As Eisner Exits Courtroom Spotlight, He Puts in Good Word for Hollywood

On his last day of testimony in a trial that has showcased lavish spending, petty quarreling and stretched truths at one of the world’s entertainment giants, Walt Disney Co. Chief Executive Michael Eisner had a message: Hooray for Hollywood.

Throughout the shareholder lawsuit over Eisner’s ill-fated hiring of Michael Ovitz as second in command, an entire industry has seemingly been sullied. But, Eisner said, don’t get the wrong picture.

“I don’t think the Hollywood that was depicted in this courtroom earlier or that is cliched in articles or written in books is the real Hollywood,” Eisner said. “I think the real Hollywood is the Hollywood that exports the greatest export outside the United States including the aircraft business.”

That Eisner even had to give a plug to his industry shows how the daily, soap-opera-like developments surrounding his firing of Ovitz eight years ago is taking its toll on Hollywood’s image, resonating beyond this small-town Delaware courtroom. Revelations include a $2-million office renovation, a piece of art used to soothe an actor’s ego, a limousine tour of a theme park and the acknowledgment by Eisner that he hid his problems with Ovitz from a rival studio he hoped could be persuaded to take him off his hands.

Shareholder lawyers in the trial, now in its second month, are using that litany of embarrassing revelations to press their case that Eisner and other Disney directors acted irresponsibly from the time Ovitz was hired in 1995 until his dismissal 15 months later. They argue that Eisner should have fired him without paying his estimated $140-million severance and are seeking to recover $200 million in payments and interest.

Eisner and other directors counter that their hands were legally tied because Ovitz did nothing egregious enough to warrant being denied his severance. Eisner also insists he kept Disney directors informed.

Friday marked the fifth and final day of Eisner’s testimony, which again was punctuated by challenges to his credibility by shareholder lawyer Steven Schulman.

Despite often-hostile questioning, however, Eisner’s performance was composed and measured, as it was all week. That stood in contrast to Ovitz’s earlier, emotional testimony, memorable for one lengthy soliloquy in which he bemoaned his falling-out with Eisner after a 25-year friendship.

In grilling Eisner for the last time, Schulman dusted off memos Eisner wrote about Ovitz, arguing that Eisner himself viewed Ovitz’s hiring as a disaster.

But Eisner in his testimony repeatedly downplayed disparaging comments he made in the past about Ovitz, continuing a balancing act of not going too far in his criticisms to support the case that Ovitz had to be paid off. Eisner often lambasted himself for even writing his most pointed comments about Ovitz. He said some were loaded with hyperbole, exaggerating Ovitz’s shortcomings as an executive.

One scathing, seven-page “Dear Michael” memo he wrote to Ovitz but never delivered was “a parade of horribles.”

Eisner said he didn’t mean it when he suggested in the memo that Ovitz might have engaged in an underhanded effort to free up a TV executive at a rival of Disney’s ABC network by spreading rumors that she had been sexually harassed by her boss.

When asked about a memo in which he criticized Ovitz for never having visited the offices of Hollywood Records, which Ovitz was in charge of fixing, Eisner retreated.

“I don’t know if he’s never been in the building,” Eisner said, although he added that “it’s certainly true that he never did what I asked him to do.”

Ovitz has been repeatedly criticized throughout the trial for being a free spender. Eisner was asked about a $1,200 Roy Lichtenstein print Ovitz gave “Home Improvement” star Tim Allen after Allen angrily left the set of his hit show. Eisner said he was unfamiliar with the gift but that it was OK with him.

“Tim Allen was the most important talent at the Walt Disney Co. He had the No. 1 show in America,” Eisner said. “If Michael Ovitz was paying attention to him, he was doing his job.”

Eisner also downplayed comments made to former top Disney investor Sid Bass that he was worried about Ovitz’s emotional state, calling them “just a passing reference.” In a deposition, Bass said Eisner told him he was worried Ovitz might commit suicide.

“I didn’t think he would shoot himself, but I was worried,” Eisner said. “It wasn’t like, I think we have a real danger here.”

Eisner was most critical about a two-page note he wrote to the coauthor of his autobiography about ethics in which he cited Aristotle. Court records show Eisner asked Ovitz to read it. Schulman suggested the letter was aimed at reminding Ovitz not to cross the line ethically.

In it, Eisner said, “Most people are average on the ethical balancing beam” and “The higher the position of the person making the mistake, the more interesting the fall, and the further the fall.”

In testimony, Eisner called his memo “pretentious,” “sophomoric” and not about any one executive.

He said that he was trying to explain the drama of Hollywood, where we are “looking every day at people who are falling from grace on a little teeny mistake, not telling the truth or whatever.”