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Ovitz


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OVITZ

I'm late. Traffic is slithering through Los Angeles like a lazy snake past an accident on Third Street, and drivers fore and aft are hunkered down, brooding. Twenty minutes later, when I finally turn over my car to a valet, I'm also sweating. Great. Lunch with the most powerful man in Hollywood, and I'm late and sweating.

Michael Ovitz, of course, is there already. A solitary figure in a private dining room, he is sitting on the floor, sipping spring water at a low-slung table. We're at Matsuhisa, a traditional Japanese restaurant, and Ovitz has slipped off his shoes and suit jacket. He smiles faintly as I rush into the room and immediately starts to put me at ease. "Gee, you had me worried," he says softly, gesturing for me to sit down. "You look rattled. Take your coat off. Have something to drink."

If ever there was a man whose reputation precedes him, it is Michael S. Ovitz, the sandy-haired chairman of Creative Artists Agency. Superagent. King Ovitz. The Most Powerful Man in Hollywood--choose your moniker.

LYON'S SHARE. While Ovitz, at 47, is surely all of those things, you'd never know it just talking to him. The first impression is that he would like nothing better than to be talking to you. Ovitz exercises power like a Zen brush painter: delicate, deliberate strokes. His earnest concern for what concerns you can be completely disarming. "He just seems to be able to see to the center of a problem and know exactly what you need," says a former CAA employee. Echoes Revlon Inc. Chairman Ronald O. Perelman: "You end up feeling very good that he took the time out to call. It seems like he really cares."

For months now, the object of Ovitz' ministrations has been Credit Lyonnais. In April, the giant French bank called in CAA to help extricate it from a disastrous foray into Hollywood. Among its troubled holdings: the Metro-Goldwyn-Mayer Inc. studio, which had been dragged down by scandal and $1.5 billion in debt. Not surprisingly, Credit Lyonnais wanted out--as quickly and painlessly as possible. But the bank couldn't find a serious buyer.

Through subtle persuasion, Ovitz talked Credit Lyonnais into sticking with the studio. His argument? If only MGM's balance sheet and management could be revitalized, the studio would again become a lucrative supplier of movies and TV programs. And with digital technology increasing the demand for entertainment, MGM's respectable business could someday become a gusher.

On July 25, Credit Lyonnais announced it would redeem or swallow $1 billion worth of MGM debt and give the studio an additional $400 million to rev up its film production. Ovitz also engineered the appointment of his longtime friend, former Paramount Pictures chief Frank G. Mancuso, as MGM chairman. "We benefit greatly from the valuable counsel of Michael Ovitz," says Fran ois Gille, the bank's general manager.

Mastering the art of moving people in his direction has made Ovitz one of the most imposing entrepreneurs on the national scene--not just in Hollywood. Rational, modulated, inordinately disciplined, he has transformed CAA from a mere talent agency into what may be the world's preeminent authority on harnessing star power to commercial ends. At a time when Hollywood entertainment is one of America's biggest exports--and the great technological race is on to feed the world's homes with new forms of it--Ovitz has virtually cornered the market for raw materials. Nobody has more talent under lock and key. Nobody has more clout.

Now, Ovitz is eagerly eyeing the convergence of entertainment with computers and telecommunications. Where some see hype and confusion, Ovitz sees immense opportunity. He wants CAA to be the first stop for companies seeking entertainment to fill their gigahertz cable systems, enliven their interactive video games, or peddle their products. "It's our job to be ahead of the curve," he says. "In the near future, someone with a book or a movie project won't have to be content with just putting it on television or film. And we'd better be able to tell our clients where they can find markets for their work."

To do that, Ovitz has turned his talent shop into a jack-of-all-trades for the multimedia age. From the sleek, $16 million headquarters that I.M. Pei designed for him in Beverly Hills, Ovitz offers his clients advice on everything from advertising and investment banking to sports marketing and technology. CAA's 100-odd agents run the gamut from Armani-wearing types to gray-suited number-crunchers (page 54).

