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Book World Live

Bob Woodward
Assistant Managing Editor, Investigations, The Washington Post
Tuesday, March 1, 2005; 3:00 PM

"DisneyWar," James B. Stewart's exhaustive study of corporate and personal neurosis during Michael D. Eisner's 21-year tenure as head of the Disney empire, is a compelling and often brilliant tale of how Eisner kept his own -- and everyone else's -- stress levels churning. Eisner's intent seems to have been to maintain an atmosphere of creativity while containing the roaring, toxic egos of the numerous barons of the magic kingdom. But in the end, it was Eisner's own ego that swamped and infected Disney.

Bob Woodward, Post assistant managing editor for Investigations, was online Tuesday, March 1, at 3 p.m. ET to discuss his Sunday Book World review of "DisneyWar," Machiavelli in the Magic Kingdom.



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Woodward is the co-author or author of 12 books, including, most recently, "Plan of Attack."

Join Book World Live each Tuesday at 3 p.m. ET for a discussion based on a story or review in each Sunday'sBook Worldsection.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

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Frederick, Md.: How does corporate governance need to change in order to prevent the kinds of abuses portrayed at Disney? Should there be a corporate ombudsman as has been adopted by other powerful institutions like newspapers?

Bob Woodward: The directors have to assume the responsibility that they have under the traditions and laws. This is about individuals seizing the moment and making sure that the firm or the business they are overseeing is really on the up and up, and that all the work is as transparent as possible.

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Arlington, Va.: Bob, I read the New Yorker excerpt of "Disney War" a few weeks ago, and it bothers me that the Disney board seems to have no control over Eisner at all. There have been two massive cash payouts now -- first to Katzenberg, and to Ovitz. I think the first payout should have wised up the board concerning Eisner's "management style." All it does it cost the company money! Then the screwup over the release of "Farheinheit 9/11" and the loss of Pixar, which calls into question Eisner's ability to play well with others. And now Eisner says he'll step down in 2006. Okay, when in 2006, January or December? My guess is that Disney will be stuck with Eisner forever, further damaging the Disney corporate image.

Bob Woodward: Disney has a giant problem and James Stewart's book lays it all out and I'm kind of surprised -- when the members of the board read it is really their responsibility that they demand some answers and some immediate remedies.

Eisner is still the CEO and though they stripped him of the board chairmanship, he's still in the driver's seat. As a reader of this book you can't help but wonder how long that can last.

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Cheyenne, Wy.: I read "Den of Thieves", and look forward to this book!

In review, you properly reference Eisner as a corporate Machiavelli. His actions, and those of other corporate leaders (which might make Jesse James blush) seem to be recurrent.

Is this the best we can do at the top of our corporate world? Are there effective means to holding our leaders accountable BEFORE court action is necessary?

Bob Woodward: DisneyWar shows, once again, that concentrations of power are unsafe -- whether in the hands of one person or just a few. The remedy here, as I said before, is transparency, introspection and people assuming the legal and moral responsibility they have.

One theme line in this book is the influence -- not surprisingly -- of money. As I attempt to show and Stewart proves -- money is driving everything. It's just not enough and should not be the sole motivation, particularly in a creative enterprise like Disney.

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New Jersey: Dear Mr. Woodward, How could Eisner be considered a success if he constantly put down his most talented employees because he felt threatened by their talents? Wouldn't Disney have been a much more successful company if he had nurtured their talent instead of creating and seemingly thriving on the chaos he created around making the talent feel insecure?

Shouldn't this be a cautionary tale to managers who engage in similar employment practices?

Thanks for your response!

Bob Woodward: I was truly surprised at the way people were treated -- both at the lowest level and at the highest levels within the Disney empire. It obviously is a management style that Eisner believes creates and maintains some sort of spark, but it really is a sad story in the details.

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Leesburg, Va.: Sir:

It seems like Disney would be a great subject for a Woodward book. Any thoughts? And: What IS the next Woodward book?

