Good news for Disney, bad news for talent agency as Ovitz moves.

Two of Hollywood's most powerful empires were forever changed last week with the announcement that super-agent Michael Ovitz would leave Creative Artists Agency to take over the long-vacant job of president at Walt Disney Co.

Disney gains a powerful and capable executive in the deal, providing both an heir apparent to Chairman and CEO Michael Eisner and a strong helping hand as Disney tries to incorporate Capital Cities/ABC Inc. into its rapidly expanding global empire.

But Disney's gain is clearly CAA's loss, as Ovitz in his 20 years with the company he co-founded built the most powerful talent agency in the business. Ovitz is credited with shifting the balance of power from the studios to the individual stars, several of whom, led by CAA, now command $20 million a picture.

Ovitz also turned his agency into much more than a mere talent agency, providing strategic planning and advice on such Hollywood super deals as Matsushita's buyout of MCA Inc., while also serving as a consultant/advertising agency for corporate clients like Coca-Cola.

But it is in the movie world that Ovitz reigned supreme, with a list of clients such ranging from Kevin Costner to Whoopi Goldberg to Steven Spielberg to Barbra Streisand, which gave the agency unprecedented power over those who made the films.

As one entertainment industry insider noted, "To get your movie made, all you really needed was CAA on your speed dial."

CAA quickly assembled a transition team to begin building the post-Ovitz era. To make matters more complicated, CAA No. 2 man Ron Meyer recently left the agency to take the top post at MCA.

Four plan future

Among those said to be on the transition committee are the company's four department heads: Rick Nicita and Jack Rapke, who run the motion picture department, Lee Gabler of television, and music topper Tom Ross.

Younger up-and-coming agents also on the Committee include Kevin Huvane, Jay Moloney, Richard Lovett, David O'Connor and Bryan Lourd.

Just who will take on what responsibilities in the wake of Ovitz's and Meyer's departure is still to be worked out. Also unanswered is how their equity stake in the company they founded will be acquired and split up among the remaining players.

That stake is said to be about 77 percent, with Ovitz holding 55 percent and Meyer holding 22.5 percent. The third founding partner, Bill Habler, also holds about 22.5 percent.

"Some of the younger agents who were not in the general public's eyes are going to come to the forefront," said Mike Adler, an entertainment attorney with Century City law finn Mitchell, Silberberg & Knupp.

"They are among the most able group of people in the business. They're smart, they're conscientious, they work hard and they work together," Adler said. "It was not by Michael Ovitz alone that the agency succeeded."

Poached clients?

Still, new of Ovitz impending exit set other talent agencies wondering just which CAA clients they can poach, and which CAA agents they can lure into their own companies.

Christopher Borde, associate analyst with entertainment research firm Paul Kagan Associates, said CAA has been a close-knit group, where agents were generally not likely to leave the firm, and therefore were not offered many jobs outside the agency.

"The prestige that came with working for CAA was enough to keep this group together, and now that prestige has lessened." Borde said. "But there was also an allegiance among the agents there. That allegiance was broken by those at the top.

"Obviously, everyone at the other agencies are enthusiastic and looking for new opportunities," Borde said. Other movie studios and entertainment companies might also approach CAA staffers looking to bolster their own management ranks, he said.

Details of Ovitz's deal with Disney were not released, and won't be disclosed until financial filings due next year.

Ovitz will assume his Disney duties on Oct. 1 and be responsible for Disney's three operating divisions - Walt Disney Studios, theme parks and consumer products - as well as for Capital Cities/ABC, which Disney is in the process of acquiring for $19 billion.

Ovitz will replace Frank Wells, who died last year in a helicopter crash, in the role of president. Since Wells' death, Disney movie studio chief Jeffrey Katzenberg's departure and Eisner's heart surgery, Disney's top management ranks seemed dangerously thin. The addition of Ovitz, 48, eases many of those fears.

Ovitz will also provide valuable input and operational skills as Disney tries to keep its reins on its ever-growing operation.

"As you create these new media conglomerates, the real challenge is to keep them manageable," Adler said. "Disney is adding on a $19 billion company (with the Cap Cities/ABC purchase). One person (Eisner) cannot manage all that.

"But Ovitz, on a macro level, is probably about the best manager to be found."

RELATED ARTICLE: And what about TV/phone venture?

Shifting alliances in Hollywood always seem to catch someone in the middle. Nowhere is this more apparent that at the offices of Tele-TV, the joint venture of telephone companies Pacific Telesis Group, Bell Atlantic Corp. and NYNEX that is working to compete with cable TV companies in bringing video programming into homes.

The three partners were brought together by Michael Ovitz and his Creative Artists Agency, which was also working with their strategic plan.

But less than a year into the venture, Ovitz will soon leave CAA to become president of Walt Disney Co., which perhaps not coincidentally is involved in its own video programming venture with phone companies GTE Corp., Ameritech Corp., Bell South Corp. and SBC Communications Inc.

"There are legitimate concerns about how that situation will play out," said entertainment attorney Mike Adler, noting that the loss of Ovitz will put a strain on the CAA/Tele-TV relationship.

Tele-TV's service launch is still on schedule, said Chairman and CEO Howard Stringer, who noted the venture began to consider a change in its relationship with CAA in June when Ovitz was in talks to take over the top spot at MCA.

Tele-TV will now "be reviewing our relationship with CAA," Stinger said, although no change is imminent.

"While (Ovitz's) departure is a great disappointment, we are not looking to disassociate ourselves from people who have been extremely valuable to us."

- Greg Spring