* * *
—
The pace picked up. I traveled to Osaka once a week, often for as little as twenty-four hours. (I made fourteen trips in all.) I was on the phone daily with Hirata, Sid, Herb, and Felix Rohatyn. I also touched base with Bob Strauss, an MCA board member who was close both to Herb and to Matsushita board member Keiya Toyonaga. Bob Strauss had a golden résumé: chairman of the Democratic National Committee, U.S. trade representative, Middle East peace broker, ambassador to the Soviet Union. MCA and Matsushita had waived any conflicts to let Bob in as “a counselor to the transaction.” A good old boy out of Lockhart, Texas, Bob was the ultimate back channel because he cared only about the deal. And another go-between was just what we needed, as I was doing all I could to keep the principals apart. I didn’t want Lew and Hirata to discover just how little they had in common.
The Japanese were cowed by Lew’s reputation and happy to bargain indirectly, but Lew, egged on by Felix, wanted face-to-face talks so he could size up the buyer. For a while I used Herb and Bob Strauss to vouch for Matsushita’s sincerity: they’d listened in on this call, they’d read that fax. But by October, Lew could be put off no longer. I arranged a get-together at his home.
I warned the Japanese going in about Sid’s mercurial personality and admonished Sid that our guests were unaccustomed to raised voices. To my relief, the meeting proved to be all small talk. Sid walked Hirata around Lew’s house, pointing out the Degas and the Matisse. Lew remarked, “You buy the company, you get the paintings, too—they’re MCA property.” It was a bizarre moment. Most people in Lew’s position would have saved that nuance for the closing, then asked for—and surely received—the paintings as a gift.
Hirata seemed more impressed by the koi pond in Lew’s backyard.
Two weeks later, as Lew mulled Matsushita’s engagement number, we sprang another leak. The Nikkei wire service reported that MCA was demanding up to ninety-five dollars a share. According to an unnamed Matsushita official, the Japanese wanted “a cooling-off period” until mid-November. Murase, I thought. It all reminded me of Shōgun, warlords at each other’s throats. If Hirata lost an internal showdown before we closed, we were dead. MCA stock fell 18 percent that day and Lew was boiling. “You better get this straightened out,” he growled at me. His shares were so depressed that a raid seemed inevitable if our deal didn’t take.
* * *
—
On November 13, Hirata and Toyonaga led their delegation into New York. The MCA contingent touched down in Lew’s private jet. At the kickoff dinner where both sides broke bread, Sid Sheinberg rattled on and on about how costly melons were in Japan. I felt even better that I’d kept him under wraps.
The next morning I went to Hirata’s hotel for the magic number. If the offer was in the fifties, I feared Lew would walk. After our good mornings, Hirata made a brief, expressionless statement. I swiveled to the translator. “We will make an offer,” he said, “of sixty dollars a share.”
I pushed for more: “This will close much faster if we go in at sixty-five dollars and hold our ground.” Early on, I’d warned Hirata that in dealmaking I represented both sides—which is how deals get done—and that I’d squeeze him if necessary. I was squeezing now.
Hirata shook his head. “We would like to offer sixty dollars,” the translator said. I pushed no further. Every offer had some give to it, and any deal could close if the bid-ask spread was within 10 percent. Lew would be hard-pressed to reject sixty-six dollars a share, nearly double the stock’s price before the Journal leak. Throw in five dollars for WOR, and we were close to the floor Herb and I had submitted two months earlier. A sixty-dollar bid was a savvy calibration, the lowest figure that would safely keep things moving.
Formal talks began later that morning at Trump Tower, where Sid co-owned an apartment with Steven Spielberg. As I led people through the agenda, the atmosphere was quiet but tense. We made short work of the agreed-upon points. Lew and Sid got five-year deals; if Lew couldn’t finish his term as CEO, Sid stepped in.
Finally, I addressed the price. First I noted that external conditions—war in the Middle East and the rising price of oil—had hurt MCA’s value since Matsushita’s initial overture. When I delivered the number, Lew professed outrage and accused us of misleading him. It was mostly an act.
