This Hollywood power clash has been playing out for years. Two weeks ago it got ugly. Creative Artists announced that France’s Credit Lyonnais, the world’s eighth largest bank, would join its glittering client list (running from Michael Jackson to Coca-Cola). CAA will help manage Credit Lyonnais’s troubled $3 billion portfolio of entertainment loans, which includes Metro-Goldwyn-Mayer and its now dormant sister company United Artists, as well as advise it on future investments. CAA’s next move: under the agency’s guidance, NEWSWEEK has learned, the French bank will soon spend an additional $250 million to resuscitate UA and prop up MGM, said to be losing $300,000 a day.
The CAA deal is historic. Never has a talent agency played the role of adviser to a financial lender with so many stakes in Hollywood, notably Credit Lyonnais’s 98.5 percent controlling interest in MGM. Since MGM hires actors, directors and writers who may be represented by Ovitz’s firm, CAA could, Berg fears, run a studio that favors its own clients. “The question is, what powers of suggestion or influence will exist [for CAA] that we won’t have access to?” says Berg, whose own clients include Arnold Schwarzenegger and Julia Roberts. “We think it’s not a level playing field.” CAA denies that. “Our agreement with the bank means we will be consulting with Credit Lyonnais in Paris. We will make no direct management or talent decisions,” says CAA spokeswoman Anna Perez.
Others in the movie industry applauded the news: saving the troubled MGM would mean more work for everyone. For Ovitz, the deal represents a whole new level of macromanagement. For Credit Lyonnais, Ovitz embodies a cure for its ills. The bank’s loans to filmmaking firms like MGM, Carolco Pictures and De Laurentiis’s Entertainment Group, made during the heady ’80s, now rank among its worst performing. Presumably, Ovitz’s ties to top talent will reel in enough box-office draws to restore both the companies and the value of the loans, thus confirming Berg’s worst fears. A sequel to MGM’s “Rain Man,” for example, could again employ the talents of CAA clients Tom Cruise, Dustin Hoffman and director Barry Levinson. Although MGM cochairman Alan Ladd Jr. is genuinely respected around town, and, sources say, his job will not be affected by CAA’s plans, his shop has been shunned by major filmmakers. The studio that spawned “The Wizard of Oz” and “Gone with the Wind” has of late unleashed nothing but box-office flops, such as “Rich in Love.”
What most intrigues the trade industry-and enflames the normally coolheaded Berg-is Ovitz’s apparently insatiable appetite. The CAA-Credit Lyonnais deal is only the latest of a string of Ovitz moves to extend his influence beyond the talent-agency business. Within the past few years he has brokered the $6.6 billion sale of MCA-Universal to Japan’s Matsushita Electric Industrial Co. and advised Sony Corp. on its $3.4 billion purchase of Columbia Pictures. Most recently, Ovitz signed a consulting deal with CocaCola to create its new advertising campaign, a coup that stunned Madison Avenue almost as much as his decision to promote and market sporting events for Nike.
Ovitz’s admirers believe that the 46-year-old martial-arts buff desperately wants to keep MGM and UA alive, if only to jump-start the languishing movie-studio business. Orion recently went bankrupt, Fox is scaling back and a score of once thriving independents have folded. A healthy MGM and a reopened UA mean two more employers of CAA’s clients-and everyone else’s. But if Ovitz plans to revive the two studios and get them sold to a stable buyer, he must move fast: court rulings have stipulated that Credit Lyonnais cannot legally continue to own MGM after late 1996. The bank could also close the studio, fire its 1,500 workers and sell off the company in parts.
In the meantime, Berg continues to fulminate. CAA’s deal with Credit Lyonnais. he says, will be carefully scrutinized this week by the three major talent guilds–representing Hollywood’s actors, directors and writers. Each guild, he notes, has agreements with the talent agencies barring the latter from representing studios in business dealings. Berg also threatens to bring legal action against CAA, asking the Federal Trade Commission to investigate possible antitrust violations. “This whole thing is about how ideas, projects and artists compete for financial opportunities in the market,” he says. “Even if this deal doesn’t bring unfair competition, there is clearly that appearance. All I’m saying is, remove the appearance. “The words came out calmly, but the eyes held deep anger. Round two coming up.
