NEWS ANALYSIS : Is Michael Ovitz Ready to Move Over to MCA? : Company Town: Some insiders suggest the mega-agent may want to gamble on landing an even bigger fish down the line.

As Hollywood continues to speculate feverishly that Michael S. Ovitz is on the verge of negotiating a move to MCA Inc., some people close to the talent agent have been advising him that he has nothing to lose by waiting for what may be an even bigger opportunity down the line.

Specifically, sources say, some executives with close ties to Ovitz are suggesting he may want to gamble on landing a bigger fish: the opportunity to run Time Warner Inc. should Chairman Gerald M. Levin falter in the next year or two. Such a move, they argue, would perch Ovitz atop the world’s biggest media company and give him more independence than he would be likely to enjoy at MCA, where 80% of the company is about to pass from Matsushita Electric Industrial Co. to Seagram Co. and its hands-on chief executive, Edgar Bronfman Jr.

Time Warner corporate executives bristle at any suggestion that Levin is anywhere near leaving his job and say such talk stems from West Coast gossips who are far removed from the company’s New York corporate center.

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“He was a man clearly in control of the company and its direction” at Time Warner’s annual meeting Thursday, chief spokesman Edward Adler said.

Rumors about Ovitz and MCA have churned nonstop since even before Bronfman signed the $5.7-billion deal in early April. Creative Artists Agency on Thursday again denied that Ovitz is leaving and suggested that such talk is being circulated by people interested in creating anxiety among the giant talent agency’s clients. Ovitz declined to comment beyond saying, “All the speculation is fact-free.”

Speculation picked up again this week following a mention in a New Yorker story by writer Ken Auletta that Ovitz is Bronfman’s first choice to run MCA but that Ovitz would want about $200 million for his CAA stake.

Sources say no formal negotiations have taken place and that the first priority of Bronfman, who just returned from a week in Europe to celebrate his 40th birthday, is negotiating a deal satisfactory to MCA President Sidney J. Sheinberg to set up a company based at MCA.

The entertainment conglomerate’s chairman, Lew Wasserman, is expected to take a chairman emeritus-type position once Seagram completes the 80% purchase from Matsushita in early June.

Sources say Bronfman could well approach Ovitz after the deal is closed but that getting him would cost hundreds of millions of dollars, a price that might be hard to justify to Seagram stockholders. Some stockholders are already wary of the company’s decision to sell its lucrative stock position in DuPont and betting the distiller’s future on Hollywood.

Frustrating Hollywood is the fact that both Bronfman and Ovitz are known to play things extraordinarily close to the vest. Senior Seagram executive Stephen Banner, one of the few people Bronfman confided in regularly, died Thursday of cancer.

Skeptics of Ovitz’s possible move to MCA say the executive has received many top offers in the past--running Sony’s Hollywood operation among them--and has turned them down.

Sources also continue to insist that Warner Bros. co-Chairman Terry Semel is a viable candidate to run MCA and is interested, though it is unknown whether he could get out of his contract.

In addition, sources said Barry Diller, a close friend of Bronfman who has discouraged any suggestions that he might go to MCA, could be lured with the right offer.

While much of Hollywood appears convinced that Ovitz will make the move to MCA, a small number of influential executives who know him think he should wait in the hope that a spot at Time Warner becomes available.

But counting on Time Warner imploding is anything but a sure bet.

There is no evidence that Time Warner’s board is near revolt. Levin is working to boost the stock price, possibly through a restructuring that would separate the company’s cable operations--which have been blamed for dragging down the stock.

Time Warner’s proxy statement shows that directors who review Levin’s bonus gave him the highest marks for 1994. Levin has shown himself to be adept at corporate politics, removing directors who were allies of former Chairman Steven J. Ross in 1992. Directors named during his chairmanship include such executives as former Major League Baseball Commissioner Fay Vincent, a longtime Levin supporter.

Still, Time Warner’s stock has been trading flat, and the company has been rocked by turmoil at its music division that resulted in Levin replacing Robert Morgado with HBO chief Michael Fuchs.

Added pressure could come if a single buyer purchases Seagram’s nearly 15% stake in Time Warner.

Time Warner directors slapped a “poison pill’ anti-takeover measure on the company when Seagram began accumulating stock in 1993 out of fear that he could gain enough of the company to shake up management.

Sources Thursday continued to discount rumors that billionaire Ronald Perelman would buy the stake. Perelman has been telling people he is not buying it, the sources said.

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Inside Hollywood

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