The media has turned the William Morris-Endeavor merger talks into a parlor game filled with rampant speculation and few hard facts.
But the recent track record of agency courtships shows a higher rate of merger futility than success.
“Since this has been going on since August, don’t you think it would have happened by now if it was going to happen?” asked a partner in a major management firm who’s heard all the rumors.
In practice, Hollywood’s top agents find their gift for dealmaking often fails them when the negotiations center on their own businesses.
Among possible mergers that didn’t happen recently: Endeavor and UTA, an earlier go-around between WMA and Endeavor and another between UTA and CAA.
The one that was consummated, between ICM and Broder Webb Chervin Silbermann, was a surprise to most. It was also a purchase that involved cashing out the partners of the TV boutiquery.
Nobody appears to be cashing out in the WMA/Endeavor talks.
Though the pair have been at it for seven months, rumors first surfaced widely last November but went unpublished when they were laughed off by the heads of both agencies. The rumor mill intensified after several newspapers/websites went into overdrive on Wednesday.
The rumors seem based on the notion that a merger seems to make too much long-term sense not to happen.
Then again, that same feeling existed two years ago when Endeavor and UTA courted. But that came to nothing.
The upside of a merger is appealing: Endeavor has been perceptually considered the No. 2 agency behind CAA (even though WMA has greater overall revenues).
Mash together the agencies’ talent and lit departments, add WMA’s music touring, nonscripted TV and publishing divisions, and watch out, CAA.
Agency watchers said a WMA/Endeavor merger would also amount to addition by subtraction, as it would eliminate the emotional burden to thin the herd of high-salaried agents and duplicative support staffs.
Perhaps the enormity of the deal, and meshing two completely different cultures – Endeavor is run by 26 partners, WMA by a board of directors – is the reason that William Morris CEO Jim Wiatt, prexy Dave Wirtschafter and Endeavor chief Ari Emanuel have not pulled the trigger.
“The money part is easy compared to the ego issues of who reports to whom, which headquarters they work from, even whether they would call the merged company WMA or Endeavor,” said the manager-partner.
Add the past skirmishes that are part and parcel of the rough-and-tumble agenting game, and this merger is a challenge. When Mel Gibson was reported to have made anti-Semitic comments, Emanuel publicly urged Hollywood to shun him. Will those words haunt Emanuel, considering that Gibson is a signature client of Ed Limato, one of WMA’s most important film agents?
Sources said that when WMA’s dance with Endeavor halted the first time several years ago, one reason was Wirtschafter’s suspicion that Emanuel was responsible for a battering he took in the New York Post’s Page Six column for comments made in Wirtschafter’s New Yorker profile.
Senior WMA agents David Lonner and Steve Rabineau left partnership positions at Endeavor – Lonner took J.J. Abrams with him – because they felt some of Emanuel’s moves were changing Endeavor’s carefully calibrated culture.
The agencies at this point most certainly have signed multi-year non-compete agreements before looking at each other’s books. Even those don’t prevent later pain in failed courtships: sources said that after CAA courted UTA and got a peek at that agency’s playbook, CAA didn’t wait long after the expiration of the non-compete agreement expired to hire away UTA partners Dan Aloni, Jason Heyman and Martin Lesak.
If the WMA/Endeavor merger occurs, it would dwarf 2006’s ICM/Broder Webb Chervin Silbermann deal, which redefined ICM but illustrated the alchemy that goes into meshing cultures. Several ICM agents were let go immediately; Limato subsequently left for WMA after a falling out, and Robert Newman later left for Endeavor.
The deliberate pace of the WMA/Endeavor talks indicates the brain trust is thinking carefully about the entire proposition. Maybe the collision of cultures will be gentler than when Bill Block sold InterTalent to ICM in 1992 and brought with him a talented roster of lit agents. ICM fired 10 agents to make room for the dealmakers, which created frosty feelings for the newcomers right off the bat. Block’s hopes to play a major role in the agency’s leadership bumped up against established ICM management, which included Wiatt.
Several of Block’s rising stars – Emanuel, Tom Strickler, David Greenblatt and Rick Rosen – loaded up a station wagon with their files late one night and formed Endeavor.
When UTA was formed from the merger of Leading Artists and Bauer Benedek in 1991, culture clashes prompted the agency to hired a “partner therapist.” One former partner recalled that the shrink once organized a bonding retreat where partners were invited to bring their favorite song and poem to recite.
Eventually, the pieces fit, but all of them involved pain.