Then my real work began. I spent three days bouncing among the two Midtown Manhattan law firms (Simpson Thacher for Matsushita and Wachtell, Lipton for MCA), Hirata’s suite at the Regency, and Felix Rohatyn’s base at Lazard Frères. Usually I walked, though limos were waiting if I needed to huddle with Herb or Sandy Climan. The first day crawled. Lew refused to consider sixty dollars and Matsushita wasn’t budging. Herb urged me to keep people talking, which was easier said than done. At five o’clock Bob Strauss called and said, “We’ve got to get this deal moving, so I’m going to hold a board meeting.”
“What are you talking about?”
“Come to the Regency and see for yourself!”
I went over to Bob’s parlor suite, which had the longest bar I’ve ever seen. Hirata and his associates were crowded around it and on their way to getting soused. “Let’s get social!” Bob said. We talked and drank, and talked and drank some more. No real business got done, but it kept everyone talking.
The next morning, two days before Thanksgiving, Hirata gave me a new number: sixty-four dollars a share. I thought it was close and took it to Trump Tower for Felix and Sid and Lew’s attorney, Marty Lipton. They said it was still too low and the deal wasn’t going to happen. I tried to stay calm. The great unknown was the inside of Lew’s head. I didn’t dare press him for a counter because it might be so high the gap would be unbridgeable. Lew had demonstrated that he would kill a deal, even one he desperately needed, if pushed too hard.
What was fair payment for his life’s work? “He’s playing hardball,” said Felix, who kept me apprised of Lew’s mood. “I think we’re at an impasse.” When Felix told me he was leaving that night for his weekend place in Southampton, I understood. He needed to make it look like the deal was toast. If Lew saw everyone leaving, he might cave.
On Wednesday, arbitrageurs bid MCA stock up to $68.50, based on a projected purchase price of $85 a share. The number had no more meaning than a Farmers’ Almanac weather forecast, but I feared Lew might use it as a basis for his ask. I went back to Hirata, knowing I had to tread carefully. If I pushed him too high, I might put him in Dutch with Tanii. I also knew he had a “shadow” adviser, the banking firm of Nomura Wasserstein, which likely was counseling him to slow-play his hand. With no other bidders, it was reasonable advice. But Nomura Wasserstein didn’t know Lew Wasserman. My gut told me sixty-four dollars wasn’t quite enough.
I said to Hirata, “I think we need to go higher. What about sweeping it up to sixty-six?” He said he’d think about it but made no promises.
Late that afternoon I left for Los Angeles. I wasn’t going to sit in New York through Thanksgiving, a big day in the Ovitz household, while Lew and Hirata had a stare down. Herb Allen took off for Long Island. Marty Lipton went home as well, which really made it seem like we were done.
But the Japanese didn’t leave, a good sign. And Lew remained at the Sherry-Netherland. That was his tell that he wanted to close, and Bob Strauss read it like Amarillo Slim. He stayed to keep Lew company, just in case.
I had barely made it home when Herb Allen checked in with an update: Lew was at the 21 Club with Bob. Bob called afterward and said, “I don’t think this deal is dead. I think we can get it done for another two dollars.” Lew had hinted as much on their car ride home from dinner. I woke up Hirata. When he got back to me with a translator, I said, “It sounds like we can do this for sixty-six dollars a share.”
“I’ll have to think about it.”
“Don’t take too long,” I said. “You’re really close.”
I spent most of Thanksgiving on the
phone in my home office. After hours of back and forth with Herb, Felix, Bob, and Hirata’s translator, Matsushita upped its offer to sixty-six dollars. I broke the news to Sid, and the two sides met that afternoon at Wachtell, Lipton. Lew and Hirata shook hands. It was killing me not to be there, but we had a tentative agreement.
What drove Lew to say yes? You could not use the word panic and Lew Wasserman in the same breath, but I think he saw the deal dissolving and understood what that would mean. For perhaps the first time in his career, Lew felt cornered. He’d spurned so many suitors no one was left but Matsushita—or the lurking raiders.
