{"id":29092,"date":"2021-03-07T10:23:24","date_gmt":"2021-03-07T14:23:24","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=29092"},"modified":"2021-03-22T00:26:49","modified_gmt":"2021-03-22T04:26:49","slug":"disney-bought-abc","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/disney-bought-abc\/","title":{"rendered":"When Disney Bought ABC, ABC Lost Its Freedom"},"content":{"rendered":"\n<p>How did things change after Disney bought ABC? Why did Mike Ovitz fail as president of Disney?<\/p>\n\n\n\n<p>In his memoir <em>The Ride of a Lifetime, <\/em>Bob Iger talks about the struggles he went through when Disney bought ABC. Iger should have been first in line to become Disney&#8217;s new president, but Disney&#8217;s CEO Michael Eisner gave the position to his friend, Mike Ovitz instead.<\/p>\n\n\n\n<p>Keep reading to learn about how Disney bought ABC and Bob Iger was shoved to the side due to nepotism. <\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How Disney Bought ABC<\/strong><\/h2>\n\n\n\n<p>In spring 1995, soon after Bob Iger became COO of Capital Cities\/ABC, Disney made clear it wanted to acquire the company. Michael Eisner, who had been Disney CEO since 1984, led the charge.<\/p>\n\n\n\n<p>What motivated the acquisition?<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Despite being one of America\u2019s most storied brands, Disney was also feeling the pressure of a changing media industry. Fierce competition in entertainment was driving smaller companies to be acquired, like Time Inc.\u2019s purchase of Warner and Viacom\u2019s purchase of Paramount. If Disney wanted to remain independent, it would need to become larger.&nbsp;<\/li><li>Furthermore, Disney was entering a creative funk. While the late \u201880s and early \u201890s saw smash hits like <em>Aladdin<\/em> and <em>The Lion King<\/em>, the mid-90s saw commercially lackluster films like <em>Atlantis<\/em>, <em>Fantasia 2000<\/em>, and <em>Tarzan<\/em>.<\/li><\/ul>\n\n\n\n<p>If Disney bought ABC, it would expand its reach to audiences through ABC\u2019s many media properties, including ABC, television stations, ESPN, cable channels, newspapers, and magazines. Better yet, the businesses were run profitably, giving Disney a financial boost and allowing it to weather the more hit-driven entertainment business. And in return, Disney would benefit ABC with its famed creative forces and perennially in-demand content.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Negotiating His Deal<\/strong><\/h3>\n\n\n\n<p>Former <a href=\"https:\/\/www.shortform.com\/blog\/the-ceo-of-disney\/\">Disney CEO Bob Iger<\/a> notes that much has already been written about why Disney bought ABC, so in his memoir <em>The Ride of a Lifetime,<\/em> he focuses on his personal experience.&nbsp;<\/p>\n\n\n\n<p>Iger wasn\u2019t completely thrilled about the deal. On a personal level, he was in New York, and the job would likely require moving back to Los Angeles. His first marriage had ended, and his new fiancee Willow Bay was a TV host in New York. New York also had his daughters and his aging parents.<\/p>\n\n\n\n<p>On the other hand, this was yet another opportunity to rise and gain experience. Michael Eisner made clear that he wanted Bob Iger as part of the deal; this suggested Eisner knew he needed help running the newly combined massive company, especially ABC\/Capital Cities&#8217; sprawling properties. Furthermore, <strong>Iger couldn\u2019t help dreaming about possibly one day running Disney<\/strong>.<\/p>\n\n\n\n<p>To negotiate on his behalf, Iger hired a lawyer. Iger wanted to be as close to the top as possible, ideally reporting directly to Eisner and possibly eventually being named second-in-command. Eisner refused, stating he wanted the freedom to name someone else as president, and that Iger would report to that person.&nbsp;<\/p>\n\n\n\n<p>Ultimately, Iger agreed to a five-year contract as head of Disney media. The deal closed in February 1996 and Disney bought ABC\/Capital Cities for $19.5 billion <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Adjusting to the Company<\/strong><\/h3>\n\n\n\n<p>To most of Disney and ABC, the acquisition was a complete surprise, and people immediately started wondering how the two companies would work together. In speaking to Capital Cities\/ABC executives, Iger was clear that there would be cultural clashes\u2014where ABC had spent years under Tom and Dan becoming humble and embodying classic good values, Disney was aggressive, creative, and deeply rooted in Hollywood.<\/p>\n\n\n\n<p>For example, Tom and Dan had always run Capital Cities\/ABC with <a href=\"https:\/\/www.shortform.com\/blog\/advantages-of-decentralization\/\">decentralization<\/a>. They had a meager corporate headquarters, instead trusting the individual business units to make the best decisions for themselves and the company. In contrast, <strong>Disney was a completely centralized company<\/strong>; all major decisions had to be run through the \u201cStrategic Planning\u201d group.&nbsp;<\/p>\n\n\n\n<p>\u201cStrat Planning\u201d consisted of MBAs who provided data and analyses of Disney\u2019s major decisions, giving the CEO Michael Eisner peace of mind. But people in Strat Planning knew their lofty position and acted like schoolyard bullies, speaking abrasively and shutting projects down by fiat.&nbsp;<\/p>\n\n\n\n<p><strong>Iger felt this setup constrained the company\u2019s entrepreneurial forces.<\/strong> For example, ABC heard a pitch for a new fashion\/lifestyle magazine appealing to younger women called <em>Jane<\/em>. Iger liked reaching a new demographic and gave it the green light. In response, Strat Planning admonished him, saying all businesses needed to run major decisions through Strat Planning, and Iger didn\u2019t have permission to greenlight projects on his own. When Disney bought ABC, ABC lost their freedom.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>The Rise and Fall of Mike Ovitz<\/strong><\/h3>\n\n\n\n<p>During negotiations, Eisner wanted to retain the ability to choose a president, and it soon became clear why\u2014a month after the deal closed, Eisner named his friend Mike Ovitz as president.