UTA-Paradigm Deal Chatter Heats Up as Agencies Feel Urge to Merge

Jeremy Zimmer and Sam Gores Split-Getty-H 2019
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Long-running rumors that the Jeremy Zimmer-led agency is acquiring Sam Gores’ music powerhouse have intensified in the past two weeks amid rival Endeavor’s filing to go public.

Is United Talent Agency about to gobble up rival Paradigm?

The deal buzz in Beverly Hills reached a crescendo in the past week as insiders speculate about a possible combination of the rival agencies. Sources tell The Hollywood Reporter that the deal talks are real and have heated up lately, but that several hurdles still exist and either side could walk away. UTA declined to comment, while Paradigm denied a deal is in the works.

Under one scenario discussed, UTA could buy Paradigm outright, adding a powerhouse music client list that includes Ed Sheeran and Coldplay, as well as a robust television and literary business. But sources say UTA, which is larger and represents A-list stars such as Chris Pratt and Kevin Hart and has a solid film and television creator business, has pushed to potentially cleave off the Paradigm music department, which is considered stronger than UTA’s music group. Sam Gores and the Paradigm team are said to be resisting that scenario.

The intensified rumors have created a sense of unease at Paradigm, and two separate agents say they have been getting calls from UTA as if a deal is imminent.

Rumors of some kind of deal between the two agencies have swirled since last year, but they have intensified in the past couple weeks after Endeavor, home of the WME agency, filed for an initial public offering May 23. Endeavor’s action is expected by some observers to agitate the agency landscape, possibly precipitating a domino effect of mergers, acquisitions and consolidations as rival representation firms look to shore up their competitive edge.

Under the leadership of CEO Jeremy Zimmer, UTA has made no secret of its ambitions to grow and diversify. Over the past several years it has been on an acquisition push, beginning with absorbing broadcast news powerhouse N.S. Bienstock in 2014 to become a leader in that space, and a year later purchasing The Agency Group, then the largest independent music agency in the world. In 2015, UTA poached a team of top comedy agents from CAA. Last August, it took on private equity backers, selling a significant stake to Investcorp and the Public Sector Pension Investment Board. Both Endeavor and CAA have fueled recent growth with private equity investments from backers as varied as Silicon Valley fund Silver Lake Partners, Japan’s SoftBank and Texas-based TPG Capital.

When it comes to film and television representation, Paradigm, founded in 1992 by Gores, is seen as sitting in the tier just below the Big Four (WME, CAA, UTA and ICM Partners) in terms of name-brand talent, although it represents Ezra Miller, Zoe Kravitz and Aquaman director James Wan. Significantly, it also handles Stephen King, whose prolific body of work makes him the world’s most adapted living author.

Sources stress that Paradigm’s leading music group would be the key to a deal with UTA or any other agency, and an acquisition would be in line with its M.O. of acquiring entire agencies to bolster specific business units. Paradigm has itself been an aggressive dealmaker in the music agency space, striking up partnerships with international firms like Coda Music Agency and X-Ray Touring as well as genre specialists including Windish and AM Only, and eventually bringing the latter pair formally under its roof.

Paradigm’s roster of top artists includes Janelle Monáe, Imagine Dragons, Kacey Musgraves, Shawn Mendes and Zedd. Absorbing that clientele would instantly put UTA in a competitive position with WME and CAA in that category. And it would position UTA as a growing player at a time when it might be looking for further financial backing.

“Endeavor's public offering will make it easier for other talent agencies to go public, take on outside investments and make acquisitions," Matthew Kennedy of Renaissance Capital, a manager of IPO-focused exchange-traded funds, told THR for a June 6 story. "Importantly, they'll have a direct public comp, so they'll be easier to value. And new private investors now have some assurance that an IPO/liquidity could easily be on the table."

The merger talks are intensifying as the major talent agencies grapple with the ongoing Writers Guild dispute over packaging fees and affiliated studios. Thousands of film and television writers have fired their agencies, which are the defendants in a WGA lawsuit alleging conflicts of interest and fraud. The uncertainty is said to have lit a fire under the UTA leadership to take on other diversified assets like Paradigm. Packaging fees contribute sizable revenue to agencies, and should the WGA come out on top in court, traditional players like UTA would need to find new revenue streams.

For his part, Gores has been considered unlikely to sell off Paradigm's music assets and is also said to be reluctant to share the CEO role. (Gores has never had a partner atop the agency during his two-decade-plus run, and the company recently relocated to an elegantly designed office space on Wilshire Boulevard, just a stone’s throw from UTA headquarters.)

To that end, at least two top agency sources speculate that UTA agents have been fanning the flames of merger rumors in an effort to destabilize Paradigm, convince Paradigm to sell and position UTA as an acquirer in the face of one of its chief rivals going public. WME and CAA are also said to be keen on acquiring Paradigm's music offerings if they become available. Separate chatter in agency circles focused on UTA also targeting Gersh, another mid-tier agency. And one source says ICM Partners has engaged the Lazard investment bank to explore fundraising for a growth initiative. (ICM declined to comment.)

“It’s crazy out there,” says one top agency executive. “Everyone’s feeling the pressure to do something big.”