ARTS; THE PLAYER

Agents never make mistakes. Their deals are always beautiful, because they are made before the film flops

Michael Ovitz is Hollywood's most powerful agent. Without his say-so,

the stars refuse to shine. Now he may be about to make a deal which

will change the way movies are made forever. David Thomson reports

FOR THE moment, he is an agent, the most illustrious and far-reaching in Hollywood - granted that everyone else takes pride in despising agents. But Michael Ovitz has been feared and respected, too. For years people have said he is so brilliant, so cool, such a manager, he should go into politics. But he's also so self-effacing and dedicated to the principle that an agent doesn't discuss his clients' affair. How could anyone so naturally and spiritually silent get on in politics? Yet a persuasive case can be made that he is among the most powerful Americans alive today.

Put it that way and one has to wonder why Michael Ovitz isn't better known in America. The country is always looking for power, and so often disappointed in those who claim it. Recent Presidents have fumbled so many balls. "Success" in the Gulf war has never lost its ironic quotation marks. Thorough failure in Vietnam still means more. Power in America means earthquake and flood, the soaring execution of returned basketball player Michael Jordan and the bite taken out of the Federal Building in Oklahoma City. That power is local, natural or crazy; it's slam-dunk time. No one has much faith in the efficacy of sustained expert management.

That's one reason why Ovitz isn't really known outside Los Angeles - even if he has a close to perfect record. He doesn't do interviews; he doesn't see any advantage in outrageous assertions of personality. He's quiet, discreet, efficient; there's a lot of reason for believing he's dull. For though his business is the show, he does not radiate creative visions, stories for pictures or such insane notions as Jurassic Park - apart from getting $20 million for that piece of lacquered Spam, Sly Stallone, for a picture to be decided on later. Instead, Ovitz looks after the people who have the visions.

But modesty can be deceiving. By concentrating on other people's comfort, and getting them more and more money, Ovitz has had a large effect on our movies. It helps indicate the special kind of neutral, empty-headed genius in Ovitz to say that in the age of his empire, American films have never been worse. Further, in so many non-American-thinking countries, indigenous movie-making is succumbing to the young audience's assumption that a movie is only a movie if it's American and if the characters behave like Power Rangers. Ovitz is small, slight and of gentle demeanour, but he has an appreciation of hunks like Stallone. After all, Ovitz saw a frozen-faced aikido teacher named Steven Seagal and just willed him into being a great star. There's a clue, maybe, to some inner turmoil: why does a gentle multi-millionaire with no time need to be studying aikido?

So, for the moment, Michael Ovitz is an agent. But he's wondering about it, and trying to gauge the balance of power in what has been his Hollywood. The rumours are all over Hollywood that he is about to be offered the job of running the new MCA, a crown in the showbusiness world of which the central jewel is Universal Studios. For an agent, running a studio is a rare challenge. But for someone like Ovitz the wondering is whether that job would be stepping up, sideways or - does he know this word? - down? To run a studio, Ovitz would have to change his pitch, his talk - his personality even. But does he really have a personality?

HIS BASIC facts are unremarkable. He was born in Encino, an anonymous suburb in the smoggy tract of the San Fernando Valley, to the north of Los Angeles, in 1947. He was the son of a modestly successful liquor salesman. Ovitz went to a good high school (junk-bond tycoon Michael Milken was a contemporary there), and then to UCLA, where he met his future wife, Judy. They are still married and they live in a nothing-to-be-ashamed- about Beverly Hills mansion with their three children and Ovitz's considerable collection of modern paintings. Few honours in life have meant more to him than being appointed to the board of the New York Museum of Modern Art.

He flirted with law school, but he was always set on work experience in showbusiness. While a student, he had earned money in the summers as a guide on the Universal Studio tour. And he was enough of a Valley boy to see nothing beyond the picture business. But he had no urge to make movies. It was the deal that fascinated him. A picture takes maybe two, three years to make - and then it can flop. But an agent does a dozen deals a day, and deals never fail. Gratification-wise, it's win-win. So he joined the William Morris talent agency.

