"An Economic Samurai"

By John Greenwald

Even before his latest coup, he was regarded as the most powerful man in Hollywood. Michael Ovitz, the town's No. 1 talent agent, can make or break a movie project or an actor's career. But as the power broker behind Matsushita's acquisition of MCA, Ovitz has reached an international stature that even legendary moguls might envy. "He is the mega-dealmaker," says an industry executive. "Not only on a film-by-film basis, but on the very largest scale of buying and selling studios. That is the most significant thing you can do in Hollywood."

Ovitz, 43, has pursued power with the fierce concentration of a student of aikido, the Japanese martial art that he practices each dawn. "He's an economic samurai," says a colleague. Starting in 1975, when he and four young colleagues left the William Morris Agency to form their own firm, Ovitz has managed to assemble the hottest stable in town. Creative Artists Agency has a roster of 675 clients ranging from superstars Tom Cruise, Sylvester Stallone and Madonna to directors Oliver Stone and Martin Scorsese.

) Ovitz prospered by matching such talent with CAA screenwriters and peddling the stars and stories to studios. But assembling the elements for such hits as Ghostbusters and Rain Man only whetted Ovitz's appetite for even greater power packages. His first real taste of corporate matchmaking came last year when Sony, impressed by his unrivaled Hollywood contacts, tapped him as a consultant for its $3.4 billion acquisition of Columbia Pictures.

Not long after the Columbia deal, Matsushita sought out Ovitz to lead the company's search for a major acquisition. The Japanese company first sent a group of top executives to meet with Ovitz in Hawaii, where they talked about everything from world politics to prospective merger partners. A team of CAA experts then prepared a list three possible targets. The Japanese company rejected one studio, Orion, as too small. Another candidate, Paramount, was dismissed because some of its holdings, ranging from publishing (Simon & Schuster) to sports (the New York Knicks), didn't fit into Matsushita's strategy. Ovitz recommended MCA, which had the mix of show-biz operations that Matsushita wanted.

Ovitz orchestrated the merger with cool precision. To avoid the bickering that marred the Columbia deal, he handpicked the law firm, investment bankers and public-relations agents to represent Matsushita. He then served as a shuttle diplomat between the two companies, anticipating problems before they could grow. When the merger was clinched, Ovitz joined the army of 100 dealmakers at Matsushita's law firm in Manhattan for a 9:15 a.m. champagne toast. For Ovitz's work on the merger, Matsushita could eventually pay CAA as much as $40 million. The sum aroused the green-eyed envy of deal-starved Wall Street firms, which suffered the indignity of watching a talent agent walk away with one of the biggest deals of the year.

Ovitz predicts that the Japanese style of long-term planning will help bring stability to Hollywood. "That's very important to creative people," he says. By the same token, he feels that Americans will grow more comfortable with such global alliances. "It's crystal clear that we are no longer an isolationist country."

What's next for Hollywood's hottest leading man? After the Matsushita deal, Ovitz may be in line to succeed Lew Wasserman as head of MCA. Yet such a move could limit his power, which now encompasses the entire movie business. And he is not yet finished changing the face of Hollywood.

With reporting by Jeanne McDowell and Edwin M. Reingold/Los Angeles