The Keys to the Kingdom (49 page)

Eisner was celebrated universally, though he took a little ribbing. “[Eis
ner] was stating both publicly and privately how bad an idea [buying] a broadcast network was—until last Monday,” noted NBC president Robert Wright.

“It's never been easy for Michael to buy anything,” said Diller. “He's too cheap. But this merger says, more than anything, that he has graduated.”

Despite those backhanded comments, the deal was well reviewed by almost everyone—Diller, Rupert Murdoch, and even David Geffen. Katzenberg was quoted, graciously calling the merged companies “the most prestigious, important, and powerful media enterprise on the planet in every respect.” On Wall Street, shares in Capital Cities/ABC surged by $20.125; and defying the usual trend when a company makes a big acquisition, Disney ticked up $1.25. Not even the issuing of 155 million new shares as part of the purchase discouraged investors. The legendary Buffett, who had seen a $345 million investment in Cap Cities turn into a stake in the combined company worth $2.3 billion, helped matters by saying that he was only too happy to become one of Disney's largest shareholders. Buffett even boasted that he had won a $100 bet with a Disney executive that the company's shares would not drop when the acquisition was announced.

One of the few doubters was John Tinker, an analyst at Furman, Selz & Co., who wondered whether Capital Cities/ABC might slow Disney's growth. Some noted that ABC, the number-one network, had no place to go but downhill, making it a surprising choice for a man who described himself as “a bottom fisherman.” A couple of years earlier, said sources close to the company, Eisner balked at buying ABC for $11 billion. He had defied his own wisdom—and been handsomely rewarded by rave reviews.

There was some editorializing over whether Eisner would show appropriate respect for ABC News, though Eisner vowed that the division “will be left alone to operate autonomously.” The only other murmurs came from some politicians and consumer advocacy groups, who worried about increasing consolidation in the media world.

And there was DreamWorks, which had made a deal worth up to $200 million to produce television shows with ABC, and was now looking at the prospect of an unanticipated partnership with Disney. DreamWorks' plans for ABC's Saturday-morning cartoon schedule were doomed, because Disney would clearly take over the time slot. But flush with victory, Eisner was inclined to magnanimity. Just a few days after the deal was announced, he called Katzenberg—as well as Spielberg and Geffen—to express a desire that some peace be brokered. Katzenberg said he responded enthusiastically:
“Michael, we've had nineteen fabulous years and ten terrible months. Let's not make it eleven.” But that call was as far as Eisner was prepared to go. Katzenberg's hopes that the door would open to resolution of his contract claims would be dashed again.

With the acquisition of Capital Cities/ABC, Eisner was now master of the domain where he had worked as a young man. But he still had some problems. Even as the ABC deal was announced, the issue of succession at Disney was still undecided—and it was perhaps even more important than before this dramatic expansion. Eisner had a concerned wife who wondered how he would handle his duties without a second-in-command. It was time to go looking for a partner—and Eisner had a candidate in mind.

M
ICHAEL OVITZ WAS
the youngest of CAA's five founding partners who had defected from the William Morris Agency in 1975, but he rapidly asserted himself as the first among equals. In fact, the others soon became a bit less than equal. Mike Rosenfeld was forty years old at the time—thirteen years older than Ovitz—but he said it took him “about four days” to realize that Ovitz would dominate. By the mid-eighties, Ovitz controlled 55 percent of the agency, while the two remaining founders, Ron Meyer and Bill Haber, split what was left.

Ovitz had grown up in the San Fernando Valley, where people were very conscious of social status. His family was middle class but Ovitz quickly convinced his classmates that he was destined for big things. “We knew in the fifth grade,” says boyhood friend Fred Fox. “From the beginning, you just felt he was going to be very successful.”

He was a member of an exceptional class at Birmingham High School in Van Nuys, just a semester behind Sally Field and Michael Milken; one group shot from the 1964 yearbook shows the future junk-bond king standing behind the seated superagent-to-be. Another picture shows Ovitz, vice-president of the student body—stern, unsmiling, disconcertingly baby-faced in a cardigan and an inch-wide tie. Based on the photo, Ovitz had more natural gravitas than half the faculty.

