Company Town : Animated Rumblings in Disney’s Land

In an in-house departmental newsletter this week, Disney animation chief Roy Disney wanted to soothe his troops.

” . . . because it probably did get a little lost in all the Michael Ovitz stories, I thought I should also point out that feature animation has retained its unique position at the heart of the Walt Disney Co., in that it continues to report to Michael Eisner, by way of [animation President] Peter Schneider and me.”

Ending his “special note,” the Disney vice chairman added, “I doubt the press will pick up that little nuance, but I thought it might not hurt to point it out. . . . It’s important, I think, to the way we perceive ourselves and our place in this enormous enterprise.”

The reason the press didn’t pick up this nuance, of course, is that Eisner said clearly and succinctly that the company’s three operating divisions--filmed entertainment, consumer products and theme parks--and eventually the new Capital Cities/ABC venture, would report directly to Ovitz, when he joins as president Oct. 1. The only exceptions noted were that Sandy Litvack, Disney’s chief of corporate operations, and Chief Financial Officer Steve Bollenbach would continue to report to Eisner.

Not much ambiguity there.

But apparently, Ovitz’s reach won’t extend across Riverside Drive to the new palace of animation, where, under the sorcerer’s cap, sits one of the company’s most powerful forces--Roy Disney.

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Company officials privately confirm that Disney, who along with Schneider is responsible for the department that creates and produces animation, will continue to report to Eisner, as he has since 1984. Sources say Ovitz is comfortable with this arrangement, though as a Disney insider pointed out, “it’s very strange that the most profitable part of the company doesn’t report to the new president.”

Disney’s movie group chairman, Joe Roth, who oversees the marketing and distribution of all live-action and animated movies, is primarily responsible for the development and production of live-action product. But he has been getting increasingly involved in earlier stages of the animated films, as did former studio Chairman Jeffrey Katzenberg.

Sources said Roth had been led to believe by Eisner that soon after Ovitz’s arrival, he would be given additional responsibilities at the studio, including animation, home video and television. This idea, according to those sources, has apparently been tabled for the time being.

As Roy Disney’s newsletter seems to indicate, even though it’s five weeks before Ovitz officially comes aboard, there are already rumblings of discontent and turf wars at the Magic Kingdom, particularly around the loaded issue of chain of command.

Although Disney officials flatly deny it, several high-level sources at the company say Eisner has considered restructuring the film operations so that live-action movies, animation, television and home video all fall under the same umbrella as they previously did. When Katzenberg left, Roth took over live-action; former TV head Rich Frank was put in charge of TV & Telecommunications, which included home video, and animation reported to Eisner.

“We will all certainly be severely impacted,” said one highly placed Disney executive.

Sources say Roth may be worried that his role will be overshadowed by that of Ovitz, who has been a powerhouse in the movie business as an agent for more than a decade. Roth will report to his former agent, where he previously reported directly to Eisner.

A fiercely independent executive who likes to run his own show, Roth has said publicly that this will not be a problem if in fact he can continue to have a free hand in running his division, as promised by Eisner and Ovitz.

Roth has told colleagues that he is taking a wait-and-see attitude toward the new situation. Sources close to him say Roth’s contract, which still has four years to go, stipulates that he report to Eisner, giving Roth a possible legal out if that changes. Those close to Roth say the first time Ovitz meddles in the movie business, Roth may exercise that right.

Rumors have been circulating all week that Warner Bros. has approached Roth in the event that co-Chairman Terry Semel leaves and goes to MCA, as rumored.

Another key executive said to be taking a wait-and-see attitude is Buena Vista Home Video President Ann Daly, who is also rumored to be courted by other companies, including DreamWorks SKG, the start-up studio run by Katzenberg, Steven Spielberg and David Geffen.

There is also speculation on the Disney lot about the future status of Dennis Hightower, president of Disney TV & Telecommunications. Since the former consumer products group chief had no experience in TV before taking his latest post, sources are wondering if Ovitz may not bring in a heavier hitter.

And then there’s the nagging question of what will become of ABC’s long-term deal with DreamWorks in light of Disney’s impending purchase of Capital Cities and Katzenberg’s and Geffen’s strained relations with Eisner. DreamWorks has an out in its contract if ownership of ABC were to change. Sources say despite the recent and very public rapprochement between Eisner, the DreamWorks partners are said to be in active discussions with Les Moonves, the new head of CBS Entertainment, as well as others.

It is not surprising that at this critical point in Disney’s evolution, with the proposed purchase of Capital Cities/ABC and Ovitz coming aboard, that once again Roy Disney, the 65-year-old nephew of the late Walt Disney, is making his mighty presence felt. Though it is said that he spends more time at his vacation home in Ireland than he does at Disney, he remains extremely protective of the company’s legacy.

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Disney was integral to the management coup in 1984 that brought in Eisner and his late partner, President Frank Wells. And it was widely known that Disney played a role in Eisner’s decision to pass over Katzenberg as Wells’ successor. Disney made no secret to his associates that he was irked that Katzenberg grabbed so much credit for the success of the company’s blockbuster animated movies, such as “The Lion King” and “Aladdin.”

And it might be well for Ovitz to keep in mind that, as one Disney insider aptly points out, “anybody with the last name Disney holds the power here. Anybody with the last name Disney wins.”