Who Is Michael Ovitz?

by Michael Ovitz

  With Herb’s and Felix’s approval, Edgar and I went to Seagram’s board with our backup plan to slowly amass Time Warner stock using Allen & Company as the purchasing agent. The plan went into effect after Steve Ross died that December. By May 1993, Seagram owned more than 5 percent of the company. Eight months later it owned more than 11 percent. Herb Allen was skillfully amassing stock without attracting undue attention. The idea was to plateau at 15 percent before suddenly jumping to 20 percent. At that point Edgar could swing Time Warner’s board and change top management at his pleasure.

  But before Seagram could get there, Levin pushed his board to adopt a poison pill: any buyer moving past 15 percent would trigger a flood of newly issued shares, diluting the buyer’s stake. Seagram had so much cash we could easily have bought the necessary extra shares and gotten the poison pill revoked, but Edgar, somewhat inexplicably, pulled the plug on the plan. (Much later, we learned that the Desmarais family—sometime business partners with the Bronfmans—also owned 5 percent of Time Warner, so perhaps Edgar was concerned about an SEC investigation.) He wanted to move on to an easier target with a more motivated seller. So we began looking at MCA.

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  —

  In November of 1993, ten months after he was inaugurated, Bill Clinton called and asked me to host a fund-raiser for the Democratic National Committee, which was running out of money. Clinton himself would be the star attraction. Though I’d raised money for Senator Bill Bradley, one of his primary opponents, I’d been impressed by Clinton since I’d seen him speak at a lunch at the Beverly Hills Hotel a couple of years earlier, and I had raised money for him in the general election. We didn’t know each other well, but the leaders of the DNC were very familiar with me, and Clinton knew that CAA was a conduit to a heavily Democratic industry.

  I told the president, “Sure, I’d be happy to.” Taking a deep breath, I added, “But I have a couple of conditions.” We both laughed, recognizing that I was living up to my reputation. “One, I want to see the speech beforehand, to make sure you don’t unintentionally say something that will get you into hot water out here. And two, I’d like you to consider announcing some sort of major legislative initiative. It’s show business; your audience will want something theatrical.”

  He agreed, amiably—and then he told me the fund-raiser had to happen in three weeks. I laughed, stunned. Then, after we hung up, I started calling around like crazy to set it up. Ron and Bill weren’t happy about the idea of hosting Clinton, because they didn’t want to ask clients and buyers to an event they’d have to pay $1,000 to $5,000 to attend (the larger sum got you entrée to an intimate cocktail party with the president beforehand, in our conference room). I knew that they were probably right—it would be a quasi-extortionate ask—but I thought we should do it for the greater glory of CAA. So I went ahead.

  Three weeks later, CAA’s atrium was filled with more than four hundred people, including many of our leading clients as well as the town’s top studio and network executives. More than fifty reporters were also present. As I stood at the podium to introduce President Clinton, I felt a real sense of consequence.

  As politics depends on favors, too, I asked Clinton for a favor shortly thereafter. I was part of a small group raising $850 million for a new UCLA hospital. (On the committee with me, awkwardly enough—though we never spoke directly—was Lew Wasserman, who raised $125 million on the condition that the complex be named after Ronald Reagan.) I raised $350 million on my own, and then, after the ’93 Northridge earthquake in Los Angeles, we applied for FEMA money. I called Clinton for assistance; he put Vice President Al Gore on the case, and FEMA gave us $400 million. Then I got I. M. Pei to design the hospital—which was actually easier than persuading the medical school’s architecture committee to consider Pei. No one on the committee, astonishingly, had even heard of Pei. Maybe CAA’s building wasn’t quite as famous, even locally, as I’d thought.

  Meanwhile, the agency was firing on all cylinders. In 1993 we signed a deal with Nike to develop and promote sporting events together, the result of my barraging the company’s founder and chairman, Phil Knight, with schemes and suggestions for six months. In July, Phil and I had pitched the NCAA on our biggest idea: a seven-game playoff system (quarterfinals, semifinals, and a final) for college football teams, leading to a title game between the best two: a college Super Bowl. We projected that by building TV specials around the games, and showing the title game worldwide, the tournament would net the NCAA more than $100 million a season. But the organization sat on our idea for a year and finally rejected it. They eventually adopted a simplified version of our plan in 2014, the College Football Playoff that now crowns a national champion. As was often the case, I was a little too early.

