Disney-Ovitz Deal Ratchets Up Stakes Among Media Giants : Entertainment: Latest executive shift puts pressure on Hollywood’s other big players to consider their own mega-mergers.

This summer may go down as one in which the action was hotter in Hollywood’s corporate suites than it was in your neighborhood multiplex.

On Tuesday, Hollywood was still reeling from the news that Michael Ovitz would jump ship from Creative Artists Agency, which he co-founded 20 years ago and led as chairman, to become second-in-command at Walt Disney Co. Two months ago, it was reeling because Ovitz didn’t take a job running MCA Inc. But his former partner, Ron Meyer, did.

Now CAA is scrambling to hold itself together amid the chaos and fend off challenges from other talent agencies.

Before hiring Ovitz, Disney agreed to buy Capital Cities/ABC Inc. for about $19 billion. Both moves are expected to prod other media giants, such as Viacom Inc., Sony Corp. and MCA, to examine whether they’re being left on the sidelines.

If that wasn’t enough, Westinghouse Electric Corp. wants to buy CBS for $5.4 billion. But not if Ted Turner, who covets the network, can help it. Some on Wall Street are even convinced that General Electric Co., owner of NBC, may try to buy media giant Time Warner Inc. at a cool $30 billion-plus, although many analysts are skeptical.

Nearly lost in the mega-deals shuffle is the anticipated sale of Hollywood’s last major independent film distributor, the financially strapped Samuel Goldwyn Co., which is expected to be added to the Turner empire as early as next week.

This summer of Hollywood musical chairs and huge mergers involves the biggest players as they fight to build the largest and most competitive organizations in a rapidly changing world. Sparked by technological advances, an easing of government regulations and a flood of investors eager to put money into entertainment, the stakes have never been higher.

“Competition is great because it raises the expectation of the game and moves all the other players to another level. Nobody wants to be left at the starting gate,” said Scott Sassa, president of Turner Entertainment Group.

CAA, which had been characteristically quiet about its own future, issued an unusual statement seeking to downplay talk that it is unraveling with the loss of Ovitz and Meyer.

In the statement, the agency said that it “has, from its inception, dedicated itself to serving the best interests of its clients. We continue to do so without interruption.”

The company said it is forming a new management team and will announce details shortly.

A top-level source at the agency said details on a new management structure--as well as terms of buying out Ovitz’s 55% stake and Meyer’s 22.5% stake--are expected to be worked out through a 12-member transition team by the end of next week. Things are in such a state of flux, however, that some CAA agents continued to insist that the transition team numbered only nine people, although the official word from the company is that the number is 12.

Meyer’s percentage has been put into a blind trust to satisfy talent guild rules that preclude studios and their executives from owning an interest in an agency. Likewise, Ovitz’s share of the agency is expected to be put into a blind trust if he has not divested it before joining Disney on Oct. 1.

The status of CAA’s remaining partner, television agent Bill Haber, who also owns 22.5%, is uncertain. Hollywood executives are speculating that Haber, who is vacationing this week, will leave the agency either to retire or take a senior industry post.

How CAA will finance a buyout of Ovitz and Meyer is unclear, and a number of options are being explored. One possibility is a bank-financed loan against CAA’s receivables, although some bankers said obtaining financing would be more difficult with the departure of Ovitz and Meyer. One source said CAA loans for working capital in the past have been personally guaranteed by Ovitz, Meyer and Haber.

As CAA fought to close ranks Tuesday, rival agencies circled. Sources said some agencies are already meeting with CAA agents hoping to lure them and their star clients.

Unlike a number of other agents, CAA’s employees aren’t under contract. Some clients aren’t, either, although several have contracts specifying that they are free to go only if a group of specific agents departs. One longtime writer-director client of the agency reportedly was sent via Federal Express a contract for general representation, a move viewed as an aggressive attempt to keep him.

Meanwhile, more executive shifts may be rippling through Hollywood. Warner Bros. Chairman Terry Semel is said to be a serious candidate to join MCA next year as chairman under its new owner, Seagram Co., and its chief executive, Edgar Bronfman Jr.

Sources said no formal discussions are taking place now but that Semel, who is vacationing this week with longtime friend Meyer, has recently sent signals to Time Warner executives that he is being courted, news that is apparently not being received well at Time Warner’s New York headquarters. One top MCA source said Semel has an escape clause in his contract come January and that after that “all bets are off.” Bronfman told the Times in a recent interview that Semel is the kind of Hollywood executive he admires.

Another executive reportedly being actively courted is successful talent manager and television producer Brad Grey of Brillstein-Grey Communications. Sources said Grey is being sought for jobs overseeing film and TV operations at MCA and Sony.

* OVITZ AFTERSHOCKS: Agency world in motion. F1