OVITZ UNDER FIRE

According to the Los Angeles Times, Ovitz is struggling to steady his core management company during the current barrage of bad news. Three years after launching a venture designed to leverage a star-studded roster of clients through an array of companies in all facets of the entertainment industry, his Artists Management Group is cutting back in an effort to survive.

The lawsuit claims that Ovitz made "grandiose promises" and "false representations" to Eric Tannenbaum when he hired him to run the now-defunct Artists Television Group, a sister company to Artists Management Group. Ovitz promised he would personally finance the television company for five years and boasted of a "billion-dollar line of credit" Tannenbaum could access as he built the enterprise from the ground up, according to the suit.

"The parties named in this lawsuit deny the allegations and are confident that these claims will be determined to be legally and factually meritless," Ovitz's lawyer, Terry Sanchez, said in a statement. "Mr. Tannenbaum ran Artists Television Group from its inception with substantial funding, and despite the efforts of many people, ATG was not financially successful."

After five months of on-again, off-again negotiations to settle Tannenbaum's claims against Ovitz, talks broke down last week and the suit was filed.

The television unit officially shut down in August after two years and a reported $100 million had been spent developing shows. Though "Madigan Men" aired on ABC, "Cursed" on NBC, "The Street" on Fox and "Grosse Point" on WB, none of the shows survived beyond their first season, the Times reports.

The lawsuit is the latest in a string of bad news to hit Ovitz, including word last week that comedian Robin Williams had fired AMG and returned to his former talent agency, CAA.

Also last month, StudioCanal backed out of its three-year multimillion-dollar pact with Ovitz's film production arm, Artists Production Group. Ovitz's company, with no films in production, has yet to secure another film financing and distribution partner.

At the same time, Ovitz recently slashed costs and reorganized his sports management division, ending a foray into managing hockey players as well as an effort to establish a foothold in tennis. Last month, key sports manager Jill Smoller left AMG to join William Morris Agency, taking clients including Rick Fox with her.

In addition, the co-heads of Ovitz's music management office as that unit cut costs and trimmed staff.

Now, Ovitz's enterprise rests on the talent management firm run by Julie Silverman Yorn and her brother-in-law, Rick Yorn, the Times said. Their clients, who include Cameron Diaz, Leonardo DiCaprio and Samuel L. Jackson, along with Ovitz's clients, including Martin Scorsese, Sydney Pollack and Oliver Stone, are the bedrock of the management company.

Tannenbaum resigned as President of Sony’s Columbia TriStar Television unit in May 1999 to become President/CEO of Ovitz' Artists Television Group.

The suit, filed late on Thursday in Los Angeles Superior Court and made public on Friday, said Ovitz "panicked" at the first signs of trouble. The suit alleges Ovitz halted ATG's operations over Tannenbaum's objections and ordered the sale of its creative assets.

The suit said Ovitz failed to honor his personal, written guarantee to pay Tannenbaum's $1.5 million annual salary for at least five years.