"Enough Is Enough!"

Their features have the strong, distinct contours of cartoon characters: Michael Eisner, with a smooth oval face and a personality as big and buoyant as a Macy's parade float; Jeffrey Katzenberg, his relentless energy packed into the trim lines of a bantam rooster. Some animation wizard--at Eisner's Disney or Katzenberg's DreamWorks--could build a clever scenario around the adventures of these two critters. But don't expect to see a cartoon version of Katzenberg's lawsuit against Disney anytime soon. A film about that trial, which had Hollywood adrool over a public brawl between two of the town's most potent moguls, would be a drama of rage and rancor. Call it An Uncivil Action.

Last week, suddenly, peace broke out. Nearly five years after Katzenberg abruptly left Disney, where he had run the animation and live-action film units, and two years after he sued for what he saw as his rightful share of profits from the movies he shepherded there, the two sides settled. "Enough is enough!" Katzenberg was told by David Geffen, the DreamWorks partner who brokered the settlement with Disney board member Stanley Gold. "This time it's for real. It can get done, and therefore it should get done." It got done, early last week, at Geffen's Malibu beach home.

Each side can be grateful it's over. Disney gets a public relations ogre off its back at a time when its fortunes are lagging. Also, it is spared the final phase of the trial, in which Eisner would have had to counter Katzenberg's estimate of future revenue by poor-mouthing the company's prospects. And Katzenberg gets a nice bundle--if not the $580 million he wanted. No dollar figure was disclosed, but the educated guess was around $250 million, including the $117 million Katzenberg has already received. The sum is to be paid within a year, giving the plaintiff a fat payday--and an enormous tax bill.

A tie can be seen as a win or a loss. Katzenberg, paraphrasing Geffen's definition of a fair settlement, told TIME, "I'm disappointed that I didn't get what I thought I should, and they must be disappointed they paid more than they thought they should." Eisner accentuated the positive: "I'm satisfied this is behind us. Jeffrey deserved something because he was very much a part of the Disney renaissance. And in the end he's probably getting less profit participation than some of today's stars and directors."

At issue was Katzenberg's 2% share of royalties from Disney movies and their lucrative spin-offs in video, on CD and on Broadway. His team argued that these royalties could be virtually perpetual, as new markets and technologies opened. Disney was prepared to state that the big profits came only from the first cycle of theatrical and video release. But this suit was personal. Katzenberg often referred to Eisner as a father figure; Eisner had been his mentor for 19 years at Paramount and Disney. So he had to be stung by Eisner's offhand slur, in informal notes for an autobiography, that "I think I hate the little midget"--a remark notable not just for its animosity but also for its redundancy (a former English professor of Eisner's called the CEO to make just that point). The gibe, says a Katzenberg colleague, "was so painful that no money could make him feel better. What Jeffrey always wanted and never got was Michael's appreciation. The check was just a really nice Band-Aid."

Now both men can devote full time to companies that need tending. Disney has suffered its first slump in the Eisner era. Though the theme parks remain strong, animated films are pricier and less profitable than in Lion King days; the studio has not had a breakout live-action hit this year; the Disney stores are hurting; the home-video arm is being restructured; the blending of Disney's and ABC's production units means layoffs. Consequently, Disney stock, long a Wall Street pet, is down 25% in the past year.

DreamWorks has its own problems. After a robust 1998 (Saving Private Ryan, Deep Impact, Antz, The Prince of Egypt), the studio has sagged in '99. The TV-animation unit was dropped, as was a highly touted interactive video operation. Some departments have been ordered to cut their budgets 35%. The legal staff and other top people spent precious time researching Disney's potential earnings for the Katzenberg case. "Jeffrey has devoted a lot of time to this lawsuit, which had an impact on DreamWorks," says Geffen. "He was more invested in it than he should have been."

Plans for a studio "campus" in Playa Vista--a fervent wish of the company's third partner, Steven Spielberg--are dead. "Steven is our main asset," says an executive, "and his next two films are owned mostly by other studios. We're running out of money." DreamWorks' motto could be "Wait till next year, "when it has films starring Tom Cruise, Tom Hanks and Harrison Ford.

Both companies can rebound, if only because Eisner and Katzenberg never settle for the status quo. What these two very animated figures learned last week is that sometimes it's best just to settle.