefully spread by enemies-suggesting Eisner was no longer up to his job.

But that was then. Now Eisner's back, seemingly a new man. One studio exec, usually no fan, sums up the latest take from Tinseltown: "He had an awful year, but he's turned it around. The ABC deal is like one giant wad of Clearasil--all your blemishes go away." In fact, they don't, at least not completely. Yes, Michael Eisner has proved his doubters wrong. Like a swash-buckling captain of cinema, he's seized the helm of Disney's troubled ship and steered it through choppy seas. Financially, the company has never been stronger; its movies, led by "Pocahontas," dominate this summer's box offices. Yet questions persist. Some concern his health. Eisner now diets and exercises "obsessively," as one insider puts it, and insists he's never been more fit. Yet he almost stridently refuses to designate a successor, or even a No. 2. Disneyites also speak privately about a so-called "new" Eisner: more secretive and autocratic, less willing to be challenged. Instead of slowing down after his illness, Eisner seems in some ways to have speeded up, as if he's determined to reinvent Disney and deliver it, personally, into the next century.

Eisner saved Disney once before, and the story is Hollywood legend. The son of a well-to-do New York family, Eisner, 53, grew up on Park Avenue, attended the best prep schools and Denison University in Ohio, where he studied theater and literature. After graduation he finagled a mail-room job at NBC, then moved to ABC, developing children's programs and such prime-time hits as "Happy Days." Along the way he became a protege of Barry Diller, who was running the network's movie division. When Diller became head of Paramount Pictures in 1974, he picked Eisner to run its studio. Churning out hits from "Grease" to "Raiders of the Lost Ark," they made Paramount hot. When Eisner was offered the top job at Disney, in 1984, the House of Wait languished as a Hollywood also-ran. The vaunted animation division was a shambles; revenues were anemic. Together with Wells and Jeffrey Katzenberg, head of Wait Disney Studios, Eisner transformed the company into the $10 billion behemoth it is today. Almost singlehandedly, Disney revived animation as an art form. It expanded its theme parks and hotels and bought a sports team, enriching itself and its shareholders. If Disney is today an icon of American culture, a lion king's share of the credit goes to Eisner.

It was an impressive success. But lastyear brought a sterner test, and one that for the first time Eisner had to face alone. It began with the death of Wells, his trusted No. 2, a confidant Eisner eulogized (revealingly) as someone who was always "cheering me on." Oddly enough, Wells's departure affected Eisner almost more than his own brush with death. That was the real "wake-up call to mortality," he told NEWSWEEK. "The death of Frank became the very first step," a catalyst for the plans he and Wells had laid to revive Disney by shaking up the place, reshuffling staff and charting new paths. Hollywood saw only madness, not method, in Eisner's actions. Katzenberg, for one, coveted Wells's job. When Eisner refused to give it to him, last August, he angrily quit. Other high-level defections followed. Among them: the head of Disney's TV programming, Richard Frank, who left the company in March. More recently, a pair of top TV-animation executives departed to join DreamWorks SKG, the new studio begun last year by Katzenberg, music mogul David Geffen and director Steven Spielberg.

The upheaval divided Hollywood into pro- and anti-Eisner camps. Katzenberg and others wasted little time taking credit for Disney's successes--most notably "The Lion King" and the plans for acquiring a network. Some of the gossip has been outright vicious. In a recent interview in Los Angeles magazine, Geffen called Eisner everything from a "liar" to a "woo hoD," finger encircling his ear to make the slur explicit. "Life's too short to fight," shrugs Eisner. But the sniping clearly bothered him. "It's pretty petty stuff," says Roy Disney, nephew of the founder and a company director. "It gets under his skin."

Eisner focused on rebuilding. By cutting costs and bringing in outside investors, he turned around Euro Disney, now for the first time in the black. He hired Joe Roth from Twentieth Century Fox ("Home Alone," "Mrs. Doubtfire") to take over from Katzenberg. He flouted the Hollywood tradition of hiring from inside the industry. For instance: Disney's new financial officer is Stephen Bollenbach, a Marriott hotels executive whom Eisner credits with giving him courage to take on the debt required to finance ABC. He'd been eying the network seriously for at least three years, he claims, but had always balked. The time never seemed right. But with Disney's management and theme-park distractions behind it, that changed. Says Eisner: "I wanted to do it when we could really concentrate on coming together."

Eisner clearly expects the coup to dispel any lingering doubts about his leadership. But his success is far from perfect. One problem: who would succeed him, should he not stay healthy. Instead of resolving the issue, Disney's board has ducked it. If something happened to Michael? "I guess we'd have a meeting," says Roy Disney, a bit too casually. Eisner himself talks of playing the "quarterback," grooming new players and maybe (just maybe) one day anointing a backup. Bottom line, as he sees it: no big deal.

Meanwhile, there's the not-so-niggling question of the Dream Team: Katzenberg, Geffen & Co. DreamWorks has a big TV deal with ABC, and the former Eisner critics are (not surprisingly) muting their criticism. If their stuff is to be picked up by the network, it will ultimately be on the authority of . . . guess who? That brings the year full circle. On Thursday, Eisner phoned his once-and-future amigos. Spielberg agreed the feud should end. "Let's get this behind us," said the bearded one. Geffen jokingly passed off responsibility for his barbs. "That was Jeffrey, not me," Eisner quotes him as saying. Said Katzenberg: "We've had 19 great years together, and 10 lousy months. Let's see to it that it's not 11." Clearly, ABC has given Eisner the last big laugh on his rivals, and one Disney exec delighted in the irony of it all. "Ha! Ha!" this source imagines Eisner saying. "Ha! Jeffrey and David. . . See, if you had stuck around you might have had something really big to run!"