Although far from an exact science, chemistry will be key to merger's success
EmptyAs venerable an agent as Ed Limato, who joined WMA two years ago in the wake of the ICM/Broder tie-up, might find himself in an awkward spot. He reps Mel Gibson, a major moneymaker for the agency but a controversial client — so much so that Endeavor's Ari Emanuel not long ago penned a piece suggesting folks in the entertainment biz shouldn't work with the star again because of his anti-Semitic and racist remarks. So, how will that work out?
That's one of the ticklish issues surrounding what might be one of this decade's most intriguing mergers.
Limato aside, "What happens to me?" was the nagging question posed during the weekend by agents and actors alike as Hollywood became unusually rattled by two big developments: a tentative agreement between SAG and the Alliance of Motion Picture & Television Producers after nearly a year of labor talks, and a tentative agreement to merge two of the town's top talent agencies, WMA and Endeavor.
The likelihood of either deal alone would have been enough to spice up talk at premieres and screenings, but together the speculation swept aside all thoughts of Zac Efron and Miley Cyrus going head to head at the boxoffice.
That actors and producers finally see eye to eye on contract terms can only be good for the town; execs can get back to greenlighting movies, actors to acting and all the bickering will die down — at least until the next round of talks heats up in, what now, 18 months?
That should be about the time that dust from the merger of Endeavor and WMA settles and the combo moves into new digs (already leased by WMA and under construction) on Beverly Drive.
I mention the dust because so many of these media mergers play more smoothly on paper than in practice.
Hollywood saw a flurry of such deals during the late 1990s, culminating in the AOL-Time Warner amalgamation in January 2000. Remember the aftermath of that? Corporate cultures were at odds, synergy was resisted or subverted, the stock sank and everyone's 401(k) tanked, Ted Turner got sidelined, many execs lost focus and a few of the deal's architects made out like bandits.
Not that WMA-Endeavor has the breadth or depth of that mismatch, but if it happens it will alter the rhythms of the biz. Agencies are the lymphatic system that keeps the business flowing; if they are dysfunctional, the effects are felt throughout town.
As for making sense on paper, a lot of folks think the combo does — though, because they're privately held firms, the precise financials are hard to tease out.
One thing is clear: Like every other sector, the agency biz is having to rethink its economic model, not only because of the recession but also because the WGA strike last year changed the equations. There are fewer movies and TV shows to commission, studios are holding the line on star salaries, the syndication of TV reruns is not the gravy train it used to be, repping corporate brands is not as easy or lucrative as it looks, and so on.
"Endeavor may be the hippest and most buzzworthy of the agencies, but overhead there doesn't allow for rapid growth anymore," a rival agency rep said in describing what's driving the deal. "Ari has to look outside, and WMA generates that music cash flow but also needs a shot in the arm."
So money is a big-time issue among agents, though I imagine it's the individual egos involved that make putting the deal together so tricky — and possibly the key to the merger's success.
It is not hard to see Emanuel and Endeavor as the energetic, pursuing partner — all one has to do is watch HBO's "Entourage" to know that — and Jim Wiatt and WMA as the proud but standoffish progenitor of the representation business. In little more than a dozen years, Endeavor has pieced together a first-class roster of film actors and directors and TV showrunners; after 120 years, WMA has a hold on music, commercials and nonscripted TV but has lost its mojo in the motion picture- and TV-packaging business. Given the economics, what's not to like? Together, their portfolio should be formidable and give their competitors pause.
But back to the anxiety rippling through the town.
The partners apparently plan to pare the agency ranks to about 150; WMA now boasts 182 reps and Endeavor about 75. Most of the blood-letting is expected to be on the WMA side: Word late last week was that a list of 100-odd agents to be let go had been compiled, and many would come from WMA's motion picture and TV lit department. The combined board, on the other hand, is expected to be weighted with five members from WMA and four from Endeavor.
Unless there's a last-minute derailment — even the name could be contentious: "Endeavor" is evocative, but "William Morris" is a world-class brand; probably best to keep them both — a substantial number of agents are going to be shown the door, or in a few cases might choose to leave. All will be rattled.
And as inevitably as night follows day, clients will be discombobulated.
Rival agencies are licking their lips at the prospect of picking off a few who have been jettisoned or luring unsettled clients into seemingly more stable folds. Calls to various shops suggest that overtures are being made to talent whose reps might be on the hit list. As for ousted agents, they won't find many open slots at other agencies and could swell the ranks of independent managers.
Other agencies also will assess the bigger picture and the wisdom of further combinations. UTA and Paradigm certainly have complementary strengths. As for CAA, it can continue to bask in its A-list talent glory and, if inclined, go after one or two untethered stars. There should be plenty to choose from: Limato alone, were he to leave, also reps Richard Gere, Denzel Washington and Steve Martin.
In any case, the whole thing will be exhilarating for some, dispiriting for others and distracting for months for just about everyone.
Elizabeth Guider can be reached at elizabeth.guider@THR.com.
Patrick Whitesell WMA