THE FOXES ARE finally in the Hollywood chicken coop, or at least one might be excused for thinking so. Sylvester Stallone signed a reported three-picture, $60 million contract at MCA/Universal shortly after his former agent, Ron Meyer, was picked to run the studio.
And one can only imagine what the installation of the world's most powerful agent, Michael Ovitz, as the chief executive at Disney might portend for his old clients.
After years of grumbling about Ovitz and his Creative Artist Agency's alleged high-handedness in brokering with the studios for talent, the studio chieftains seem to have surrendered by inviting Ovitz and Meyer into the system. But before stars start lining up with their wheelbarrows, they should take pause.
The superagents' entry into the studios does mark a fundamental shift in the balance of power in Hollywood; really the third revolution in the relationship between industry forces. Only it may not turn out to have the consequences the stars are hoping for.
To understand this new Hollywood revolution, one might look to Revolutions I and II. The first occurred from roughly 1910 to 1915 when the original film moguls, those who held the patents on the motion picture camera and projector (including Thomas Edison), grudgingly yielded to a group of Eastern European Jewish immigrants, most of whom had moved from exhibiting movies to producing them.
The triumph of these one-time nickelodeon operators established a simple and incontrovertible rule. The motion picture business is driven by movies, or, put in today's jargon, it is primarily a software business. While this may be the glory of Hollywood for the audience, it is an affliction for businessmen. The trouble with movie software is that to be profitable, people have to want to see it.
This puts unrelenting pressure on producers to gauge public tastes and satisfy them. The Holy Grail of Hollywood, then, has always been to devise a system in which the risk could be minimized, the product pre-sold. That is why aggressive pioneers such as Adolph Zukor at Paramount vertically integrated the industry, with studios not only producing pictures but distributing them to theaters they owned.
And that is why, in the '20s, they inaugurated the vaunted studio system. By putting film production on a factory basis, standardizing the product and creating stars who functioned as brand names, the studios could supply a steady stream of
pictures to their theaters and ensure a reasonable audience.
Though the studio system wasn't exactly the grail, it did function reasonably well for nearly 30 years, until a host of forces led to its collapse. These included competition from TV, the government-enforced divorce of theater ownership from film production, the court-ordered end of contracts that essentially turned stars into indentured servants, and the aging of the old moguls.
Hence Revolution II. Into the vacuum rushed the talent agents, most notably Lew Wasserman of the Music Corporation of America, whose percentage deals with the decrepit studios gave his clients a piece of their pictures' profits and whose idea of setting up independent production companies enabled his clients to develop their own material.
When Wasserman's MCA took over Universal studios in 1961, it only confirmed that the stars had gained control. For four decades the stars have reigned as the most reliable way of attracting audiences. What the brilliant Wasserman began, the brilliant Ovitz built upon.
He recognized that stars, not the movies, are now the software; they are commodities who lend their celebrity to the movies rather than gaining celebrity from them. Obviously the studios hated to cede power to stars and agents, and they have constantly sought some means of redress. Enter Revolution III.
With Disney's acquisition of ABC, the company's chairman, Michael Eisner, may not only have found that means, he may have finally found the grail itself, the key to guaranteed profit.
By combining movies, broadcast television, cable television, video, foreign video, foreign television, merchandise, theme parks, soundtrack albums, books and heaven knows what else, Michael Eisner has devised a new form of vertical integration that takes virtually all the risk out of movie software and gives truth to the producer Joseph E. Levine's classic pronouncement that you have to be "an imbecile to lose money in this business."
In doing so, however, Eisner has also reconfigured the relationship of the studio to talent. In the short run the new media colossuses will compete to corner the big names, thus Stallone's new deal. The same thing happened when the industry was first vertically integrated. Mary Pickford and Charlie Chaplin became the objects of fierce bidding wars.
Yet the long run may be a different story. Certainly no one will need take up a collection for Tom Cruise or Arnold Schwarzenegger. But just as the old studio system stabilized salaries by stabilizing the demand for movies, this new global studio system may control the rate of increase. When risk is vanquished, when even awful movies can be profitable, the stars lose their leverage. Once upon a time, Jeffrey Katzenberg, while head of Disney studios, challenged the primacy of talent by making a program of pictures with second-rank stars. The results were dismal.
"You got a bunch of pictures starring Steve Guttenberg," a talent agent once joked to me. In this new global studio system, where a dozen media outlets can provide a large aggregate audience, such movies would probably make plenty of money.
Just as likely, the huge multifaceted studios like Disney will revive the techniques of the old studio system: signing young stars to long-term contracts and grooming them as human software, or signing established stars to multi-picture deals and then cross-collateralizing them in all the other media outlets they will control. They won't call these "deals"; they will no doubt call them "alliances," with the stars and the studios sharing the returns as partners. But whatever they call them, the days when talent reigned supreme may soon be over.
The agencies and their clients are no longer 800-pound gorillas. The studios are back in power. Why else would the greatest agent of them all have decided to defect to the enemy?
Neal Gabler is author of "An Empire of Their Own: How the Jews Invented Hollywood."