FIRM HAND. Make no mistake: Ovitz still derives his clout from the big names in his Filofax. Michael Jackson, Steven Spielberg, Kevin Costner, and so on. Just look at this summer's big movies: CAA packaged combinations of stars, directors, and writers for Jurassic Park and Cliffhanger. It represented many of the stars in Dave, Sleepless in Seattle, and Dennis the Menace. And Ovitz rescued The Firm, a project that had all but fallen apart last year when CAA client Tom Cruise balked at the directors Paramount had proposed for the film. Along came Ovitz, with client Sydney Pollack in tow. With Pollack at the helm, The Firm has generated $115 million in ticket sales so far.

What sets Ovitz apart, though, is his dogged push to insinuate himself and CAA into realms far beyond mere moviemaking. The MGM deal solidifies his sta-tus as Hollywood's foremost investment banker. He already advised Sony on its $3.4 billion purchase of Columbia Pictures and brokered Matsushita's nearly $7 billion acquisition of MCA.

Ovitz can be a powerful force behind the scenes, too. This spring, he offered shopping tips to Edgar Bronfman Jr., a longtime friend and president of Joseph E. Seagram Corp., who was looking to invest in a media company. In June, Bronfman plunked down more than $700 million for a 5.7% stake in Time Warner Inc. Ovitz is also advising Paramount Communications Corp. on possible deals, including a joint venture with British recording giant Thorn EMI PLC that didn't get off the ground: "He's an opportunist," says Paramount Chairman Martin S. Davis, "and I mean that in the finest sense of the word."

Last year, Ovitz spirited the creative portion of Coca-Cola Co.'s huge advertising account away from McCann-Erickson Worldwide, the soft-drink giant's longtime agency. Now, he is trying to help Nike Inc. break into sports-event promotion by producing a Super Bowl for college football, with six playoff games, TV specials, and a worldwide satellite broadcast. As with everything, Ovitz views the deal in multimedia terms: "Entertainment and sports will be the Trojan horse that brings everything else into the home," he says.

To close the loop on digital media, Ovitz is also forging ties with technology companies that produce multimedia hardware and software. In recent months, Ovitz has cultivated such high-tech heavyweights as Microsoft Chairman William H. Gates III, Apple Computer Chairman John Sculley, and Robert M. Kavner, technology czar at AT&T.

Ovitz and Gates are nearing an agreement to co-develop interactive TV commercials and programs. CAA would supply the star power, while Microsoft would kick in the interactive gadgetry. "People should think of CAA as more than just a talent agency," says Gates, who first met Ovitz 18 months ago in a Seattle restaurant. At the time, Ovitz says Gates wasn't sure why a Hollywood agent wanted to link up with a software creator. Four hours later, the two were convinced they should team up on interactive programming.

The first details of Ovitz' relationship with AT&T emerged on July 28, when Ma Bell said it would buy into an on-line service called Sierra Network. AT&T plans to broaden the network's programming, and insiders say Ovitz will line up the entertainment.

TOO THIN? With such multilayered contacts, rivals question whether Ovitz has grown too influential. They wonder, for example, whether Mancuso will be able to rebuff Ovitz when the man who helped put him atop MGM comes to his studio with a pricey deal. And others still call Ovitz' deal with Credit Lyonnais a conflict of interest. Jeffrey Berg, chairman of archrival International Creative Management, has asked the Justice Dept.'s Antitrust Div. to investigate the arrangement.

A more pertinent question might be whether Ovitz is spreading himself too thin. He insists that he still spends 75% of his time on client business. But with his pampered clientele, even the appearance that Ovitz is tending more to Gates or Sculley than Cruise could prove damaging. As Paramount President Stanley R. Jaffe, a longtime Ovitz champion, points out: "In a creative business, when someone doesn't get a call back in the 30 minutes he's allotted you, he may start to look elsewhere." Indeed, ICM's Berg crows that five CAA clients, including actor James Woods, have left Ovitz' agency in recent weeks.