Bob Woodward: First, as I say in the review in The Post, I don't think anyone would dare take on this subject again because Stewart has done such a magnificent job.

I'm going to attempt to do a book on the first part of President Bush's second term when I figure out what topic A is going to be. Any ideas and inside information are most welcome.

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Bob Woodward: My e-mail is woodwardb@washpost.com.

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Shelbyville, Tenn.: Is Steve Jobs waiting until Michael Eisner is gone before renewing the Disney/Pixar contract for film distribution? How much input does Disney have in the storyboards for the Pixar films? How much does Disney contribute to the success of the Pixar films?
Thanks.

Bob Woodward: Those are good questions and I don't really know the answers. I'm sorry -- the future of that relationship was not really addressed in the book.

As usual, Stewart's book reports that Eisner bad-mouths Steve Jobs, calling him "a Shiite Muslim."

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Murfreesboro, Tenn.: Was it a mistake for Disney to purchase Cap Cities/ABC? Through some accounting trickery, it showed profits for four years until the goodwill money ran out.

Bob Woodward: That will be debated for a long time because the question can only be answered after many more years of operating ABC, in my opinion.

At the same time, I'd like to add that this book has a balance to it and shows that Eisner had some very good years and nurtured significant talent in the entertainment world. One of the strengths is that balance.

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Southern Maryland: Do you feel that "Disneywar" vindicates the campaign by Roy Disney and Stanley Gold to oust Eisner? Looking at the company's recent artistic output, I think these two have a legitimate point. When Roy headed the Disney animation unit, the company's animated features were artistic and financial successes. (I'm talking about the period from "The Little Mermaid" through "The Lion King.") Since Roy's departure, Disney hasn't had a true hit with an animated movie, except for the Pixar features. I don't know if the famed "Disney magic" is genetic, but Pixar's movies have had more of that magic than Disney's lately.

Also, this quote from your review was interesting: "Eisner's management DNA: keep everyone deep in self-doubt, mired in uncertainty, off-balance, their heads swirling with contradictory information. At Eisner's Disney, inducing paranoia was a leadership strategy." That's almost exactly how Lee Iacocca described Henry Ford III's management DNA.

Bob Woodward: First, I wouldn't make a judgment about who is vindicated right now. Obviously, the books shows that some of Roy Disney's and Gold's complaints were legitimate.

I was not aware of the Iaccoca point you make and it's interesting.

Just as a side thought, you have to ask yourself the question: How do you want to live your life? Do you want to live in an environment of paranoia and self doubt or do you want to have comparitively straight, direct relationships with people? The Eisner style of generating stress in employees would make me -- and I think a lot of people -- refuse to work there, no matter what the payoff in money or big entertainment acheivements, it ain't worth it.

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Atlanta, Ga.: So Eisner is no longer known as the effective leader of the happiest place on Earth ... but what will the real fall-out be for him and his career?

Bob Woodward: Who knows? He has incredible survival skills, but he's at an age and of sufficient wealth that I suspect there will be some kind of retirement or semi-retirement life ahead.

But he's a very driven, focused person and the rule of Hollywood and Washington is: don't ever count anyone out until they are completely gone.

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Fredericksburg, Va.: When is the annual Disney board meeting scheduled? How much chance for an insider to replace Eisner?

Bob Woodward: I don't know. The press accounts suggest that Bob Iger, the number two at Disney, is the likely successor. But, some thoughtful board members may want to bring in someone from the outside with sufficient stature to make sure that the train gets back on the track.

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Reston, Va.: I have a naive question, how much power can a board have over a CEO?

Bob Woodward: That is an excellent question.

By law the board is responsible, but a board generally is made up of insiders who report to the CEO or outsiders who only pay attention part of the time. The lesson here might be the shareholder suits against the board -- holding them responsible. And if some of the board members in companies and corporations start having to pay damages of some sort, they likely will give more attention to their duty.