  * * *

  —

  CAA had so much money coming in that we could pay someone like Jack Rapke, a great agent but hardly a household name, $4 million a year to handle a number of our top directors. The Young Turks were all making more than a million dollars a year. We were expanding in every direction. When I stood in our building, overlooking the atrium, and heard the phones ringing all around me—when I felt our turbines humming on every floor—I felt proud.

  And yet our seams were beginning to fray. Ron and Bill were making well over $12 million a year—and in some years, many millions more from our M&A work—which papered over a lot of problems. But Ron still wanted Bill out. I kept telling Ron, “Look, I hear you, but I don’t feel that strongly. If you want to do it, you should do it.” Ron seemed as cheerful as ever, but my stonewalling on this point would eventually drive him, oddly enough, toward Bill Haber. In later years, they’d become very close friends, united, at least in part, by their growing distrust of me.

  And I was growing annoyed that I was in the office every Saturday morning, working out tax deals and fretting about our overhead and not seeing my kids. The ceaseless work was taking its toll. Because I couldn’t afford to be human all day long—because I had to seem interested and attentive and farseeing and wise with everyone—it made me less human over time. I became insensitive, impatient, someone to be avoided if at all possible. Colleagues transferred their childhood issues onto me: I was everyone’s distant father or bad mother. One weekend our agent Tony Krantz, whose mother was the novelist Judith Krantz, called me from an EST seminar in Monterey, clearly at the prompting of the staff after a session exploring his demons. “I just called to say I’m not afraid of you,” he said, his voice shaking. “That’s great, Tony,” I said. “I’m glad you feel that way, and that you have the ability to say it.” I tried to be encouraging, but I’m sure that my customarily even tone had the opposite effect. Neither of us referred to that call again, but it informed every conversation we had after that. I’m not afraid of you.

  When Frank Wells, Eisner’s beloved right-hand man, died in a helicopter crash in 1994, the memorial service, held at a soundstage at Warner Bros., was packed with more than a thousand devastated mourners. I tried to cheer up Frank’s widow, Luanne, by saying, “If I died tomorrow, there’d be twenty-five thousand people here to make sure I was dead.” She laughed, which was my intent.

  But it was true.

  * * *

  —

  Early in 1993, a scandal at Matsushita forced the resignations of Akio Tanii and Masahiko Hirata. The board replaced Tanii with Yoichi Morishita, a hardware man who’d never been to Los Angeles and had no interest in MCA. Lew and Sid didn’t know it, but they’d lost their strongest allies.

  Jurassic Park aside, Universal’s movie division was struggling. Waterworld, the postapocalyptic epic being shot off Hawaii, was way over budget with no end in sight. The film’s director and star was our client Kevin Costner, and though I’d never understood Kevin’s passion to make the film, I flew to the Big Island with Sid Sheinberg and studio chief Tom Pollock to provide what moral support I could. We took a speedboat to the artificial atoll they’d built near Kawai
hae Harbor. I wore jeans and a T-shirt because I knew what I was in for. Sid had on jeans and a button-down shirt. Tom came in dress slacks and a blue blazer, like some gentleman yachtsman.

  A catamaran brought us to the atoll. To get onto the land we had to crawl across an expanse of netting as the ocean heaved beneath, drenching us. Tom froze midway across, turned green, and gave up his breakfast. We sent him back. Later the swells forced Kevin to stop shooting for two hours—an all-too-standard delay. There wasn’t much we could do to help, other than voice hollow encouragement. Based on half a century of Kawaihae’s climate patterns, Kevin’s technical people had forecast flat seas through the shoot. But as soon as they arrived the weather turned capricious. The thousand-ton set kept bobbing in the wind, a big problem for matching shots in the edit room, and one storm washed the entire setup onshore. A stunt man commuting to work on a Jet Ski ran out of gas and was fifty miles out to sea by the time the Coast Guard picked him up.

