MICHAEL MOUSE

By RICHARD CORLISS

Michael Eisner is happy doing things. He just has to be doing everything. In 1989, during the televised extravaganza that launched the Disney-MGM Studio theme park in Florida, Eisner noticed that a spangle from the costume of one of the 1,200 dancers had fallen on the red carpet. He waited till the cameras had passed, then darted out, picked up the spangle and put it in his tuxedo pocket. At Disney, neatness counts. So, for the chairman and ceo, does a twin obsession for the big picture and the smallest, shiniest detail.

Last week Eisner was a very happy man. A fortnight after springing word of the Walt Disney Co.'s $19 billion acquisition of Capital Cities/ABC, he announced that Michael Ovitz had agreed to leave his post as mega-boss of Creative Artists Agency and join the Mouse conglomerate as president, effective Oct. 1. In June, Ovitz, a.k.a. Hollywood's Most Powerful Man, had passed up a $250 million offer to run MCA. So the news that he would be Eisner's-or anyone's-No. 2 left observers giddy with admiration. "Disney now is not only the world's biggest entertainment company," says Porter Bibb, managing director of the brokerage house Ladenburg, Thalmann & Co.; "it is also the best-managed one."

Eisner could use the help. "When Michael took over," says Richard Rainwater, an Eisner confidant who helped bring him to Disney, "it had a $2 billion public market valuation. Today, after the merger, it's a $30 billion to $40 billion business. And he's got a team that can take a company that size and have it grow at surprisingly high rates." And the two Michaels? "They have always liked each other, and they'll have an absolute ball together."

The hire capped the busiest period in Hollywood's game of musical moguls since 1984, when Barry Diller moved from Paramount to 20th Century Fox, Eisner and Jeffrey Katzenberg from Paramount to Disney, and Frank Wells from Warner Bros. to Disney. Those shifts cued the creation of Fox as a fourth TV network and Disney's growth into a multimedia behemoth . Now, in less than a year, Katzenberg leaves Disney and starts DreamWorks with Steven Spielberg and David Geffen; Ovitz's partner Ron Meyer takes the vacant post at MCA; and Ovitz, the top dealmaker, joins Eisner, the most powerful showman. Says director and CAA client Martin Scorsese: "It will be interesting to see what films get made, and who flourishes, in this new world order."

The industry convulsions could be seismic. Watch the Hollywood earth tremble! CAA clients like Tom Hanks and Tom Cruise feel orphaned, while rival agencies go all adrool, dreaming of talent raids. Or, as David Letterman--whom Ovitz sold to CBS as the $42 million late-night man--says, "Oh, my God, it's the end of show business!" He's probably joking.

Huzzahs rang out from Ovitz's new colleagues . Says Robert Iger, president of Cap Cities/abc: "My initial instinct, and the instinct that remains, is that I'm thrilled with it. Michael Ovitz knows our business, so there's a familiarity that will lend support." Harvey Weinstein, co-chairman of the Disney subsidiary Miramax Films, calls Eisner and Ovitz "the greatest one-two combination since Sandy Koufax and Don Drysdale--only they're both Koufax. Mike Ovitz is the No. 1 talent magnet. Talent loves him. If you say, 'Hey, Mike, I'm having trouble casting this movie,' in about an hour you're not going to have much trouble."

Some observers have trouble picturing Eisner, 53, and Ovitz, 48, coexisting in the same company. Eisner calls it a partnership, but Ovitz's title is president--not president and chief operating officer, as Wells' had been before his death in a helicopter crash last year. On the company's official power flowchart, Ovitz is below Eisner and just above chief financial officer Steve Bollenbach and chief of corporate operations Sanford Litvack, who continue to report to the chairman. "How can he run the operation," an industry potentate wonders, "when the operations people don't report to him? Ovitz is the most calculating person who walks the earth--and I say that as a compliment. So there must be another agenda at work here."

As an agent, Ovitz had hundreds of masters. "I've always worked for clients," Ovitz says. "You're always working for somebody." Now he has to please only two people: Eisner and himself. "What's important is what Mike wanted for himself and feels good about," says Freddie Fields, a film producer and the former head of Creative Management Associates, "not what other people perceive of his move." Jim Wiatt, president of International Creative Management, spoke with Ovitz last week and says, "He sounded very relieved and happy he had made a decision--any decision. But clearly he's happy he made this decision."