There had been a time in movies when there were no agents. Then, in the 1930s, men like Myron Selznick and Leland Hayward invented the middle- man's position. They were like people who forced their way onto a crowded bus - people with snakes round their shoulders. The studios hated them, because the agents were trouble-makers trying to get a little more for their clients. And they whispered rebellion in the lovely ears of dumb stars. But in those days everyone in pictures was on the contract system, so there was not much room for negotiation. Big attractions were paid a lot, but very few people had what is now called "participation". They got their salary and the studio took the profit. The agents took 10 per cent of what they won for their clients. Why 10 per cent? It was a misunderstanding, joke agents; it was meant to be 10 per cent to the clients.

Momentous change began in the Fifties and took over the business in the Sixties. The studio system was said to be breaking down. Long-term contracts were deemed a form of slavery. The select band of big stars beloved by the public now negotiated their careers picture by picture. That's when MCA began to be important.

The letters stood originally for Music Corporation of America, which was founded in 1924 by Jules Stein, an ophthalmologist. It was then an agency that booked bands and singers for clubs and dances. As the enterprise expanded, so in 1936 MCA picked up a new employee, Lew Wasserman, who would guide the agency towards movies, and then television. It was Wasserman who brokered a landmark deal in 1950 - between actor James Stewart and Universal - whereby Stewart began to share in the profits of his movies (that's participation). Later in the same decade, Wasserman fashioned a vital arrangement with the Screen Actors Guild. He obtained a Guild waiver that allowed MCA to get into TV production. Without that waiver MCA would have been subject to anti-trust charges - TV agencies are not allowed to be producers. Without an obliging Guild president there would have been no deal. That president was Ronald Reagan. Ron's agent was Lew Wasserman.

I'm cutting a long story very short, but Wasserman was (before Ovitz) the most innovative agent the business has ever had. He foresaw the money factory in network television and syndication rights, and he appreciated the bonanza in the sale of old movies to television. MCA became more powerful than movie studios, and in 1962, led by Stein and Wasser-man, it bought out Universal - but Attorney-General Robert Kennedy approved the deal only if MCA gave up its agency business (by then only 10 per cent of its operation), for to be an agent and a producer was by then established as monopolistic. So MCA crossed over; it was a classic example of lawyers and agents taking over the movies from old-fashioned showmen.

Wasserman is 82 now, but still with MCA. Tall, upright, with silver hair and black horn-rim spectacles, he is a commanding figure and the elder statesman of the business. He is also a testament to hard work, domestic decency and keeping everyone happy. He was surely the best example Mike Ovitz had as he began at William Morris in the late Sixties. In those days, the Morris Agency was the class act in talent, but inclined to take too much for granted. An agency can function very nicely on the status quo, but the great agents are those who look ahead at new technologies and fresh opportunities. Ovitz and four other young hustlers at Morris believed their employer was going stale and complacent. They started meeting as a group, brainstorming to get ahead - and Morris proved all the kids' suspicions correct by firing them for attempted mutiny. William Morris has never quite been the same again.

Without any other choice, the five set up a new business, and they called themselves Creative Artists Agency - CAA. That was 1975.

CUT TO today. With Mike Ovitz as its chairman, CAA is established in purpose-built offices - designed by IM Pei, the architect of the Louvre pyramid - at the junction of Wilshire and Santa Monica Boulevards. It also bestrides the business of high-concept pictures made for a young audience. For more than a decade, CAA has been the dominant agency in showbusiness. And agencies now are often the stable, generating forces in pictures. They remain and abide as studios come and go. They have a steady list of clients in the way studios once had contract artists. They are eager to package those clients, and so they facilitate the making of pictures. Rain Man had two stars and a director from CAA. Without Ovitz's care, that troubled picture might have fallen apart. And agents now negotiate not just an up-front salary, but a part of the profits and residuals, all the way down to video sales in far-flung territories. The contracts are thicker than the scripts - and they are read more carefully.

