Company Town: Ovitz Joins Disney : What Now for the CAA Powerhouse?

The announcement that Michael Ovitz would leave Creative Artists Agency stunned agents and raised a battery of questions about the structure of the close-knit talent shop and who would run it.

If there was a consensus in Hollywood about the effects of the departure of the founder of the nation’s most powerful talent agency, it was this: Without Ovitz’s power to lock up talent and use key movie directors and stars as leverage, the agency business will open up, allowing competitors such as William Morris Agency and International Creative Management to gain some ground--possibly even driving down the costs of movie making.

“The agency business is up for grabs,” said one top entertainment executive. “You no longer have one guy driving all movie deals. This should be good for everyone in town and bring down costs, which have gotten out of control.”

Though it may make most of its money from arranging television deals, CAA virtually controls the movie business by virtue of its client list, which includes such stars as Sylvester Stallone, Tom Cruise and Kevin Costner, and sought-after directors, including Steven Spielberg, Barry Levinson, Joel Schumacher and Martin Scorsese.

Yet before any effect on movie costs, Ovitz’s departure could stir a power struggle at CAA that could be unsettling to clients and the staff as agents fight to fill the leadership vacuum. Sources speculated that some agents could leave, unhappy with their new roles.

After Ovitz leaves in October, only one of the three founders who built the 20-year-old agency into a movie and television powerhouse in the last decade will remain. CAA lost its president this month when Ron Meyer, the glue that held the agency together, started a new job as head of MCA Inc.

That leaves Bill Haber to hold down the fort, though he already spends most of his time at his house in France and is said to be mulling a move, worried that his nearly 23% interest in CAA will be less valuable post-Ovitz. He has been rumored as a candidate for the top television job at MCA and at Disney.

No one at CAA returned calls Monday. In fact, many of the top agents there, including Haber, Jack Rapke and Rick Nicita, were on vacation. But sources close to the agency said a 12-member management transition team had quickly been assembled at CAA to run the company and pick new leadership.

Nine of them are apparently working on a plan to use the future income of the agency to buy out the approximately 78% interest in CAA held by Ovitz and Meyer. Although Ovitz had put a $200-million value on his 55% ownership stake in CAA, Hollywood executives expect the buyout package to be worth much less.

The nine include five thirtysomething agents known around Hollywood as the Young Turks whose de facto leader is Jay Moloney, who is recovering from heart surgery. The other four are department heads--Rapke and Nicita, who run the film group; Lee Gabler, who runs television, and Tom Ross, in music.

The remaining three on the management team are Ray Kurtzman, head of business affairs; Bob Goldman, the chief financial officer, and Sandy Climan, the chief strategist, who worked closely with Ovitz to develop a lucrative consulting practice at CAA. But one source described Climan as the eyes, ears and business brains of Ovitz, and many expect him to be next to join Disney.

The Turks, at least, began crafting a succession plan after Ovitz’s close call with MCA in June. Some entertainment executives said it was an opportune time for the Turks to strike off on their own, the way Ovitz and four other William Morris defectors did in 1975 when they formed CAA, using their wives as telephone receptionists and card tables as makeshift desks.

“Why take on all that overhead, the expensive art and headquarters building, and all that debt, which is about to get bigger, when all you get is talent that could leave?” asked one Hollywood executive.

The remaining mortgage alone on the I.M. Pei building on Wilshire Boulevard in Beverly Hills is estimated at $30 million. And without Ovitz, a consulting practice worth more than an estimated $20 million a year could evaporate. In the last decade, Ovitz has advised clients including Coca-Cola and Matsushita Electric Industrial Co., which he helped buy and sell MCA Inc.

Entertainment sources said rival agencies are probably already calling CAA clients to capitalize on the uncertainty (which could drive prices up rather than down). Said one executive at a rival agency: “Talent is insecure, and you’ve just taken away two, maybe three of their anchors. If you are Barbra Streisand, you don’t want to be handed down to some younger agent.”

Agents began breaking the news to clients and asking their support directly after a mandatory 10 a.m. meeting called by Ovitz on Monday. Ovitz praised CAA’s 100 agents for showing courage and professionalism during the recent management turbulence. His voice cracking with emotion, he then abruptly told them of his departure to scattered applause, a few gasps and many sniffles.

The management team became clear before noon, as industry sources speculated that the most logical leader is Rapke, a powerful movie agent whose clients include Schumacher, the director of “Batman Forever,” and Robert Zemeckis, the director of “Forrest Gump.”

His friends said they thought he would stay despite being approached recently to work side-by-side with Mark Canton, the chairman of Sony Corp.’s Columbia TriStar Motion Picture Cos. unit. A Sony Pictures Entertainment spokesman vehemently denied negotiations.

Yet industry sources said the agency was already fractionalizing, with the aggressive Young Turks squaring off for power with the older guard, many of whom make $1 million or more and have powerful client lists. “Some agents are not going to be too happy if every opportunity and hot new actor goes to the young guys,” said one rival agent.

Times staff writer Claudia Eller contributed to this report.

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