Hollywood agencies overshadowed by monolith

By Anne Thompson

LOS ANGELES (Hollywood Reporter) – For years, the elephant
in the room whenever Hollywood turns its attention to talent
agents has been the mighty Creative Artists Agency (CAA).

In the 30 years since five agents — Mike Ovitz, Ron Meyer,
Rowland Perkins, Mike Rosenfeld and Bill Haber — defected from
the then-dominant William Morris Agency (WMA), CAA has grown
into a Borg-like monolith, gobbling up so much top film talent
that resistance is futile. “You’ve got to get along with CAA or
you’re dead,” one studio producer says. “They play it rough.”

Through the ’80s and ’90s, CAA’s two closest rivals, WMA
and International Creative Management (ICM), steadily lost
ground to CAA’s fiercely competitive team work ethic. And in
the past decade since Ovitz and Meyer left the agency in the
hands of the so-called “young Turks” — Richard Lovett, Bryan
Lourd, Kevin Huvane and David O’Connor — along with key
partners Lee Gabler and Rick Nicita, CAA has only gotten bigger
and better.

Its power hitters include Nicole Kidman, Tom Cruise, Brad
Pitt, Ron Howard, George Clooney, Steven Spielberg, Robert
Zemeckis and Tom Hanks.

“There’s CAA and everyone else,” one manager says.

ICM once claimed the best actress roster in town — until
CAA systematically chased down the likes of Cameron Diaz, Julia
Roberts, Drew Barrymore and Sandra Bullock. When CAA couldn’t
land the clients it wanted, it cherry-picked the best agents in
town instead, paying them top dollar to bring in the likes of
Kate Winslet, Cate Blanchett and Will Ferrell.

Which is why, in the wake of a series of industry
consolidations — including General Electric’s purchase of NBC
and Universal Pictures, Sony Pictures Entertainment’s
investment in MGM, Walt Disney Co.’s pickup of Pixar, the
merger of UPN and WB Network to form the CW, and Paramount
Pictures’ acquisition of DreamWorks — there has been so much
talk of agency consolidation.

“The only way to rival CAA is for two agencies like UTA
(United Talent Agency) and Endeavor to get together to create a
second agency,” one uber-producer says. “That’s the only way
they can compete.”

But will it ever happen? On paper, agency mergers make good
business sense, especially at a time when anxiety runs high in
Hollywood.

Studio profit margins are narrowing, bringing downward
pressure on star salaries. “The bottom is falling out of the
$20 million market,” one manager says.

As asking prices fall, agents become more vulnerable.
“Agents have pushed prices to a place where their clients can’t
get employed,” a studio producer says. “They don’t want to go
back to their clients with a salary cut, afraid that they’re
going to leave.”

Several agencies boast enough cash reserves to make some
big buys — among them, Paradigm, ICM and WMA, whose television
and music divisions can be far more lucrative than motion
pictures. In November, ICM reeled in new co-owner Suhail Rizvi,
along with a cash infusion of $100 million. Merrill Lynch is
backing an ICM acquisition play.

Both ICM and WMA have been kicking the tires of UTA,
Endeavor and Broder Webb Chervin Silbermann. But for all the
rumblings about pending combinations, including Paradigm
merging with ICM, nothing has happened. No one can imagine that
ICM chairman Jeff Berg is ready to give up control of an agency
that represents Jodie Foster, Mel Gibson, Denzel Washington and
James L. Brooks.

But why hasn’t Berg, who has made no secret of his desire
to be acquisitive, bought anything? “These deals take time to
be completed,” suggests one ICM insider. “To grow the agency,
we’ll do what makes financial strategic sense.”

Rolling up ICM, Endeavor and UTA into one super-agency to
go up against CAA is “an interesting concept,” one ICM agent
says. “Then there are the people.” After months of rumors and
press reports of a merger between UTA and Endeavor, this week
those talks petered out in part because of clashing cultures at
the two agencies.

One look at the scrappy characters involved in such a
merger makes it easy to see why some of the partners at UTA,
which handles such clients as the Coen brothers, M. Night
Shyamalan, Jim Carrey and Johnny Depp — might not be ideal
sandbox playmates for the hard-charging partners at Endeavor,
whose roster includes Larry David, Adam Sandler, Ben Affleck,
Reese Witherspoon, Keira Knightley, Steve Carell and Matt
Damon.

“Personality gets in the way,” one Paramount producer says.
“There’s room for a rival to CAA. They are very, very good, but
what they do can be duplicated. The business need for this is
overwhelming. Whoever does it will win.”

Reuters/Hollywood Reporter