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Todd, Bethesda, Md.: Besides, messing up the Pixar relationship, what were some of the missed opportunities that Eisner is faulted with? Does he see them as misteps or does he see himself as "too right to be wrong?"

Bob Woodward: Well there are a list of TV shows -- such as the Survivor, Apprentice and a number of other big hits that Eisner or ABC turned down. It's not a very good track record. But I believe Eisner believes in his overall batting average, which has been high -- particularly in many of the early years.

In fairness to Eisner, it should be added that one of his accomplishments was refusing to merge with an online company, thus avoiding the immense difficulties that Time Warner has had in the merger with America Online.

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New York: Dear Mr. Woodward,
The story you mentioned about Eisner, Eisner's wife and Belushi was quite moving. Does Eisner admit any regrets about Belushi, can his wife explain his callousness?

Stewart is a great journalist, his "Den of Thieves" was fabulous.

Thanks.

Bob Woodward: Eisner's position was -- when I interviewed him more than two decades ago -- that a movie studio in practice could not be responsible for how an actor, even one so totally out of control like Belushi, spends his or her money. But it all contributed to what would now be called an "enabling environment" -- making it easy for someone to pursue their addiction.

But Eisner was not indifferent, he just insisted that it wasn't his or the movie studio's responsibility.

These days, many companies wisely broaden their definition of responsibility to employees and offer all kinds of services and assistance to people with addiction or other problems.

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Woodstock, Md.: Doesn't the book address comments Eisner has made that indicate he sees himself as a kindred spirit or a "descendant", if not in fact but in legacy, of Walt Disney (who most certainly did not manage in the same manner as Eisner)?

Thank you.

Bob Woodward: Yes, there are examples in the book where Eisner makes such comparisons. The Disney family members who are still around have not been happy with that. That's all I know about it.

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Harrisburg, Pa.: What do you think George Mitchell's presence does to the Disney corporation? Does he bring in some sense of sanity while maintaining Eisner's trust, or is he too much of an Eisner ally to really accomplish much?

Bob Woodward: The information about George Mitchell, the former Senate Democratic leader, emphasizes his passivity. His character really doesn't come alive in the book. It's one of the areas I would have liked to see more on.

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Washington, D.C.: One of the most striking examples of executive inconsistency in the Disney organization has been Eisner's selection (and sometimes de-selection) of executives, the Michael Ovitz episode being merely the most public. Senior execs have come and gone under Eisner's tenure for years. Roy Disney and his ex-Board colleague have asserted that the yes-men stayed on and got promoted, while other execs were shown the door on little notice, for what often amounted to very little reason. For example, press reports indicate that the CEO of Disney International was expelled quite suddenly a few years ago, along with one in three Disney country executives, and that Eisner has reorganized that division twice since then.

What role does the current Disney Board play in executive selection, retention, or dismissal? Any expectations that the revolving-door management will change upon Eisner's departure?

Bob Woodward: It's mostly Eisner, but the board is supposed to provide sufficient supervision. I recall some details about those executives, but there wasn't enough information to make it clear precisely what happened.

At the same time, a board has to allow the CEO to run the company and make the basic personnel decisions. The best example in Stewart's book is the number two position at Disney -- which gets offered, waved around, candidates proposed, candidates rejected and denounced. That should have been the tip off to the board that somehow Eisner was not comfortable sharing any real authority with someone else in the company. In turn, that highlights another problem with Disney -- the apparent failure to groom a successor (or several possible successors).

If you read this book, you will find that as soon as Eisner praises somebody, within the coming pages he will soon be denouncing that person. It is a yoyo that goes up and down on people with lightning speed.

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Baltimore, Md.: Bob,
There aren't a lot of books that give truly revealing looks into the operations or board rooms of Fortune 500 companies or of important business institutions like this one. Are there other books you would recommend in this genre? I can think of "Liar's Poker" by Michael Lewis and the published work of Ken Auletta, but not much else. Thanks a ton for any suggestions!

