Hollywood Sizing Up Firm’s Grasp

The Firm, the generically named talent management company that began in a Malibu apartment in 1997, has raced through the music industry with the velocity of a bullet train, picking up some of the very biggest names in pop music. Now, after scooping up entertainment mogul Michael Ovitz’s remaining empire, the wild ride is headed down a new track: Hollywood.

The Firm has long been the talk of the music business because of the aggressive style and unyielding appetites of its chief executive, Jeff Kwatinetz, a lanky Harvard law graduate with a famous temper.

To Kwatinetz’s stellar list of music clients, including Limp Bizkit, Korn, Mary J. Blige, Linkin Park and the Dixie Chicks, he will add the Tiffany collection from Ovitz’s Artist Management Group--Leonardo DiCaprio, Cameron Diaz, Samuel L. Jackson and Benicio Del Toro.

This latest deal comes after Kwatinetz has expanded his company into everything from sneakers to teddy bears to record labels. Now film and television players will be sizing him up. “You can’t take your eyes off the guy,” one music manager said Monday.

Kwatinetz does not enjoy the scrutiny.

On Monday the 37-year-old declined to answer questions about the nature and breadth of his plans and said he would prefer to emphasize “the team” of the Firm, not the name of its CEO.

“There’s lot of work ahead. It’s not an easy thing to take on a lot of people and integrate two cultures,” the Brooklyn-born manager said. “I get uncomfortable when people focus on Jeff Kwatinetz. I’m reluctant to speak about myself because the Firm and this deal ... have nothing to do with Jeff Kwatinetz. They have to do with the amazing team of people here. And things we believe we can do for the best clients in the entertainment business.”

This week the Firm announced that it will gobble up much of Ovitz’s Artists Management Group, which Ovitz had hoped would reinvent the basic blueprint of entertainment companies. Echoing some of Ovitz’s ambitions, the Firm will look toward becoming a venture that not only negotiates record contracts, but also has its hand in brand marketing and filmmaking.

The Ovitz dream fizzled, in part, because much of Hollywood delighted in thwarting his plan for a multifaceted company that would produce and distribute movies and television shows for his clients.

Although the boundaries of Kwatinetz’s plans are still hazy, some who have watched him scale the heights of the music business say he, too, may have burned too many bridges to build a new-look empire.

Two top music executives, for example, on Monday characterized Kwatinetz’s negotiating style as abrasive and, ultimately, damaging to his own clients. They say he is known for behind-the-scenes threats of litigation against record companies and regularly demands exorbitant advances for his music acts.

But other executives such as Jimmy Iovine, whose Interscope Group releases music by Firm acts Limp Bizkit and Puddle of Mudd, characterize Kwatinetz as a champion of his clients.

“The guy is relentless,” Iovine said. “He gives it all every minute. His attention to detail is ridiculous. The dynamic between him and [Bizkit lead singer] Fred Durst and [Geffen Records President] Jordan Schur is something that I haven’t seen in rock ‘n’ roll in a long time. It’s high octane. I’m glad it’s in my boat.”

Tom Whalley, chairman of Warner Bros. Records, called the manager unflinching and inventive. “Jeff has no fear to try things no one has ever done,” Whalley said. “He’s not afraid of failure whatsoever--and that is how he has become so successful so quickly.”

The trajectory of his success makes some critics wonder if Kwatinetz can make it all last. His most lucrative client, the Backstreet Boys, left the Firm two months ago. (They signed with Irving Azoff, another hardball manager, who represents the Eagles.) The Firm’s overhead is rumored to be high, more than $2 million a month, with 130 employees.

Regardless, the Firm, co-founded by Kwatinetz and Michael Green, has compiled an impressive client list that at one time included Michael Jackson. The meteoric success of acts such as Limp Bizkit and Staind was credited by industry observers to the Firm’s hands-on detail work, and the company also crafted a successful path for the Backstreet Boys.

Although some of his critics say Kwatinetz is more concerned with his reputation than his clients’ career health, he has described himself as a manager who wants to harvest the careers of artists, not strip-mine them. In an interview with The Times last year, he said he fought against promoters who wanted to book the Backstreet Boys in stadiums instead of arenas. The larger venues would have made for a bigger payday but would have failed to sell out, undermining the group’s health as performers.

“That cost my company $6 million in commissions on the tour and another $2 million in [merchandise] and I just wonder how many managers would take $8 million out of their pocket to do the right thing by their group,” he said.

Kwatinetz, who bought out Green’s partnership interest in the Firm, wants his company to be far more than a music management venture.

The Firm bought the near-defunct Pony sneaker brand, a hot brand in the 1970s after athletes such as Muhammad Ali, Joe Frazier and Earl Campbell sported the shoe.

Firm officials now say Pony sales, $2 million last year, are expected to reach $50 million in wholesale sales for 2002.

After that deal, Kwatinetz took a 50% stake in the marketing rights to Build-a-Bear Workshop, a mall-based chain with sales of $158 million that lets kids design their own stuffed animals. Kwatinetz also has a deal to merchandise Arthur, the polite cartoon aardvark. And the firm is involved in a film production company and a record label.

Some wonder if the Firm may be spreading itself too thin.

Haim Saban, the billionaire television mogul who cashed in on the Power Rangers craze, said he opted not to invest in the Firm after discussing business plans with Kwatinetz to build a far-reaching entertainment empire.

“The fundamentals weren’t there,” Saban said. “I believe this is an industry of giants. You can do really well as a well-focused small player, like [computer animator] Pixar, but to launch a multifaceted company and really compete with the big ones, that was a battle that

Although Kwatinetz has been a successful fighter in the music business, he also has suffered some bruises along the way. He had to return $25 million to Robert Sillerman of media firm FXM after a merger with the Firm turned sour.

Kwatinetz’s dream of reviving Michael Jackson’s career fell short and they parted ways in short order. There also was an ugly split with former employer Sandy Gallin, who Kwatinetz claimed was a sexual harasser in a lawsuit. Gallin denied the charges and the suit was dropped.

By the numbers, the Firm looks good. According to Forbes magazine, the company has a stable of actors and musicians that in 2000 generated more than $1.5 billion in gross revenue. Kwatinetz hopes to build on that.

The harsh appraisals of Kwatinetz’s plans are premature and off-base, said Julie Silverman-Yorn, his new partner as a result of the merger. Silverman-Yorn and her brother-in-law, Rick Yorn, are taking 40 of their best managers--from the film, television, music and publishing arenas--over from AMG to the Firm.

“We will be judged by our work,” Silverman-Yorn said. “I really believe that this group is smart, entrepreneurial, young, thinks out of the box, really protect their clients’ interests. That’s why we did this.”

Others took a wait-and-see approach.

“He’s a very smart, ambitious guy,” said Jim Wiatt, head of the William Morris Agency. “A very successful music guy whose ambition is to make movies.” He’ll be able to attract money to build something interesting, he said.

Talent manager Marty Bauer said he believes there will be a fair amount of fallout from the merger of AMG and the Firm affecting both agents and clients.

“There will be a ripple effect,” said Bauer, predicting, “A lot of the managers that are let go will become agents and therefore they will try to take their clients away.”

Bauer doubted that the balance of power and the management business would be affected. “Not even close,” he said. But he acknowledged that Kwatinetz and company are creating conversation for the power lunch set.

“It’s the perfect Hollywood story. It’s something to talk about and gossip about. It’s fun,” he said.

Times staff writers Claudia Eller and Chuck Philips contributed to this report.