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Hollywood agencies overshadowed by monolith

Posted on: Friday, 24 March 2006, 05:01 CST

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

Source: REUTERS

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