GLENDALE, Calif. — Jeffrey Katzenberg was at his first day on the job as chairman of The Walt Disney Studios in 1984 when CEO Michael Eisner called him over to his corner office window.

Katzenberg had a laundry list of goals to get the struggling studio back on its feet, and Eisner seemed eager to get started. But as Katzenberg was leaving the third-floor office once occupied by co-founder Walt Disney, Eisner asked him to look out the window.

"See that?" Eisner said, pointing to a building housing the animation team. "That's your problem."
Katzenberg froze.

 

He knew nothing about animation, and didn't consider himself a fan of cartoons. "I had never made an animated movie, had no familiarity in any shape or form," he says. "I didn't even know where to start learning."

Then a colleague mentioned that Disney kept copious notes from his days as a filmmaker and executive, and even recorded most of his conversations at work. Even better, most of the tapes and scribblings remained in a studio vault.

Katzenberg found the trove — and inspiration.

"Walt had essentially left the recipe for making a Disney animated movie," he says. "You'd have to be deaf, dumb and blind not to see that he was leaving bread crumbs the size of Volkswagens. To this day, I feel like I was a student of Walt Disney."

Within four years, Katzenberg turned around the department, overseeing some of the studio's biggest hits, including Beauty and the Beast (1991),Aladdin (1992) and The Lion King (1994).

Internal squabbles at the studio resulted in Katzenberg leaving the Mouse House in 1994, but he rebounded by co-founding DreamWorks, the first major Hollywood production studio in 60 years. That established him as an industry rarity: an animation force not employed by the Disney empire — which has since expanded to absorb Pixar and Lucasfilm.

The 62-year-old Katzenberg, meanwhile, is seeing his own empire buck industry trends. Last month, as Hollywood recorded revenue that was down 11% from the same period in 2012, DreamWorks surprised Wall Street by posting a net income of $5.6 million for the first quarter of 2013.

And then there are bragging rights. Katzenberg rebounded from his high-profile Disney divorce by creating the most profitable animation franchise in Hollywood history in Shrek, whose five films have grossed more than $3.5 billion worldwide, according to Box Office Mojo.

"He has some of the best instincts of anyone I've ever met," says Nicolas Cage, who just anchored DreamWorks' The Croods and will star in the sequel. "He doesn't see animated films as something just for kids. He knows what's going to work for the adults, too."

Cage would know. He turned down Katzenberg's offer to give voice to Shrek, a role that would later go to Mike Myers.

"If I had it to do over again, maybe I make the movie," says a grinning Cage of the film that would make $484 million worldwide in 2001.

Cage says of that brief career stumble: "The lesson I learned is to not question Jeffrey too much when he gets an idea."

Katzenberg suffers no shortage of them. Born in New York in 1950 to an actress mother and stockbroker father, Katzenberg got Hollywood's attention when, as a 28-year-old executive at Paramount Pictures, he was tasked with reviving the Star Trekfranchise, perhaps into a film or two.
The following year, 1979's Star Trek: The Motion Picture would make $82 million and spawn 11 more movies, including May 17's Star Trek Into Darkness.

"I always enjoyed live-action" films, Katzenberg says in his DreamWorks office, which brims with stuffed toys borne of his movies, including a half-dozen Shreks and Kung Fu Pandas. "I must have (overseen) 500 of them. But animated movies are, by a factor, more of a collaborative effort. Which is what makes it a passion of mine."

A passion that developed late in life. Katzenberg remembers not being that impressed at age 4 with the first animated film he ever saw, Pinocchio.

"I remember it being scary," he says, laughing. "But I didn't get hooked until I began reading this amazing archive that Walt kept. It was a recipe for making the classic Disney animated movie."
The cookbook's first chapter: Choose an antagonist. "Walt believed that an animated movie was only as good as its villain," Katzenberg says. "I never forgot that."

Other tips: Don't scrimp on a musical score or animation technology, and lean heavily on classic Western fairy tales.

And this commandment, which Disney made a studio mantra: Make a film for children and the child within every adult.

By following that road map, Katzenberg eventually turned around Disney's animation department. But in 1994, when Eisner's second in command, Frank Wells, died in a helicopter crash, Katzenberg and his boss clashed after Eisner refused to promote the 44-year-old. Katzenberg left the studio and filed suit, settling out of court.

"Was I hurt by the way I was treated? Yes," he says. "The hardest thing about leaving the company was leaving the thing I had fallen head over heels in love with."

So Katzenberg decided to reignite that love affair, this time with his own studio. Katzenberg approached friend and music mogul David Geffen and suggested they start an entertainment studio. Geffen said he was in — as long as Katzenberg could persuade mutual pal Steven Spielberg to say yes.

"David had just sold his record company and made his third or fourth billion," Katzenberg says. "Steven had just won an Oscar for Schindler's List and releasedJurassic Park. I had been fired from my job and was out of work."

Still, Katzenberg says, he had a juicy carrot to dangle before Spielberg: autonomy.

"I told him that we had spent our entire careers working for studios," Katzenberg recalls. "I told him, 'It's time you had your own.' And he was on board. He'd do live action, David would handle music and I would run the animation."

Despite the new studio's star power and Katzenberg's experience at Disney, DreamWorks' animated films were middling performers: 1998's Antz made $91 million, followed later that year by The Prince of Egypt, which made $101 million.

"They were different from Disney animated films, which we wanted, but they were modest successes," he says of the box-office hauls. "They were Disney (sized) blockbusters, but they were expensive. We were coming close to losing the studio."

But in 2000, producer Laurie MacDonald brought Katzenberg a 26-page children's book she had to read three times a night to her daughter: William Steig's story of an irreverent ogre named Shrek and his princess, Fiona.

Though a sliver of the story, "the DNA of the movie comes straight from the book," Katzenberg says. "The spirit of the story is in the movie, which made so much money it saved the studio."

It would also define DreamWorks' mission: "I realized that DreamWorks' brand is that we make movies for adults, and the adult that lives in every child. I think we come to the same point (as Disney), just from the opposite direction. Since Shrek, I think every DreamWorks animated movie has had an element of that."

Not that Katzenberg believes Shrek is lightning in a bottle.

"People say, 'How can you possibly find something like that again?' But I have always been an optimist," he says. "Do I believe there's another Shrek out there? Sure. But you'll never know unless you have the ambition to look for it."