The Japanese were better than the pirates. He had no way to manipulate Hirata because all contact was through me. He saw that he had one move left and he made it.
For their part, the Japanese weren’t going to leave New York without MCA in their pocket. As the uncontested buyer of a highly pressured seller, they held all the cards. They were prepared to bargain forever.
But, in truth, the sale price was about right. The Japanese went a little further than they’d planned and Lew took a little less than he wanted. Buyer and seller remorse is a fact of life. Objectively, both sides won. A studio was rescued from the vultures, and the Japanese had strong potential as partners. Lew had more money than he could spend and a long-term contract. The deal worked for everyone—or it should have.
Champagne glasses in hand, more than a hundred people convened in Simpson Thacher’s conference room Monday morning. I stood behind Lew and Hirata as they sat with the documents. Strong emotion washed over me; it was the largest and most demanding deal of my career. At $6.5 billion, it broke Sony’s record for a Japanese acquisition in the United States. I had convinced the last mogul to sell out before he went under, to a company he’d met with only twice. I had proved myself in M&A. I had won.
Hirata made good on the Brink’s truck. He gave me a colossal check to distribute as I saw fit: $135 million. After paying the bankers and all the consultants, I was left with $60 million for CAA (worth $110 million today). It changed everything for us. First, it put more money in our partners’ pockets—ten million for Ron; ten million for Bill, one to three million each for the guys who’d worked on it; and the rest for me. Second, it enabled us to hire more people without depleting our reserves. Third, it allowed us to keep paying our agents well-above-market rates and to ensure they didn’t leave. And fourth, it signaled that our company had stepped up in class. In Hollywood, where people didn’t know Goldman Sachs from Saks Fifth Avenue, everyone was dumbstruck that a talent agency could earn that kind of fee, let alone arrange and execute a deal of that magnitude.
Of course, my elevated profile pissed off my partners. And I began to feel that I was a hamster on a wheel. Part of me felt I was running on the wrong wheel, that I should be going into business for myself—and part of me believed I wasn’t really a hamster, but a cheetah, the fastest animal in the field. Even as everyone from Ted Ashley to Ron to my wife was telling me to slow down, I wanted to speed up.
* * *
—
A few days after the signing, I went to the MCA commissary to offer Lew my take on Matsushita. “You’re in a really good position,” I told him. “You’ve got a five-year cushion with a company that wants nothing better than to make Sony and Columbia an afterthought.” All he and Sid needed to do was communicate each day in writing with Matsushita’s scribe, a man named Uede, to keep Osaka calm and in the loop. “They love to be told things ahead of time,” I said. “Don’t call them and expect a snap decision. If you want to do a deal, make sure they understand what they’re buying before you ask them to sign the check.” I offered to guide Lew through the transition. “They’re paying me to consult for another two years,” I said. “Let me earn my money. I’ve built a relationship with these people and they trust me. Let me help you.”
Lew listened, but I could tell he had no interest. When I did business overseas, I took my cue from Akio Morita. I tuned to the local environment as soon as I stepped off the plane. But Lew was an American from the old school. He expected the world to adapt to him.
And he never forgave me for saving him on someone else’s terms. After the deal closed, I brought Tanii and Hirata and Toyonaga to the Universal lot to take formal possession of MCA. I pulled up to the front gate by Lankershim Boulevard, parked my car, and escorted my guests to the walkway, where Lew and Sid were waiting. I made the reintroductions. Without a word, Lew and Sid turned their backs on me and walked the Japanese into the studio. I kept my face impassive, but I was hurt and upset, as Lew surely intended.
I never spoke to Lew Wasserman again.
CHAPTER FOURTEEN
PICASSO
Much of the entertainment business revolved around ego and fear. People contorted themselves not to contradict a star, even when the star was obviously wrong. Someone had to be Dad, and it fell to me: No, you can’t back out of that handshake deal. No, you can’t talk to the studio like that. No, you can’t go a week over budget.
