The Big Picture

Patrick Goldstein and James Rainey
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Media uproar over Endeavor-William Morris merger talks

March 11, 2009 |  1:29 pm

After reading years of wild-eyed stories about how a host of Hollywood bigwigs were going to be toppled by the Pellicano scandal -- when in fact, almost nothing important actually happened -- I'd been taking the buzz emanating out of Nikki Finke's blog over the rumored Endeavor-William Morris merger with a big handful of salt. After all, how long can you engage in semi-secret merger talks before everyone at the agencies, worried about their future job prospects, go stone crazy?

But now that the New York Times has weighed in on the possible Endeavor-William Morris mind meld, I guess something must really be happening. Or not. The Times story lays out a credible motivation for a deal, noting that all of Hollywood's talent agencies are being forced to adapt to the industry's economic woes while also reacting to the rapid shift in power between agencies, studios, management firms and corporate financiers.

AriBut as the Wrap's Sharon Waxman, a former Times showbiz reporter, points out in a post of her own, the Times piece offers precious little inside dope on the actual talks, other than observing that the two agencies have very different office cultures -- WMA being very buttoned-down while Endeavor, under the leadership of Ari Emanuel, radiates the testosterone-fueled air of a college lacrosse team locker room. (Longtime ICM chief Jeff Berg once described Ari's take-no-prisoners competitive spirit thusly: "Ready. Fire. Aim!")

Though she surely has an ax to grind, Waxman isn't very far off when she writes that "the New York Times is feeling pressure to keep up with Nikki Finke's news-breaking blog. They shouldn't, but they do. The Times used to take the long view ... but in the panicked world of newspapers, bloggers are felt to be a threat."

Amen, sister. So far, I'd say there's been a lot of speculation about the merger, but not much actual analysis. So what is really going on? Here's my take:

In a rocky economic downturn, we have two talent agencies with different motivations for a merger. At Endeavor, Ari has been looking for a way to get bigger, either through entrepreneurial ventures or through a merger (he's already approached ICM, but those talks went nowhere). For Emanuel, the real target is CAA, the agency behemoth that's been hobbled to some degree by the lousy economy. You might say Emanuel smells a moment: Seeing CAA in a rare downturn, Emanuel figures a merger with WMA would give him a rare opportunity to grow his agency in a down marketplace and play catch up with his fiercest competitor.

For WMA chief Jim Wiatt, this is largely about legacy, both for himself and his century-old agency. William Morris still has plenty of strengths -- it has a formidable music department, lots of reality TV shows and a cadre of top filmmakers (including J.J. Abrams, Ridley Scott, Bryan Singer and Michael Bay). It also has -- and this is crucial to the merger -- a boatload of what people in the agency biz call receivables: old TV packages and other revenue streams that reliably spin off tons of found money. For Endeavor, absorbing WMA would be like buying a library that would constantly generate profits, in good times or bad.

The two agencies are a good fit, since Endeavor is strong in scripted TV and brimming with the business's most reliable talent pool: young male stars like Matt Damon, Ben Stiller, Jack Black, Adam Sandler, Steve Carell and Hugh Jackman, to name but a few. In order to really compete with CAA, an agency needs A-list talent and top filmmakers, which would be in ample supply at a merged Endeavor/WMA. So what's taking so long? I'm sure the different corporate cultures are an issue, but so are the issues of how to merge the two agencies' own talent; in other words, how many agents will stay, how many will be let go and how many will -- sensing a rare burst of leverage -- decide to take their client list to UTA or CAA rather than worry about their survival chances at a new mega-agency.

Much of the speculation about the merger has focused on what title Jim Wiatt would have at the new agency. But I'd argue that even coming up with a name for the new agency might be tricky. If a big motivation for Wiatt is cementing William Morris' proud legacy, is he going to agree to a deal where his agency's century-old name disappears forever? Mergers have fallen apart over far lesser issues. I'm betting that something eventually happens, simply because WMA, despite its great library, has a singular lack of vigor and vitality, which is exactly what Endeavor brings to the table.

Ari Emanuel has his flaws -- just ask any of his rivals -- but Endeavor has a lean and hungry entrepreneurial spirit that feels in sync with the tenor of the times. It's a young company still run by its founders, which is usually the kind of company that is most adaptable to what we're clearly seeing in today's Hollywood -- a time of enormous anxiety about the future.

Photo of Ari Emanuel from Eric Charbonneau/