Square didn't merge with Enix out of desperation. The merger was in the works since 2000. It was Enix that backed down after Spirits Within bombed, and it took until Sakaguchi resigned from his post as executive vice president (a role Hiromichi Tanaka has since taken over, coincidence?) until Enix was willing to oblige with the merger. The movie bombing delayed a merger by three years, it wasn't the reason behind it.
I think it's safe to say FFXIV is Tanaka's version of Sakaguchi's Spirits Within more or less when it comes to really tarnishing the image and success of the company.
Sakaguchi was also the mastermind behind the Final Fantasy series to begin with, with his crowning achievement being the producer of Final Fantasy VII, which went on to be the highest selling FF title of all time. Spirits Within might not have been another Toy Story, but I believe they made a mistake in getting rid of him (technically, he left of his own free will, but the pressure must have been there). The stories just aren't as daring or creative as they used to be and people can tell.
His work on The Last Story (which is notably FF-ish in name and deed and which was received with rave reviews) brings to light everything the Final Fantasy series has been missing since his departure. It comes out for the Wii in NA on July 10.