In Hollywood, as at CAA, an abrupt transition is underway. The entire entertainment industry is remaking itself in a frenzy of mergers, jolting job changes and blockbuster contracts for stars like Sylvester Stallone. And, as he has so often been during the past decade, Michael Ovitz is a leading character in Hollywood’s own drama. Early last week the 48-year-old Ovitz took the presidency of the newly gargantuan Wait Disney Co., now in the process of swallowing Capital Cities/ABC for $19 billion. The move stunned even the gossip columnists. Disney’s stock-market value jumped by $1 billion in a single day as investors cheered the news of a backup for chairman Michael Eisner. But while the rest of the country read headlines heralding Eisner’s recruiting coup and Ovitz’s influential job, things look different in Hollywood. In a town where everybody who counts keeps his own personal scorecard, Michael Ovitz is no longer the most powerful man around.
Not that Ovitz will have trouble making lunch dates. As president of the world’s largest entertainment company, he is still a power to be reckoned with. Reporting to him, once Disney completes its Cap Cities acquisition, will be the nation’s No. 1 television network (ABC), the No. i theme park (Wait Disney World), the No. 1 animation studio, the No. 1 sports channel (ESPN), mammoth motion-picture and television operations and a merchandising business that mints billions from the likenesses of Aladdin and Mickey Mouse. But there’s no disguising the fact that his longtime buddy Michael Eisner has become the king of showbiz. Already Hollywood is calling Ovitz “the prince.”
Ovitz’s rise to power is by now a familiar story. Driven by a penchant for control, he broke away from the William Morris Agency to build the most powerful talent agency ever, from scratch. Boasting a stable of top-flight talent, he and his aggressive, Armaniclad army commanded top dollar for superstar clients like Kevin Costner, Tom Hanks and Barbra Streisand. The Ovitz team mastered the art of packaging directors, writers and actors into a single offering for a TV show, telling producers to take it or leave it. And he pioneered new territory for the agency business, handling advertising for Coca-Cola, brokering the sales of movie studios, helping phone companies develop futuristic television services (page 48).
Even so, friends say, he was restless. Although his success made Ovitz a small fortune, allowing him to indulge a passion for art, he watched friends like Eisner and enemies like record impresario David Geffen amass truly fabulous wealth. Besides, constantly pampering the stars in his stable came to be a pain. When Seagram bought 80 percent of MCA in June, the chance to run the huge entertainment conglomerate seemed the perfect career change. Ovitz knew MCA well because he had brokered its acquisition first by Matsushita, the Japanese electronics company, in 1990, and then by Seagram boss Edgar Bronfman Jr. But while Bronfman was reportedly willing to pay him $250 million, Ovitz wasn’t satisfied. The negotiations blew apart–and the much coveted job went to CAA cofounder Ron Meyer, Ovitz’s friend and associate of 25 years.
Hollywood noticed a big change in Ovitz after the aborted MCA talks. Questions about MCA dogged him. The press was all over him. His friendship with Bronfman cooled; though they still talk, it’s “not like we did before,” Ovitz says. And after Meyer’s departure, Ovitz admits, “it was a strange feeling to come in and not be working with someone you’ve worked with for 25 years.” Colleagues depicted him as increasingly distracted and withdrawn. He reportedly missed board meetings of his phone-company venture or didn’t say much when he attended. Studio execs sensed that the old fire was gone. Ovitz, said one, “seems to have lost his fast ball.”
Eisner, friends say, knew that Ovitz was desperate for a change. The two have been close for 25 years, since Eisner, then a junior executive at ABC, bought a game show from agent Ovitz at William Morris. Ovitz helped organize surprise birthday parties for Eisner, and their families vacationed together. They often talked of working together, too; Eisner tried to lure Ovitz to Paramount Pictures in the 1970s and to Disney a decade ago. When Eisner underwent heart surgery last summer, Ovitz stayed at his bedside. Ovitz was one of the few outsiders to know in advance of Disney’s plans to buy Cap Cities. Right after announcing the deal on July 31, Eisner flew to Aspen, Colo. The reason: both he and Ovitz have homes there, allowing a discreet discussion of an Ovitz role at Disney. Their friendship was “critical” to his decision to accept the job, Ovitz says. But hiring Ovitz was no act of charity for Eisner. It pleased Wall Street, too, by resolving doubts about management depth at Disney.
Whatever inducements Disney offered, the financial benefits seem modest compared with the megapackage Bronfman dangled just two months ago. Sources say Ovitz will receive an unspectacular salary, an advance of less than $2 million against future bonuses and stock options that could be worth tens of millions of dollars–or much less, if he can’t help sustain Disney’s growth. He reportedly failed to win a signing bonus. And, unlike Seagram’s offer, Eisner’s does not guarantee Ovitz a major stake in the business.
Ovitz’s move to Disney threw CAA into a tizzy. Although the agency had been revamping its management since Meyer’s departure last month, Ovitz’s move forced CAA to begin redrawing its organization chart and restructure its ownership. Beyond figuring out how much Ovitz will get for his 55 percent stake. CAA must design a new partnership in which many more agents will own shares. And the post-Ovitz CAA won’t have the invincibility of the Ovitz era. Other agencies are targeting its stable of stars and agents. Top box-office draws may let their lawyers do their bargaining rather than forking over a 10th of their pay to the “10-percenters,” as agents are derisively called.
And Disney? Flush with cash, the company Mickey Mouse built shows no signs of slowing its global expansion. A Broadway theater. A Latin American Disneyland. New TV shows in Asia. In the Magic Kingdom, Ovitz will have lots of new toys. But he will no longer be the most powerful player in the sandbox.
Whether the Tiffany network falls to Westinghouse, Ted Turner or someone else, new additions are likely.
Two well-funded start-ups, David Geffen’s Dreamworks Music and Doug Morris’s Rising Tide Entertainment. are staffing up. A Time Warner housecleaning has left plenty of vacancies at Madonna’s label. Warner Music.
Said to be seeking a new hire to run its studios. One rumored candidate: Jack Rapke, long a colleague of Ovitz’s at Creative Artists Agency.
New president Ron Meyer drafted celeb lawyer Howard Weitzman last week to run operations. Expect more new faces now that Matsushita has sold out to Seagram.
Production whiz Brad Grey is being courted to oversee TV shows– but MCA wants him, too. Will that be the end of Michael Eisner’s big hiring spree?
