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Ovitz Back in the Spotlight With Stake in Livent

April 14, 1998|JAMES BATES

After a 16-month absence, Michael Ovitz on Monday stepped back into the entertainment business, gaining control of one of North America's top live theater producers and luring a respected investment banker to run it.

Ovitz is investing $20 million in Livent Inc., the Toronto-based company behind such productions as "Ragtime," "Show Boat" and "Kiss of the Spider Woman." Ovitz also persuaded Roy Furman, a founder of investment banking firm Furman Selz, to leave his company to become Livent's chief executive.

Furman will take over running the company from Garth Drabinsky, the colorful and free-spending Canadian producer who will become a vice chairman and chief creative director. Ovitz said Drabinsky, a company founder, will now "focus fully on artistic and creative leadership."

Ovitz is buying a 12% stake immediately and, after a series of complex transactions, is expected to end up with about 25%. He will serve as a director, as well as chairman of Livent's executive committee.

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But Ovitz will control the company because Drabinsky, Furman and Livent's co-founder, Myron Gottlieb, have agreed to let Ovitz vote their shares. Another major Livent investor and Ovitz friend, Boston financier Thomas H. Lee, has an agreement with Ovitz to support each other's nominees for director.

Formerly called the most powerful man in Hollywood, Ovitz for years dominated the talent agency business as head of Creative Artists Agency and also served a short, rocky stint as president of Walt Disney Co. According to people close to Ovitz, the executive saw Livent as an undervalued and poorly managed company that, with the right investors and executives running it, could stem its red ink and exploit its ample cash flow and rich assets. On Monday, the company said it lost $30.9 million in 1997 because of expansion costs and expenses related to refinancing its debt.

One appeal for Ovitz is Livent's valuable real estate assets, which include theaters in New York, Chicago, Toronto and Vancouver, Canada.

"Michael Ovitz's investment is affirmation of the validity of the live theater business," said PaineWebber analyst Christopher Dixon.

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In an interview, Furman said he pitched Livent as an investment to Ovitz for weeks. Unknown to him, Furman said, investor Lee also was trying to talk Ovitz into investing.

Furman said that once Ovitz decided to invest, he began looking for a manager, then called Furman, who was vacationing in Florida. After describing his ideal candidate, Furman said, Ovitz told the investment banker that he had him in mind. Furman, a vice chairman of Lincoln Center and a vice president of the New York City Opera, said he was initially reluctant to leave the firm he started 25 years ago, but said Ovitz never stopped making his pitch.

"He knew exactly what buttons to push. He just has a certain style that keeps drawing you in, making it clear you should do it," Furman said.

The investment marks Ovitz's return to entertainment after leaving Disney in December 1996 after 15 months as president, following a falling out with Chairman Michael Eisner. In leaving Disney, Ovitz received one of the richest severance deals in history, a package of stock and options currently worth about $200 million.

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Since leaving Disney, Ovitz has been most active in real estate, an area where he has quietly been a major investor for years. He is trying to land a National Football League franchise in Los Angeles, and has teamed with Cleveland real estate investor Herb Glimcher in a proposal to build a new football stadium in Carson. Ovitz and Glimcher also are working separately on entertainment-themed malls in Ohio and New Jersey.

Although Ovitz isn't expected to be active in Livent's day-to-day operations, he has dispatched a longtime lieutenant, David Maisel, to serve as president under Furman. Sources said Maisel's main job will be to clean up Livent's operations. But Furman said that Ovitz also may well tap his talent connections for Livent.

"He has the Rolodex," Furman said.

Drabinsky has long been lauded more for his creativity, vision and showmanship than for his business acumen. Drabinsky was forced out as head of movie theater chain Cineplex Odeon Corp. in 1989, which was plagued by losses and a big debt load.

By building his own theaters and assuming so much control over creative details, Drabinsky has been compared to old-fashioned impresarios and Hollywood movie moguls. Drabinsky has paid high prices for talent, causing fears of bidding wars among Broadway producers.

Although he has emerged as a major force on Broadway, Drabinsky's beachheads outside New York have helped decentralize commercial theater. Drabinsky launched "Ragtime" in the U.S. in Los Angeles. Then, in what was considered an unprecedented move, opened it on Broadway while the show continued running in Los Angeles.

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Times staff writer Don Shirley contributed to this report.

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