<\/p>\n\n\n\n<p>Mike Ovitz was a super-agent in Hollywood who co-founded Creative Artists Agency (CAA), one of the largest talent agencies in the world. He was now looking for a new role in Hollywood; he\u2019d tried to become head of Universal Studios but failed. Now as president of Disney, Mike Ovitz would be Iger\u2019s boss, but unlike being COO, he wouldn\u2019t be seen as Eisner\u2019s direct successor.<\/p>\n\n\n\n<p>Unfortunately, <strong>Mike<\/strong> <strong>Ovitz was a bad fit for the role<\/strong>. Disney needed a president to operate its many complicated businesses. The role needed a detailed understanding of television ratings, broadcasting rights negotiations, and talent deals. It also needed someone comfortable with the centralized structure of Disney.<\/p>\n\n\n\n<p>Ovitz was the opposite of this. Still an agent at heart, he was most interested in creating new ideas, especially lucrative deals for his agency\u2019s clients. He had little interest in the operational business details, often refusing to brief himself on <a href=\"https:\/\/www.shortform.com\/blog\/important-decisions-in-life\/\">important decisions<\/a> and rendering instant opinions. He still treated his former clients as top priorities, interrupting Disney meetings to talk to his celebrity pals like Tom Cruise and Martin Scorsese.<\/p>\n\n\n\n<p>Furthermore, having enjoyed decades of being the head of CAA, he was used to people treating his ideas as golden and racing to make them real. At Disney, his ideas were treated with lukewarm interest, most of all by Eisner.<\/p>\n\n\n\n<p>Over the months, Disney knew Mike Ovitz was failing, and Ovitz knew he was being ignored at Disney. He reacted poorly and publicly, taking a visible disinterest at senior management meetings, even when Eisner was presenting the company\u2019s strategies. The dysfunction became clear and ruined morale from the top down. Disney executives started threatening to quit.<\/p>\n\n\n\n<p>Finally, 14 months after being appointed president, Ovitz was fired by Eisner in December 1996. For his time, Ovitz received a severance package worth over $100 million (which later became subject to a shareholder lawsuit).<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How did things change after Disney bought ABC? Why did Mike Ovitz fail as president of Disney? In his memoir The Ride of a Lifetime, Bob Iger talks about the struggles he went through when Disney bought ABC. Iger should have been first in line to become Disney&#8217;s new president, but Disney&#8217;s CEO Michael Eisner gave the position to his friend, Mike Ovitz instead. Keep reading to learn about how Disney bought ABC and Bob Iger was shoved to the side due to nepotism.<\/p>\n","protected":false},"author":8,"featured_media":29103,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,39],"tags":[234],"class_list":["post-29092","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-history","tag-the-ride-of-a-lifetime","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>When Disney Bought ABC, ABC Lost Its Freedom - Shortform Books<\/title>\n<meta name=\"description\" content=\"When Disney bought ABC, everything changed. Disney was centralized and rooted in Hollywood while ABC strived to be autonomous and humble.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.shortform.com\/blog\/disney-bought-abc\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"When Disney Bought ABC, ABC Lost Its Freedom\" \/>\n<meta property=\"og:description\" content=\"When Disney bought ABC, everything changed. Disney was centralized and rooted in Hollywood while ABC strived to be autonomous and humble.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.shortform.com\/blog\/disney-bought-abc\/\" \/>\n<meta property=\"og:site_name\" content=\"Shortform Books\" \/>\n<meta property=\"article:published_time\" content=\"2021-03-07T14:23:24+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-03-22T04:26:49+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/s3.amazonaws.com\/wordpress.shortform.com\/blog\/wp-content\/uploads\/2021\/03\/meeting-room.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1061\" \/>\n\t<meta property=\"og:image:height\" content=\"576\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Hannah Aster\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Hannah Aster\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.shortform.com\/blog\/disney-bought-abc\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/disney-bought-abc\/\"},\"author\":{\"name\":\"Hannah Aster\",\"@id\":\"https:\/\/www.shortform.com\/blog\/#\/schema\/person\/f39f52830e4f7039a16e45d12354542f\"},\"headline\":\"When Disney Bought ABC, ABC Lost Its Freedom\",\"datePublished\":\"2021-03-07T14:23:24+00:00\",\"dateModified\":\"2021-03-22T04:26:49+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/disney-bought-abc\/\"},\"wordCount\":1123,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/disney-bought-abc\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2021\/03\/meeting-room.jpg\",\"keywords\":[\"The Ride of a Lifetime\"],\"articleSection\":[\"Business\",\"History\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.shortform.com\/blog\/disney-bought-abc\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.shortform.com\/blog\/disney-bought-abc\/\",\"url\":\"https:\/\/www.shortform.com\/blog\/disney-bought-abc\/\",\"name\":\"When Disney Bought ABC, ABC Lost Its Freedom - Shortform Books\",\"isPartOf\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/disney-bought-abc\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.shortform.com\/blog\/disney-bought-abc\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.shortform.com\/blog\/wp-content\/uploads\/2021\/03\/meeting-room.jpg\",\"datePublished\":\"2021-03-07T14:23:24+00:00\",\"dateModified\":\"2021-03-22T04:26:49+00:00\",\"description\":\"When Disney bought ABC, everything changed. 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