Disney Trial Shows Hollywood at its Worst | AccountingWEB

Disney Trial Shows Hollywood at its Worst

A Disney shareholder lawsuit is revealing a decidedly unglamorous picture of Hollywood, where threats and manipulation are considered business as usual.

Michael Ovitz, the former president of the Walt Disney Co., has testified not only about the deep divisions in the company but also about the gritty reality of the entertainment business.

"From the time I started in the entertainment business, every network and every studio has threatened to sue every other company on a daily basis," Ovitz said during the trial, according to the New York Times. Further, he added, "Everyone rattles their sabers and says all kinds of nasty things, and then everyone shows up at the same charity events together. This is all just the way it is on both coasts in the media business."

Ovitz received a $140 million severance package for his 14 months as Disney president in the mid-1990s, prompting angry shareholders to file suit. The shareholders claim the board of directors did not properly study Ovitz's employment contract.

Hollywood insiders say Ovitz himself was responsible for manipulating the media through leaks that Jamie Tarses, an NBC programming executive, was unhappy with the network in early 1996. Disney was trying to hire her away from NBC at the time. Ovitz denies it, but a note written by Jack Welch, former chief of Disney's parent company General Electric, suggested otherwise.

"This stuff on the West Coast is below you and Disney," Welch wrote in a letter to Disney chief executive Michael Eisner in February 1996. "I hope it is not a pattern," he continued, "but if it is, we are prepared to deal with it. Knowing you, I just can't believe you let him do it."

Another foundation of Hollywood culture is wealth, and Ovitz also testified about his huge collection of furniture from the Ming Dynasty and other riches. Ovitz was paid $17.8 million in 1995, his last year at the Creative Artists talent agency that he founded. The next year, he was paid about $27.9 million for continuing his relationship with the agency. His total compensation package at Disney came to about $109 million, the New York Times reported.

Ovitz and other board members could be held personally liable if the shareholders win the case, which seeks $200 million in damages.

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