Friday The 13th - February 2004

I guess it was the date that damned today's column to delay and disgrace. But here we are.

50 First Dates is cute and will only piss you off if you go in looking to be pissed off. Lost Skeleton Of Cadavara is wacky absurdist insanity that is probably perfect for anyone who would get pissed off by 50 First Dates.

I'm working on the industry game of Oligopoly for Monday's column. By then, of course, Proctor & Gamble will have bought Viacom, Jim Sheridan will show "My Right Breast" at the WGA dinner and Mel Gibson will have a pull-quote from God herself.

But until then, have a great weekend.

February 12, 2004

Well, how about that for the seventh sign of the movie apocalypse?

It seems that both this week and last week, as soon as I think I am finding some solid footing on the map of Hollywood, another quake comes within 24 hours. Last week, it was the report that DreamWorks was going IPO with the animation unit, confirmed on Monday by the trades. And now, Comcast makes its play for Disney.

I will have to get to yesterday’s promised projection of what Hollywood will look like in 2006 tomorrow. First, a tribute to irony. (This is one of those moments where I wish the internet offered a full multimedia experience, so I could start playing Paul Anka's Kodak song along with images of a smirking Roy Disney… but alas, no.)

“You talk about vengeance. Is vengeance going to bring your (studio) back to you? Or my (studio) to me?”

It is truly Godfatherian. A family led by Don Mikey, a powerful, once popular leader under constant attack from within and from without … his age and his arrogance allowing him to slip just enough to make him vulnerable. A former don, Froydo E. Disney, one who helped bring Don Mikey into the family, now wants to take control back from his former disciple, because he is concerned that Don Mikey is doing business that detracts from the core values of La Familia. Froydo gathers everyone who has issues with Don Mikey within the family and starts to work on Don Mikey – Tessio of Pixar, the Clemenza Brothers of Miramax…

When Don Mikey makes the move to have Froydo retired to Miami Beach, Froydo takes his concerns outside of the family, thinking that Don Mikey is ready for a fall and that he will be the hero… but Brian “Barzini” Roberts sees the vulnerability of the inside fighting and WHAM!, hits the Disney-leones with everything he’s got… well, 10% more than he thinks the Disney-leones have got. The tragic gag though, is that Barzini is a notorious cost-cutter with even less interest in family traditions than Don Mikey.

“(Froydo), you're my older brother and I love you, but don't ever take sides with anyone against the family again. Ever.”

Too late.

Thanks to Roy E.’s efforts, Michael Eisner was vulnerable to being shot down in the street by Comcast after buying some oranges. But Eisner has survived. He’s on life support, but he’s alive. And suddenly, there is a very real need to keep this guy alive. Because if Comcast or some other company manages to buy Disney for even $30 a share when without Roy Disney’s attacks, the company’s stock could well be trading in the low 30s on its own by summer, it will be remembered as a fiscal tragedy. And if Brian Roberts chops Disney up and tightens the reins beyond the Eisnerian grip – and remember, this is not going to be influenced by Roy Disney in the slightest… even less than with Eisner – it could well be remembered as a cultural tragedy, far, far worse than Roy’s perceived Eisner horror show.

62 years old next month, Michael Eisner might be happier keeping his job for the next decade before retiring. But he will be one of the big winners if this deal goes through. He won’t get credit for what happens. But more importantly, he will not be blamed. And he will get a massive going away check.

Roy Disney’s legacy, in the other hand, will be that he very smugly went about weakening the company that bears his family name and opening the door to real outsiders. Like a child who calls the police on his parent who won’t give them a second helping of ice cream and ends up in foster care when the forehead gash that really did come from hitting his head with a door gets blamed on the parent. To stretch a metaphor, it is also reminiscent of the screener lawsuit, which had a spoken intent that was honorable, but a distinct lack of insight about the larger ramifications of potentially disenfranchising the MPAA. Small picture thinking… big picture thinking.

Don’t buy into any of the hype about other media companies being drawn into the Disney-buying fray. Comcast makes sense as an aggressor. This bite is too big for the Viacom-chasing MGM or DreamWorks or any company that does not see some synergistic value in Disney. And if the Disney bid fails, expect Roberts to go after Viacom or Sony Pictures next. The problem with Viacom is that most of the entertainment side is a bit moribund, buying CBS at the top of its game would be costly, and Sumner Redstone doesn’t seem anxious to find a buyer. Sony, on the other hand, has no TV network and a sketchy television production side at this point. But these are the only two additional candidates that could get past the FCC.

And what would a Comcast Disney look like?

