'Mr Hollywood' to join Disney

Microsoft cements TV alliance as Disney appoints new boss

Michael Ovitz, the Hollywood wheeler-dealer, is to become president of Disney, the company disclosed yesterday.

Having failed to reach a deal worth more than $360m (pounds 225m) to head MCA, the Hollywood studio, Mr Ovitz, the man credited with forever changing the way Hollywood does business with its stars, may earn even more than that at the helm of Disney.

Mr Ovitz, the 48-year-old founder of Creative Artists' Agency, is expected to receive a salary in excess of the $5m a year MCA's new owners, Seagram's, had been prepared to pay. He will also get stock and stock options.

The appointment, which pushed Disney shares sharply higher in New York, immediately catapults Mr Ovtiz over the heads of his studio executive rivals. Rather than just a Hollywood studio, he will run Disney's theme parks, consumer products division, and its film and television interests, which include ABC, the US network being bought by Disney for $19bn. "Michael's background and skills will complement those of our current strong Disney management team and business unit heads," Michael Eisner, the chairman and chief executive of of Disney said.

Mr Ovitz replaces Frank Wells, who was killed in a helicopter crash last year.

Mr Ovitz became the first agent in Hollywood to package stars, directors and producers from his own stable, and attach them to studio projects. His clients included Barbra Steisand, Tom Cruise and Tom Hanks. He extended his power, and earned the name "Mr Hollywood," through, among other deals, his successful negotiation of the sale of MCA to Matsushita, the Japanese electronics company, in 1990, earning his company a hefty fee and staking out his claim to a corporate role. More controversially, his agency won the advertising account for Coca Cola against stiff competition from the advertising industry.

After the breakdown of the MCA deal observers speculated that Mr Ovitz was waiting for an opportunity to run Time-Warner. "This is a much more powerful position," said analyst Harold Vogel at Cowan & Co in New York "now that Disney is the largest company in the World. Here he has a shot at being the second in command at the largest media company in the world."

Mr Ovitz, who starts on 1 October, will immediately have to convince doubters about the wisdom of paying a premium price for ABC. While the move puts Disney ahead of nearly all challengers it could be a drag on the company if the hoped-for management and product synergies fail to materialise.