Jeffrey Katzenberg Plans on Living Happily Ever After

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BOX OFFICE MONSTERS DreamWorks investors are banking on the 2010 releases of "How to Train Your Dragon" -- with Jay Baruchel ("seen" above), Gerard Butler, Kristin Wiig, and Craig Ferguson -- and "Shrek Forever After" (below), the fourth tranche of the franchise.

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Dreamworks Animation Has Become a Tech Incubator

"I'm certain when you came through those gates, your impression was, This is about a micromanaging, hands-in-every-pie, ain't-a-decision-being-made-without-him kind of place," says DreamWorks Animation CEO Jeffrey Katzenberg.

At 59, with his tightly cropped hair and outsize biceps straining against a fine-knit black polo, Katzenberg exudes an aggressive fitness. "The myth," he says, "is a far distance from the reality."

In truth, I had come expecting just that. Katzenberg's Hollywood reputation is one of relentless ambition and a hypercontrolling management style -- part Napoleonic bully, part hopeless dilettante. (He famously told a team of animators to fix a ceiling in Beauty and the Beast, saying: "Make it French, like Botticelli.") In the decade he spent running Walt Disney Studios, he publicly waged contract wars with top stars; reportedly faked edit meetings for the press to exaggerate his creative influence; infuriated Disney nephew Roy by claiming, "I'm the Walt Disney of today"; and established a chronic work/life imbalance symbolized by his admonition, "If you don't come to work on Saturdays, don't bother to come in on Sunday."

Like most people in Hollywood at the time, Katzenberg had no love of animation when he arrived at Disney in 1984. But the failing division was on a long list of tasks new CEO Michael Eisner assigned him. Katzenberg's style immediately grated against the creative culture. "He was a screamer, and he was a shredder and a very tough force to be reckoned with," says Disney's Don Hahn, who worked for Katzenberg as a producer on Beauty and the Beast and The Lion King. After Katzenberg was ignominiously driven out by Eisner in 1994, many in Hollywood were happy to see his back.

But Katzenberg also electroshocked Disney's films out of a stuporous rut, spawning hits from Who Framed Roger Rabbit to Aladdin to The Lion King -- a revival that not only reestablished animation as an art form but also drove the studio's revenues from $320 million in 1985 to $4.8 billion in 1994. It was Katzenberg who brought in Pixar, Steve Jobs's graphics shop, as a production house for Disney and green-lighted Toy Story, the first computer-generated feature. Hahn, who directed Waking Sleeping Beauty, an upcoming documentary that portrays the Katzenberg of the period in a distinctly unflattering light, is quick to underline Katzenberg's revivifying effect on the studio: "He brought a candor and a workshopping process and an iterative approach that hadn't been around since Walt Disney was here in the '30s producing Snow White and Pinocchio and Bambi."

Katzenberg's ouster from Disney was ugly, but his many successes had made a big impression in Redmond, Washington. "We saw Disney was turning animated movies into an incredible economic asset," says Nathan Myhrvold, Microsoft's CTO at the time and now a director on DreamWorks Animation's board. "So on the day it was announced Jeffrey was leaving Disney, I got Bill Gates out of a meeting to put a call in to him."

Katzenberg declined Microsoft's offer to create a studio for the company and instead partnered with Steven Spielberg and David Geffen. DreamWorks Animation (which was spun off from Spielberg's live-action division and went public in 2004) is often dismissed as the poor man's Pixar. But it has quietly outperformed its more celebrated rival at the box office, reaping $6.3 billion in sales to $5.4 billion for Pixar (in three fewer years). "DreamWorks Animation is wildly more successful financially," says Geffen. True, nothing in the DreamWorks canon is as poignant as Pixar's Wall-E or as emotionally complex as Up, a fact DreamWorks loyalists seem ready to concede. "Up to this point, I would say Pixar, creatively, has exceeded DreamWorks," says Geffen, who negotiated Katzenberg's $250 million severance from Disney, "but each film gets better and better." Even onetime Katzenberg critics like Hahn admit, "None of us would be here without him. He really invented the modern animation industry."

DreamWorks Animation lives at a crossroads where the Hollywood studio meets Silicon Valley. In the past, the military-industrial complex often drove technological advances, but, increasingly, entertainment -- especially animated films -- is mapping the frontier. It took 7 terabytes to produce the first Shrek; Shrek 4 will take more than 75.