After the passing of Walt Disney, Disney experienced a period of decline. Under Walt Disney's leadership, Disney built a content ecosystem centered around three main businesses: content production, channel distribution, and merchandise.
In the early days of Hollywood, directors and actors held far less importance than they do now. At most, they were employees of the film studios, nowhere near the status of partners they hold today. This led to very low utilization of personnel and assets. To cut costs, leading Hollywood film companies implemented a project-based reform, treating the production and distribution of each movie as independent projects. When a project was greenlit, a temporary team would be assembled through outsourcing to achieve cost reduction and efficiency gains.
However, this outsourcing model was a double-edged sword; while it lowered costs, it also lowered the entry barrier for the entire industry. This is one reason why, with the advent of the internet age, streaming-first companies like Netflix and Apple could significantly impact traditional giants.
But for Disney, it never fully adopted the project-based reform. This was to thoroughly implement the company's corporate culture and consistently deliver unified values and content. So, while Disney supported its employees and developed new technologies, over time, the system inevitably became rigid.
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When Michael Eisner took over, employees in Disney's film and television division had developed a lazy work ethic, clocking in and out on time, having long lost the fighting spirit and creativity of Walt Disney's era. Content creation was just one of many problems Disney faced at the time. In channel distribution, adhering to the company's corporate culture meant that most live-action films had no place at Disney. While Disney managed to stay afloat in the animated film business thanks to its extensive copyrights, the struggles in live-action film prompted Michael Eisner to commit to reform.
Since 1984, Disney has continuously acquired and founded various subsidiaries, including Buena Vista Pictures and Touchstone Pictures. Earlier this year, it even acquired Miramax Films. Michael Eisner's reform strategy was singular: everything revolved around profit. All business segments were focused on profitability, with accountability established and professionals handling specialized tasks. Under a series of reforms, Disney was revitalized; animated films like The Little Mermaid, Beauty and the Beast, and The Lion King were all born during this period. From Disney's development, Michael Eisner's contributions are undeniable.
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Logically, such a distinguished leader should be given higher respect within Disney, but the reality was quite the opposite. Perhaps feeling he had poured tremendous effort into Disney, Michael Eisner was unwilling to remain just a professional manager. He then saw Disney, which he had personally led to the pinnacle of its commercial empire, once again decline under the leadership of the Disney family's "unworthy descendants." Michael Eisner boldly seized power, becoming Disney's chairman and CEO, wielding immense authority. However, this inevitably impacted the Disney family's interests within the company.
Although Michael Eisner held significant power, Disney was not yet under the "Eisner" name; a substantial portion of shares remained in the hands of Disney family members. However, the Disney family itself was fragmented and unable to unite effectively, which is why they hadn't caused trouble for Michael Eisner.
But all of this changed when Michael Eisner relinquished the CEO position, allowing his childhood friend, Michael Ovitz, to become Disney's CEO. Michael Eisner's original intention was for Michael Ovitz to be a puppet, allowing him to indirectly maintain control of the CEO position. However, it proved that indirect control was not as effective as direct control.
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Michael Eisner, under internal pressure, had to back down from his previously assertive style, which greatly encouraged those on the board who opposed him. Furthermore, Michael Ovitz showed no signs of being a puppet, making connections everywhere among senior management, leading Michael Eisner to realize that the company was gradually slipping out of his control. Especially in the live-action film business, Michael Ovitz, with the support of Disney family members, snatched away the hottest Gilbert film project from him. If Gilbert sided with Michael Ovitz in the internal Disney struggle, Michael Eisner would lose a trump card.
Of course, this only referred to the live-action film business. While Gilbert was important, he wasn't as critical as Disney's other business segments. Ultimately, Disney's core assets were its animation copyrights, the revenue from related merchandise, and the globally renowned Disney theme parks. One could say that even if all live-action film projects failed, as long as these animation copyrights, merchandise, and theme park projects remained, Disney would still be Disney.
