Agent builds toward a new Resolution

Jeff Berg isn't the first veteran talent agent to start over.

For one, his onetime arch nemesis, former Creative Artists Agency honcho Michael Ovitz, did it years ago.

But at age 65, Berg, the former chairman and chief executive of International Creative Management, is one of the first to launch a new agency in the current Hollywood landscape, which has been buffeted by shifting sands and an overall retrenchment in an economically challenged entertainment business.

Berg's new Century City-based agency, Resolution, which he opened in late January, is entering the fray at a time when agencies are increasingly reliant on those movie stars and filmmakers who can draw big crowds. But because studios are making fewer films than they did just a decade ago, there is an ever-shrinking group of A-list actors, writers and directors that agencies can count on for big commissions.

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At the same time, the television business is, more than ever, key to agencies' bottom lines, but its audiences continue to be fragmented. This industry is dominated by show creators like Chuck Lorre, an ICM client and executive producer of "Two and a Half Men," who can generate tens of millions of dollars a year for agencies. One of the key financial drivers for agencies, television "package fees" — derived from putting together actors, writers, directors and producers on a show — are more coveted than ever.

Berg faces steep competition for top-tier clients from a slew of bigger established talent agencies like CAA, William Morris Endeavor and United Talent Agency. And, there are cautionary tales. Ovitz, for example, ultimately sold off Artist Management Group, which he founded in 1999. Some observers also wouldn't think of starting a new agency in their sixties. "People always say, 'Would you want to be an agent again?' And the answer is no, it is too hard," said Gavin Polone, a former talent agent who worked at ICM with Berg in the mid to late 1980s. "I can't even imagine being 65 and doing it."

So far, Berg has hired a few agents from major rivals, including CAA veterans Adam Kanter and Martin Spencer. But he has also brought on former agents who have not worked in the cutthroat business for several years. It's not clear how many agents Resolution will hire or what caliber of clients it will represent. Berg did leave ICM with such clients as director Roman Polanski and filmmakers Nick Cassavetes and Julie Taymor.

This murkiness has led some in the gossipy agency world — including several current and former agents interviewed for this story who requested anonymity as to avoid alienating Berg — to question his strategy. Berg, who hired a crisis public relations firm, Sitrick & Co., to represent his new agency, declined to be interviewed.

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Some of Berg's allies believe that the seismic changes in the business, in part brought on by the disruptive force of digital media, could provide an opening for the longtime agent.

"If you look at how the business is changing, ultimately it all comes back to talent," said Polone, now a film and television producer. "Maybe this is a good time to start an agency — the business is a good one."

Attorney Craig Emanuel, who heads Loeb & Loeb's entertainment practice and has known Berg for more than 20 years, said that there could be an area that bigger agencies are forsaking where Resolution could make inroads. "Often the larger agencies want to focus on the emerging talent or the top-end of the marketplace.... I think Jeff has set the framework for a really interesting business and at a good time."

In response to the changes sweeping the industry, the two biggest talent agencies have, in recent years, turned to private equity partners to help fund new initiatives. Last May, William Morris Endeavor sold a non-controlling 31% stake in the company to Silver Lake Partners, a technology-focused private equity firm based in Menlo Park, Calif. And in October 2010, Creative Artists Agency sold a 35% minority interest to TPG Capital of Fort Worth in a deal worth about $500 million.

Indeed, the business looks very different from the one Berg lorded over for much of his four-decade tenure at ICM and its predecessor agency Creative Management Associates.

At ICM, Berg was known for representing some top talent, including Al Pacino and the late director Sidney Lumet. But the last years of his tenure were rocky. In late 2011, an internal struggle for control of ICM spilled onto the websites and pages of entertainment trade publications. It was widely reported that a group of ICM executives, led by President Chris Silbermann, were dissatisfied with it being controlled by private equity firm Rizvi Traverse Management, which in 2005 bought a controlling stake in the agency.

Silbermann and his supporters hoped to convert the agency to a partnership — a structure its competitors long utilized.

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The matter was complicated by Berg's frosty relationship with Silbermann and others inside ICM. In agency circles, Berg, who held a sizable stake in ICM, is known to be mercurial and have sharp elbows.

ICM ultimately bought out Rizvi Traverse and Berg in May for undisclosed sums. The agency then changed its name to ICM Partners and appointed 29 partners. Berg was not one of them. He left in October under a cloud. But Berg made it clear he didn't plan to sit on the sidelines for long, telling show business blog the Wrap in October, "I'm a doer. I'm a worker. I'm a thoroughly engaged guy. I'm not interested in retiring. I'm interested in building and creating value."

Berg, who is married to Denny Luria and has two grown daughters, could have left ICM and stayed busy serving on corporate boards or consulting. But he hit the ground running, opening Resolution three months after leaving ICM.

Though the presence of an outside investor ultimately proved an unsettling force at ICM, Berg retained such a backer to help fund Resolution: Jahm Najafi, head of Phoenix-based Najafi Cos. The size of Najafi's investment is unclear, though a person with knowledge of the matter said the agency has been capitalized at $200 million. (Resolution's chief operating officer, Jeff Franklin, is also an investor.)

Other talent agencies have used money from investors to target specific lines of business. At WME, for example, the investment by Silver Lake is being used to spur growth in the company's tech-oriented business.

Perhaps more than anything, the talent agency business has been upended by a renaissance in television. If a show is a hit, the agency that packaged it shares in the profits, and the potential windfall could result in hundreds of millions of dollars over time. ICM, for example, represents such television executive producers as Lorre and Shonda Rhimes ("Scandal," "Grey's Anatomy"), whose series are very lucrative for the agency.

David T. Friendly, producer of "Little Miss Sunshine," said that the changing nature of the agency business could provide an opportunity for a new talent house.

"It's not unlike the way the television landscape has changed. There used to be three networks and now there is a countless number. There used to be three big agencies — you went with ICM, CAA or William Morris. Today there is just a plethora of new companies and the artists are spread around," said Friendly. "It's much more of an a la carte business now, and I think it creates opportunities."

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