Michael Ovitz: The Museum of Broadcast Communications

Today we're reprinting an article from The Museum of Broadcast Communications on Michael Ovitz, again for archival purposes. We'll be back shortly to regular postings and updates; the past few days have been devoted to establishing a digital archive of past articles and information.

The original link is located here.

The Museum of Broadcast Communications: Michael Ovitz
Michael Ovitz established himself as a major force in Hollywood while heading the powerhouse talent agency Creative Artists Agency (CAA), founded in 1975 by a group of breakaway talent agents from the William Morris agency. Initially an important television packager, CAA under Ovitz's direction expanded into film, investment banking, and advertising, becoming the dominant talent agency in Hollywood. In 1995, Ovitz parlayed his dealmaking skills into a new position as President of the Walt Disney Company, where he will oversee Disney's vast empire of theme parks, films, consumer products, and its 1995 acquisition, Capital Cities/ABC.
Ovitz's career at CAA was multifaceted. As talent agent for major film stars such as Tom Cruise, Dustin Hoffman, Kevin Costner, Michael Douglas, Sylvester Stallone, and Barbra Streisand, in addition to prominent directors such as Steven Spielberg, Barry Levinson, and Sydney Pollack, Ovitz was credited with putting together the major elements of hit films such as Rain Man, Cliffhanger, and Jurassic Park. But Ovitz's power and influence extended far beyond the creation of specific works of entertainment and into the very organization of the media industries in the United States and throughout the world. As a well-known broker between talent and financiers, he was hired as investment adviser for several significant industry transactions, including Sony's 1989 purchase of Columbia Pictures for $3.4 billion, the French bank Credit-Lyonnais' rescue of MGM in 1993, Matsushita's purchase of entertainment conglomerate MCA for $6.6 billion in 1990, and its subsequent sale of that organization to the Seagram Company in 1995. On another front, Ovitz and CAA shook up the advertising industry by winning Coca-Cola's global advertising account in 1991. Seeking to target fragmented television audiences with diverse and innovative commercials, CAA produced the "Always Coca-Cola" advertising campaign, which successfully popularized Coke-drinking computer animated polar bears.

Ovitz's canny strategies for winning clients and making deals are evident in his earlier work as a television "packager." Talent agencies often combine elements of a proposed program, choosing actors, script, and a director from among their stable of clients, then shopping this "package" to the networks for approval and financing. If a network accepts the package deal, the talent agency receives an overall packaging fee from the network, usually a percentage of the program's production budget and a percentage of the syndication profits. Packaging fees are more lucrative for a talent agency than individual clients' fees. In the 1970s, CAA packaged television programs such as the game show Rhyme and Reason, the Rich Little Show, and the Jackson Five Show.

To compete with other talent agencies, CAA set its packaging fee at 3%, undercutting the 5% charged by other agencies. Ovitz also developed close ties with entertainment lawyers, who brought new clients to CAA. Furthermore, Ovitz understood that good stories and scripts would attract important acting and directing talent. His cultivation of the literary agent Morton Janklow, whose clients include fiction writers Jackie Collins, Danielle Steele, and Judith Krantz, enabled CAA to package nearly 100 hours of successful television miniseries, including Rage of Angels, Princess Daisy, Mistral's Daughter, and Hollywood Wives. Recent CAA packages include Beverly Hills 90120 and The John Larroquette Show.

Under Ovitz, CAA applied similar strategies to the film industry. CAA has attracted top acting and directing talent, in part by representing successful screenwriters who produce desirable scripts, but also because CAA often "packages" film projects with client writers, actors, and directors before shopping the projects to film studios for financing and production. Despite film studio executives' accusations that CAA has driven up the cost of talent, CAA agents have had close relations with film studio executives, especially with those who rely on CAA to negotiate their own employment contracts with the studios.

Beyond talent brokering for film and television, Ovitz has also worked with companies developing the new technologies that may deliver tomorrow's entertainment. He has been a consultant to AT and T and to Bill Gates, head of the computer software giant Microsoft. In 1994 Ovitz consulted with Bell Atlantic, Nynex, and Pacific Telesis to create Tele-TV, a video programming service that may one day carry interactive services over telephone lines. As Ovitz has explained, at some point soon, "There will be a high-tech box on your television set that enables you to access a cornucopia of choices." Once in place, according to Ovitz, "There will be the most incredible shortage of product!" Consequently, Ovitz says, in a 1993 Time magazine interview, "I want to feed that box".

In 1995 Ovitz rattled the power structure of Hollywood when he agreed to sell his stake in CAA in order to become president of the expanding Walt Disney Company. Working with Disney chairman Michael Eisner, Ovitz is expected to oversee Disney's film studio, television production company, theme parks and resorts, and Disney's 1995 $19 billion acquisition, Capital Cities/ABC. His skill as a talent agent is expected to improve Disney's relations with top Hollywood talent, as well as help Disney integrate its products throughout Disney's diverse media holdings, which include film, animation, television programming, publishing, cable television, and the national broadcast network, ABC. As a leader of what appears to be the world's largest entertainment conglomerate, Ovitz will be well-positioned to "feed that box" with Disney entertainment, whatever shape the box may eventually take.
-Cynthia Meyers

MICHAEL OVITZ. Born in Chicago, Illinois, U.S.A., 14 December 1946. Graduated from University of California, Los Angeles, 1968; briefly attended law school. Married Judy Reich, 1969; children: Christopher, Kimberly, and Eric. Joined William Morris Agency, first as trainee, then as agent, 1969-75; co-founder of Creative Artists Agency, 1975, and served as chair until joining Disney; president and member of board of directors, Walt Disney Company, since 1995.