Agents dealt force majeure blow

The strike has now officially impacted the major talent agencies and management companies.

ICM invoked force majeure late Wednesday on as many as five agents in the motion picture group. In addition, the percentery instituted a series of pay cuts for agents and executives making six-figure salaries. The percentages range to a high of 30% for agents making the most money and service clients in areas that have been debilitated by the writers strike.

The ICM agents who were force majeured include Renee Tab, Eva Lontscharitsch and Brian Levy; the number could be as high as seven by the time the dust clears.

The dealmakers remain under contract and can conceivably return once the strike is over. But ICM isn’t obligated to pay them while the strike goes on. Those agents are getting some strike payment from the agency, and their health benefits remain in place, according to the percentery.

The agency is hardly the only service company in cutback mode, though most of the big shops have so far limited themselves to salary cutbacks that each company hopes will prevent layoffs of assistants and support staff.

UTA, whose partners decided last October that it would defer 20% of the salaries of agents making six figures beginning Nov. 1, enacted the move right after the start of the new year. According to the agency, those cuts are voluntary, but high-priced agents who kick in aren’t likely to get that money back — as was part of the original plan — now that the strike has gone beyond eight weeks.

Management companies weren’t immune, either. Brillstein Entertainment partners instituted a system in which managers who make more than $100,000 will take a 17.5% pay cut after that first $100,000 is earned. Rumors had other management companies readying similar systems.

Smaller agencies are on the ropes as well, and there are expected to be more depressing stories like that of Innovative, which this week laid off at least seven lit agents, following an earlier layoff of assistants. Other boutiques, including Abrams Artists (which represents mostly television actors), made force majeure moves that cut salaries late last year in preparation for the rough period ahead.

CAA, Endeavor, William Morris, Paradigm and Gersh were holding steady at least at this point, though each pared back expenses and travel to the bare minimum. CAA, which expanded its business and added new Century City headquarters, also said goodbye to a number of pricey veteran agents over the past year.

Some of those agencies were thinking hard about their traditionally lavish Oscar parties.

The fetes thrown by CAA’s Bryan Lourd, Endeavor’s Ari Emanuel and WMA newcomer Ed Limato always host hot ticket parties on Academy Award weekend, but each of those bashes is completely up in the air at this point.

Final decisions on whether to hold the three parties would depend upon factors ranging from how many agency clients got nominated to whether WGA and SAG will permit members to attend the Oscars and the parties. CAA just cancelled plans to hold a Golden Globes party, not surprisingly, after the normally opulent awards ceremony was reduced to a press conference announcing winners. If the agency Oscar parties go on, there is a good chance they will be more modest than in past years.

Many top agents feel that layoffs will be unavoidable at most agencies if the strike continues through the spring. Though top agents worked together to try to broker peace between the WGA and AMPTP, their efforts were unavailing, and now they are feeling the pain as commissions continue to dry up. Even agencies with diversified businesses rely primarily on film and television revenues, and those segments won’t likely return to normal until year’s end.

“We’ve been looking at this for months, and it’s a matter of preparing yourself for the reality of the business,” said Jon Liebman, CEO of Brillstein Entertainment Partners, in explaining company salary cuts that were designed to prevent layoffs. “Fortunately, we’ve got people with longevity at the company, who understand the nature of the problem, which is beyond our control. But showbiz isn’t going away; it’s just on hiatus, and this is a precautionary measure.”

Gersh Agency’s David Gersh said that while his agency hasn’t had layoffs, salary cutbacks were being considered.

“We made some cuts in manpower over the last year in anticipation of this, and we have trimmed expenses as much as possible,” Gersh said. “We were able to make ourselves leaner, but the longer this continues, the harder it is going to become. You might roll back on the bonuses, and perhaps roll back pay between 10% and 20%. The strike has been painful to every agency, but you do your best not to have it kill individuals.”

Paradigm’s Sam Gores said his agency has so far avoided layoffs, a trend he hopes will continue.

“I realize this is more serious than a common cold, but it’s not terminal cancer, either,” Gores said. “Even if you see a 30%-35% drop in revenue this year, if you’ve got a growing company, you can handle it. If you amortize that loss over 10 years, that’s 3% a year. You have to look at it that way even though, of course, you must be cautious over the short term.”

Filed Under:

Follow @Variety on Twitter for breaking news, reviews and more