Inside the 1995 Media Merger That Changed Disney Forever
A longtime ABC exec who worked closely with Bob Iger remembers what happened when Michael Eisner arrived.
Back in the early 1980s, Disney was a much smaller organization than it is today. The company as it exists now is a massive media conglomerate, an entertainment giant whose (mouse) paws reach into every corner of our cultural life through multiple movie studios, TV networks, and streaming platforms — all in addition to its iconic theme parks. But before the Magic Kingdom got supersized, Disney’s ambitions were considerably less grand: It focused mostly on family movies, in-person experiences, and managing its storied library of beloved characters.
And then it hired Michael Eisner.
Eisner was a 42-year-old Hollywood studio player when he took control of the Mouse House in 1984, a rising star in the industry who’d made a name for himself at Barry Diller’s Paramount Pictures with projects as diverse as Happy Days and Saturday Night Fever. Disney’s new CEO reinvigorated the company’s flagging film division, reenergized its signature animation studio, and perked up the parks. Within a few years, he was being called more Disney than company founder Walt Disney.
But Eisner’s boldest and most consequential move came in 1995, when he struck a $19 billion deal to buy the parent company of ABC. Suddenly, Disney controlled one of the Big Three broadcast networks (back when they really mattered) as well as an up-and-coming cable network called ESPN. That one megamerger started Disney down the road to becoming the corporate colossus it is today. And it’s also the starting point for Land of the Giants: The Disney Dilemma, a new podcast series from Vulture and Vox Media Podcast network that premiered on Wednesday.
I’ve been lucky enough to be part of the team working on this project since last winter. Over the next six weeks, The Disney Dilemma — co-hosted by myself along with staff writer Rebecca Alter, film critic Bilge Ebiri, and senior reporter Chris Lee — will explore the many fiefdoms within the Magic Kingdom, from its vaunted theme parks and animation factory to its stewardship of the Marvel and Star Wars franchises to its attempt to turn itself into a streaming power. First up, though, is a look at that 1995 deal to purchase Capital Cities/ABC and how it totally transformed the company — and paved the way for the rise of current Disney CEO Bob Iger.
One of the people we interviewed for this episode was a TV-industry legend I’ve known since the mid-1990s: Ted Harbert, the former head of entertainment at ABC, who’d later go on to be a top studio exec at NBCUniversal and Comcast. He’s retired these days, but we spent an hour earlier this year talking about his front-row seat to Disney’s takeover of ABC and Iger’s rise years earlier. Only a little bit of our chat could make it into this first episode, but for anyone interested in the glory days of network TV and how Eisner and Iger played pivotal roles in redefining television, Harbert had some great stories to tell about how both men wielded power and why ABC and its parent company were such important acquisitions back in the 1990s. Read on for our conversation, but first, click here to check out episode one and subscribe to future episodes of Land of the Giants: The Disney Dilemma.
Let’s go back in the time machine to 1995. You were head of entertainment at ABC. It was right before Disney bought your parent company. What were things like at ABC just before the merger with the Mouse?
Ted Harbert: Things were doing quite well. NBC was No. 1 in total viewers, but Tom Murphy and Dan Burke, our bosses at Cap Cities, said, “We do not care about total viewers. We want you to be No.1 in adults 18-to-49 because that’s where we make our money.” And I think in 1995, during the 1994-95 season, we did take the crown in viewers too. We had a very successful young-adult schedule fueled by the young-adult hits, with the TGIF shows like Full House and then shows like Who’s the Boss? Those kinds of shows and then also more adult comedies with Roseanne and Home Improvement. And we had a really good slate of dramas with NYPD Blue and thirtysomething and China Beach, and all those shows that I was very proud of.
Bob goes, ‘I’ve never read a script before. I’ve never watched a rough cut.’ I said very bluntly, ‘If I can do it, you can do it. It’s just doing your homework.’
You had worked with Bob Iger in the years leading up to that win, working with your partner, Stu Bloomberg, to rebuild ABC. What was Iger like to work with at that point?
You know what? It was just plain great. Sure, it can be a little scary. I knew him, but I didn’t know him very well. I like to tell the story about an ABC Affiliates meeting at the Century Plaza Hotel in the mid-to-late 1980s. I’m sitting in the left section, watching Bob do the sports presentation. Roone Arledge, head of ABC News and Sports, was too busy to do the presentation himself. So Bob got up there and gave the entire sports schedule for the summer with no notes, not looking at anything, and he just had it memorized. As he still does today, he spoke flawlessly for 45 minutes. I turned to Brandon and whispered, “That guy’s going to run the company someday.”
