Two big Hollywood talent agencies poised to merge

By REUTERS

June 18, 2010 Updated Apr 27, 2009 at 5:11 PM EST

* Deal would create larger rival to powerhouse CAA
* Merger seen as boosting revenues amid industry slump
* Morris' Wiatt would chair, Endeavor's Emanuel run
day-to-day

By Alex Dobuzinskis

LOS ANGELES (Reuters) - Two of Hollywood's top
talent agencies, William Morris Agency and Endeavor, were
poised Monday to finalize a merger that would enable them to
weather a production downturn and challenge their powerful
rival Creative Artists Agency.

The board of William Morris and the partners who run
Endeavor were meeting Monday, amid anticipation the two
private companies would soon announce a merger.

A combination of the 111-year-old William Morris and the
14-year-old Endeavor would create a company with more than 300
agents, and combine the former's strength in reality TV, music
and books with the latter's edge in film and TV, experts said.

"You've got one agency that predates the existence of
movies and another one that's a scrappier, hipper upstart,"
said entertainment attorney Jonathan Handel, who is not
involved in the deal. "They really do complement each other in
terms of their strengths."

The merger could also lead to layoffs and departures at
both agencies as the two shed duplicate employees and as agents
leave to pursue their own interests, Handel said.

A deal between William Morris and Endeavor has been talked
about for months as talent agencies have grappled with how best
to increase revenues in the face of tough times in Hollywood.

Declining DVD sales, slumping TV advertising and growth in
reality TV, which has resulted in fewer opportunities for
actors in scripted TV dramas and comedies, have all led to
fewer job opportunities and, as a result, lower fees generated
from actors who pay agents roughly 10 percent of their salary.

Larry Gerbrandt, a principal at Media Valuation Partners,
tied the possible merger to the downturn in Hollywood.

"You simply don't need as many agents running around town
pitching projects," he said.

Agencies earn additional money from grouping their actors,
directors and writers in a "package" of talent for a movie or
TV show. Creative Artists Agency, or CAA, has for years been a
leader in "packaging," so a merged William Morris and Endeavor
would have more clients to challenge CAA's lead.

ROSTERS OF STARS

CAA boasts a client roster that includes director Steven
Spielberg and actors Brad Pitt and Will Smith.

William Morris boasts of representing Kanye West, Britney
Spears and Russell Crowe, while Endeavor has actors Matt Damon,
Robert De Niro and Adam Sandler.

William Morris is the larger of the two merging agencies,
with 800 employees, including more than 250 agents, while
Endeavor has some 280 total employees, including 80 agents.

"This is actually a lot more about agency economics than
anything else, and the realities of doing business in Hollywood
in the middle of a recession," Gerbrandt said.

Jim Wiatt, chief executive officer at William Morris, is
expected to chair the newly merged company. Endeavor founder
Ari Emanuel would have a role running day-to-day operations.

Emanuel is the brother of Rahm Emanuel, U.S. President
Barack Obama's chief of staff, and he was the character model
for Hollywood power agent Ari Gold in fictional TV show
"Entourage" on cable channel HBO.

The U.S. Justice Department would have to approve a merger
between the two companies, and several Hollywood unions would
have to sign off on the deal.
(Reporting by Alex Dobuzinskis: Editing by Bob Tourtellotte
and Cynthia Osterman)




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