WMA, Endeavor: agents of change?

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What would a hookup mean? As WMA and Endeavor continue to try to hammer out a potential merger, the consequences for the industry are emerging as vast and complicated.

The combination of the two shops would be nearly unprecedented in modern Hollywood, whose agency pairings have tended to come more as absorptions than as mergers of equals.

Yet WMA and Endeavor have been in discussions for weeks, with agency partners including Ari Emanuel at Endeavor and Jim Wiatt and Dave Wirtschafter at WMA said to be in the talks. Reps for the two agencies declined comment. But some observers put the odds at 50-50 that a deal could be worked out — far from a certainty but a very real possibility.

A merger would hold appeal for both companies, combining departments and strengths that in many cases are complementary.

"This would get William Morris back in the game with talent, and it gives Endeavor a financial toehold that it needs," said a studio producer who has worked extensively with clients from each, noting that WMA does have many A-list actors, but a merger would further bolster their ranks.

In addition to its core film and TV business, WMA has developed a proficiency in music, television commercials and, to some degree, brands, giving it multiple revenue streams in a time when the entertainment business is consolidating.

The agency also has extensive real estate holdings — though, like all privately held companies, the value of its portfolio is hard to determine.

Endeavor, meanwhile, is known for its deep reserve of acting talent, particularly comedy; many of the genre's biggest names in front of the camera now call the shop home.But there are areas where the two have similar — and potentially overlapping — strengths

Endeavor is better known for its TV and motion picture lit businesses, but both agencies have well-developed departments in that area. On TV, for instance, Endeavor is considered stronger, though WMA has two of the medium's biggest names in J.J. Abrams and Tyler Perry.

That would make the combined units a powerhouse. But it also would create potential redundancies, which raises the spectre of cuts, as it often does in mergers.

Perhaps even more tricky than any one department, agency cultures would have to be integrated — Endeavor's well-oiled and lean startup mind-set with William Morris' more genteel and traditionalist approach.

Meanwhile, physical layout and management structure also needs to be figured out.

One possibility would have the film side housed in the WMA building and the television side in the Endeavor building until the new WMA headquarters is completed next year, when all could move into one building.

Agents at both have been on tenterhooks as the talks continue. Some execs describe a situation that's intriguing because it will mean they're working for an employer with added heft — "like going to CAA without having to go to CAA," said one wag — but simultaneously daunting because what it means about job security.

A deal also would have consequences for agencies up and down the Hollywood ladder. While people currently talk about the Big Five agencies, a merger undoubtedly would put a lot more distance between the top two — CAA and the combined WMA-Endeavor entity — and everyone else.

That would put CAA in a spot where it suddenly needed to beef up even further of it wanted to maintain its competitiveness on the scale front.

On the other hand, CAA in the past has been dinged by the argument that it is bigger and impersonal while rivals such as Endeavor and WMA are more intimate. A WMA-Endeavor merger would neutralize that argument.

Further down the ladder, it would put more pressure on UTA and ICM to keep up. If it wouldn't exactly set off more merger talks, it would force each to hone more specialties. Both already have done that in areas likes digital, younger stars and up-and-coming writers and directors.

But the impact on smaller shops wouldn't necessarily be negative. One agent outside CAA, WMA and Endeavor was all but smacking his lips when asked what a merger would mean for his business.

"The chaos that will happen — the firings of agents and clients, the reassigning of clients — people will not be focused on business," the agent said. "It's distracting, and clients will be unhappy. It will mean great signing opportunities."

That chaos would of course not be guaranteed. ICM and Broder merged in 2006 with minimal disruption; that deal saw a neat complement as the latter helped ICM bolster its TV writer and business. But a deal like that is more the exception than the rule.

Knotty issues from management structure to agency culture to financial incentives to the name of the firm itself would need to be resolved before the even knottier business of merging teams could be broached. Said one entertainment insider, "There's a reason why agency mergers usually result in more talk than action." (partialdiff)
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