Woods may be no Madonna or Spielberg. But Ovitz can't shrug off any client defections, since he owns little but his relationships. What's more, industry experts say overall revenue in the talent-agent business has dropped 20% since 1991 as Hollywood battles its costs. For his part, Ovitz insists CAA's revenues are up. Rivals estimate the agency rakes in $200 million a year; Ovitz' 55% stake could net him an estimated $10 million. Still, CAA draws its power from an ephemeral network of clients and potential clients. As demand for their services shifts, so must Ovitz.

The superagent learned that lesson early in his career. The son of a liquor salesman, Ovitz grew up in a middle-class home in the San Fernando Valley. He was class president at Birmingham High, where his classmates included Michael Milken and Sally Field. As a youngster, he frequently rode his bike to the RKO Studio lot, sneaking in to watch as they made films. "It was amazing how they could make something magical out of such chaos," he recalls.

His parents wanted him to be a doctor, and Ovitz soldiered through pre-med at the University of California at Los Angeles. But having worked summers as a tour guide at Universal Studios and Twentieth Century Fox, Ovitz caught the Hollywood bug. After college, he went to work for the famed William Morris Agency Inc.

Corny as it sounds, Ovitz actually started in the mail room--the same one that produced Hollywood aristocrats Barry Diller and David Geffen. He made agent six months later, after the head of the agency found him working at 11 p.m. one night studying the day's correspondence. His first assignment was handling rock groups, but the wildness and drug use made him uneasy. So he moved into the more sedate world of TV instead and took on such clients as Merv Griffin and Rich Little.

STORY POWER. By 1975, however, Ovitz and four other agents grew restless with the stolid atmosphere at Morris. They decided to launch their own agency in Century City. At first, CAA had only a handful of stars, Little and Ernest Borgnine among them. But soon, Ovitz saw where the power lay. He figured if he could sign up enough screenwriters and other producers of raw material, the stars would follow. His most assiduous courtship was of Morton Janklow, the high-powered New York literary agent.

Packaging, a common notion these days, didn't exist in feature films when Ovitz began. But it was old hat in television and radio. Basically, a network planning a new show would turn to an agency such as William Morris to supply writers, actors, and a director. Ovitz wanted to do the same for movies, but he needed compelling material. So for a year, Ovitz phoned Janklow's office every Thursday morning at 10:30 sharp. "You could set your watch by him," recalls Janklow. "Finally, I gave him a project that had fallen apart."

Within weeks, Ovitz had lined up Charlton Heston and Billy Dee Williams for the project, a story about a small-town police force called Chiefs. Better yet, CAA sold it to CBS Inc. for three times what Janklow says he expected to get. An informal partnership was born that gave CAA access to hundreds of Janklow's "stories." Among them: Silence of the Lambs.

By the mid-1980s, Ovitz and his two remaining partners--CAA President Ron Meyer and William Haber--had built Hollywood's largest agency. CAA remains a reflection of its chairman: secretive, buttoned-down, and intense. Agents are smartly dressed and efficient. Some earn $1 million a year and are eligible for hefty bonuses. But the hours are torturous and the pace frenetic.

Ovitz works as hard as anyone. He rises at 6 a.m. to read six newspapers while doing 30 minutes on an exercise cycle at his Brentwood home. A black belt in karate, he spends another hour most days practicing the sport in a gym at his home with a private instructor. He takes a few days off each summer to plan his life in three- and five-year intervals. And his days are a tightly scripted routine of meetings with clients, phone calls, and 1 p.m. lunches.

Away from work, Ovitz lives a similarly ordered existence. He has been married to his wife Judy for more than 20 years. And he recently flew home for a few hours from a conference in Idaho to watch one of his three children play in a baseball game. Ovitz is currently remodeling his Brentwood home, where he keeps valuable collections of art and Chinese furniture. He also maintains homes in Malibu and Aspen.

Above all, Ovitz is a prodigious schmoozer. He calls a list of about 100 movers and shakers every couple of weeks, whether or not he is doing business with them. When Wall Street financier Theodore J. Forstmann was in the hospital for an operation to fix a sinus blockage, Ovitz called him regularly and sent him videos to keep him entertained. The two have never done a deal, but both hold the door open to future ventures. "I think that in what he does, the business and the personal are very mixed up," says Forstmann.

