Why CAA buying ICM is a really big deal for Hollywood
This is the Sept. 28, 2021, edition of The Wide Shot, a weekly newsletter about everything happening in the business of entertainment. Sign up here to get it in your inbox.
First, a little history.
In 1995, four top agents at International Creative Management were caught hatching a scheme to form a rival company.
What’s more, ICM had discovered that the agents had taken client files from its offices. The agents in question were David Greenblatt, Tom Strickler, Richard Rosen and, of course, Ari Emanuel, who, humorously enough in retrospect, received third billing in The Times’ story about the incident.
Here’s how The Times described the Hollywood-script-ready plot:
Over the last month, Greenblatt had discussed his ambivalence about working at a large agency with ICM President Jim Wiatt. The company had offered to make Greenblatt a better deal to keep him at the agency, a source said. Greenblatt and Wiatt met as recently as 6:45 p.m. Tuesday, at which time Greenblatt promised to give ICM his decision the next day, sources said.
That all changed Tuesday night, when a fellow employee spotted Greenblatt’s assistant carrying boxes out of the agent’s office at ICM’s Beverly Hills headquarters, sources said.
Awkward!
Creative Artists Agency said Monday that it is acquiring ICM Partners, one of Hollywood’s largest talent agencies.
Anyway, that quartet of Young Turks would go on to form Endeavor Talent Agency, which would later merge with William Morris Agency, now part of the larger, publicly traded Endeavor Group Holdings.
Endeavor’s dramatic origin story is just one example of how cutthroat the business of agencies can be. But although that hardscrabble spirit still exists, the real hyper-competitive bouts are now happening at a totally different level.
As Creative Artists Agency’s planned purchase of ICM Partners shows, the business is no longer about brash upstarts sneaking off with boxes of paper; it’s about a corporation swallowing up the No. 4 player in the industry to wage a battle for supremacy with its biggest rival, Endeavor, which also owns the Ultimate Fighting Championship.
CAA’s planned ICM Partners acquisition (financial terms not disclosed) is just the latest mile marker in the entertainment industry’s race for scale. In a world where most media companies are trying to bulk up for the fight with Netflix — and in some cases buying up other studios to do so — agencies want more leverage for themselves.
This is especially true as they go up against the studios in tense negotiations over how their A-list clients ought to be compensated for the movies and TV shows fueling the streaming subscriber growth, and thus boosting the media firms’ stock prices.
When they spoke to The Times by phone, executives at CAA and ICM sidestepped questions about whether the need for leverage drove the deal, saying instead that the agreement, signed at 8:17 a.m. Monday, was spurred by a belief that “the combined effort, energies here and resources strengthens opportunities for clients in all areas,” as CAA President Richard Lovett put it.
They also downplayed the potential for imminent “synergies” (layoffs), and the natural expectation that this deal is a precursor for an initial public offering, which would surely please private equity backer TPG. Too early to talk about either topic, they said.
Although CAA executives wouldn’t directly say that they’re looking for more firepower at the negotiating table, CAA Co-Chairman Bryan Lourd has been loudly banging the drum on behalf of his own clients. It was Lourd who, after Walt Disney Co. responded to Scarlett Johansson’s profit participation lawsuit with a blistering statement, publicly took the company to task.
I’m told the CAA-ICM deal had been discussed long before that July war of words between Lourd and Disney. With Lourd knowing this transaction was in the works, the statement in support of ScarJo seems all the more remarkable. Stephen Galloway, dean of Chapman University’s Dodge College of Film and Media Arts, gave me his thoughts on the message Lourd was sending to the industry.
“I’m reading that differently now,” Galloway said of Lourd’s decision to publicly hit back at Disney. (Hat tip to Galloway for also reminding me about that opening Endeavor anecdote.) “I’m reading that as a flare shot up to say to talent, ‘Don’t worry, when we merge and become another enormous multi-headed octopus, we still believe in you.’”
How this reshapes the industry remains to be seen. Will UTA respond with its own acquisition? What does having an industry of even bigger agencies mean for the non-A-list talent? It’s possible that the combination of CAA and ICM will open up space in the industry for a scrappy boutique agency to step in, promising a more personalized, individual approach for clients than they might get at the Big Three. I can almost visualize the pitch deck now.
Current and former employees of ICM Partners allege that the talent agency tolerated harassment and misconduct toward women and people of color.
Stuff we wrote
— The Jack Kirby fight all over again? Disney, ever litigious when it comes to its intellectual property, has sued some former Marvel artists over Iron Man and Spider-Man rights. The artists, or their heirs, served Marvel with copyright termination notices earlier this year.
— A risky bet fueled Universal Music’s resurgence. Now it’s publicly trading in Europe. “A decade ago, if you told investors they’d be in a situation where music would be a very attractive sector, they would’ve said, ‘You’re crazy,’” said Wedbush analyst Daniel Ives.
