Writers Guild Claims That Endeavor's IPO Filing Inflates Client Numbers

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Endeavor is attempting to raise roughly $500 million in an IPO that could value the entire company at about $10 billion.

As the Endeavor Group presumably looks to wrap up its IPO roadshow, the Writers Guild of America appears to be throwing a monkey wrench into the company's plan to trade publicly by telling regulators that Endeavor's WME talent agency is inflating its client numbers.

In Endeavor's Securities and Exchange Commission filing, it claimed over 6,000 clients and, while the document notes that "the agency has received termination letters from a majority of its writer clients," the company is underplaying the fact that 1,400 writers have informed WME that it no longer represents them, according to a letter from WGA West general counsel Anthony Segall to William Hinman of the SEC.

A source close to Endeavor counters the guild's contention, claiming that the company has far more than 6,000 clients, as stated in the SEC filing, and that, of the 1,400 writers who have sent letters of termination, a significant number are represented by the agency in other areas. 

"Once again, in an attempt to disrupt our business, WGA leadership is misrepresenting the facts," an Endeavor spokesperson stated. "Endeavor has clearly stated that it has ‘more than 6,000 clients.’ This is not a static number given the fluidity of the client business, and is still accurate today even after the departure of our former writer clients."

The issue, of course, is that writers are engaging in a strike of sorts against their own agents in an effort to end "packaging fees," the money studios pay to agencies for the purpose of employing several of their clients for a single project. 

"Endeavor has not adequately disclosed this significant reduction of its client base," Monday's WGA letter to the SEC says. Endeavor's talent-agent business generated $1.3 billion in revenue in 2018, while its entertainment and sports business was good for $2.3 billion, according to the company's filing.

The WGA attorney notes that between SEC filings made on Feb. 14 and another made on May 23, Endeavor did not update its language involving its number of clients, even though that figure sank 23 percent.

Endeavor is attempting to raise roughly $500 million in an IPO that could value the entire company, which includes WME, the Ultimate Fighting Championship and other assets, at about $10 billion, though the WGA appears to be using Endeavor's desire for an IPO to negotiate better terms for its writers in the months-long dispute.

The WGA had filed suit against the major agencies on April 17, seeking to end the practice of packaging fees. WME, CAA, UTA and ICM are named defendants. 

June 24, 4:55 p.m. Updated with a statement from an Endeavor spokesperson.