Disney Estimate Is Used to Argue for Katzenberg

Jeffrey Katzenberg’s lawyers countered Walt Disney Co.’s claims that the live-action movies released during his 10 years at the studio lost $231 million, producing on Thursday an estimate by a Disney expert saying they actually have made about $400 million to date.

During testimony in Katzenberg’s breach-of-contract trial, his lawyer, Bert Fields, introduced the document from accounting firm Arthur Andersen to support Katzenberg’s testimony earlier this week that the live-action movies launched under his watch have made “hundreds of millions” in profit.

Katzenberg sued Disney in 1996, claiming he is owed more than $250 million as part of a bonus he was to receive if he ever left Disney, as he did in 1994 in a bitter falling-out with Chairman Michael Eisner. Disney and Katzenberg reached a partial settlement in 1997 that guarantees him a payment, with the current phase of the trial aimed at arriving at a dollar figure. Katzenberg is now a partner in the DreamWorks SKG studio with director Steven Spielberg and mogul David Geffen.

Disney lawyer Lou Meisinger unsuccessfully objected to the document’s being introduced. Disney is expected to eventually argue that the $400-million figure doesn’t take into account studio overhead costs that are typically charged off against movies.

Separately, Katzenberg in finishing his testimony confirmed long-standing reports that then-Disney President Michael Ovitz tried to settle the dispute for $50 million to $100 million but that Eisner overruled him. Sources have said Ovitz and Katzenberg, who was sometimes represented by Geffen in the secret negotiations, had talked about a settlement in the $90-million range.

As part of his Disney compensation, Katzenberg received a special bonus of 2% of the profit generated by the films and TV shows put into production while he was at the studio. As part of the deal, Katzenberg says, he should have received a special lump-sum payment after leaving Disney based on an estimate of the profit the films and TV shows would generate in perpetuity, a payment he likened to “an annuity” for his children.

According to the documents made public Thursday, Katzenberg’s bonus, based on the 2% formula, earned him $32,720 in 1991, $100,000 in 1992, $4.9 million in 1993 and $7.1 million in 1994. The company calculated that Katzenberg’s incentive pool from 1985 to 1994 was worth $896.7 million the year he left, meaning he would have received about $18 million in bonuses.

Katzenberg is arguing that the parameters for his bonus were much broader than the way Disney wants to define them.

City News Service was used in compiling this report.