Two weeks after he engineered the biggest merger in show business history, Michael Eisner yesterday hired Hollywood super-agent Michael Ovitz as the new president of the Walt Disney Co.

Ovitz is chairman of Creative Artists Agency, known as CAA, and is widely regarded as the most powerful talent agent in Hollywood, representing such celebrities as Tom Hanks, Robert Redford, Barbra Streisand and Tom Cruise.

Ovitz will report to Disney on Oct. 1 and take charge of its newest acquisition, Capital Cities/ABC Inc., which Disney will purchase for $19 billion, plus its film unit and theme parks.

The move pairs two of the entertainment industry's most successful dealmakers and fills a 16-month gap in Disney's top management.

"I am especially gratified to be able to have an additional partner going forward to manage this great and complex entertainment company," Disney Chairman Eisner said. "There's plenty for the two of us to do." He and Ovitz, 49, have known each other for more than 20 years, though Disney has not worked as closely with CAA as other studios.

"I have a lot to learn here," said Ovitz in a joint interview with Eisner last night. "I've never worked in a public company."

Eisner, 53, said he had been discussing the deal with Ovitz for two weeks, since Disney announced its agreement to acquire CapCities/ABC.

Eisner depicted the new relationship as a partnership, saying, "I don't want to do it alone; it's no fun {and} I believe you judge an executive by the people who work for him. That was my pitch to him."

Eisner said that Ovitz, like other top executives at Disney, "has placed himself in the same position as our shareholders," but Eisner declined to discuss terms of Ovitz's hiring.

The move helps Disney fill a void that was created when former president Frank Wells died in a helicopter crash in April 1994. Eisner has had health problems and underwent coronary bypass surgery one year ago.

"It eases investor concerns about the succession question," said Harold Vogel, an analyst with Cowen & Co. in New York. "And it provides the company with Ovitz's wide network of contacts and skills. Frank Wells was always a sounding board for Eisner. Ovitz will be in a similar role." But Eisner denied speculation that he was in effect naming Ovitz as his heir. "I have at least another decade here," he said.

Disney shares rose $2.50 to $59 on the New York Stock Exchange. Capital Cities/ABC was up $3.12 1/2 to $116.62 1/2 per share.

The move took executives from both CAA and Disney by surprise. Joe Roth, head of the Disney film studio, was called back from a vacation over the weekend and told the news. CAA agents learned of Ovitz's departure at a meeting yesterday morning.

"I know I'll never have another moment like this," Eisner said of his recent spate of Page One news.

Ovitz began his Hollywood career as a tour guide, first at Universal Studios, then at 20th Century Fox. He later worked in the mail room of the William Morris Agency and began a successful career there as a television agent.

Ovitz and his partners founded CAA in 1975 and built it into the film industry's No. 1 agency, representing more than 1,000 of the most famous entertainment personalities.

But Ovitz has long since transcended the role of agent. He has helped shepherd such huge Hollywood transactions as Japanese electronics company Matsushita Electric Industrial Co.'s purchase of MCA Inc., Sony Corp.'s acquisition of Columbia Pictures, and new financing for the MGM/United Artists studio. More recently, Ovitz arranged a deal in which CBS News executive Howard Stringer became the head of Tele-TV, a video programming venture by three regional Bell companies: Bell Atlantic Corp., Pacific Telesis Group Inc. and Nynex Corp.

Still, to some observers, Ovitz's star power had begun to fade recently. His reputation as being crucial to any big Hollywood deal took a blow when one of his most valued clients, Steven Spielberg, did not seek Ovitz's counsel when he set up a new film company, Dreamworks/SKG. Joining Spielberg were David Geffen and Jeffrey Katzenberg, two moguls who were not friendly to Ovitz. Katzenberg formerly led Disney's film division, but joined Dreamworks after Eisner declined to promote him to president after Wells's death.

Now Dreamworks must decide whether to exercise an option to abandon a lucrative joint television venture with ABC. A Dreamworks official, who requested anonymity, said the company will explore offers from other networks.

Ovitz earlier this year began high-profile, protracted negotiations to change his job, talking with Seagram Co.'s 40-year-old president and chief executive, Edgar Bronfman Jr., about becoming the head of its MCA studio division for a compensation package estimated at more than $250 million. The talks collapsed in mid-June, however.

When MCA then hired Ovitz's partner, Ron Meyer, for the job, some observers said Ovitz missed an opportunity. Others said he was wise to wait.

"I think Michael believed he had one shot," said one powerful Hollywood investor. "He's 49 years old. If he took {the MCA job} he would be head of a second-tier company. A powerful, but second-tier company, and have to report to a 40-year-old." By joining Disney, he becomes the No. 2 man at the No. 1 company.

Ovitz's departure from CAA to join Disney already has set off a mad scramble among other top agencies for CAA's clientele.

Within the agency, there is a tier of mid-level executives and a more rebellious group of five younger agents who had grown restless about the prospect of Ovitz leaving for MCA.

"This does tend to throw the agency business into a period of turmoil. It will be up to the senior agents at CAA to pull together," said Bill Mechanic, a former Disney executive who now is president and chief operating officer for Fox Filmed Entertainment in Los Angeles.

Of CAA's future, Ovitz said, "Of course I'm worried about it, but I think they'll do great."

CAA's success was largely due to a culture that placed a high value on loyalty among agents. During the MCA negotiations, late-night talk show comedian David Letterman called Ovitz and said, "If you leave {CAA}, what about me?"

Executives at Hollywood's other top talent agencies immediately began dialing for dollars, calling celebrities to urge them to drop CAA. The William Morris Agency called a staff meeting yesterday upon hearing the announcement, sources there said.

"It's about to get very interesting," said Jeff Berg, president of International Creative Management, the No. 2 agency behind CAA.

Mechanic and Berg said Disney did not hire Ovitz, despite his reputation as a top agent, to acquire his roster of stars. "The job isn't to bring in talent, it's to manage the company," Mechanic said. But Ovitz's contacts could prove important to the company. Eisner noted, "How many people can speak on a first-name basis to {Coca-Cola Co. Chairman} Roberto Goizueta and others like him?"

Eisner and Ovitz both are widely viewed as intense and relentless negotiators.

"Think about the duo of Michael and Michael," said one source close to the Disney studio. "Who is going to be the good cop?" Staff writer Kim Masters contributed to this report. CAPTION: Ovitz will head Capital Cities/ABC, plus Disney film unit, theme parks. CAPTION: THE ROAD TO DISNEY LAND MICHAEL OVITZ'S PATH THROUGH HOLLYWOOD EARLY CAREER * Ovitz wanted to be a doctor, but a summer job as a tour guide at Universal Studios changed his mind. He worked at the William Morris Agency from 1968-1975, starting in the mailroom, before developing talent and shows. CREATIVE ARTISTS * In 1975, Ovitz and four others founded Creative Artists Agency. Some of its clients include: Barbra Streisand, Robert Redford, Tom Cruise, Tom Hanks, Keanu Reaves, Anne Rice * Since then, he has overseen some enormous entertainment industry deals and advertising campaigns including:

* The sale of Columbia Pictures to Sony in 1989

* Matsushita's purchase of MCA in 1990.

* The Coca-Cola ad campaign that featured the Coke polar

bear.

RECENT CAREER

* He was widely rumored to be Seagram's choice as chairman of MCA, but the deal fell through in June.

* Yesterday, he was named president of Disney.