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Taking Major Risks, Ovitz Tries for Prime Time Again

TV: His new firm has sold a record seven shows to networks, but he could lose millions if they don't become hits.


Hollywood is giving Michael Ovitz a second chance--of sorts.

The former-super-agent-turned-talent-manager has scored an unprecedented first-year success in television. His Artists Television Group, the year-old arm of the talent management firm Ovitz formed in December 1998, has landed seven new shows on network schedules--besting every independent in a decade marked by studio domination.

Thanks to heavy spending on top-drawer talent and the salesmanship of its energetic president, Eric Tannenbaum, ATG outranks even established studios. By Fox's tally, Warner Bros. and ATG are tied for first place in the number of new orders for the coming season, with Fox, Paramount Television and Disney trailing behind. Ovitz's sizzling comeback after his humiliating ouster two years ago as president of Walt Disney Co. could quickly turn into a costly flameout, however.

Securing orders is only the warmup drill in the prime-time marathon. The punishing economics that have killed most independent producers come into play as production begins.

By taking the unconventional path of self-financing his television production, Ovitz must pump millions of dollars into his shows. With prime time's 95% failure rate, there is a good chance he may never recover most of those costs. And with the season approaching, Hollywood sources say he is scrambling on a number of fronts to offset his risks.

Network executives say Ovitz's plan could work if the financial backing is there and a hit comes quickly. The game is to find partners who can share the burden of success.

No surprise, ATG officials say they are in advanced talks with at least two potential partners who could bring strategic distribution or "revenue-enhancing" assets to the table.

Tannenbaum says ATG is under no immediate financial pressure and that its business model is sound. He's extolling the virtues of ATG's independence. He says it's easier for Fox, say, to buy from ATG than from Paramount Television, which could hold the network up for big increases in renewal talks for a blockbuster hit by threatening to put it on its own CBS network.

Most important, ATG has spent aggressively to lock up top writers, producers and actors who are sought after by the networks. Just as Ovitz brought Hollywood to its knees ruling over powerful talent at Creative Artists Agency, the bet is that he will rise again using star power--rather than distribution control--as leverage.

ATG has committed an estimated $60 million to a handful of writer-producers and stars such as Steven Weber and Darren Star, the producer of "The $treet" who also is credited with "Sex in the City."

Those numbers add up to pressure even for Hollywood studios. Fox struggled for several years to reap the benefits of its own $60-million spending spree on comedy writers.

And ATG has other expenses to worry about. Its overhead runs an estimated $1 million or more a year, industry sources say, and that does not include the world-class digs at the Wilshire Beverly Center building that house ATG and Ovitz's management company.

ATG's search for a strategic partner has taken on greater urgency as "The $treet," a one-hour drama for Fox, has gone over budget. ATG will be more than $7.9 million in the hole after filling Fox's half-season order. And the costs will grow in success until reruns are sold years down the road.

Television executives say Ovitz has made the rounds internationally and in Hollywood, but is painted into a corner by an earlier deal he did with Sony. For most of the summer, ATG has been trying to redo that deal, which gives Sony worldwide distribution rights in exchange for modest advances on ATG's shows. Other investors are reluctant to come in without distribution rights to offset their risk.

"They need more money," said one senior television executive who has dealings with ATG. "It's almost like they didn't think it through. They factored in the fixed costs, but didn't think about what it would cost to produce the shows and keep them on the air. That's what can kill you."

Tannenbaum dismisses the scuttlebutt, in part because he says Ovitz is comfortable with the business plan and with drawing on his own substantial bankroll.

In fact, he's expanding. In addition to new network pilots ATG is developing for January, Tannenbaum says it continues to spend on talent deals. Just last month, it signed actor Billy Baldwin to a $1.5-million deal.

"If you get lucky and have a hit in your first or second year, like we think we can, [our plan] will really look smart," said Tannenbaum, who Sony released early from his contract as president of Columbia Tristar Television as part of the distribution deal with ATG.

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