  Movies made on water have a grim history, and Waterworld would add its sad chapter. It grossed $88 million domestic but cost twice that much to make. Recently some critics have called the film an overlooked classic. Nobody was overlooking it at Matsushita, believe me.

  As Japanese real estate crashed, Matsushita battened down. In June 1994, Morishita vetoed a Universal theme park to compete with Tokyo Disneyland. Three months later Lew and Sid flew to Osaka with an even more ambitious plan, a joint venture with ITT to buy CBS. It felt like do-or-die for Universal, the only major studio that lacked a cable or network distribution arm. I urged Sid to prepare his owners beforehand, again to no effect. For two hours he and Lew cooled their heels in an outer office, and then they got shot down. Morishita was merely dodging a confrontation, business as usual in Japan, but Sid took offense and wrote a scathing letter to Chairman Masaharu Matsushita. For a while I stayed current with the drama through Keiya Toyonaga. But after Matsushita officially killed the CBS deal that fall and Sid blasted them in the New York Times, the curtain came down. For weeks the Japanese spoke to no one.

  In November they made their move. Matsushita didn’t call me; because they’d asked me to keep an eye on MCA for them, they worried that I’d be sympathetic to those I’d kept watch on—even though Lew and Sid had frozen me out. Their call went to Herb Allen, who, displaying his characteristic class and loyalty, immediately said that he wouldn’t work on a sale of MCA without me. The next week I joined Herb and a dozen top executives in Osaka. The execs posed their question carefully: If they wanted to sell MCA, what was it worth and who might buy? I was to say nothing to Lew, whom they venerated and feared, or to Sid, whom they despised. I couldn’t talk in any case because of my nondisclosure pact with Seagram.

  On my next trip I disclosed my ties to Edgar and outlined what Seagram was after. (Herb and I worked for both sides throughout the transaction. No conflict, no interest.) For form’s sake I named five other potential suitors, including Polygram and TCI. I had a private interest in Seagram winning out: Edgar had made it clear that I was a contender to run MCA, and I was definitely interested. MCA had great bones: it was a forties-style studio that had a huge lot, a great library, and the best TV department in town. And running the studio had been my dream ever since I gave those tours there as a kid.

  Trying to realize your childhood dream can be perilous. I started a snowball rolling downhill when I began talking to Edgar, and it would trigger an avalanche.

  The Matsushita executives asked: “Of all the companies you’ve shown us, who can actually close, and close quickly?” They hoped to complete the deal within ninety days, the bare minimum to get past the regulators. Their goal was merely to make back what they’d paid for MCA, or close to it, to avoid a savaging in the Japanese media. I told them what I’d told Steve Ross: “Seagram can cut a check for the full amount. They’re the only ones who don’t need to line up a bank.”

  It rarely snows in Osaka, but that day it never stopped, and I had a weird, uneasy feeling. I flew out to attend Sid Sheinberg’s surprise sixtieth birthday party that evening in L.A., leaving my associates. Six hours later, the Great Hanshin earthquake struck near the city of Kobe, less than twenty miles from where we were staying. Six thousand people were killed.

  Spago Beverly Hills was filled with clients and rivals by the time I arrived. Sid and I did a lot of business and I felt traitorous giving him a warm greeting. Once Matsushita sold MCA, he’d be done, and I knew he’d be irate that I hadn’t tipped him off. Yet my hands were tied. If Sid went to Lew and set off World War III, I’d get sued for breaking my nondisclosure agreements. And the deal would be made anyway, with or without me. Later on, Sid would indeed complain that I fucked him over by not giving him a heads up. Our houses were adjacent in Malibu, and he simply stopped speaking to me—it was as if I no longer existed.

  In truth, though, I felt worse for Lew. Even though he’d never had any use for me, he was one of the industry’s all-time greats. I’d modeled my business life on his example, and it was only when I started doing things he hadn’t dreamed of that I began to feel I was truly a success. Yet his private life scared me to death, because he had no hobbies, no social life, nothing except a close relationship with his grandson, Casey. Lew’s whole being was devoted to MCA and Democratic politics, and without MCA he would no longer be a player. What would he do without his only reasons for being?