A friend from the Zeta Beta Tau fraternity at UCLA remembers Ovitz as a strong-willed president who engineered the chapter's move into an abandoned hotel on Wilshire Boulevard while the house was being rebuilt. Before he joined the fraternity, Ovitz already had a job at the Universal Studio Tour and he subsequently helped other brothers get jobs. And his brothers helped him, too, by agreeing to name his girlfriend, blond Judy Reich, the official ZBT sweetheart. Ovitz argued that because she belonged to the Waspy Kappa Alpha Theta sorority, naming her would be a coup
for the predominantly Jewish ZBTs. “Mike said, ‘It's good, it's good. We need that image,'” says former ZBT brother Daniel Beck, now an attorney in Santa Rosa. “Mike knew he was going to be a star as far back as I can remember.”

Ovitz wasn't the best-liked fellow in the house but the others looked up to him. “The word is respect,” Beck says. “You respected him but there was always this sense that he was in charge and you weren't…. No one got too close to him.”

After UCLA, Ovitz attended Loyola law school but quickly dropped out. Then, like Barry Diller and David Geffen before him, he went to work in the William Morris mailroom. Veteran writer and producer Bill Persky remembers that Ovitz seemed intimidating even as a delivery boy: “Ovitz, he was so mysterious. It was always like he knew more than he was telling. Michael, even as a junior executive, always convinced you there was something he knew that was going to make a difference.”

This was a tactic that Ovitz later honed to perfection at CAA. At weekly staff meetings he was prone to making cryptic announcements about major events he said would happen at a certain studio in “30 to 60 days” or sometimes “60 to 120 days.” He was right often enough that everyone paid attention. “It gave the impression to the people staring at him that he was in control of everything in the entertainment business,” remembers a CAA agent. “It was so funny. You got to wondering, ‘Is it going to happen on Day thirty-one? Oh well, it doesn't matter because Mike knows.' Ninety-five percent of the people left CAA meetings feeling, ‘He's got it wired.'”

At William Morris, Ovitz rose to be assistant to Howard West, a leading television agent who was impressed by Ovitz's long hours and “insatiable thirst to learn.” After a year, however, Ovitz surprised West by leaving to take another crack at law school, only to change his mind again and beg for his job back. “Senior management said, ‘No,'” remembers West, who went on to be an executive producer of
Seinfeld
. “The attitude of upper management was, ‘You leave, you're dead.'” But West pleaded for Ovitz, who was permitted to return.

Ovitz was eventually promoted to agent and plunged into the minutiae of packaging television game shows. “I thought this young fellow must be one of the best young agents I'd ever seen,” says Ray Kurtzman, Ovitz's office partner. “He was totally prepared. He was a great salesman. He was and is the most dedicated person I know when he gets his teeth into something…. He just does not take no for an answer.”

In 1975, Ovitz and Meyer joined three other agents who had already broken away from William Morris. At first, the agency was little more than a group of guys working on card tables. But it wasn't long before CAA became a force. In a business brimming with bluster and gimcrackery, Ovitz was a model of steamroller drive and iron discipline. “He was incredibly good at managing not only clients but his company and the talent he had working for him,” says Rosenfeld. “He was able to instill courage and balls into his young agents and he gave responsibility out like it was chopped liver. He made them feel like they were really better than maybe they were.”

But Ovitz remained aloof. At one point Rosenfeld and Ovitz shared a condo at the beach. Rosenfeld told his children they had to keep quiet whenever Ovitz was around. One afternoon, as Rosenfeld's teenage son strummed his guitar in his bedroom, Ovitz yelled, “Stop making that fucking noise!' Then he relented and told the boy to come out of his room and play so Ovitz could see if he was any good. After the boy played three bars, Ovitz interrupted. “That's enough,” he said. “You suck.”

