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Blind Ambition: Why Jeff Berg’s Resolution Was Doomed From the Start

Monday’s surprise announcement of the closure of Jeff Berg’s Resolution amounts to a classic example of Hollywood hubris trumping reality.

Former ICM chief Jeff Berg launched Resolution less than two years ago on the heels of his bitter breakup from ICM, the agency where he spent nearly 40 years until finding himself on the losing end of a power struggle with Chris Silbermann. His failed attempt to maintain his status as a top Hollywood power broker eerily echoes Michael Ovitz’s rise and quick fall with Artists Management Group more than a decade ago.

Berg founded Resolution as a talent and literary agency in early 2013 with much fanfare. He chose luxurious offices in a ritzy Century City building and went on a hiring spree of veteran film, TV and music agents at eyebrow-raising salaries — some at $1 million annually. On Monday, Berg informed the staff–which numbers between 40 and 50 — that he would be closing the office over the next month.

On Monday, at least some soon-to-be former Resolution agents — of which there are about 20 — were grumbling that they are still owed outstanding expense checks and that the agency was late in paying commissions.

Berg opted to go big from the beginning despite the lack of bread-and-butter cashflow from TV packaging deals, high-profile movie stars and other sources of income that agencies can rely on to help keep the lights on. Most significantly, Resolution tried to propel itself into the big leagues at a time when even the largest agencies are challenged to navigate through a dramatically changing business landscape.

Berg’s initial round of funding came from Phoenix-based investor Jahm Najafi, who stopped providing new money at the end of last year. That forced Resolution to tap China-based Bison Capital, announcing that partnership in March with an estimated $200 million infusion.

Berg told staff Monday that Bison’s refusal to provide adequate coin was to blame for the failure of the agency. But in reality, Resolution had been in a tailspin for months. Berg, by many accounts, is a savvy dealmaker but lacking in the kind of people skills that he would need to motivate employees of a start-up operation going through inevitable lean times. Instead, one source said Berg seemed to be trying to project an aura of invincibility that came off as detached and out-of-touch.

Insiders have said that Berg dismissed suggestions from those who cautioned that Resolution should take a less aggressive route to expand as an agency — and avoid costly hires in favor of growing talent from within its ranks. In other words, it should pursue a strategy similar to what the partners at Verve, the most successful Hollywood agency start-up of the past decade, did when launching their agency after leaving WME.

Instead, Resolution focused on recruiting well-established agents. Insiders say that job offers went as high as $5 million for five years — well above the scale that a mid-tier agency would pay, much less a start-up.

Early Resolution pitches to many middle-tier agents targeted for hiring included promises that they would get paid what they were actually worth;  fewer staff meetings (although one insider said there were actually more such meetings): and the promise that top talent agents like CAA’s Tracy Brennan and Chris Andrews would be joining — moves that never materialized.

Instead, the agency had a rocky first year with a number of defections including Jeff Franklin, Leigh Brillstein, Dennis Kim, Steve Alexander and Adam Kanter. The agency had difficulty from the get-go attracting enough young, hungry agents and A-list talent. Morale was hampered by Resolution lacking the firepower on its client list to aggressively compete for the top jobs in film and TV. One insider said that even the prominent agents at the company were not as productive as younger reps who tend to do much of the heavy lifting at Hollywood shops.

As of Monday, Resolution’s highest-profile clients included Lindsay Lohan, Rose McGowan, Ray Winstone, Haley Joel Osment, Michelle Yeoh and Roman Polanski.

Insiders said that at the start of this year, many Resolution’s veteran agents saw reduced bonuses as a result of not pulling their weight. In several cases, that was impetus for their eventual departures.

Additionally, the decision by Najafi to stop providing new funds served as a warning signal for other agents to start planning their exits.

When Resolution disclosed that it was pulling the plug on the agency Monday, some insiders asserted that the reason more people had not yet departed was because they had more restrictive contracts.

The announcement also spurred rumors that Bison Capital had been attempting to sell Resolution and that Resolution had been seeking merger partners but was unable to land one because of the debt that had accumulated over the 21 months since the agency’s formation.

 

 

 

 

 

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