— No outside investigation at ABC News. Staff has been told there will be no outside probe into the company’s handling of sexual assault allegations against former “Good Morning America” senior producer Michael Corn.
— How do influencers make money? And how much? She’ll tell you. Content creator Lynette Adkins, 23, carved out a niche by turning the camera on herself in a way few others have: detailing how, exactly, to make good money and a sustainable career from having an online following.
MPA’s new diversity initiative
Hollywood studios have created or expanded numerous pipeline programs in the last couple years in the name of fostering diversity and inclusion, saying they can help eliminate persistent barriers to entry that have impeded progress in the entertainment industry’s push to bring in more people of color.
The Motion Picture Assn. on Tuesday announced a new fellowship initiative with the Entertainment Industry College Outreach Program (EICOP), specifically focused on expanding opportunities for recent grads to get into the legal and government affairs departments of the major studios.
The program is intended for graduates from historically Black colleges and universities (HBCUs) and other institutions serving underrepresented groups, including Latinos, the MPA told The Times. The Entertainment Law & Policy Fellowship will offer two recent college or law school graduates a yearlong, paid program with the MPA and one of its six studio members.
Fellows will work for three months at the MPA’s Los Angeles office, followed by three months at its Washington headquarters. The last six months will consist of work experience at Disney, NBCUniversal, Netflix, Paramount, Sony Pictures or Warner Bros.
The seeds of the new fellowship were planted when EICOP’s L.A.-based president and CEO Stacy Milner met with MPA Chairman Charles Rivkin at a Washington diversity event in September 2017, shortly after Rivkin took the job.
MPA executive John Gibson, who created MPA’s diversity and inclusion program in 2012, said recruiting from HBCUs and other minority-focused institutions, many of which are based in places like the Northeast, could help expose people to the industry who may not have otherwise gone into entertainment.
“I might be a finance major, and I may not think the industry has a place for me,” Gibson said. “Being an advocacy group, it was time to take it to the next level.”
The application period ends Dec. 30 for the inaugural program, which begins June 1, 2022.
Number of the week
Box office analysts love to talk about a film’s “multiple,” or the amount of spending it generated at theaters during its entire domestic run, divided by its opening weekend gross.
This is usually a measure of longevity. If a film opens with $50 million in the U.S. and Canada and ends its run with a total of $150 million, for a multiple of “3x,” that’s considered a strong hold, probably driven by positive buzz. If you release “Bohemian Rhapsody” (4.2x) or “A Star Is Born” (5x), even better.
Franchise movies (i.e. Marvel superhero films) tend to have smaller multiples (2.75x), but that’s mainly because those movies have built-in audiences that tend to rush out to the multiplex on opening weekend.
Can the multiples for movies released during the pandemic tell us how simultaneous digital releases affect staying power? One might assume that a movie released through Disney+ would quickly fade from multiplexes, and indeed, “Black Widow” (released same-day through Disney+’s $30 Premier Access plan) suffered a steep second-week drop, whereas “Shang-Chi” (only in theaters) did not.
But actually, it’s not that simple, according to Shawn Robbins, chief analyst at Boxoffice Pro. Day-and-date releases have managed to “leg out,” too, like Disney’s “Jungle Cruise” (3.2x) and “Cruella” (4x), which were released on Disney+ via Premier Access.
Warner Bros. movies released through HBO Max while in theaters generally had lower multiples, but not always. “Godzilla vs. Kong’s” stamina was close to what you’d expect in normal times, though a lack of competition probably played a role.
“I’d say there still isn’t enough data to support a conclusion either way,” Robbins said. “While it’s fairly simple to suggest that overall ticket sale volumes are impacted by day-and-date releases, box office legs have a varying track record.”
You should be reading...
— Nicole Sperling profiles Bruna Papandrea, Hollywood producer and master of adaptation who worked with Reese Witherspoon on hits like “Wild” and “Gone Girl” before starting her own company, Made Up Stories. (New York Times)
— Are Emmy voters picking fewer winning shows than they used to? Four series, “The Crown,” “Ted Lasso,” “Hacks” and “Mare of Easttown,” took home 17 major-category honors, while all other shows combined for 10 trophies, continuing a recent trend. (The Hollywood Reporter)
— The soothing art of looking for vinyl records. Author Marcus J. Moore writes that “the trick to crate digging is to simply go at it: Dive into the sections, flip through the jackets and trust your gut.” (NYT)
— ‘I never talk about “Nevermind”!’: Courtney Love on the Nirvana album that changed everything. (LAT)
Finally...
People tell me that studios aren’t making enough TV comedies that are actually funny. To that, I say, “Please watch ‘The Other Two’ and then get back to me.” I liked the show and its weird family dynamic when its first season ran on Comedy Central. The second season, on HBO Max, is lights out, thanks in no small part to Molly Shannon.
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