Though the elder Rosenfeld and Ovitz shared some laughs—and Ovitz had a sharp, dry sense of humor—it wasn't exactly a friendship. “I wouldn't say he let his guard down much or relaxed much,” Rosenfeld says. Most of their time at the beach was spent reading scripts.

In his professional life, Ovitz demanded loyalty even from those who didn't work for him. If he was crossed, he made it unpleasant. When Joe Roth was the head of the Fox studio, he made the mistake of asking CAA agent Rosalie Swedlin if she was interested in running a film division there. Swedlin met with Barry Diller, then chairman of the company. But when she approached Ovitz about the possibility of leaving, he was enraged that she had not consulted him earlier. He rebuked Swedlin and froze Roth out for months, even though Swedlin remained at CAA. (Later, when Katzenberg went through channels and asked for permission to court Swedlin, Ovitz still withheld his blessing.)

Of course, Swedlin had been known to participate in Ovitz's power plays. A former CAA screenwriter remembers complaining to another Ovitz client that the agency had promised him a network job that never materialized. “Forty-five minutes after saying that,” the writer recalls, “I get a call from [Swedlin], and she threw me out of the agency. She said, ‘Mike heard you were bad-mouthing the agency and we don't want you here anymore.' There are dozens of disparate stories like this that happened to people large and small all over the place…. It was typical of the thuggishness there.”

On the phone, Ovitz spoke so softly that listeners strained to hear; his half whisper could turn soothing or menacing. “‘Do you want to keep your job?'—he would always say things like that,” says a former studio chief who recalls other standards: “‘Have I offended you in some way?' The ‘I'm confused' line is famous. ‘I find it hard to understand your rudeness.' He starts conversations to bring everything into the intrigue of a world in which he is at the center pulling all the strings.”

Within a few years of launching CAA, Ovitz made it clear that he intended to go beyond the role of agent. He wanted to be included in deals. In 1986, producer-manager Bernie Brillstein sold his firm to Lorimar without giving Ovitz a role in the deal. After Brillstein took over as head of the combined companies, he found that CAA would not be an ally. “Mike felt betrayed and blindsided,” says a former CAA agent. “There was a kind of mandate to service Lorimar but do nothing to help it grow.” Another executive then at Lorimar remembers a getting-to-know-you meeting with a group of CAA agents. Expecting a lively exchange of ideas about clients and projects, the Lorimar contingent was greeted with stony silence. CAA can't be blamed for Lorimar's ultimate failure (the company was sold to Warner in 1989), but agents who were with CAA at the time acknowledge that they might have done more to help.

CAA's most publicized blowout came in 1989, when screenwriter Joe Eszterhas claimed in a series of “leaked” letters that Ovitz had threatened him when Eszterhas told him he wanted to quit the agency. Ovitz allegedly told Eszterhas that his “foot soldiers” would “blow your brains out.” The story created a sensation but with no serious repercussions. “It didn't hurt us at all,” says a CAA veteran. “I would say it probably was helpful. The people in this business want to have tough representatives. They're not interested in having nice representatives. When that all happened, people said, ‘Wow, this guy is really ready to stand up and fight.' It kind of gave Mike a cachet. It added to the aura he had.”

At one time Ovitz had displayed an engaging side to his personality, but even his original partners concede that it had faded as he became more successful. “In the early days, he did have a sense of humor and knew how to be charming,” says Rosenfeld. “As he got more powerful, that took too much time.”

 

OVITZ MADE A
quantum leap in the late eighties when Sony set out to buy an American studio. This gave him a chance to reposition himself as a man who had moved beyond mere agent status by brokering a big, multinational deal. Ovitz introduced Sony executives around Hollywood and then took them to Columbia Pictures, then owned by Coca-Cola. As the ill-fated acquisition loomed, Sony decided that Ovitz was the first choice to manage the studio. Sony's legal team drew up a proposal—code-named Superman—for hiring him.