Bob Woodward: I think Stewart's earlier book, "Den of Thieves," really penetrated Wall Street and various operations there. That, however, did not focus on one company. It's a good question and I know there are some examples, but they don't come to mind.

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Lyme, Conn.: It was interesting reading your review along with of Edward Epstein's new book. It seems that while we have greater choices in channels and entertainment selections, there are six companies that own the vast majority of all television networks (including cable networks) and movie studios. Are independent voices being drowned out, or may they continue to be heard although by smaller audiences, or is there some sense of obligation among the leaders of the large media corporations to allow independent and creative voices find avenues to be heard?

Bob Woodward: There are actually lots of independent movies and other entertainment that does get distributed, probably not enough, but it's approaching -- or at times approaches -- a situation similar to the Internet. There are incredible numbers of small independent movies that get around and get into theatres or get on television. By and large, the big studios have the hammer, but it seems to me there is a trend toward democratization.

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Rockville, Md.: Is it Eisner's style that is under attack, or his lack of success in recent years? Not that many years ago he was considered a corporate genius with a midas touch; now that some of his decisions have gone wrong, his methods are being criticized. Did his approach change or just the results?

Bob Woodward: I think the record in DisneyWar shows that Eisner pretty much operated the same way over the years. Paradoxically, it is the public legal disputes with his former closest friends -- like Mike Ovitz -- that opened the door for the public and the Disney board of directors to see what was going on behind the curtain.

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East Lansing, Mich.: I enjoyed your review of the book. What I have never understood is the "kid gloves" treatment Eisner received from the press for so long. I remember him being interviewed by network television programs years ago and the interviewers treating him as someone like anyone else doing a good job. This was at a time in which he made $100-200 million cashing in on his Disney stock options. It is one thing for someone to build up a company from scratch and become rich. It is another for someone to be hired as an executive and become incredibly wealthy at the expense of stockholders. Does the books author address the paucity of press examination of Eisner of several years ago?

Bob Woodward: Yes, the book does and it shows how skillful and charming Eisner can be and how he is able to play and has an uncanny knack for finding insecurities in other people.

Eisner kept three groups of people off balance -- his executives, the board and by and large, the media.

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Rockville, Md.: Who do you think made the bigger mistake? Miramax in allowing itself to be bought by Disney or Disney by buying Miramax. Neither one has beeen very successful since.

Bob Woodward: That's a question that I'm unqualified to answer.

But Miramax has made a lot of good, important movies. I'm sorry I'm not familiar enough with the financial arrangements. Hopefully someone other than Eisner got money off those Miramax hits.

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Monroe NY: Dear Mr. Woodward,
You must read a book like Stewart's from the perspective of a peer. I'd appreciate it if you could comment on his reporting/writing style, or generally discuss what qualities you notice when reading books by other people.

I'd also be interested in who would be your heros and favorite authors.

Thanks very much.

Bob Woodward: DisneyWar is a really significant achievement and the questioner is right -- not only do I read what's on the page, but I try to figure out how Stewart pieced together descriptions of some of the meetings and big decisions. It's clear he is a genius at source development, used the large public record very well and also found some people who provided notes and documentation for many of the incidents that are described.

Many of the sources are not identified, but it is interwoven with such authoritative documentation that I never really questioned whether he had a strong basis for reporting each chapter.

I try to read all the time and sometimes I can't even remember the names of the books I read last week, I try to go through them pretty rapidly... so I'm going to plead temporary memory loss.

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Dulles, Va.: Does the deflation of Disney and Coca Cola stock indicate, together with the ongoing U.S. defeat in Iraq, the final failure of the American empire?

