On This Deal, the Fee May Be Only the Icing for Ovitz

When the Japanese come calling on Hollywood, talent agent Michael Ovitz, chairman of Creative Artists Agency, often serves as their advance man.

He smoothed the way for Sony Corp.’s takeover of Columbia Pictures Entertainment last year, and he is playing a similar role in talks between the giant Matsushita Electric and MCA. The difference this time, however, is that Ovitz may walk away with more than a consulting fee.

Speculation is rife that Ovitz will be tapped to run MCA if the sale goes through. People close to the discussions say Ovitz may eventually replace aging MCA Chairman Lew R. Wasserman under the deal, thereby satisfying a long-held desire to head an entertainment conglomerate.

“You know the problem with Mike. . . . Big hat, no cattle,” said one top Los Angeles investor, referring to Ovitz’s big ambitions but relative lack of funding to play the takeover game. In Matsushita, a $38-billion-a-year giant, he may have found cash to play at the highest level.

Industry sources say Ovitz probably wouldn’t move into a management spot at MCA for a year or even more. With the prospect of running MCA, however, Ovitz could face the most daunting management task of his career: Leaving behind a viable agency that revolutionized the way deals are made in Hollywood.

Ovitz, who would presumably be required to sell his CAA holdings under federal antitrust guidelines, is widely held to be the most powerful and innovative agent to work in Hollywood since Wasserman.

CAA built a huge “packaging” business in TV by cutting its fees, and in movies by organizing ensembles of big-name stars and directors. Along the way it also amassed a stable of clients including Tom Cruise, Dustin Hoffman, Robert Redford, Jane Fonda and director Steven Spielberg.

CAA spokesman Stephen Rivers branded as “rumor” suggestions that Ovitz’s relationship to the Japanese electronics giant extends further than “software consulting.” “His role and our company’s role in this situation are as agents, not principals,” Rivers said.

Should Ovitz leave, sources close to CAA say his departure could take a heavy toll. “The good news is that Ovitz is a strong, willful, dynamic manager,” said one source close to CAA. “The bad news is that despite the best-laid plans, his departure will leave a gaping hole. The whole fabric of the agency would change.”

Many in the industry say the whole fabric of the agency business would change, too. Ovitz personally represents about a dozen of the biggest stars and filmmakers in the business--names such as Barry Levinson, Spielberg, Sydney Pollack, Dustin Hoffman, Redford and Bill Murray--who might be courted by other agents if he departed.

Just as importantly, CAA’s talent agents could be wooed away by competitors. Unlike some other big competitors, CAA does not bind its agents with contracts, and ownership of the company is closely held by Ovitz (55%) and his co-founders Ron Meyer and Bill Haber (who split the remainder) rather than spread out among senior agents.

Although Meyer and Haber were founding partners, it has been Ovitz who shaped the culture of CAA. Said one source close to CAA: “Mike is such a godfather-type figure there. This would be a huge, huge change. It would be like Disney losing Mickey Mouse.”

Ovitz built CAA on a steadfast resistance to hierarchy. In recent years, for example, co-owners Meyer and Haber served as Ovitz’s lieutenants but Ovitz--as president--was the only one to carry a title in the company.

That has begun to change. Early this year, Meyer was made president and Ovitz became chairman--a move that many insiders took as a signal that Ovitz had one foot out the door.

There have been other signs of Ovitz’ restlessness. In February, 1989, Sony hired him as a consultant when it was shopping for a Hollywood studio. When the Japanese electronics giant settled on Columbia Pictures six months later, Ovitz was offered the top job.

Under one scenario discussed by Ovitz and Sony, Coca-Cola or its Columbia unit would have bought CAA and then spun the agency back to its senior agents in a leveraged buyout, according to sources close to the negotiations. But Ovitz and Sony could not agree on terms and the top posts went to producers Peter Guber and Jon Peters instead.

Even then, sources close to the agency say, Ovitz appeared to be distancing himself from the agency, more frequently keeping his doors closed to all but the most senior agents. About three months ago, Ovitz took the more dramatic step of turning over the Wednesday morning motion picture staff meetings to Meyer.

In Ovitz’s stead, it is expected that Meyer would become the top manager. A popular figure inside the agency, Meyer often plays good cop to Ovitz’ bad cop, but insiders say he is less interested in the administrative side and not enough of a hardball player to gain the stature that Ovitz enjoys.