Gores
Zimmer
Gersh
As the Big Five talent agencies become the Big Four, the questions for WMA and Endeavor's large and medium-sized rivals are how significantly and how quickly will the dynamics of dealmaking change?
Veteran agents and their clients will be on the move from both companies (especially WMA) as the newly minted WME Entertainment undergoes an immediate round of pinkslips to tenpercenters and their support staffs who don't fit into the game plan developed during the past few months by Endeavor and WMA leaders.
For the town, CAA and WME become the Really Big Two, while ICM and UTA round out the Big Four. Already there's chatter that ICM and UTA may pursue a deal (though both camps deny it).
Sam Gores' Paradigm, which has grown considerably the past few years, and well-established midsized agencies like Gersh and APA could be in a position to benefit from the post-merger fallout among WMA and Endeavor clients.
With financing tight and the biz facing an uncertain economic picture, biz insiders said they doubt the WME deal will spark a flurry of agency linkups, as occurred in the late 1980s and early '90s when WMA swallowed Triad Artists while Bauer Benedek, Leading Artists and a portion of InterTalent formed UTA.
WME rivals speculated it could take as long as 18 months for the pieces of the new agency to jell, and it could take as long for outsiders to assess how smart a move the merger was.
"I can remember the day that Time Warner announced its AOL merger, and it was the most dynamic thing in the world," said UTA co-owner Jeremy Zimmer. "AOL was this hot piece that was going to enable Warners to own the world, to distribute everything through AOL. The feeling was 'game over.' The story of that merger, two years later, was holy geez, what happened?"
Zimmer said UTA, which actively explored merger talks with Endeavor about three years ago, aimed to exploit its position as the smaller alternative to the two megasized agencies.
"UTA is not merging with anybody," he said. "We're the clear alternative in a three-agency town. There are two monoliths and us. For us to merge and try to become a mini-monolith would just be stupid."
Gersh Agency's David Gersh said he is content to run his business as usual, with the possibility of adding quality manpower.
"I hope it doesn't mean that this whole business is contracting and consolidating, which is the message of this merger in a way," he said. "We feel confident we can make a run the way we have been doing. From our standpoint, this has eliminated a competitor, and by making them a bigger entity, there is a much clearer distinction for the people who want to choose between us and a really big company."
But will size alone give WME a strategic advantage over the rest of the field? Coming at a time when Hollywood's traditional paydays in the film and TV biz are being dramatically trimmed, tenpercenters say virtually every deal is a battle in a buyer's market.
"CAA has all the leverage in the world, and I know they are having a helluva time right now," Zimmer said. "If you have to get 100 people a job, you might not kill as hard. Every deal doesn't count as much, and CAA is having a hard time getting people jobs."
WME does benefit, rivals acknowledged, from a diversified base of operations with guaranteed cash flow in WMA's strongholds like music, nonscripted TV and publishing.
Zimmer sees light at the end of the tunnel for agencies, no matter how big they are.
"What is interesting and calculated about this company is you don't see the word 'Agency'; it's 'Entertainment,' " Zimmer said. "I think Ari is putting a strong point on the idea that we'll figure out how to morph from an agency that services clients to a company that will use clients to get stuff done. It's an exciting notion, but a challenging one."
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