Seagram fails in bid to bring Ovitz to MCA


Hollywood's most closely watched deal ended up on the cutting-room floor yesterday as negotiations for Michael Ovitz to become head of the entertainment giant MCA Inc. unexpectedly collapsed.

The end of the talks scuttled plans by Seagram Co.'s president, Edgar Bronfman Jr., to give Mr. Ovitz, chairman of the Creative Artists Agency, the reins of MCA, which Seagram now controls.

Mr. Ovitz, who wields enormous clout in Hollywood as the top deal maker in the movie business, had been seeking about $250 million in compensation and equity from Seagram in return for agreeing to give up his majority stake in the talent agency and run MCA, individuals involved in the negotiations said.

Seagram yesterday completed the $5.7 billion purchase of an 80 percent stake in MCA from Matsushita Electric Industrial Co., the Japanese electronics concern that acquired MCA five years ago but never mastered Hollywood's intricate byways. In addition to the Universal Pictures movie studio, MCA owns major record labels and runs two successful theme parks in Orlando, Fla., and Los Angeles.

Both sides declined to comment yesterday on the collapse of a deal that Mr. Bronfman, at least, felt was close to completion as recently as Sunday afternoon, according to people familiar with the negotiations. But it was only fitting, since neither Mr. Bronfman nor Mr. Ovitz had ever officially acknowledged what had become one of the longest and most publicized mating dances Hollywood had ever seen.

While there were hints of trouble last week, the news of the break down of the talks came as a surprise to many when Mr. Ovitz, at a regularly scheduled Creative Artists staff meeting at 9:30 a.m. in Los Angeles, announced that he would be staying at the agency. Members of the staff broke into applause, said one who attended the meeting.

In the end, people in Seagram's camp said, Mr. Bronfman, the 39-year-old scion of the family that founded the Seagram liquor business, concluded that Mr. Ovitz's relentless demands for money and unfettered independence were simply too onerous to accept.

On Mr. Ovitz's behalf, an executive close to Creative Artists said, Mr. Ovitz finally decided that he was unprepared to give up the autonomy he enjoyed as owner and chairman of the agency.

The question now is what Seagram will do. Mr. Bronfman sold a huge Seagram stake in E.I. du Pont de Nemours & Co., to raise cash for a gamble that he could succeed in the risky movie and entertainment business where so many other outsiders failed.

Several Hollywood executives said that the loss of Mr. Ovitz was a significant setback for Mr. Bronfman, who needs to assure stable management at MCA.

For now, one person close to Mr. Bronfman said, he plans to play a more active role in MCA, keeping Sidney J. Sheinberg as president and other top managers. But he is expected to resume the search for someone else to run the company.

The leading candidate, officials said yesterday, is Terry S. Semel, the co-chairman of Warner Brothers, the movie studio owned by Time Warner. Mr. Semel, who did not return phone calls yesterday, has a contract at Warner Brothers but, according to one person close to that company, the contract could be broken in December if Mr. Semel.

On the New York Stock Exchange, Seagram's stock fell only 50 cents, to close at $30 a share, indicating that investors hoped that the company could find a suitable replacement.

Some analysts suggested that Mr. Bronfman was wise to avoid a potential debacle similar to the one at Sony Corp. after it spent several hundred millions of dollars to hire the producers Peter Guber and Jon Peters to run Columbia Pictures but whose tenure proved disappointing.

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