The Dream Factory: The return of the talent man

In Hollywood, Michael Ovitz is a name to be feared rather than admired. Memories are still fresh of the egos he bruised, the associates he spurned and the savage deals he cut when he was riding high as the most powerful talent agent in town in the 1980s and early 1990s. Ovitz was to the movie business something akin to what Andrew Wylie was in the publishing world - a notorious booster who brought almost as much publicity to his own activities as he did to his clients'. Unlike Wylie, though, he managed to turn himself into the focal point of the whole industry, the middle-man nobody wanted to deal with but nobody could afford to ignore.

Ovitz helped push the star system to unprecedented heights of media fetishisation and, more than anyone, was responsible for the dizzying inflation in big- name salaries from $5m to $10m to $20m per picture.

Well, that was then. Since 1995, when Ovitz left his agency, Creative Artists, he has been somewhat adrift. He served as the number two at Disney for a rocky 15 months before being tossed out by the company supremo Michael Eisner. He made an unsuccessful bid to take over the music and entertainment group PolyGram, messed around with plans for a football franchise in Los Angeles and - most spectacularly - sunk $20m into the Broadway production company Livent six months before it went belly-up under a mountain of hidden debts and dubious accounting practices.

Ovitz's old sparring partners in Hollywood might have thought, a touch gleefully, that he was finished. But he has just roared back into town, and in true Ovitz fashion has managed to antagonise just about everyone within weeks of launching his new enterprise.

Tired of the agency business, Ovitz has opted instead for talent management. Together with two other partners, Rick Yorn and Julie Silverman Yorn, he formed the Artists Management Group at the beginning of this month and immediately started announcing some of the big names he was recruiting - Martin Scorsese, Sydney Pollack, Minnie Driver, Claire Danes, and so on.

There was, however, a problem. Many of his signings were also clients of Creative Artists, whose new management immediately began to suspect he was trying to poach away their business while pretending to be offering a complementary, rather than competing, service. The final straw came when Mike Menchel, a Creative Artists agent whose client list includes one of Hollywood's highest-earning stars, Robin Williams, announced he was quitting and setting up in business with Ovitz instead. Not only did Creative Artists cry foul, it also issued an unprecedented ultimatum last week: telling its remaining clients they had to make a straight choice between them and Ovitz. "He is a competitor, not a collaborator. His work cannot be trusted," said the agency's president, Richard Lovett.

According to sources at the agency, Ovitz has been calling every big name there to try to lure them across. Lovett's ultimatum almost certainly signals the start of an all-out war - one which could result either in Ovitz being run out of town again or, if he wins, in the dismemberment of the agency that he founded in the 1970s.

Why does any of this matter? Aside from its value as an entertaining spectator sport, much like the cockfights outside the Bankside theatres of Elizabethan London, the dispute also sheds interesting light on the way Hollywood is changing as a business.

When Ovitz first set up Creative Artists, agents were the key players since they negotiated contracts and effectively controlled the careers of the top actors and directors by playing the big studios off one against the other.

As the stars themselves have grown in importance, however, their personal business managers have taken on a greater role, securing for the talent not only acting roles but a stake in the production of their movies. Megastars earning tens of millions of dollars a year have effectively turned into mini-corporations of their own; the manager acts as chairman of that corporation, while the agent merely serves as the company lawyer.

The added attraction of management is that it is almost entirely unregulated. Agents, for example, are limited to commissions of 10 per cent, but managers can and do charge up to 15 per cent. Agents cannot themselves participate in film production, but managers can.

The fear among Ovitz's enemies is that he wants to make agents all but obsolete by offering clients the same services and more. Whether he will succeed is another matter. First of all, the studio heads are wary of him - his co-founder at Creative Artists, Ron Meyer, is now head of Universal and not believed to be on speaking terms with him.

And secondly, his manoeuvring is being countered in the California state legislature where a new law is being drafted to stop managers usurping the agent's role in negotiating contracts. If that law goes through, and it has teeth, his gambit may be thwarted from the outset.