COKE COUP. Ovitz networks with the restless energy of an obscure presidential hopeful stumping in Iowa. While he was clinching the MGM deal, he flew to Atlanta to pitch his client Coca-Cola on a series of new CAA-produced TV commercials. Two days later, Ovitz was back on Walt Disney Co.'s corporate jet as a guest of Chief Executive Michael D. Eisner. His destination: New York, where Ovitz attended a 50th birthday party for Senator Bill Bradley (D-N.J.).

Ovitz' decade-long wooing of Coke is a case study of his methods. He befriended former Coke President Donald Keough when Coke originally bought Columbia Pictures (and later sold it to Sony Corp.). Ovitz had been pals with investment banker Herbert Allen, a Coke director, for years and had worked with him on the MCA-Matsushita deal. Peter Sealey, Coke's former senior vice-president for marketing, had been an acquaintance since he ran the marketing department at Columbia.

Although McCann-Erickson didn't know it until too late, Ovitz had been planting the idea with each of them that CAA could produce commercials as well as a traditional Madison Avenue shop. As if that wasn't enough, Ovitz hired Sealey's former assistant at Columbia, Shelly Hochron, and Len Fink, a creative star at Chiat/Day Inc., who taught CAA the ad business.

When the showdown came with McCann last October, the Coke board was mesmerized by Ovitz. "He was so charming that I almost started applauding his stuff," says John F. Bergin, a retired McCann executive. "He was exquisitely turned out. My Buick probably cost less than his suit." Ovitz has ingratiated himself with so many Coke execs that Sealey's resignation on July 21 hardly ruffled CAA's sails. Indeed, on the next day, the company ordered 33 more commercials from Ovitz for next year.

One problem with being on top is that there are plenty of people who would like to see you fall. And as Ovitz barrels into the future, he is getting further and further from what got him this far. There's no telling how much of the multimedia revolution is mere hype and how much of it really will provide a huge new market for CAA's entertainment interests. Already, some people are taking shots at Ovitz' skills in investment banking and advertising.

Rivals point out that Columbia has had a mixed record under Sony. And Matsushita has had cultural problems with MCA. As for MGM, Ovitz told Credit Lyonnais that a revived studio could fetch at least $1 billion within two years from a cable or telephone company. But it's unclear that Mancuso can churn out the hits to meet such a prediction. Media executives also say Ovitz' presence on both sides of so many deals has fueled Hollywood's escalating costs. "He has created his own hunting preserve," says one top executive of the MGM deal.

NIKE TRIUMPH. In advertising, the jury is still out on whether the 24 ads CAA produced for Coke are selling the product or just entertaining TV viewers. Advertising Age critic Bob Garfield likes the spots, with their snappy jingle and "Always Coke" slogan. But he notes that "the things are riddled with technical deficiencies of all kinds."

Few doubt Ovitz' ability to win over skeptics. When Nike went before the National Collegiate Athletic Assn. last month to broach the idea of a college-football Super Bowl, Ovitz faced a virtual firing squad. Nike Chairman Philip H. Knight marveled at how he soothed the academics, who balked at teaming up with a talent agent. Now, at least they're thinking about it. "He moved them about as far as was humanly possible," says Knight.

Still, the question remains: Will Ovitz lose his iron grip on Hollywood by roaming too far afield? Of course, he doesn't think so. Indeed, soon after James Woods left, Michael J. Fox signed on.

What keeps stars such as Fox coming is a simple fact: Michael Ovitz gets startling results. Just ask talk-show host and client David Letterman, who last December won a $42 million three-year contract to jump from NBC to CBS. "That's so much money," he says, "you just laugh and laugh until things start coming out your nose." Of lesser things are Hollywood legends made.Ronald Grover in Beverly Hills, Calif., with Mark Landler and Michael Oneal in New York


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