LOS ANGELES — Century City-based Creative Artists Agency said Monday that it is acquiring ICM Partners for an undisclosed price, in a deal that could transform Hollywood’s talent agency industry.
The transaction, which is subject to regulatory approval, would reduce the number of top agencies to three dominant players: CAA, WME and United Talent Agency. ICM is considered the fourth largest talent firm.
The sale — the biggest talent agency deal since WME scooped up IMG in 2014 — would give CAA and ICM the size and scale to better compete against Beverly Hills entertainment juggernaut Endeavor, which owns talent agency WME and has been on an aggressive growth spurt. The company recently launched a successful IPO.
“It’s definitely going to shake everything up in Hollywood,” said Tom Nunan, a lecturer at UCLA School of Theater, Film and Television of the acquisition. “It’s asking the question is bigger necessarily better.”
The deal gives CAA access to a lucrative publishing business and ICM’s top clients, including “Grey’s Anatomy” showrunner Shonda Rhimes, actor Samuel L. Jackson, director Spike Lee and Ellen DeGeneres.
CAA already represents prominent talent including showrunner Ryan Murphy, actors Reese Witherspoon and Tom Hanks, as well as music artists such as Ariana Grande.
After the deal closes later this year, all of those clients are expected to fall under the CAA brand.
“We think that the combined effort, energies here and resources strengthens opportunities for clients in all areas,” said CAA President Richard Lovett in an interview. ICM’s London-based sports representation agency Stellar Sports, will help CAA expand its roster internationally, Lovett said.
CAA’s purchase of the smaller ICM Partners comes amid a broader consolidation of the entertainment industry as media companies bulk up their film and TV content offerings for streaming services. The shift to streaming has led in an explosion in demand for content.
“What’s happening now is another seismic shift in the industry,” Stephen Galloway, Chapman University’s Dodge College of Film and Media Art. “Whenever one giant part of the industry changes, another part of the industry inevitably changes too.”
The business of talent representation is changing dramatically as well, as the industry’s priorities evolve.Whereas movie stars and top directors were once the kings of Hollywood talent, the power has shifted toward writer-producers and showrunners who can fetch nine-figure deals with media companies and streaming services.
ICM, for example, represents megaproducers including “Bridgerton” creator Shonda Rhimes, “Breaking Bad” creator Vince Gilligan and “The Handmaid’s Tale” creator Bruce Miller.
“In some ways, what used to matter, which is movie stars, is very much the B-minus part of the business,” Galloway said. “What matters today is the people who can launch franchises and series, an empire of content.”
The acquisition comes as talent agencies have been under growing strain during the pandemic, as COVID-19 concerns have canceled or delayed live events, concerts and Hollywood productions. Last year, many companies including CAA and ICM, took cost-reducing measures including salary cuts and layoffs. In the summer of 2020, CAA laid off 90 agents and executives and furloughed 275 staffers, while ICM Partners laid off 40 of its support staffers.
CAA also filed a lawsuit recently against its insurance company to cover some of its losses due to COVID-19.
The deal comes after agencies lost a bruising battle with the Writers Guild of America, members of which fired their agents over so called packaging fees and affiliated production companies, which the writers said were conflicts of interest. The major agencies agreed to concessions on packaging, which had been a serious moneymaker.
CAA’s purchase is a potentially powerful statement to Hollywood and the agency business. Endeavor, the owner of WME and Ultimate Fighting Championship, earlier this year held an initial public offering, raising more than $500 million and further upping the status of super-agents Ari Emanuel and Patrick Whitesell.
CAA, backed by private equity firm TPG, may be fattening itself up in preparation for its own IPO, analysts said. While Endeavor grew by expanding into businesses like MMA and professional bullriding, CAA has remained mostly focused on the representation business, which could make for a cleaner pitch to investors.
“This is a resounding cry saying, ‘Guess what? These agencies can still be extremely lucrative, and lucrative enough that we can position ourselves for an IPO,’” Galloway said.
It’s also a signal to studios, which have sometimes clashed with actors and other talent over how creators and A-listers should be paid as the business model changes. CAA client Scarlett Johansson sued Disney in July, contending that the studio shortchanged her out of box office bonuses by putting her film “Black Widow” on Disney+ for $30 at the same time as its theatrical release.
Bryan Lourd vocally hit back at Disney after the company issued a blistering statement in response to Johansson’s lawsuit. “They have shamelessly and falsely accused Ms. Johansson of being insensitive to the global COVID pandemic, in an attempt to make her appear to be someone they and I know she isn’t,” Lourd said at the time.
Now Lourd, who has been increasingly vocal about talent’s relations with studios, will have more leverage as dealmaking continues to be in flux.
“If you want to fight Scarlett Johansson, you’ve got a whole lot more people against you,” Galloway said. “As the studios have become these massive steroid pumped bodybuilders, you’ve got another steroid pumped bodybuilder in the ring with you.”
Hollywood talent agencies are also recovering from a bruising battle with the Writers Guild of America over such practices as investing in productions and charging fees for packing shows. For more than a year, agencies including ICM Partners and CAA were unable to work with WGA writers until an agreement was reached.
Under a deal that both companies reached with the WGA last year, agencies are limited in their ability to diversify because of a restriction on ownership in production companies. Additionally, by the end of June 2022 they will no longer be able to charge new packaging fees. To comply with the agreement, CAA recently reduced its stake in Hollywood production company wiip to about 20%.
Already, a union that represents actors says it will be closely monitoring CAA’s acquisition of ICM Partners.
“We will carefully scrutinize this combination of two storied talent agencies to ensure that performers will benefit from, and are not disadvantaged by, the deal,” said SAG-AFTRA National Executive Director Duncan Crabtree-Ireland in a statement.
Industry insiders say they expect the acquisition will cause staff reductions, but on Monday, executives said they are still at the early stages of coming together.
“Once all of the legal work is complete, and, and we get approval from, from all legal elements of this to start really pulling the companies together, we can better address all of that,” Lovett said.
ICM Partners CEO Chris Silbermann will join CAA’s shareholder board.
Founded in 1975, International Creative Management has become one of the industry’s leading talent agencies. Silbermann joined ICM in 2006 when it acquired Broder Webb Chervin Silbermann Agency, where he was the youngest partner and earned a reputation as a sharp and ambitious agent.
In 2012, the Century City firm rebranded itself as ICM Partners after Silbermann led the charge to make it a partnership, with agents buying out private equity investor Rizvi Traverse Management.
In 2019 the company took on funding from Crestview Partners and began an expansion drive. Last year ICM bought Stellar Group — making it a major player in sports representation — acquired live-music booking agency Primary Talent International and took a minority stake in Swedish firm Albatros Agency.
ICM Partners had recently come under scrutiny, after many former employees described mistreatment by their managers to the L.A. Times. The paper’s investigation highlighted numerous allegations of harassment and other misconduct against women by several male agents and executives.
ICM has said it “does not tolerate harassment, bullying or other inappropriate conduct. HR investigates all reports received and addresses each with appropriate disciplinary measures up to and including dismissal.”
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