GEORGETOWN, Del. — Michael Ovitz defended today the sale of his private jet to Walt Disney Co. when he joined as president, telling a Delaware court he lost money on the deal and that the transaction was aboveboard.
Ovitz testified that Chief Executive Michael Eisner suggested buying the Gulfstream III in 1995 for $7.8 million because it was a good deal. Ovitz originally purchased the plane through a trust he controlled a year earlier for $5 million, but said he spent $3 million renovating it.
Ovitz's testimony in Delaware Chancery Court came during his cross examination by lawyer Steven Schulman, who is representing shareholders in a lawsuit against Disney directors seeking to recoup $200 million in Ovitz severance payments and interest.
Lawyers argue that Ovitz's conduct in 1995 and 1996 during his 15-month tenure justified withholding his severance, and that Disney directors failed to properly oversee his hiring and firing.
Schulman's questioning centered on often minute details of transactions and spending — including why Ovitz had a daybed in his office for naps. Outside the courthouse, the trial continued to attract attention in this small town, including a stunt by a local radio station staging a mock scuffle between Mickey Mouse and Donald Duck characters.
Schulman questioned Ovitz about an intermediate transaction in which the corporate jet was sold for $6.7 million to a leasing company in between the time Ovitz's trust bought it and the time it was sold to Disney. Ovitz's lawyers described the transaction as a sale-leaseback deal with a Bank of America unit done for tax reasons, adding that Ovitz was the owner at the time of the sale to Disney.
Schulman's questioning was an attempt to undermine Ovitz's credibility by raising questions about his truthfulness and his judgment in spending while at Disney.
Schulman asked about a joint "Larry King Live" interview with Eisner and Ovitz, suggesting that the two were disingenuous in trying to counter rumors that their relationship was in trouble. Ovitz said that he asked Eisner to try to use the interview to "shut down the rumor mill."
Schulman also suggested that Ovitz has been inconsistent in answering questions about a $2 million office renovation, most of which went toward Ovitz's office. Schulman noted that while Ovitz has testified he raised concerns about the spending, he also said in a deposition that he did not pay enough attention to the project and should have been embarrassed by it.