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However, times had changed, and the Disney theme park projects were facing significant issues, which Michael Ovitz saw as an opportunity. He seized the chance to cause trouble during a board meeting, aiming to seize more power from Michael Eisner and extend his influence into Disney's most core business segments.
"Last year, our park projects experienced significant problems, with merchandise sales declining 4.3% compared to 1994. Park project revenue sharply decreased by 5%, especially Disneyland Paris, which incurred a loss of $3.5 million. This is unacceptable for Disney. Our company has major internal issues and urgently needs change."
Michael Ovitz passionately spoke at the Disney board meeting, as if he were back at CAA, wielding immense power and controlling everything. But unlike his time at CAA, he still had Michael Eisner above him.
The board members listened quietly to Michael Ovitz's speech. Some shareholders even looked at Michael Eisner, a few with a hint of schadenfreude on their faces. Michael Eisner appeared calm on the surface, as if Disney's declining performance had nothing to do with him. However, his clenched fists indicated that his inner turmoil was not as serene as his exterior.
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Robert Iger, as the head of a Disney subsidiary, was certainly entitled to attend board meetings. As Michael Eisner's confidant, he felt compelled to speak up.
"Mr. Ovitz, please note that Disney's profit decline is more due to objective reasons. It's not just us; Warner Bros., Fox, and Paramount also saw declines in their merchandise businesses last year."
Michael Ovitz seemed to have anticipated this question. He slammed his hand on the table, asserting his authority as CEO. "Bob, as a senior executive at Disney, are you unaware that these businesses are our core segments?"
"Of course, I am, but Mr. Ovitz—"
Robert Iger was cut off by Michael Ovitz. "As far as I know, the Disneyland Paris project was initially opposed by the board. Someone forced its approval and construction in Paris. Now this project is incurring losses, and someone must be held accountable."
All eyes on the board turned to Michael Eisner, because Disneyland Paris was built largely due to his strong advocacy. At this, Robert Iger fell silent. He was in charge of the live-action film business; distribution and merchandise were not his responsibility. This accusation was too heavy for him to bear, so he could only watch how Michael Eisner would respond.
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Although Michael Ovitz's sudden attack today was somewhat unexpected, Michael Eisner was a seasoned veteran and could handle this kind of situation. He tapped the table with his finger, a habitual gesture of his. Upon hearing the tapping sound, many shareholders instinctively straightened up, listening attentively to Michael Eisner's remarks, much like respectful subordinates. This behavior was a result of Michael Eisner's years of authoritarian rule, which had ingrained this attitude in many shareholders towards him.
However, today's tapping gesture seemed a bit hollow, as if the situation was slipping out of Michael Eisner's control. Once all the board members were looking at him, Michael Eisner finally spoke, "Disneyland Paris is for Disney's development in Europe. Profitability is not the main focus; promoting the brand and seeking long-term development are the primary goals."
While there were some losses, they were insignificant to Disney and entirely manageable. The shrewd board members also knew that this couldn't be used as a reason to attack Michael Eisner. But it depended on how things were done and what approach was taken. Previously, Michael Eisner had no rivals, no one contending for power with him, but now the situation had significantly changed.
Without Michael Ovitz even needing to speak, a member of the Disney family immediately said, "Mr. Eisner, I remember that the board members initially opposed the Disneyland Paris project. You forced it through and built Disneyland Paris. Do you remember what you said back then? That Disneyland Paris would serve as a 'calling card' to promote Disney's culture across Europe. But now, Europeans aren't buying it. Not only is it losing money, but since its opening a few years ago, there have even been protests. This hasn't served to promote the brand; instead, it has made Europe dislike Disney even more."
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This was indeed true, and Michael Eisner couldn't refute it, so he simply remained silent. In the past, a mere glance from him would make anyone tremble, but now his gaze lacked that same intimidating power.
Was this the end? Seeing no reaction from Michael Eisner, Michael Ovitz's face lit up with joy. Finally, Michael Eisner was about to concede. He pressed his advantage, "I suggest we push for reforms at Disneyland Paris and collaborate with the French government and cultural sector to bring new development opportunities to the park."
