'Mr Hollywood' sets his sights on the top job at Time Warner

The crusading Mike Ovitz has just one problem: there is no vacancy

Mike Ovitz, the man being hyped as Mr Hollywood, is believed to have his eye on the top job at Time Warner. The only problem is that there is no vacancy: Gerald Levin is pulling out as many stops as he can to prevent the removal of his name plate from the chief executive's office at the Rockefeller Plaza headquarters of what is probably the world's biggest entertainment company.

The analytical gurus on Wall Street, however, think it is only a matter of time before Mr Levin goes the same way as Doug Morris, fired last week as head of the highly profitable domestic music division.

His departure underscored the continuing strife within the company, particularly given that Time Warner's spirits were lifted briefly a few days earlier when its shares reached a year's high with a 6.2 per cent jump to $43.125 as Batman Forever opened to a $52m box office weekend and the Federal Communications Commission hinted it would remove the cap on subscription rates charged by cable-TV operators.

Euphoria at Time Warner, though, seldom lasts more than a day. Political in-fighting in the corridors of power has been intense since last summer, when the venerable heads of Atlantic, Electra and Warner Bros Records, WEA, were eased out. In one corner stand the creative "Music Men" of old, in the other the besuited corporate executives.

The spectacle of Time Warner tearing itself apart has led to mounting criticism of Mr Levin ,whose weak response to Senator Dole's cultural attack has further undermined morale at the company.

Even before the political assault, Time-Warner was rumoured to be interested in selling the music division to cut some of the company's $15bn of debts .With worldwide earnings of $740m on a turnover of $4bn the WEA division, with a 24 per cent share of the $12bn market in the US, is the most profitable element of the company.

Its sale would also free Time Warner's cable interests from political pressure. In the short term, Mr Levin, who regards music as the illegitimate child of cable, may offload Time Warner's 50 per cent stake in Interscope Records, the label that represents the most vociferous of the Gangsta rappers.

Whatever action the company may now take will not ease the underlying anxiety over Time Warner. The chief executive's headlong dash in trying to make the company one of the principal cable suppliers has alarmed market analysts because the new technology is coming to a crossroads of delivery standards. Will home entertainment of the future be piped by the cable companies or through the fibre-optic systems of the telephone industry?

Mr Levin has cast his bet and new cable acquisitions will raise Time- Warner's debt to $17.4bn next year.

Observers are taking bets that the caped crusader who will rescue the company is Mr Ovitz, who runs the CAA talent agency for Hollywood stars. Not only does he aspire to the most powerful job in the industry, but as Hollywood's king deal-maker, he has the proven agility to play dual roles as a hard-nosed corporate executive and agent used to placating the most delicate of entertainers' egos.

New details of his recent MCA deal-that-wasn't will give Time Warner shareholders something to reckon on when the time comes. Mr Ovitz sought a colossal $360m to run MCA, the Los Angeles-based entertainment giant in which Seagram of Canada recently acquired an 80 per cent stake from Matsushita of Japan for $5.7bn.

The proposed remuneration package comprised $285m in MCA stock, $50m in salary over 10 years, $25m in Seagram stock and a large bonus. Edgar Bronfman, chief executive of Seagram, which also owns 15 per cent of Time Warner, balked at the package, and the negotiations collapsed three weeks ago.

But like all deals in the land of outsized egos ,the money was never more than a vanity - a token of how much Mr Ovitz was wanted. At the helm of Time Warner, he would be answerable to a board of directors but still maintain some of the autonomy he enjoys at CAA. At MCA he would have been an employee of what is still largely a Canadian distiller.

In any case, the much-trumpeted MCA deal to distribute movies produced by Dreamworks, the Spielberg-Katzenberg-Geffen studio, is not especially valuable. Dreamworks has raised little over $1bn so far.