I mean, he was just really impressive. I got to know him some more when he got that job in New York. They took him out of sports and made him the head of the television network. They gave him oversight over the business-affairs department of ABC Entertainment on the West Coast, because Cap Cities was always worried that too much money was being spent. That’s where Bob got his first training in the business of television. Then, when he came out to Los Angeles, and as humble as he still is today, said, “Okay, we all know what’s going on here. I’ve been thrown out here. You guys might have wanted the job.”
You probably did want the job, right?
Sure, I had wanted the job since I was 10 years old. But I didn’t think I was going to get it at that age. Bob was obviously a superstar with the guys in New York and said, “Okay, help me out. Let’s figure this out together, how we’re going to do this.” The thing I learned a long time ago, and I think the reason why I was lucky enough to work for five presidents at ABC, is that I made it my job to make them look good. Not about me looking good; it’s about them looking good. I had a very simple logic to it. If I make them look good, they’ll be happy, and they’ll be happy with me working for them. Because, really, what I wanted to do was keep my job.
What was Iger’s attitude toward overseeing the Hollywood part of the network when he first arrived?
Bob had some trepidation. He goes, “I’ve never read a script before. I’ve never watched a rough cut.” I said very bluntly, “If I can do it, you can do it. It’s just doing your homework. Go home, read your scripts, watch your rough cuts, and then we come in the next morning and talk about them.” This guy was a fast learner, and he did it and he read his scripts. He got into it. We had a pretty good division of labor. He ran fantastic interference with New York. It was great having him there because once he was in place, the New York guys trusted him, and that was a huge burden off of me.
Under Iger predecessor Brandon Stoddard — I loved him, but he didn’t want to talk to New York at all — I had to go back to New York once a month to a big committee meeting where I had to take them through the schedule, review all the decisions, all the spending. Now, I didn’t have to do that anymore. I could concentrate on my job. Stu Bloomberg was head of development of comedy and drama, and I did the rest of the departments. I did current and reality and scheduling and movies, and ran the budget.
And it all worked.
I don’t know what it was. Maybe it’s because we liked each other and we had a good time and we laughed. Nobody was out for the other guy. A rare thing in Hollywood: Nobody wanted anybody else’s job. Bob was frankly just a blast, kind of irreplaceable. Even though I’ve been lucky to have some other terrific jobs, that personal experience was incredibly rewarding and enjoyable.
I was very worried, because I knew Michael Eisner pretty well. I said, ‘Okay, the good days where we have a lot of autonomy and confidence from New York? Those days are gone.’
This was a few years after you had been impressed with Iger at that ABC affiliates meeting, but before Disney came in. You were now working with him day-to-day. I imagine it made you even more convinced that he was going to run the company at some point?
I just knew he was going to be unstoppable. He was very, very close to Tom Murphy and Dan Burke. He was like a son to them. I think he knew he was part of the succession plan. I think Tom and Dan had a plan for this guy from very early on meeting him when he was in sports, doing really most of the heavy lifting. There was just a ton of pressure on that division, especially with the Olympics.
So fast-forward to the summer of 1995. Disney announces it is buying ABC’s parent company at the time, Capital Cities. What do you remember about how that all went down, especially Iger’s role in it?
I knew nothing. There might’ve been rumors, but my real memory is that on the Sunday, I think, before the announcement, Bob calls me at home and says, “Get on a plane.” I said, “Okay, how come?” He says, “Get on a plane; can’t tell you.” So I get on a plane and then found out the next morning. When the news was coming out, he said, “I’m sorry, I just couldn’t tell you. It was just too secret.” That was pretty good news for me because I collected some stock along the years. At the house I had in Pacific Palisades, I wrote in the cement in the garage, “This is the house that Disney built.” [Laughter.]
Besides the good financial news for you, what did you make of what it was going to mean for ABC and the company?
I was pleased financially. But I was very worried, because I knew Michael Eisner pretty well. I said, “Okay, the good days where we have a lot of autonomy and confidence from New York? Those days are gone.” Michael Eisner could speak for hours about how “this was a great fit for the other properties” and how he wanted ESPN. But I was there: This guy wanted to run a network. He had wanted to run a network since he was a VP at ABC before he went to Paramount. And now he wanted to run ABC prime time.
Why were you so sure this is why Eisner wanted to do the deal?