John Disney had already secretly coordinated with Michael Ovitz. He immediately stepped forward and said, "I suggest Mr. Ovitz take charge of the Disneyland Paris project and spearhead the park's development in Europe."
This suggestion was very clever. It didn't try to seize control of all Disney parks, just one of them, to avoid a strong backlash from Michael Eisner. However, Disneyland Paris held significant importance because it was the second Disney park outside the United States and the first in Europe.
The first was Tokyo Disneyland, which began its development with U.S. economic aid after the war. A widespread pro-American sentiment existed among the younger generation in Japan, who had a strong affinity for American culture. Therefore, when Tokyo Disneyland opened, it was immediately popular with Japanese people, especially the youth. Statistics show that 97% of visitors to Tokyo Disneyland were Japanese nationals.
However, this park project was led by Disney's former president, Ron Miller, and had little to do with Michael Eisner. The project truly championed by Michael Eisner was Disneyland Paris. Unlike Japan, the French often looked down on Americans from the North American continent, and given that Americans were helped by the French in establishing their nation, this gave the French a stronger sense of superiority. In the eyes of the French, Americans were uncivilized barbarians.
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Paris is not only the capital of France but also the birthplace and hub of modern European culture. For a relatively short-lived American culture to break through Europe's traditional ideas and establish itself in Paris was indeed very challenging. During the construction of Disneyland Paris, some French intellectuals opposed Disney, calling it "America's cultural Chernobyl." In October 1989, when Disney stock was launched in Europe, some young people at the ceremony held anti-American placards and threw rotten eggs and tomatoes at Disney executives. It was against this backdrop that Michael Eisner vigorously pushed for the opening of Disneyland Paris. Given this history, it was not surprising that Disneyland Paris incurred losses.
Actually, when the site was initially chosen, London or Rome were considered. But Michael Eisner was personally fascinated by art and believed that Paris, as the world's art capital, would greatly enhance Disney's cultural value by building a park there. If it had been built in London, it might have fared better, as they were "cousins," and opposition wouldn't have been as strong. Although the UK has a long history in Europe, the glory of the British Empire had long faded, unlike the fiercely independent Gauls after De Gaulle. Rome was out of the question; it was eliminated early on, mainly because of Italy's economic downturn, which would have likely made the project's impact worse than in Paris.
The board meeting concluded with Michael Ovitz strongly seizing control of Disneyland Paris with the support of most shareholders. Michael Eisner suffered one setback after another, seemingly on the verge of losing this power struggle. But was the situation truly as it appeared in the board meeting? Not necessarily.
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Michael Eisner had controlled Disney for over a decade, weathering many storms, and he had a profound impact on the entire company that couldn't be erased overnight. Although Michael Ovitz currently held the upper hand, as Robert Iger and Gilbert had said, Michael Ovitz lacked the ability and wouldn't be able to defeat Michael Eisner.
So, what does this have to do with Gilbert? He's just a film director, and Disney's core businesses don't concern him much. Well, actually, it has a lot to do with him. Even though his films are currently handled jointly by Disney's Touchstone Pictures, Warner Bros. Pictures, and 20th Century Fox, Touchstone Pictures is undoubtedly in a dominant position.
From a personal perspective, Gilbert preferred working with Touchstone Pictures. The reason is simple: Warner Bros. and 20th Century Fox each have their own prominent names and can operate perfectly fine without Gilbert. But Disney's live-action film business cannot afford to lose him; he is the top name in Disney's live-action film division, and whoever takes charge will need to curry favor with him.
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Therefore, after the board meeting, both Michael Eisner and Michael Ovitz reacted similarly: they sought Gilbert's opinion. At this time, Gilbert was enjoying himself in the UK, planning to return to North America in a few days to work on the post-production of Saving Private Ryan. To gain an advantage and prepare Gilbert, Robert Iger, after speaking with Gilbert on the phone, planned to personally visit Watermelon Manor and communicate with Gilbert once he returned to North America.