Media Curmudgeon

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January 23, 2005

Eisner and Katzenberg

In its January 10 issue, BusinessWeek names "The Best Managers...And The Worst" in its cover story. The venerable business magazine plays this naming game annually, but I found it especially ironic this year.

Fourth on the list was not a single manager, like all of the other listed managers , but a trio of "managers:" Steven Spielberg, Jeffrey Katzenberg, and David Geffen of DreamWorks SKG. Their key accomplishments were: ">>In the spring, the computer animated Shrek 2 set a record with a gross of $436.7 million. >>Had one of the year's hottest IPOs, pulling in $812 million. Stock zoomed by 45% the following month."

The annual BusinessWeek ranking of the best and worst managers of American companies has nothing to do with how nice or gentle or empowering they are, the evaluations are based stictly on financial performance of the companies they manage. Nevertheless, I found it ironic that Katzenberg was high on the list while his erstwhile nemesis, Michael Eisner was a similar number four on the list of worst managers.

Remember, Katzenberg quit in a huff when Eisner didn't promote him to be president of Walt Disney Co. (he had been head of the animation division and had produced a lot of hits). Instead, Eisner hired his pal Michael Ovitz who he fired after about a year on the job and to whom he gave an outrageous $140 million severance package (the exact amount is in dispute, but $140 million is bad and close enough). Eisner is being sued by Disney stockholders over the Ovitz severance package in an embarrassing trial that makes both Eisner and Ovitz look like sleazy liars.

Katzenberg also sued Disney and Eisner over his inadequate severance package and won. Can you imagine Eisner skimping on Katzenberg who made Disney millions with boffo animated hits but squandering stockholders' money on Ovitz, who had never made a movie or run a theme park? I think Eisner should have been higher on the BusinessWeek list of worst managers in the country.

Also, can you imagine how sweet it must have been for Katzenberg to read that issue of BusinessWeek? In the picture of the three DreamWorks moguls, Katzenberg has the biggest smile by far. We understand, Jeffrey. Smile away.

He's also probably smiling because Eisner has finally been forced by angry stockholders and a board of directors that is no longer under his thumb to name a replacement as CEO when he retires in 2006. Although he hasn't done so yet, it is obvious to all that he intends to name Robert Iger as his heir. Why would this make Katzenberg smile? Because Iger is a suit. In the BusinessWeek story on Eisner, one industry expert says about the pending crowning of Iger that it "shows how weak a bench Eisner had." Hardly a ringing endorsement.

I wouldn't put it past the egomaniacal Eisner to name Iger his successor because he knows Iger isn't that good and will fail, thus making Eisner look good in comparison. At least I sense that's the way Eisner thinks. Isn't it sick? So keep smiling, Jeffrey.

Posted by Charles Warner at January 23, 2005 2:31 PM

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