CAA's Doc O'Connor Exit Means the End of an Era (But Not the End of an Agency)
As a powerful managing partner prepares to become CEO of Madison Square Garden, the remaining "Young Turks" are far better positioned than when Michael Ovitz and Ron Meyer left in the mid 1990s.
In August 1995, the entertainment industry was rocked by one of the most devastating personnel shifts in its history, when Michael Ovitz announced he was leaving CAA, the agency he had co-founded two decades earlier, to become president of the Walt Disney Co.
That singular event plunged CAA into a crisis from which few thought it could recover. After all, the agency had been run with flinty efficiency (not to mention bone-chilling fear) by Ovitz, widely considered the most powerful man in the business. Now he was going — just weeks after the departure of his partner, Ron Meyer, who had jumped ship to become president of MCA/Universal.
Almost 20 years later, one of Ovitz's handpicked successors, David "Doc" O'Connor, is now departing to be the CEO of Madison Square Garden. He leaves in place only three of the so-called "Young Turks" who were named to run the agency alongside him and a handful of others. Few expect his move to have anything like the impact of Ovitz's and Meyer's.
But no matter how well CAA contains the repercussions for clients, relationships and the industry as a whole, it is hard not to regard this as the end of an era — call it the end of Phase 2 in CAA's history.
If Ovitz, Meyer, Bill Haber and the other CAA founders were the greatest generation, as far as the modern agency business is concerned (despite occasional threats to renegade clients that CAA's "foot soldiers" would rampage down Wilshire Boulevard to deter them), O'Connor and his friends have been the quintessential baby boomers, building on the work of their predecessors without having to go to war to do so. Doc's exit (nobody calls him David) may be a signal that Generation X is a step closer to seizing power — and certainly much closer than anyone imagined just a few weeks ago, when a dozen comedy agents bolted CAA for rival UTA, in the most attention-drawing defection since Ari Emanuel and pals left ICM in the middle of the night to form Endeavor.
Still, the absence of chatter within the industry — the phones barely buzzed when the news about O'Connor broke — speaks more of stability than turmoil, and contrasts with the convulsions that accompanied Ovitz's resignation. O'Connor may have played a major part in expanding CAA's sports business and its investment arm, but the agency is now a vast corporation, majority owned by private equity group TPG Capital and run by a solid and largely nonfactional team that can swallow his loss — assuming others don't follow.
Back in 1995, the industry could hardly believe what it was hearing when Disney CEO Michael Eisner announced that Ovitz would become his new No. 2, replacing Frank Wells, who had died in a helicopter accident. (Ovitz had flirted with the MCA/Universal job that Meyer ultimately took, but turned down a $250 million deal to take the job, then assured his CAA staff he was staying.) Eisner was under pressure; he secretly had been in talks to merge his company with ABC, which would be announced imminently, and now he needed somebody to help him run it.
With Wells gone, and with Eisner's former deputy Jeffrey Katzenberg out on his own and ready to sue Disney for back pay, no suitable executive loomed on the horizon — except one: the man he deemed his best friend, who had visited him every day following a recent heart attack that had left Eisner's future and the Disney succession in question, just as the CAA succession would soon be, too.
When Ovitz accepted the job, pundits had to reconsider whether he was indeed "the most powerful man" in town, given that he was now someone's deputy; they also had to decide whether Ovitz's former empire could possibly survive without him. "Not a hope" was the widespread consensus.
"Already, CAA as we know it is mutating into a lesser beast," Vanity Fair reported shortly afterward. "Within hours of the Ovitz announcement, the company's vaunted Tele-TV deal — in which CAA partnered with Baby Bells NYNEX, Pacific Telesis and Bell Atlantic to deliver home video via telephone lines — collapsed. Robert Kavner, hired from AT&T in June 1994 to be the agency's telecommunications point man, announced that he and Tele-TV would be working without CAA's further input."
In the following days, as Ovitz readied to move on, CAA scrambled to maintain an illusion of power while operating from its I.M. Pei-designed headquarters in Beverly Hills, so closely associated with the Ovitz era. A frantic series of meetings took place as Ovitz arranged a succession plan that rewarded some and ignored others, identifying a number of managing directors who would own and operate CAA, including chairman Rick Nicita and president Richard Lovett.
The junior members of that leadership group — the Young Turks, as they were dubbed by THR's Kim Masters — were the best of friends and the closest of collaborators, four men mainly in their 30s who had grown up believing Ovitz's mantra of teamwork, who toiled and traveled together. (They might have been joined by a fifth colleague, Jay Moloney, if not for a drug problem that would lead to his suicide in 1999.)
Now they introduced themselves to the world, inviting select members of the press to come over to their offices, and gradually shedding the mask of anonymity that Ovitz had imposed on them. They even replaced his liaison to the media, the redoubtable PR maven Anna Perez, a former White House staffer who had worked for Barbara Bush. Word gradually seeped out of a rift between them and Ovitz, the man believed to be their mentor, with whom they would feud openly several years later when Ovitz had left Disney and founded his Artists Management Group.
With Ovitz absent, the new CAA leadership waged a war of attrition, reaching out to their clients and prominent industry members to convince them that the agency was rock-solid and would remain the nexus of power in Hollywood for years to come. Nobody believed them, but they were right.
In the following years, they not only clung to power as some of the CAA elder statesmen departed (Nicita, Lee Gabler, Jack Rapke) but even built on the agency they had inherited. CAA generated gross revenue of $647 million and $121 million in pro forma–adjusted EBITDA in the fiscal year ending in September 2014.
They succeeded not just by being talented agents and executives, but also by forming an unshakable bond that continued through marriages and divorces, single life and parenting, ownership of their company and the sale of a majority share to TPG. That bond was helped by O'Connor's easy-going personality and bedrock stability that will no longer be part of the company's DNA.
Now the industry will wait to see how important O'Connor was to that success. Few doubt that there are skilled executives at CAA ready to take on his tasks (not least the sports business he championed); whether anyone can serve as a glue to help hold the others in place few can say.
Readers of the tea leaves also will have to parse whether his goodbye is a one-off peeling-away or the first in a series of dominoes that will soon start to cascade in his wake. Until now, there was no hint that any of CAA's top leaders were ready to go, and industry speculation had centered entirely on their long-term plans. But inevitably, now, speculation will turn to whether one or more might be induced to break away — just as Ovitz did after Meyer told him he was going.
Should that happen, it will dwarf the exodus of the UTA agents and become the kind of transformative event CAA's rivals would pounce on. But if O'Connor is the sole survivor to leave this island, his exit is unlikely to have the impact of Ovitz's and Meyer's. Saying goodbye to O'Connor means bidding farewell to CAA's past, which is huge. But it is unlikely to alter much in the future.