OVITZ DOWN BUT NOT OUT, INSIDERS SAY : FRIENDS, FOES ALIKE EXPECT REAPPEARANCE.

Byline: Bernard Weinraub The New York Times

Michael Ovitz turns 50 today, humbled and fallen from grace like few power brokers in the history of Hollywood. But no one - not even his numerous enemies - is predicting that Ovitz will disappear from the entertainment industry's corridors of power.

Ovitz leaves the presidency of Walt Disney Co. - the chairman, Michael Eisner, happily opening the door for him - with an extraordinary windfall, perhaps as much as $90 million after only 14 months in the No. 2 job. The former talent agent still has important friends in Hollywood and on Wall Street, still retains an aura of power and mystery and, despite his failures at Disney, can point to an extraordinary record over the past 10 years of deal-making success.

Already Friday, Ovitz's associates and even some foes were reshaping his image from that of the Disney president who floundered to that of a man put in an untenable position by Eisner. Many top executives and agents in Hollywood said that the corporate marriage between Michael Ovitz and Michael Eisner, who have claimed they were the closest of friends, was doomed from the outset. And the fault, they said, rested just as much with Eisner as Ovitz.

Ovitz, who announced Thursday that he was quitting Disney after a brief and turbulent reign, found himself unable to carve out a role at one of the world's best known companies, and was psychologically unable to adjust to playing No. 2 to Eisner after years running the Creative Artists Agency, executives close to him said.

At the same time, Eisner, who has a reputation as a brilliant but abrasive manager, was faulted Friday by studio executives for his inability to open the way for Ovitz. He was also blamed, to a degree, for helping stage-manage the fall of his friend by speaking openly to associates and others of being disappointed with the performance of Ovitz.

By all accounts, the two men had agreed in recent months that Ovitz was simply not working out in the job.

``Ovitz went over there with an understanding what the job would be - that they had a huge company to run, and it would be nothing less than a partnership, sharing duties and responsibilities,'' said a longtime associate of Ovitz's, who spoke on condition of anonymity.

``Eisner said he was sick; he couldn't possibly do the job himself; he couldn't work 14-hour days anymore; there was too much on his plate,'' the Ovitz associate said, referring to Eisner's quadruple bypass surgery two years ago. ``The reality was Eisner did not let go. He did not take time off. He increased rather than decreased his workload.''

A source close to Eisner put it differently. ``Ovitz got surprised at what the job was, and Eisner got surprised at what Ovitz knew and didn't know,'' he said. ``Ovitz wasn't Frank Wells, and Eisner wanted Frank Wells,'' he added, referring to the late Disney president who had overseen nuts and bolts like labor negotiations and dealings with Wall Street, allowing Eisner to concentrate on the creative side and global expansion.

Though there was talk in the entertainment business that Ovitz's departure left Disney without a clear succession plan, it had little effect on Disney's stock. The shares closed at 70-1/4 Friday, unchanged on the New York Stock Exchange.

Ovitz has decided for now against seeking a high-level corporate job. His associates said he preferred to take over a company and work for no one but himself. He is expected to start talking to investment bankers immediately.

Because Ovitz helped build Creative Artists from scratch and because he has solid relationships on Wall Street, the debacle at Disney is not expected to damage his reputation with deal makers, several investment bankers said. There were predictions that Ovitz would eventually seek financing to buy a spinoff from a larger entertainment company. ``He's very innovative,'' said Herbert Allen Jr., a prominent investment banker closely involved in the movie business.

Ovitz leaves with a huge pay package. Some rival studio executives insisted that the package was $20 million. But associates of Ovitz's said it might be as high as $90 million - $50 million in cash plus stock options that are now worth about $40 million. Disney spokesmen declined to discuss it. The details will emerge when Disney files proxy materials early next year.

Although Ovitz had engaged in talks with Sony about taking a top job there - talks that fueled Eisner's anger, according to studio executives - the Japanese-owned entertainment giant has vigorously denied that the former agent will move to Sony.

While Disney's board has firmly endorsed Eisner's decisions, the departure of Ovitz ``by mutual agreement'' raised questions among top entertainment executives about the board's unbending support for the chairman in the future.

For one thing, Eisner has been unwilling to retain a powerful No. 2 executive since Wells' death in an accident two years ago. He dismissed Jeffrey Katzenberg, chairman of Walt Disney Studios, who wanted to move up to the company's presidency. And Eisner eagerly accepted Ovitz's resignation.

Even Disney executives acknowledge that Eisner's management style was, perhaps, anathema to Ovitz. But studio executives said Ovitz bore the brunt of the blame with some highly publicized missteps, including clashes with top Disney officials; an imperious management style that included a huge office and staff, even by Hollywood standards, and a feud with NBC that was set off when he lured a top programmer, Jamie Tarses, from that network to Disney's ABC network.

Ovitz also went out of his way to recruit Martin Scorsese, the film director who was his former client, to Disney, agreeing to distribute the filmmaker's project, ``Kundun,'' a film about the Dalai Lama, the Tibetan spiritual leader, who is in open conflict with the Chinese. Another entertainment company, Universal Studios Inc., had refused to distribute the film partly because of fears that it would damage efforts to expand business in China.

Yet Ovitz - and Disney - were startled when the Chinese threatened to derail the company's efforts to expand in China if the Scorsese film was released. Disney announced that it would proceed with the film. But the episode was one more embarrassing setback for Ovitz, who had focused his role at Disney on the international marketplace, especially China.

Critics inside Disney said that since Ovitz had made himself the company's point man on China, he should have been on top of the situation from the outset.

``Michael Ovitz was just not able to deal with the culture of a somewhat freewheeling and open company,'' said one Disney executive close to Eisner. ``CAA was very tight and buttoned up. He couldn't make that leap.''

But Ovitz's associates said he could not make the leap because Eisner thwarted him by not giving him detailed responsibilities or the power to manage the various Disney divisions.

The divisions, including Disney theme parks and resorts, consumer products, the film studio, animation, television and Euro Disney, had gained a freer rein after Wells' death and during Eisner's recovery from heart problems.

CAPTION(S):

Photo

Photo: Michael Ovitz

Aura more or less intact