CEOs will continue to tighten deals

FROM THE MOMENT Hollywood first invented itself, the battle lines were drawn: The stars vs. the suits. Most observers agree that the balance of power today resides more with the suits than at any time within memory.

So will the mega-merger of Endeavor and William Morris change anything? Ask major players on both sides and you get a resounding “no,” followed by a subdued “maybe.”

Clearly the formation of the new agency represents a reminder that talent, too, can flex its muscles. CAA and the newly named WME Entertainment both want to prove their macho to clients.

But talk to studio CEOs and you quickly learn that the resistance will be fierce. “My mandate is to tighten deals, and we’re not backing down,” said one CEO over the weekend. Understandably, he did not want to be singled out.

MEANWHILE, the talent fraternity feels under siege. Stars are receiving a blizzard of phone calls from rival agents, and some wonder whether their agendas may be overlooked as their reps fight their own power struggles.

Meanwhile, the “majors” have reason to gloat. They have substantially beaten back the talent guilds. They have orchestrated major job cuts. They increasingly monopolize the key release dates. They have cut budgets of films and TV shows and sliced gross participation deals.

While production chiefs are keenly aware that the superstar talent pool is both finite and fragile, they believe they have the weapons to enforce their new cost structures.

ON THE TALENT SIDE, the two key weapons in the hands of the agencies are muscle and money. Control over talent provides the muscle, but money is another issue. Both CAA and Endeavor have attempted to mobilize production funds on behalf of top talent, but the upheaval in the economy has hampered these initiatives. Indeed, the studios themselves are fighting for funding.

Clearly, if the new entity, like CAA, is successful in raising substantial production funding, it can combat the studio pressure on dealmaking. But formation of the new talent agency, in the view of the CEO fraternity, will not substantially change the economic imperatives.

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