One irony of this process is that these giant media companies have become so large that the corporate leader really can’t have the all-encompassing role that Eisner has played at Disney. Karmazin, Chernin, Horn, Stringer and Meyer all act as management buffers, separating the entertainment divisions from the highest corporate leadership. Each has a boss that has different degrees of involvement with quarter-to-quarter entertainment operations. But Eisner has for too long played both roles. That said, the ideas of tradition espoused by Roy Disney would suggest a preference for an old school leadership… so long as it respected Roy Disney. With the exception of Sony, every one of the top dogs has had significant involvement in entertainment operations before building their current empires.

Under Comcast, I would expect true divisional leadership. Live Action Film, Animated Film, Television Production, ABC, Disney Cable and ESPN & Other Cable Nets would all presumably seek top-of-the-industry talent to lead the divisions, offering great autonomy than was available under Eisner. Steve Burke would presumably lead the way to synergy.

Variety reports that Pixar, Miramax and ABC were celebrating the notion of a Comcast-owned Disney. Interesting. And remarkably off the beam. I suppose that ABC might be pleased by the prospect of television people controlling the network, perhaps having a specific preference for Steve Burke over Eisner. But Pixar? Miramax?

Unless I’ve missed something, Comcast would have to maximize profits in a fairly significant way to make up for the acquisition costs in this deal. So with everyone in the industry quite aware that the Pixar deal is an issue of image more than cash flow, what makes Steve Jobs think that Brian Roberts would give up a significant piece of the last movies that Pixar owes Disney – the real issue in the dissolution of the deal, not Eisner’s personality – in order to continue a relationship that would reduce Disney’s cash flow from Pixar titles to a simple distribution deal? Is Pixar suddenly going to agree to Eisner’s business demands because they like Brian Roberts? Does “reinvigorating animation” mean doing a deal with a company that will being surface success and very minimal return on that success for Disney?

And is it a remarkable coincidence that DreamWorks’ animation IPO was reported in the trades a day before this hostile take-over bid – which was clearly never expected to be a friendly negotiation by Comcast, given their Eisner-trapping time table – or was DreamWorks positioning itself as Comcast’s potential Pixar or priming the pump for a Universal deal, as the studio was aware that the Comcast bid would lead to an industry assumption that Pixar might be back off the “available” pile?

As for Miramax, Comcast could be a major disaster for the Weinsteins. Michael Eisner’s ego and awkward in-house position was one of the tethers to finding an answer to the Miramax question. While Comcast might be a whole lot more open to the Weinsteins bringing outside money into the mix while they are still under the studio’s roof, the notion that Comcast would be any happier with the Weinsteins being in the $70 million–plus film business on Disney’s dime than Eisner is strikes me as a bit delusional. Burke is talking about finding $1.2 billion in operational savings via this merger, and it does not suggest to me for a second that throwing another $300 million a year back onto the Miramax budget line is in the offing. (Of course, they are also assuming a $300-$500 million upside for ABC by “improving the performance of the network." That’s as much of a sure bet as having repeat years like 2003 in the feature division.)

Additionally, the long-stalled Miramax network is not only a bad idea on the face of it, but if there is no new deal for the Weinsteins, Disney keeps the 550-film library and the Miramax name and does what it wants with that. With due respect to the Weinsteins, the film library business has a lot more upside for people who don’t care about production than active production does. The future of Miramax with the Weinsteins at Disney is no more assured, in my view, with Eisner or with Brian Roberts in charge. (Or does Harvey think that he’s taking over Disney’s film division under Comcast?)

Remember, there hasn’t been a truly successful takeover in the film business since Viacom ate Paramount… and that’s looking a little shaky these days. NBC/Universal stinks of potential success, but we aren’t there yet. And as smart as Brian Roberts is, Comcast is not as complicated a company as G.E. and there is no clear indication that his leadership skills can make the world’s biggest media company run smoothly. The AT&T Cable takeover was impressive, but it was a merger of like companies. Hollywood and Pennsylvania are a long way away from one another.

You know, I could just be the guy pissing on the fire that is warming everyone else. But if Comcast is the fairy godmother that all these people seem to be dreaming it is, this merger will be almost as unsuccessful as AOL/Time-Warner. They would quickly drown in their debt and have a hard time implementing synergies. I don’t think that Brian Roberts is a sucker. And with at least $12 billion in merger debt to contend with, I don’t think Disney is about to become a cash buffet under Comcast.

None of this lessens the troubling issues that Eisner embodies. They are real. They need to be addressed. But one must be careful what they wish for. Getting it can be one ugly experience.

E ME: Why is Comcast eating Disney a great idea? A bad idea? Going to happen? Not going to happen?