But Ovitz wanted to be more than Superman; he made a bold play to run not only the studio but Sony's record division, with earnings of $2.9 billion. He sought an expanded empire and a package worth about $200 million. For once, Sony—which seemed willing to overpay for anything related to Hollywood—balked over price. According to insiders, the Japanese felt betrayed by Ovitz's audacity. When his proposal was rejected, he tried to return to the bargaining table, scaling back his demands. Sony politely turned him down. Ovitz then asked some executives in the Sony camp to back him up as he spread the story that he had rejected Sony's advances.

Ovitz collected an $11 million fee for his role in the Sony deal. But unbeknownst to most of his CAA associates, funds from CAA's various consulting activities, including work for Coca-Cola and Nike, were part of a separate partnership. The CAA agents knew nothing about CAA's finances. They had no idea how much CAA was making or how it was allotted among them. And they didn't ask questions. As agent Tom Ross put it, “All of us made more money each year, so we felt we must be getting part of this.” The agents were later stunned to learn that for some years Ovitz had been flying around on a CAA-owned private jet. With the exception of Haber and Meyer, none even knew that CAA owned a plane.

In the wake of the Sony transaction, Ovitz won a new client—Matsushita—and helped broker the purchase of MCA. He was on his way to superstardom, and left the day-to-day client work to Ron Meyer and the other agents. During this period, a string of high-profile assignments—ads for Coke, the creation of a joint short-lived programming venture for the Baby Bells, a public role in helping Crédit Lyonnais rid itself of MGM/UA—led to a swelling tide of fawning reviews for Ovitz in the press. His celebrity had already been confirmed by a 1991
New Yorker
article that included an unnamed “friend” suggesting that Ovitz's ambitions might even include the White House. He was named to the
Council on Foreign Relations as well as the board of the Museum of Modern Art in New York.

But at the end of the day, he was only an agent, and even a superagent is still subject to the whims of a fickle roster of demanding and high-strung clients. He had not enjoyed the prestige on Wall Street and in the world that the chairman of a major company accrues. And though he was rich, his wealth was dwarfed by the millions that his friend Michael Eisner was mopping up at Disney. He was making tens of millions, but he was not making hundreds of millions.

 

OVER THE YEARS
the central dynamic in the Eisner and Ovitz relationship had been their ability to war during the day and still see each other socially in the evening. The same competitive spirit emerged even when Eisner was in the hospital and Ovitz appointed himself Eisner's unofficial gatekeeper, stationing himself at his friend's bedside and screening calls and guests. Eisner later reported that he “took my phone away from me and told me Disney had plenty of gifted employees who would be better served if I rested.” But Eisner was never content to rest.

As Eisner lay in bed, Ovitz continued to do CAA business, speaking on a cell phone. At one point Eisner overheard him pounding out the final details of the deal that became Tele-TV—a doomed joint venture in which the Baby Bells were to create programming, theoretically for transmission over phone lines. (Hollywood was in hot pursuit of such linkups with regional phone companies in those days, though they ultimately produced nothing.) Eisner had been arranging Disney's own deal with another group of telephone companies. He waited until Ovitz visited the men's room and then phoned Katzenberg. “Ovitz is about to put Tele-TV together,” Eisner whispered. “You have forty-eight hours to close our telco deals.”

“This is how Eisner feels about his ‘best friend,'” a former Disney executive chortled later. “He couldn't wait for his best friend to take a tinkle so he could screw him.”

Over the years Eisner had talked intermittently to Ovitz about working for Disney. He had brought it up, abortively, when the two flew to Sun Valley in 1994. After Katzenberg left Disney, Ovitz dispatched Ron Meyer to represent him in a negotiation with Eisner. They had a five-hour lunch at the then-fashionable but now-defunct restaurant Cicada on Melrose Av
enue. Meyer returned to CAA and urged Ovitz to join the Disney team. He felt that CAA was ready for a transition and Ovitz was clearly restless. Eisner pledged that he and Ovitz would be partners. “I will never disagree with Mike in front of people,” Eisner had pledged, “but in a room alone, I have to be boss.” On reflection, Ovitz demurred. “I can't work for Michael Eisner,” he said.