TV Woes Another Setback for Once-Invincible Ovitz

For two decades, Michael Ovitz reveled in his persona as the most powerful agent in Hollywood.

On Thursday, one day after making devastating cuts at his fledgling television production company, Ovitz sounded uncertain whether his latest venture would last beyond tomorrow.

“I don’t know what’s going to happen next,” Ovitz said in a telephone interview. “I’m just trying to keep the company functioning. . . . Emotionally, it’s really tough. . . . We’re trying to put it all together. It’s not easy. . . . I don’t know how it’s going to end, if it ends.”

Ovitz, 54, used his clout as the premier talent agent to force the entertainment industry to play by his rules.

But his foray two years ago into television production, a cutthroat business that was unfamiliar to him, has cost him millions of his own money.

“The television business is hard for an independent whether his name is Mike Ovitz or his name is Universal,” said Sidney Sheinberg, former president and chief operating officer of the then-parent of Universal Studios. “I presume the advantages he thought he brought had to do with leveraging important client relationships. But if your shows are not any good . . . then those relationships only go so far.”

On Wednesday, Ovitz’s Artists Television Group laid off 18 of its 38 employees. The news is the latest sign that Ovitz’s comeback effort may be faltering.

After losing a personal fortune that people familiar with his operations estimate at $50 million to $80 million, Ovitz is preparing to pull the plug on his television business. It is unclear whether such a failure would have any effect on Ovitz’s overall enterprise, as well as his talent company, Artists Management Group, which represents comedian Robin Williams, actor Leonardo DiCaprio and director Martin Scorsese. Ovitz formed AMG in December 1998, with the idea of drawing on clients to expand his business into music, movie, television and sports programming.

Ovitz declined to detail the extent of his personal financial losses. He emphasized that his other production and management enterprises are separate entities and in good financial shape.

Wednesday’s layoffs, which included the senior vice president of production, Bill Phillips, are one step toward getting the TV unit back on track, Ovitz said.

“We just let go 18 people; 14 were assistants. I have funded this thing for 2 1/2 years, tried to do the right thing. This is just one of our companies. We have so much else going on.”

Ovitz’s partner at AMG, Rick Yorn, left less doubt about the TV company’s fate. “We can’t keep going like this. It’s time to restructure. It’s going to be over soon. We can’t do it with Michael financing this. We’re getting near the end,” he said.

Hollywood executives said Thursday that Ovitz’s troubles stem from his lack of knowledge about the inner workings of the television business and the difficulty of starting a production entity from scratch in an industry dominated by huge multinational companies.

“This is a pat on the back for the studio system,” said one executive who declined to be identified. “When you have four or five shows, you need a studio to back you. He’s laying out all this money with no money coming in. His big mistake was in trying to grow too big too fast.”

This turn of events for Ovitz is the most recent in a series of humiliating setbacks in the last several years.

Ovitz’s domineering role as a Hollywood power broker ended in 1995 when he abruptly left the talent company he founded in 1975, Creative Artists Agency. After failing to get the top job at Universal Studios, Ovitz was rescued by his good friend, Walt Disney Chairman Michael Eisner. He became president of Disney, only to be shown the door 14 months later. Estimates of Ovitz’s severance package range from $90 million to $130 million.

Broadway, NFL Efforts Fall Short

After being pushed out of Disney, he invested $20 million in Livent, a Broadway production company that was forced into bankruptcy six months later because of an alleged accounting scam by previous management. Ovitz’s failed attempt in 1999 to bring an NFL franchise to Los Angeles cost him his friendship with supermarket magnate Ron Burkle.

Ovitz also invested funds with money manager Dana Giacchetto, who is serving a 57-month sentence for stealing $10 million from accounts of clients including Hollywood stars. Ovitz called Giacchetto his “life advisor.”

Ovitz’s philosophy and financial structure for the television production company were a high-wire act from the beginning.

“The formula for the television business assumed we would find a strategic partner to help finance the shows,” Ovitz said. “We were never able to consummate those discussions.”

One source close to ATG said Ovitz had serious discussions with major studios and even an energy company, Enron. AT&T; proposed a partnership with ATG but failed to close the deal, the source said.

Ovitz said he has been brainstorming his next moves in staff meetings throughout the week. Others in Hollywood say Ovitz is down to his last Hail Mary in television.

After trying without success to unload his TV operation, Ovitz has one looky-loo left. CBS, NBC, Disney and Sony already have rejected his overtures, leaving Paramount Pictures as the last studio in talks with Ovitz.

A Paramount official said Thursday that the company is unlikely to strike a deal. The company declined to comment.

Although all five of ATG’s prime-time shows that debuted last fall were canceled, the unit has four new series for the 2001-02 season. Its most promising program is “The Ellen Show,” starring comedian Ellen DeGeneres, on CBS, owned by Paramount’s parent company, Viacom.

Ovitz’s free-spending approach to the business, according to network and studio executives, posed another problem.

In the mid-1990s, 20th Century Fox set off a bidding war for television writer-producers, making millionaires out of even modestly successful sitcom scribes. When some of those development deals failed to produce the expected hit series, the studios scaled back.

TV Series Lose Money From the Start

At the same time, Ovitz jumped into the television business by committing an estimated $60 million to writers and producers, including “Sex and the City’s” Darren Star and Adam Chase, a veteran of “Friends.”

Ovitz declared his strategy a success when he sold 10 pilots his first season last year, with five series picked up by the networks. The reality, however, was that the company began bleeding money as he self-financed those series.

Network executives estimate that Ovitz was spending $20 million to $25 million a year on television executive salaries and writer-producer deals. Producing shows cost ATG millions of dollars on top of that. For instance, ATG lost more than $600,000 an episode on its most expensive series, “The $treet,” by Darren Star, which was canceled by Fox early in the season.

Studio and network executives who dealt with Ovitz said he appeared not to understand that, even with a hit show, it would take five years before he could recoup his investment by selling reruns in syndication. Even worse, more than 90% of prime-time programs don’t make it beyond a few years.

Now Ovitz is trying to sell off his television assets heading into ATG’s second prime-time season. This also is the time when most studios are starting to develop new programs for next year.

“Mike went into the business with all this largess and opened offices suitable for his mogul status, not his business,” said a former CAA colleague. “You need a TV business that works and clients that are making more money than the people who represent them.”

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Times staff writers James Bates and Claudia Eller and researcher Nona Yates contributed to this report.

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Fewer TV Sales

Artists Television Group, the TV arm of Michael Ovitz’s talent management firm, sold six shows to the networks in its first prime-time season, an unprecedented success for an independent.

ATG shows ordered for the 2000-01 season:

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Program Genre Network Status Cursed/The Weber Show Comedy NBC Canceled Fighting Fitzgeralds Comedy NBC Canceled Grosse Pointe Comedy WB Canceled Madigan Men Comedy ABC Canceled The $treet Drama Fox Canceled The Michael Crichton Project Drama Fox Never produced

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In contrast, four new ATG shows have been picked up by the networks for the 2001-02 season:

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Program Genre Network Status The Ellen Show Comedy CBS Fall Lost in the USA Unscripted WB Fall Cedric the Coach Comedy WB Midseason No Ordinary Girl Drama WB Summer

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Sources: Artists Management Group, Times files Researched by NONA YATES / Los Angeles Times