It's been a long, gold-paved road for the Agent on High. In 1969, after ucla (major: psychology),he entered the William Morris Agency via the mail room and was soon packaging daytime TV shows. In 1975 he founded CAA with four William Morris partners, and within a decade it was Hollywood's largest agency. Now Ovitz packaged movies, presenting a studio with star, director and script of big-ticket properties; some (Ghostbusters, Rain Man) were hits, others (Legal Eagles, Havana) pricey flops. He brokered the multibillion-dollar sales of Columbia and MCA (twice). He brought the telephone companies to Hollywood. Along the way, he made deals, fortunes, kings and enemies.

Eisner and Ovitz go way back. In the early '70s, Ovitz was pitching show ideas to Eisner at abc. Eisner tried to hire him then and, a few years later, at Paramount. After Wells' death, Eisner put out further feelers. The occasional business spat--Eisner was angry that Ovitz's client Letterman spurned a Disney TV offer--never soured their relationship. The two families often vacation together. Decades ago, when the Manhattan-bred Eisner first visited Disneyland, California boy Ovitz was his guide.

Last month, three days before he announced Disney's acquisition of Cap Cities, Eisner called Ovitz and asked him to come to his home. "It's nothing bad," he assured Ovitz, meaning that Eisner, who last year underwent a quadruple bypass, had no medical crisis to report. He spelled out the abc deal to Ovitz, adding, "We now have this giant company, and I'd like you to seriously think about this." Ovitz, Eisner says, "was shocked." Two week s later, the friends went hiking in the 12,095-ft. elevation of Independence Pass, near Aspen, Colorado. Eisner again popped the question, and Ovitz agreed. Why, finally, this time? Reports Ovitz: "He said, 'Please.' "

Now that Ovitz and Meyer are out, CAA faces the same fretful future that Disney did a year ago: no formal line of succession. Rumors have swirled about defections of CAA's top managers and their celebrity clients. Barbra Streisand and Steven Seagal were whispered as ready to bolt the agency for rival ICM; Kevin Costner, it was said, had decided not to have any agent. That's what Tim Allen is doing, relying on his manager and attorney, and he's a triple win ner in TV, movies and best- selling books--all at Disney.

Is this the dawn of the Post-Agent Era? If Ovitz can defect to a movie company, will the balance of power tilt back to the studios? "You'll see a frenzy to lock up talent," predicts analyst Bibb, noting Meyer's MCA signing of his ex-client Sly Stallone to a $60 million, three- picture deal. "This will be a re-enactment of the contract-player system of the '40s ." And the titanic studio struggles. Already Ovitz and Meyer are separately wooing Brad Grey, co-owner of the Brillstein-Grey management firm, perhaps to boost their respective TV divisions.

According to an insider, CAA is being restructured along law-firm lines, possibly with senior and junior partners. Says actor-director Warren Beatty of the team: "They're smart, they're young; there's no reason to feel they can't do better. I think it was a good time for Ronny and Mike to proceed to a different area." On the matter of succession, Bernie Brillstein, Grey's partner, foresees a slow shakeout: "Eventually, a No. 1 will emerge, the way Ovitz did from a group of five equal partners."

Ovitz may become the lion king of Disney. But that would require the death or transfiguration of Eisner, and you can bet the chairman isn't planning on either one. Besides, there's plenty of work to do. Disney is expected to be among the bidders if Thorn EMI puts its record unit on the block. Disney could also be in the running for a Southern California football franchise, an online service or new cable channels. "The asset base is extraordinary," raves Ovitz of the new, beefier Disney. "And this company is so big that the whole issue of my autonomy is sort of irrelevant."

So is power mongering another expectation that Ovitz means to deflate? "Part of the reason I did this," he says, "is that it was time for me to make a change in what I was doing." He had played the MCA deal as if Michael Ovitz were one of his top clients, deserving of a huge, history-making deal. Maybe this student of Zen tactics was demonstrating the art of war one final time on a job he didn't really want.

But somewhere above Aspen, Ovitz de cided he wanted to be coaxed into a new job, nearly as much as Eisner wanted to pick up the biggest, shiniest spangle in Hollywood. To make one or two men very happy, all it took was "Please."

--Reported by Sam Allis/Boston, Andrea Sachs/New York and Jeffrey Ressner/Los Angeles

With reporting by SAM ALLIS/BOSTON, ANDREA SACHS/NEW YORK AND JEFFREY RESSNER/LOS ANGELES