  The question tickled a deep anxiety. For years, I’d viewed CAA as a launching pad for larger opportunities, convinced that I could leave at any time. But what if I was more like Lew than I thought?

  * * *

  —

  My team updated our survey of MCA’s film and TV libraries, what they had in the pipeline, the music business, the theme park. Allen & Company looked at the real estate and created the statistical models. The work went much faster this time, as we already had the template.

  Two weeks after my return from Japan, a junior Matsushita executive—in deference to nemawashi—phoned Steven Banner, Edgar’s chief financial officer, to sound out Seagram’s interest in acquiring MCA. Banner confirmed Seagram’s interest and reported the call to Edgar and to me. Talks within Seagram intensified. Charles Bronfman opposed the deal, and Edgar senior was lukewarm at best. But he couldn’t bring himself to say no to his son.

  Rupert Murdoch was sniffing around any available asset as usual, and Michael Eisner wanted MCA’s library for Disney. But Matsushita wasn’t out to bleed the last buck from a sale. They wanted a clean exit and agreed to grant Seagram an exclusive bidding window. By March 1995, when Edgar scheduled a trip to Osaka, it was Seagram’s deal to lose.

  I briefed Edgar on the basics: Don’t cross your legs and don’t show the soles of your feet; it’s disrespectful. Here is how you hand them a business card. Never take your jacket off in a meeting without asking everyone else if they want to take off their jackets, too. Never ask about the other person’s health—that’s strictly private. I described each senior executive’s personality, hobbies, and children. Edgar went to Japan ready and able. Unlike Lew and Sid, he was at home in any setting. I’d watched him handle himself in Sun Valley and New York and knew he’d be fine at Matsushita. In the first MCA sale, I did all I could to keep the two sides apart; in the second one, I pushed them together. The sooner Edgar and Yoichi Morishita established a relationship, the sooner the deal would close. When they met, Edgar steered clear of numbers and all went well. Three weeks later he went back with an offer letter in his briefcase.

  The parties quickly settled at $7.1 billion, a hair above Edgar’s original offer. At the eleventh hour, to save face and keep a hand in the entertainment business, Matsushita asked to hold back 20 percent of MCA and cut the final price to a prorated $5.7 billion. Their Hollywood foray was more or less a wash.

  By March 31, when the Wall Street Journal broke the story, the deal was done but for the signing. When my friend Ronald Perelman and the German media company Bertelsmann (another CAA c
lient) suddenly expressed interest in MCA, I told them Seagram was too far along. After reviewing the proposed contract with Edgar and his father, I felt so sure about the outcome that I left to join my family in the Bahamas.

  On April 6, DuPont bought back nearly all of Seagram’s shares for $8.8 billion, more than enough cash for MCA. I returned to L.A. for the closing at Shearman & Sterling, Seagram’s attorneys. As I descended to the firm’s lobby to greet Matsushita’s delegation and escort them to the twenty-first floor, I wasn’t sure what to expect. Would they begrudge their five-year escapade? But shaking hands with Morishita alleviated my concerns. He and his associates were warm and forthcoming—even gleeful. They wanted out of show business as fervently as Edgar wanted in.

  As we gathered for the signing, Matsushita’s group sat along one side of the big table and Seagram’s principals and chief advisers sat along the other. Herb Allen stood in a neutral corner. I had to make a quick choice. Matsushita had vaulted me into the major leagues in M&A and I’d always be grateful. But Seagram was my future.

  I sat down next to Edgar and watched him sign my last big deal for CAA.

  CHAPTER SEVENTEEN

  GONE

  Through all the deal making, I kept agenting. One day in 1995, I called Barbra Streisand with big news: I’d found a home for her romantic comedy The Mirror Has Two Faces. TriStar wanted Barbra to produce, direct, and star. The money was excellent for an actress who was fifty-two, an age when leading roles become exceedingly scarce. “They’ll pay you eight million dollars against a percentage of the gross,” I told her.

  “That’s it?”

  “Barbra, it’s a great deal,” I said. “Plus, you get to make the movie you want to make.”