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Machiavelli in the Magic Kingdom

Reviewed by Bob Woodward
Sunday, February 27, 2005; Page BW03


By James B. Stewart. Simon & Schuster. 572 pp. $29.95

To understand the universe of 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, consider this: In 1995, Michael Ovitz -- once the most powerful person in Hollywood, then the president of Disney -- was trying to persuade Disney CEO Eisner that they should give a gift to Robert Iger, then the head of ABC television, to acknowledge his hard work. "Why?" Eisner asked. "He's got a contract. He's not going anywhere."

_____Book World Live_____
Bob Woodward will be online Tuesday, March 1, at 3 p.m. ET to discuss his Sunday Book World review of "DisneyWar."

"Don't you want him to be comfortable, happy in his job?" Ovitz asked.

Eisner seemed to think about that. "Not really," he replied. Thus does Stewart reveal 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. As Eisner offhandedly remarks, "I sort of liked stress." Readers of DisneyWar will doubt only the "sort of," and they'll probably laugh out loud.

I did. DisneyWar is a compelling and often brilliant tale of how Eisner kept his own -- and everyone else's -- stress levels churning. To give Eisner the benefit of the doubt, his 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.

In the interest of full disclosure, Stewart and I have the same publisher, Simon & Schuster, and editor. That said, I believe by any fair measure, DisneyWar is a monumental achievement of in-depth reporting -- tough and scrupulous. It is so comprehensive that I suspect no one will ever have to -- or even try to -- write this story again.

Yet for many readers, the book's clear strength -- its more than 500 pages of detail -- will also be its weakness. Stewart brings a high-resolution microscope to the task -- perhaps too high. He focuses on nearly a hundred characters, and relentlessly examines each major Disney movie, ABC television series and countless Internet and cable deals.

But all this may be needed to underscore two of Stewart's key points. First, notwithstanding all of Disney's vaunted "family values" rhetoric, money drives the train: percentages of profits, payouts and simple greed. Box-office revenue and TV ratings become the ultimate measure of success. Second, Stewart shows that the human toll is significant, dissecting the treatment of everyone from the long-suffering animators (who provide a nice Greek chorus, as if Walt Disney himself were chiming in) to the jousting top executives. The Disney empire was rife with pain, confusion, lying and wasted opportunities. Indeed, DisneyWar shows us corporate leadership so dysfunctional that the book might have been entitled "Playpen" instead.

Still, Stewart has a cool eye and provides careful balance. Disney, he notes, has long been at the forefront of American entertainment and myth-making, from Mickey Mouse and Snow White to a striking recent run of popular animated movies such as "The Little Mermaid," "Aladdin" and "Beauty and the Beast." Stewart carefully charts the company's creative successes, especially in Eisner's first decade at the helm, from 1984 to 1995, which brought a tenfold return for stockholders.

Eisner fell as dramatically as he rose. Much publicity has attended the astonishing spats -- recorded in lawsuits -- Eisner has had with Ovitz (his former best friend, who received a pay-out of $140 million for about a year's work), Jeffrey Katzenberg (the head of Disney's movie studios, who pocketed a settlement of $280 million) and Roy E. Disney, Walt's nephew. These served as a wake-up call. Roy Disney was the board member who helped to recruit Eisner in 1984 then led the revolt against him. Eisner was stripped of the board's chairmanship in 2004, and he has said that he will retire as CEO next year. Stewart treats these sections -- the juiciest parts of the Eisner tragedy -- expansively, and on most pages a reader will wonder why someone at Disney didn't call for straitjackets from a psychiatric version of 911.

But the larger thrust of this book -- and the one that makes it such an important work -- is to call into the question the system of corporate governance, and the legal and moral responsibility of a board of directors to provide adult supervision of the firm it supposedly oversees. Disney was hardly alone; as even a casual newspaper reader knows, the financial pages are filled with tales of runaway CEOs and docile boards. One of Stewart's most memorable "characters" is Stanley Gold, a longtime Disney hand and board member who emerges as one of the book's few heroes. A wealthy lawyer and businessman, Gold finally woke up after years of deceit and bullying by Eisner and provided an unusual degree of introspection. After another director publicly defended Eisner in 2002, calling him "the best CEO in the business," Gold fired back. "We, the Directors, are guilty of not discussing the real issues affecting the Company," he wrote Eisner and his fellow directors. "We have not fully and critically addressed the failed plans of our executives or the broken promises that management has made to the Board and the shareholders over the last five years. We are too polite, too concerned with hurting each other's feelings. . . . we, the Disney Directors, have long been too compliant and uncritical of management's failures."

As with Machiavelli, the real Eisner story is in his technique -- the way the corporate Prince devises a staggering number of gambits to rattle subordinates and competitors, all in order to dilute their authority and enhance his own.

Eisner used several tactics. First was promising promotions (or hinting strongly about them) when he had no intention of following through, something he did to so many people on so many occasions that it seems impossible to count them. Disney's presidency, the number-two position under Eisner, is dangled, promised and withheld, floating throughout the narrative like Cinderella's glass slipper. For example, Eisner told Katzenberg, who had been among his closest colleagues and friends for nearly two decades, "I might consider [promoting you to president] down the road, if you earn it."

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