A lot of people say Michael Ovitz was overpaid at Walt Disney Company. These critics dwell on the superficial, noting, for instance, that he worked at the company just 14 months and was paid $140 million when he quit.
But yesterday, Ovitz testified in a Delaware Court, where Walt Disney directors including chairman Michael Eisner and Ovitz are being sued for mismanagement, and set the record straight. Ovitz proved in a way that should satisfy anyone that the problem was not--repeat, not!-- that he was ovitzpaid. The problem was that he was unditzused. This unditzutilization of the man who might have been one of Hollywood's greatest executives cost Disney not just millions in severance, but untold billions in lost profits.
In short, if Ovitz were writing the script, the Disney shareholders would be paying him.
Ovitz explained that he had great plans for Disney, but was thwarted at every turn by Eisner who "had the final say on everything.'' Ovitz didn't say it--nor did he have to say it, as everyone in the courtroom must have been thinking it--but Eisner was clearly jealous of his vision. (Disney could not be reached for comment.)
Here is what Ovitz would have done for Disney, given half a chance:
Start with movies, because Ovitz, as a former Hollywood uberagent, knew movies best. Ovitz would have bought Beacon Communications, the company that made Air Force One with Harrison Ford. Eisner said no, thus losing the opportunity to make Bring It On, Princess Caraboo and End of Days. As none of these films did business like Air Force One, let's call this lost opportunity a wash.
Ovitz couldn't sing, nor dance. But the man knew music. In 1995, he wanted to sign Janet Jackson. This is back when everyone else was still talking about Michael Jackson, nine years before she bared her breast at the Super Bowl. Estimated loss to Disney for not listening to Ovitz: $300 million, easy.
Ovitz was, at heart, a dealmaker. He wanted to deal--it's what he did. Thus he "explored" acquisitions and "considered" joint ventures with the likes of EMI Group and Sony. Eisner said no, too expensive, try again--and then he fired him! Estimated loss to Disney for not listening to Ovitz: hard to say, but let's call it $1 billion.
Ovitz wanted to sign a deal with producer Brad Grey, who later helped develop The Sopranos. Had Disney done it, it would be Sopranos at 8 o'clock and Desperate Housewives at 9 o'clock on ABC. Estimated loss to Disney: $500 million.
Ovitz had friends, big friends, powerful friends, and not just movie stars like his friend Tim Allen, but people who write books, like Michael Crichton, Stephen King and Tom Clancy. They might have worked with Disney, but Eisner stood in the way. The price of not listening: say, $75 million.
Ovitz was known for his temper and his expense account. (Mouse House bean-counters squeaked when Ovitz needed $2 million to remodel his office.) But at his core he was a peacemaker. He was close to a deal with former Disney studio chief Jeffrey Katzenberg, who had left Disney after clashing with Eisner. Ovitz would have paid him $85 million (which, in context, is nothing). Instead Disney wound up settling for more than $250 million, as Ovitz explained. Estimated loss to Disney: $165 million.
Ovitz was a creature of Hollywood, but he wasn't limited to that world. Disney hired him for his vision, and vision is what they got. Ovitz, just for instance, also wanted to buy a stake in Yahoo!. In 1995! Before its IPO! That, people, is vision. Today, Yahoo! is worth $48 billion. Estimated loss to Disney for not listening to Ovitz: $5 billion, minimum.
In short, the cost to Disney for firing Ovitz was not $140 million in severance. It was at least $7 billion ($300 million + $1 billion + $500 million + $75 million + $165 million + $5 billion). And that's for just one year's work!
If the lawyers had any imagination--if they had visions the way Ovitz had visions--they would be suing for a lot more.