CAA has a commanding list of star clients, and Ovitz has had a beguiling way of strategising their careers: Kevin Costner, Dustin Hoffman, Tom Cruise, Warren Beatty, Robert De Niro, Robin Williams, Michael Doug-las, Sylvester Stallone, Sean Connery, Martin Scorsese, Oliver Stone, Francis Coppola, Tim Burton, Robert Red-ford, Barry Levinson, Steven Spiel-berg, Barbra Streisand. It has also been an assiduous hijacker of other agencies' stars. Ovitz has had the capacity of assuring very tender plants that he can look after them better. And so he has been at war with his two main rivals, the Morris Agency, still, and International Creative Manage- ment (ICM), headed by Jeff Berg.

Ovitz has done very well for his clients, most of whom swear by him and are a little afraid of losing his favour. He has never had all the stars to be had, but in the Eighties he had enough of them to affect studio plans. He permitted projects to advance by bringing his people to the table - but that permission led to a rapid inflation in star salaries, and in what writers and directors could get. If only because of the exploding video market, Ovitz was able to bargain prices up on the basis that, eventually, the money would be earned back. Refuse him, and a studio could find itself seriously short of the relatively few talents audiences wanted to see.

There were some on the receiving end - like Jeffrey Katzenberg, at Paramount first, and then at the Disney Studio - who argued that Ovitz's pressure (greed) was putting the whole business in jeopardy. The average budget for a movie has tripled in the CAA era, and very few movies earn that money back in the domestic market. So studios have to borrow to cover the delay, while agents get their 10 per cent early. Ovitz has fostered the hunt for blockbusters. His technique for pushing up his stars' salaries to exorbitant levels is always the same. "Look," he will tell the studios, "these guys, my guys, could give you the big one - Tootsie, Batman, Mrs Doubtfire, Jurassic!" So, gradually, it has become harder to take on difficult subjects and smaller audiences. Every movie reaches for slam-dunk power. It's a strange trick, but Ovitz's calm and rational manner has bred a kind of hysteria. He has made careers, everyone agrees, but has he ruined the business?

But Ovitz hasn't been showy himself. He has always preferred the Wasserman tradition, though there are tales of tantrums behind closed doors. When screenwriter Joe Esz-terhas left CAA, Ovitz - according to the writer - turned very nasty and very melodramatic: "My foot soldiers who go up and down Wilshire Boulevard each day will blow your brains out." Ovitz said he never remembered saying that - but sometimes Hollywood people do talk like bad movies. And think that way. But very few people have left CAA, or talked about Mike's temper. The town has been in awe of his secretive ways and his astonishing success. Increasingly, he has enjoyed a private, king-making role as consultant to the powerful.

To take just a few examples: he made an agreement with Coca-Cola, advising them on ads and image. He also signed on as consultant to Credit Lyonnais, the French bank that owns the hapless remnants of MGM. That was so close to an anti-trust arrangement that Jeff Berg of ICM protested. But the matter was never acted on in Washington, apparently because Ovitz had higher-placed friends than Berg could muster. Like Wasserman, Ovitz believes in cultivating Presidents.

But then, in 1990, Ovitz was the facilitating go-between in the talks that led to the purchase of MCA by the Japanese electronics company Matsushita for $6.6 billion. This was looking ahead with a vengeance, for it anticipated the heady synergy of Japanese hardware and American software in the next generation of video - something that could even spell the demise of theatrical film-going. Ovitz had also played an enabling role in the earlier deal whereby Sony bought Columbia and TriStar. The Ovitz of those discussions - shadowy, sympathetic to Japanese formality, yet promising raw American clout - was hard to pin down: was he doing it all for the future and friends, or did he have a commission - if so, how much? And what did a conflict of interests mean anymore if an agent was advising the people he was hired to screw?

Those Japanese deals didn't work out too well. Ovitz is not blamed for this. But at a managerial level, without his daily help, without Mike on Line One, the two nations never got along. In some cases, Tokyo and Los Angeles never talked. Sony have lost billions on their venture. And Mat-sushita and MCA had been looking for a way out for at least a year. In Japanese eyes, the American studios painfully lacked Ovitz's clear vision, cool head and cultivated manner.

