SHAKE-UP AT DISNEY : Wide-Open Plot : Katzenberg’s Hot-Property Status Has Rumor Mill Working Overtime

For months it has seemed that Jeffrey Katzenberg just couldn’t wait to be king, or at least the crown prince at Walt Disney Co. under Chairman Michael D. Eisner.

Now, with the former Walt Disney Studios chairman out of a job after having failed to convince Eisner to give him the studio’s No. 2 post as president, he instantly becomes Hollywood’s biggest catch in years.

While Katzenberg, 43, insists he’s had no conversations with prospective employers, including the heatedly rumored Sony Pictures Entertainment, he has been linked to practically every studio and network with a leadership vacuum. Said entertainment mogul David Geffen, one of his best friends: “Jeffrey has been approached by any number of companies. In the past he never spoke to them.”

There are few jobs that would give Katzenberg the profile and power he has enjoyed in 10 years at Disney. But nearly everyone’s top candidate is Sony Pictures, the parent of Columbia and TriStar studios.

Indeed, one source close to Sony on Wednesday already had Michael P. Schulhof, Sony’s top executive in the United States, discussing with Sony lawyers a deal giving Katzenberg control of Sony’s record division, filmed entertainment and TV operations, plus guaranteed funding to build an animation division. The deal presumably would set the stage for a Sony public offering, which would allow Sony to richly reward Katzenberg via stock options and other entitlements.

Sony denied late Wednesday that Katzenberg has been offered a position.

Peter Guber, Sony Pictures’ restless chairman, has been rumored to either be pushing for a more senior job with Sony Corp. or returning to his roots as a producer after the first of the year. A large executive bonus pool will kick in then for Guber and his former co-chairman, Jon Peters. It hasn’t helped matters that Sony’s movie performance has been dismal, with the combined market share of Columbia and TriStar lower than its five other major competitors.

Sony is also said to be talking with former CBS Entertainment President Jeff Sagansky about a high-ranking position, but the framework of that discussion is unclear. Skeptics question whether Katzenberg would be willing to take on such a daunting rebuilding project and whether Sony’s successful music chief, Thomas D. Mottola, would agree to report to Katzenberg.

Rumors have also circulated that Katzenberg could find a home at MCA Inc. and its Universal Pictures. Sources say the longtime team of Chairman Lew R. Wasserman and President Sidney J. Sheinberg might retire when their contracts expire next year, which could create an opening for Katzenberg. The outgoing Disney Studios chairman is close to Sheinberg, and executives at MCA parent Matsushita Electric Industrial Co. are said to be big fans of Katzenberg’s.

One hang-up might be that MCA has been working hard to stabilize current management, which is among the longest-lasting in Hollywood. It recently renewed the contracts and expanded the responsibilities of such executives as MCA Motion Picture Group Chairman Tom Pollock, Universal Pictures President Casey Silver and MCA’s music chief, Al Teller.

Viacom, which now owns Paramount, recently brought in Jonathan Dolgen as de facto studio head. Sherry Lansing, the head of motion pictures at Paramount, is believed to be getting along well with Dolgen.

One interesting possibility is Fox Inc. Its owner, Rupert Murdoch, has moved in the last few months to consolidate management at the studio and do away with several managers. He is looking at dissolving some corporate jobs at Fox. But Murdoch is a grand opportunist and has been known to change strategy based on circumstance. Murdoch is the kind of executive who would rush to cut a deal with Katzenberg and decide later where he fits in.

Another possibility is that Wall Street would go shopping for a media company for Katzenberg, much as it helped Barry Diller land the head job at home shopping giant QVC Inc. Also, some speculate that Katzenberg’s friendship with billionaire Geffen could produce an entrepreneurial business deal involving the two.

Hooking up with cash-rich Blockbuster Entertainment to build a movie business would have made more sense a few months back, but the video rental giant’s proposed acquisition by Viacom is back on the front burner.

Although there are no top jobs open in television, Katzenberg could be invited in by any one of several companies that could utilize his management skills. Working against him, however, would be the fact that he’s more closely associated with film.

Capital Cities/ABC Inc. has been wrestling with management succession for more than two years and earlier this year brought back Chairman Thomas Murphy as CEO after Dan Burke stepped down.

But people inside Cap Cities expect the top job to go to Robert Iger, president of the ABC Network Group and an executive vice president of Cap Cities. However, opinion about Iger is divided, and some think that if Murphy--and major Cap Cities shareholder Warren Buffett--wanted Iger as CEO, he would already be there.

CBS and NBC are also long shots. The management teams at both networks, while not roundly revered, are nonetheless stable.

CBS Inc. Chief Executive Laurence Tisch and CBS/Broadcast Group President Howard Stringer are firmly in control and Katzenberg would not bring anything to the table. If anything, he would be overqualified for a job at CBS.

There are also no openings at NBC. While many people expect CEO Robert Wright’s nearly 10-year tenure there to be drawing to a close, parent General Electric is expected to pick one of its own as a successor. Neal Braun was recently hired as president of the NBC Television Network from Viacom and is widely regarded as the front-runner insider the company.

Of course, all bets are off if one of the networks merges or is taken over. Ted Turner is known to be eyeing both CBS and NBC. And Cap Cities is frequently touted by Wall Street as a top merger candidate with, ironically, Disney.

Highlights of Jeffrey Katzenberg’s Career

* The son of a successful stockbroker, he dropped out of college in 1974 after one year to take a job in the mail room of Paramount Pictures, where he became the protege of then-Chairman Barry Diller.

* Moved to Walt Disney Co. from Paramount with Michael D. Eisner in 1984 as chairman of Walt Disney Studios, heralding a sea change in management style at Disney.

* After an initial flush of success, became frustrated with the high cost of star-driven movies. In 1991, wrote a 28-page memo explaining why film costs needed to be cut. The document, which Katzenberg insisted was never supposed to be made public, became famous.

* Personally shepherded production of such animated blockbusters as “Beauty and the Beast,” “Aladdin,” “The Little Mermaid” and “The Lion King.”

* Responsible for such live-action hits as “Pretty Woman” and “Sister Act,” as well as flops such as “Father Hood” and “The Rocketeer.”

* Brought in Joe Roth and Roger Birnbaum to set up Caravan Pictures, which produced “I Love Trouble” and “Angels in the Outfield.”

* Signed a three-year deal with the producer-director team of Ismail Merchant and James Ivory, responsible for such films as “Howard’s End” and “A Room With a View.”

* Was instrumental in Disney’s purchase of Miramax, the distributor of such films as “The Piano” and “Like Water for Chocolate,” for an estimated $60 million.

* Said he would push forward a production slate of 60 films, 37 more than in 1992, with an estimated cost of more than $1.4 billion. Later rethought the strategy.

* Credited with helping build the studio’s revenue from $225 million in 1984 to $4.5 billion today.

Sources: Wire reports, company reports, Business Week

Researched by ADAM S. BAUMAN / Los Angeles Times

EXIT: Katzenberg leaving. A1

PROFILES: His successors. D3