One morning in 1992, I heard from my client Sherry Lansing, the Paramount studio chief. She was very concerned about Indecent Proposal, a CAA package with Bob Redford, Demi Moore, and Woody Harrelson. “The dailies aren’t good,” Sherry said. “Bob’s close-ups look awful.” As Bob was playing a virile executive who gets a younger woman into bed (albeit by paying for it), this was bad news. At Sherry’s request, I went to Paramount and screened the dailies. Sure enough, Bob had bags under his eyes.
I stopped by Bob’s trailer and said, “Is there something I should know about?”
“Everything is fine.”
“Everything doesn’t look fine. You look tired in the dailies and the studio is petrified to say so. What’s wrong?”
Bob glared at me and said, “We’re done.” Meaning: you’re fired.
Back in the office, I was steeling myself to tell the staff we’d just lost one of our biggest stars when Bob called and asked me to come back. I stepped into his trailer and waited. “I haven’t been sleeping well,” he said softly.
“Happens to me all the time,” I said. Without prying for details, I said we’d have the movie suspended on the studio’s insurance and get him a long weekend. After he had some rest, I said, “We’ll reshoot all this stuff and get it right. Sherry is completely behind you.”
I was speaking with no authority, but Sherry understood actors. When I told her Bob needed a break, she shut the set down. Bob went to his place in Malibu and got squared away with a few sleeping pills. He returned the following Monday rested and strong. He didn’t look young, but at least he didn’t look old. The movie grossed close to $300 million.
* * *
—
More than a decade after we’d signed him, I still had to spar with Sydney Pollack on every project. When Paramount bought rights to The Firm, John Grisham’s breakout legal thriller, they attached Tom Cruise to star. We went to Sydney to direct, and he said no, as usual: “Loved the book, hated the ending.” In Grisham’s novel, the protagonist, Mitch McDeere, goes on the lam after skimming $10 million from his crooked Memphis law firm. Sydney found this unsatisfying.
I said, “Why don’t you talk to Grisham about changing the ending for the movie?”
“That’s an idea,” Sydney said, “but no author in the world would do it.” He would not make the call. I arranged for him to speak with Grisham’s agent, and a surprised Sydney phoned me to report, “Grisham’s fine with a new ending.”
“That’s great!”
“But I still don’t know if I want to do it,” he said.
“Syd, this is The Firm with Tom Cruise. You’ve got to do it.” I pushed and pushed until Sydney agreed to consider it. He devised an ending he liked better, with Mitch McDeere honest to the end. He met Tom and sat with the writers. And then he vacillated. Sydney was always deeply worried about selling out. He wanted the adulation of mass success, but he hated looking me
rcenary.
At wit’s end, I phoned our client Stanley Jaffe, the president of Paramount. “Let’s try something with Sydney,” I said. “I want you to congratulate him on taking The Firm. Go on about how delighted the studio is, and how it’s going to be a hit, and how you’ll back it to the hilt. Don’t let him get a word in edgewise, then thank him and hang up.”
Then I called Tom Cruise and said, “I want you to call Sydney and tell him how thrilled you are to be working with him and how great it’s going to be. Lay it on heavy, then hang up.”
Our staff was on a retreat in Ojai, ninety minutes up the coast from Los Angeles. I told Mike Marcus, Rosalie Swedlin, and Paula Wagner, who handled Sydney and Tom, not to answer if the phone rang in their rooms.
Stanley reached Sydney first, and then Tom came through on his other line before he could respond to Stanley. When Tom abruptly signed off, Sydney shouted to his assistant, “Get Ovitz on the phone! Get him on the phone now!”
Donna tried me and reported, “He’s on a retreat.”
“Get Mike Marcus or Rosalie Swedlin!”
“They’re at the retreat, too.”
“Get Paula Wagner!”
“Same retreat.”
I waited five hours to call back. “How are you, Syd?”
“You son of a bitch!” he screamed. “How could you tell them I’m committed? I’m not committed. This is crazy, I’m not doing that movie!”
“I have no idea what you’re talking about, Syd. I’d suggest you call Stanley Jaffe and Tom Cruise if you don’t want to do the movie.”
“You call them!”
“I’m not going to call them. I think you should do the movie.”
Who Is Michael Ovitz? Page 28