Then, last autumn, the power scene shifted. Three major figures announced they were forming a new studio: Steven Spielberg; the record company mogul David Geffen; and Jeffrey Katzenberg, who had just broken dramatically from Disney and its chief, Michael Eisner (Ovitz's best friend in the business). The threesome had no name at first, and it was speculated that they were waiting to see how the Matsushita-MCA dispute was resolved. For Geffen and Spielberg were both very close to MCA and Lew Wasserman. There was some chance that MCA might buy itself back from the Japanese and make an alliance with their old friends - Spielberg had done Jaws, ET, Jurassic Park and Schindler's List for Universal and he was especially close to executive Sidney Sheinberg. Spielberg was also a Mike Ovitz client, albeit one who took more care of his own business than most clients.

That moment of opportunity passed. The trio came up with a name of their own - DreamWorks SKG - though they have not yet announced many projects, apart from the plain intent to compete with Disney for animation talent. They have also made it clear that Wasserman and Sheinberg have stock options in the new studio.

Then, this April, a wild card dropped on the table. Edgar Bronf-man Jr, 39 years old, the president of Seagram's (the Canadian liquor company), sold back extensive holdings in Du Pont and used the cash to buy 80 per cent of MCA. Matsushita was getting out as best they could: in five years with MCA they had lost about a third of their original investment ($6.6 billion). And Seagram's was exchanging over $8 billion in a blue-chip stock for a far chancier enterprise.

Bronfman is movie-mad. He was a script reader for David Puttnam. He produced a dire movie in 1973, The Blockhouse, and years later he did the Jack Nicholson picture The Border. So he isn't likely to keep his nose out of MCA, where Wasserman and Sheinberg remain - seniors now, but very smart. But Bronfman hardly made the deal without having a spectacular new studio boss in mind. And he is a close friend to Michael Ovitz.

Hence the wondering; is Ovitz the poacher about to turn game-keeper? There's been no announcement that he has been offered the job. But there has been a very significant refusal to appoint anyone else. The pause is big enough for rumours. There are other people around who could fill the job - notably Barry Diller, once of Para-mount and Fox, but now unattached. There remains the chance that DreamWorks and Universal could yet join forces, with Katzenberg running the whole thing. But Ovitz has done all he can do at CAA. He is young enough, and ambitious enough, and he may long to dispel the legend that he is dull and uncreative. He has seen so many projects made; he has endured the times when his good advice was ignored. It must be tempting to show his world that he can run a studio. Having your name on smash hits is still the height of glamour in Hollywood. How long can authentic American power stay discreet?

There's another factor. Agents only ever make 10 per cent. CAA has annual revenues in excess of $100 million, and Ovitz has the best piece of that pie. But the agency overhead is high: it employs over 60 other agents in its showpiece office. In other words, Ovitz has never had the stock and the bonuses and the very big money that studio executives can earn - in the class of the $75-million bonuses Michael Eisner has had at Disney. Sooner or later, the power wants the loot.

Of course, there's a downside. Over the years, Ovitz has inspired fear, loathing and a taste for vengeance, and once he crossed over he'd be an idiot like all the other studio heads. The town would be waiting for him to have his name and reputation tied to a dog - perhaps the troubled Water- world, the upcoming Universal picture, estimated cost $150 million and rising (and sinking). Ovitz is already linked to this venture, for it hangs upon his client Kevin Costner. As a studio head, Ovitz would have 10 seconds to learn the truth of what Katzenberg has been preaching about the ruinous level of salaries. He would have to try to bargain CAA down, a CAA led in all probability by his old friend Ron Meyer, one of the five who quit William Morris.

There is much to lose in the way of magnificent silence, near-Japanese dignity and flawlessness. Ovitz may flinch from that threat. But CAA would become all the staler once he made that timid decision. His real wonder, even now, may be whether he is truly a quiet, facilitating man - or as crazy and egotistical as the rest of the town. What Mike Ovitz faces is whether to risk making a fool of himself. You see, agents never make mistakes. Their deals are always beautiful, because they are made before the film flops. And if the film does fail, then that was the fault of others. But studio heads wrestle with the crazed beasts that are big pictures, and which have too many egos to be orderly. They are suckers five times before lunch. They have to be if they're dealing with CAA. And Ovitz, so far, has been like a Robespierre who never goes near the guillotine. If seeming perfect is his thing then he'll pass, and begin to grow older fast. !