Bob Woodward: There are lots of people, including President Bush, who would argue that we have not been defeated in Iraq. The final judgment on the war is not in. I also suspect that people are going to continue to drink Coca Cola and go to Disney movies.

The U.S. dominates the world in movies and music and soft drinks. But that, too, can change.

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Houston, Tex.: It seems that Eisner "changed" when Frank Wells died. Was he the last/only person who could influence Eisner, whose judgment/intellect Eisner respected as much as his own?

Thanks.

Bob Woodward: Wells was the president of Disney during the first years of Eisner's tenure, but as Stewart shows in this book, true to form, Eisner bad-mouthed Wells also. So, you leave the wonderful world of Disney wondering if Eisner respects anybody. Everyone gets what I would call "the treatment" it seems, in one way or another. It's not a pretty picture.

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Nashville, Tenn.: Bob,

An earlier question points out the similarities between Eisner's management style and that of Iacocca and Ford. In Jim Collins' book, Good to Great, he shows that these CEO's had great results, but set the company up to fail, or at least take a huge hit, when they left. Do you see that happening when Eisner finally leaves Disney?

Bob Woodward: Obviously no one knows, but you can't read this book and not feel that some serious improvements could be made that would have to, in the long run, lead to better products.

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ALexandria, Va.: I am a big fan of Bob Woodward. My question, is about the marketing focus versus creative integrity. Walt Disney had both. Eisner had neither -- although he thought he was a marketing genius in his own mind. I think Walt Disney would have been ashamed of Eisner's reign at Disney. Eisner certainly focused his attention on trying to meet the financials versus coming up with quality work.

In my opinion, quality will generate the sales -- Eisner just never quite got it. Do you think Corprate America ever will?

Bob Woodward: Let's hope so, because if the people running these large empires don't almost religiously focus on quality improvement, that is like a virus which will cause not only a decline in revenue and profits, but a disenchantment.

One of the things that's troubling about this book is, in a way, I won't look at a Disney product or book in the same way. Having learned so much of the back story leads to much less confidence, even in something that may be a great movie or a great product. There is a taint that comes with this kind of mismanagement and treatment of people.

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Arlington, Va.: So is Michael Eisner "Deep Throat"?

Bob Woodward: You know, over the last several years I have declined to include or exclude anyone from the list, but today I will make an exception: Eisner could not have been the Watergate source Deep Throat. He was in Los Angeles and, to my knowledge, had no involvement in politics or the Nixon administration.

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Southern California: I worked for ABC when it was CapCities, then Disney came along. For being a large company, CapCities was a nice place to work, management was respectful, people were seen as humans. Again, then Disney came along.

I can't say how much of the Disney "culture" (i.e. anti-employee, anti-family, race-to-the bottom economics) came from the top, but the change in atmosphere as the merger unfolded was noticible. Basically, anyone without a pension left, mostly those in their 20s and 30s. I felt sorry for the old-timers who basically had to hold on until either they were laid off or retired. During my last visit to ABC I noticed that other than admins, there were hardly any people under 40 working there. Who needs to deal with such a caustic, anti-employee atmoshere? I didn't, so I left.

Bob Woodward: That's sad to hear and it is consistent with what Stewart reports about the treatment of people at the highest level in Eisner's realm.

The last thought I would offer has to do with money. Eisner, I can't really keep track of it -- but he earned hundreds of millions of dollars as the CEO of Disney. He was the highest paid CEO in America for a long time. I find it stunning that somebody could really think that they're worth that much money, that they would be running a publicly owned company and feel that somehow an entitlement to this kind of compensation. Lots of sports leagues have salary caps, maybe someone ought to think about putting one out in the corporate world -- not just as a cost-saving measure, but as an effort to tamp down these extravagant egos that somehow think they alone are creating so much value. Maybe it's something boards of directors should give consideration to, and it should be a tipoff to people in public when it's reported that somebody is drawing that large paycheck, that the ego might not be in control and that reality may just not be sufficiently perceived.

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