CAA's fortunes have nosedived in recent months -- The heavyweight talent agency is on the defensive with execs and stars departing in quick succession

By Charles Fleming
Updated December 01, 1995 at 05:00 AM EST

Hollywood always has a hearty appetite for someone else’s bad news, and lately, Creative Artists Agency, the industry’s most powerful talent house, has been serving its competitors a banquet. Since last summer, when agency cofounders Michael Ovitz and Ron Meyer announced their departures (for Disney and Universal, respectively), the agency has lost some of its biggest marquee clients. Sylvester Stallone! Alec Baldwin! Kevin Costner! Steven Seagal! Directors John Hughes and Adrian Lyne. Digesting the news nuggets, gleeful gossip, and trade paper headlines, analysts are predicting the downfall of a company once powerful enough to terrorize enemies and silence critics.

Reports of the agency’s demise seem to be greatly exaggerated. But the last three months have been a public embarrassment and a public relations nightmare for CAA — and the defections may not be over yet. ”This is a continuing process in the agency business,” says a rival agent. ”For CAA, unfortunately, it’s a continuing process down.”

Founded 20 years ago by five renegades from the William Morris Agency, CAA dominated the industry for the last decade, and, in the person of former chairman Ovitz, reinvented the role of the Hollywood agent. CAA brought to the film business the TV practice of ”packaging” — in which the agency assembles a project that employs a CAA writer, producer, director, and star. And the agency broadened its reach by brokering studio sales to Sony and Matsushita, producing TV commercials for Coca-Cola, and working with Tele-TV, an alliance of three U.S. phone companies, to wire the information superhighway. CAA outearned and outclassed the competition, hands down.

When Ovitz and Meyer left — with TV giant Bill Haber following soon after — much of that ended. The Coca-Cola advertising account followed Ovitz to the Walt Disney Co. Tele-TV’s relationship with CAA evaporated. Competitors who had long been loath to approach CAA clients started making phone calls. And clients started fleeing.

In the last three months alone, CAA has lost at least 30 high-profile accounts. Stallone left for rival International Creative Management, as did Steven Seagal, Chevy Chase, and Lyne (Indecent Proposal). Baldwin left for William Morris. The new agency Endeavor — where CAA veteran agent Marty Adelstein is one of the head execs — attracted TV series creator David E. Kelley (Chicago Hope) and top writer-producers from The Simpsons, Home Improvement, and Hope & Gloria. United Talent Agency lured Showgirls‘ Elizabeth Berkley, Sherilyn Fenn, and TV talent like St. Elsewhere cocreator Bruce Paltrow, Seinfeld coproducer Carol Leifer, and Homicide producer Julie Martin. (They may not be big names, but TV writer-producers account for a huge portion of an agency’s revenue.)

Competing agents can scarcely contain their ”Dingdong, the witch is dead” glee. Ovitz and Meyer had them terrified that any act against CAA would result in persecution. (The effects of that remain: None would speak for the record, nor would CAA’s current leadership.) ”There was this feeling that these guys would kill you if you crossed them,” says an agent. ”The operating code was all about fear,” says another. ”Now the fear component is gone.”

The principal difference is that those who have inherited CAA — though by all accounts capable and well liked — are not perceived to have sufficient weight to keep Ovitz/Meyer loyalists around. The reason Costner departed, says a source close to the actor: ”Michael wasn’t there anymore. It’s nothing against CAA, but his agent wasn’t there.” Stallone, who had worked with Meyer for more than 15 years, had no ties to anyone at CAA once Meyer was gone — and Meyer, upon arriving at MCA-Universal, signed Stallone to a three-picture, $60 million deal.

The inheritors of the Ovitz/Meyer mantle are a team composed of senior CAA agents Jack Rapke, Rick Nicita, Lee Gabler, and Tom Ross, and the group of more junior agents known in the industry as the Young Turks: Richard Lovett, Bryan Lourd, Kevin Huvane, David O’Connor, and Jay Moloney. But there may be some cracks in the new power structure. Rapke, who did not return phone calls, is widely rumored to be seeking employment elsewhere. And Moloney, who last August underwent open-heart surgery, is now in a drug rehabilitation center in Oregon, and is planning to return to work early next year.

Veteran Hollywood players caution that anyone celebrating CAA’s death may soon be attending his own funeral instead. Sure, Costner and Stallone walked, but CAA still represents approximately 1,200 clients, including Tom Hanks, Tom Cruise, Michael Douglas, Meryl Streep, Liam Neeson, Brad Pitt, Demi Moore, Robin Williams, Nicole Kidman, Robert De Niro, Al Pacino, Whoopi Goldberg, Sean Connery, Hugh Grant, and Winona Ryder. It still represents directors Martin Scorsese, Barry Levinson, Robert Zemeckis, Sydney Pollack, Richard Donner, Oliver Stone, Joel Schumacher, Ivan Reitman, Rob Reiner, Ridley and Tony Scott, and Ron Howard. Over the next few months, it’ll be collecting commissions on movies like The American President, Money Train, Casino, Jumanji, Sabrina, Heat, and Nixon. Just take a single case: CAA client Val Kilmer, who appears in Heat, also stars in the upcoming Island of Dr. Moreau, opposite Michael Douglas in The Ghost and the Darkness, and in the next Batman. And last week he was picked to wear the halo in Paramount’s The Saint. That’s a lot of commissions.

In addition, during the last three months, CAA has signed Anthony Hopkins; TV stars Jennifer Aniston (Friends), Jonathan Silverman (The Single Guy), and Thomas Haden Church (Ned and Stacey); pop-music powerhouses Green Day; and dozens of others.

How badly have the lost clients hurt the agency? Maybe not that badly. CAA made the deals for Stallone’s next four movies and will collect the commission. ”By the time ICM collects a commission, Stallone is going to be doing Grumpy Old Men 4,” jokes one film executive. And at his new shop, ICM, the action star joins fellow clients Arnold Schwarzenegger, Steven Seagal, and Jean-Claude Van Damme. When the next hot script comes in, who will be the last action hero to read it? The loss of Stallone may make a great headline, but it doesn’t kill an agency. Says competing agent James Kellem, of the Agency for the Performing Arts, ”CAA has lost some clients, but the core of the business of CAA is a solid core.”

But a question remains: How many more clients might CAA lose, and what would it cost to keep them? According to various insiders, some top-drawer CAA clients are coming forward with a deal: Cut the commission rates from the usual 10 percent, or lose me as a client. ”They’re saying, ‘Do 7 percent, or do 5 percent, and I’ll stay,”’ says one source, who adds that CAA is refusing to renegotiate. But if a big client like Michael Douglas — who a spokesman says is staying with CAA ”for the moment” — decides to bolt, that could change, and the revolving door may start spinning again.