The reason I knew that is because, when I was working for Brandon Stoddard, one of the things I was in charge of was the Disney Sunday-night movie that aired at 7 o’clock. Michael hired an exec from Sony, Gary Lieberthal, to run the Disney Sunday movie. Gary and Eisner would come in to pitch to Brandon and me the movies they had coming up for the slot.
Gary would come in with these fancy binders with his plans. But Michael would apparently go into the Arby’s on the first level of the ABC Entertainment Center right before our meeting, and then would come up to Brandon’s office with a bunch of ideas scribbled on napkins and just pitch them out. And I had the lousy job of saying, “No, Michael, we’re not doing that movie. It’s not thought out.” Me, this kid, saying no to Michael Eisner, the most powerful guy in show business. It was crazy. It ends up that I found out that he ended up respecting me, because he said, “No one ever says ‘no’ to me. This kid at least says what he thinks.”
So, even though you might have gotten Eisner’s grudging respect, you were pretty sure Eisner was going to be a micromanager at ABC?
I knew who this guy was, and I unfortunately was proved to be right. Running an entertainment division under Bob was a dream. And I was technically still under Bob. But Mike, he was Dr. No. By the way, I’m not telling any tales out of school. He’s more than happy to tell people that’s the way he ran the company: “The answer’s ‘no,’ and now find a way to convince me of ‘yes.’” It was really difficult.
Every Monday, I’d have to go over to the rotunda on the Disney lot for the leadership lunch or whatever it’s called. He would go around the room and just massacre people. People had their heads down — sort of “Don’t pick on me, don’t pick on me!” He would say, “Ted, why was Home Improvement off by two-tenths last week?” I’d say, “Michael, I don’t know, maybe somebody that’s got a Nielsen box went on vacation.” None of us ever had any answers. He would ask the poor Parks guy why Big Thunder Mountain Railroad attendance was down 8 percent last week. It was extraordinary. I had previous bosses that could be tough, but nothing like that.
Scheduling meetings in May were particularly difficult. Michael would just say, “No, we’re not doing that.” I said, “Michael, this is a great testing pilot!” He would just say “no.” I’ll never forget — it was actually the last show that Brandon Tartikoff was involved in. It was called Second Noah. I knew it was a very soft show. I didn’t have a good time slot for it. But I wanted to put it on. And Michael just kept on saying “no.” When he finally agreed, he then said, “Go get it for half the price.” I said, “But we have a negotiated business license fee with Brandon Tartikoff.” I had to call up Brandon, and I ended up getting like 50 grand or something off the license fee. Michael Eisner wanted his pound of flesh. I still got to run an entertainment division, but it was just more difficult.
So, despite all the other reasons for Disney to buy Cap Cities/ABC, like cable and ESPN, you think what sealed the deal for Eisner was that he wanted to have control of a Big Three broadcast network.
That was the motivating factor. He had all sorts of smart guys who would lay out all the good business reasons why it was smart to acquire ABC. I really think that in his heart of hearts, he wanted to be able to pull the strings on a prime-time schedule.
And that’s sort of what happened, right? It wasn’t just scheduling or promotion. He was very involved in the creative process too?
At the end of my ABC career, Michael called us all up to Aspen where his ski house was, the one which had Mickey Mouse’s face carved out in the back of his chairs. We had to go over all the shows with him, and he just said, “No, that’s not going to work. That’s not going to work.” He goes, “Here’s what you do, Ted. Just go get the old Mod Squad scripts and just reshoot them.” I said, “Well, Michael, I liked Mod Squad a lot. I could go get those scripts and get them rewritten to make them more modern.” He said, “No, no, no, no. You don’t understand: exactly the way they’re written. I don’t want to spend anymore money on new writers for these. Just go get them exactly the way they’re written.” I said, “You mean with Linc and Julie and the way they talked back in the ’60s?” He said, “Yes, it’ll be fine.” So I was spending a fair amount of personal capital and time and energy trying to talk the chairman out of ideas.
I know there were other factors, but I now understand why you left ABC about a year after Disney took over and took that big producing deal at DreamWorks TV.
Jeffrey Katzenberg came to me and said, “All right, Ted, you’ve done that for 20 years. You learned how to run the network. You’ve got to learn something else. Come be a producer at DreamWorks.” He really wanted me to get out of that company. I don’t know whether he thought it would hurt ABC or it would be good for me or good for DreamWorks. It may be all those things. But in December 1996, I said, “This isn’t working for me.” We agreed that I would stay until Washington’s Birthday in February 1997. So I left ABC on a Friday and started at DreamWorks the next Tuesday.
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