The reps rule

Film biz casts a watchful eye on CAA's ever-growing clout

August 14 will mark the 10th anniversary of Michael Ovitz’s exit from CAA. Under his reign, Hollywood worried that the agency had too much clout. Now, a decade later, it arguably has more power than Ovitz ever imagined.

It’s been 40 years — since MCA in its heyday under Lew Wasserman — that one agency has so clearly dominated.

While rival agencies — particularly WMA, ICM, UTA and Endeavor — give CAA a run for its money in TV, music and corporate accounts, CAA has established a dominance in film.

A small list of its clients includes Tom Cruise, Will Smith, Tom Hanks, Brad Pitt, Julia Roberts, Nicole Kidman, Cameron Diaz, Angelina Jolie, Renee Zellweger, and directors Steven Spielberg, Ron Howard, Robert Zemeckis, Michael Mann and Sam Mendes.

What’s more, the agency has been on a spree lately, bringing in a slew of agents whose clients usually follow (see chart). CAA officially maintained a steely silence on this article, but the tenpercentery’s goal is simple: market-share dominance.

Last week, the agency signed Will Ferrell, marking its invasion into bigscreen comedy — the one area where it wasn’t the 600-lb. gorilla. When CAA wants to expand, it’s at the expense of rivals. Rather than developing comedy talent, it signed UTA agent Jason Heyman, and client Ferrell followed.

In October 2006, CAA will move to new 150,000 sq. ft headquarters in Century City, nearly double the old building, to accommodate its growing numbers.

Those newcomers sometimes have a hard time adjusting to the company’s unique structure. Some newcomers may feel their individuality threatened when their star client, who defined the agent’s career, is suddenly shared with a team of reps.

Unlike other agencies, CAA has tried to break down the walls between departments. The result is an abundance of meetings, which drives some crazy. But because of this, departments actually talk to each other, providing a big-picture view of a client’s career.

Rival agents recoil from what they perceive as a clannish attitude, as clusters of CAA agents can be seen sitting in their dark suits, huddling in the Polo Lounge.

Competitors also tell stories of unhappy clients languishing on CAA’s midlist, with tales of second-line actresses frustrated when the best scripts go to Kidman, Roberts or Diaz. But if the second tier is unhappy, the talent doesn’t seem to leave; there is not a huge churn rate at the agency.

And even though rivals groan at CAA’s size and tactics, they grudgingly admit CAA is, maybe, better organized and more aggressive.

“Rather than sit here and whine about the power of CAA, we should go out and sign a movie star, and nobody else seems to be doing much of that,” admits the topper of a top-five agency.

CAA’s move to new headquarters is practical, given the growing staff. But it’s also symbolic. The shift severs all ties to the era of Ovitz, who oversaw I.M. Pei’s design of the BevHills building — including the commissioning of a massive Roy Lichtenstein painting in the lobby, worth millions if anyone could figure out a way to get it out the door.

Current staffers sometimes complain about the building’s cold mood; they are anxious to distance themselves from the previous era. They go to extreme lengths to avoid neo-Ovitzian bullying and flaunting of power, instead emphasizing a “we’re just here to help” folksy approach.

Also absent is the Ovitz-era intimidation that made talent think twice about leaving.

Current agents are not the bullying type. They don’t have to be.

Will the other Big Four take counter-measures? They may get more aggressive, but unless there is a consolidation among the runners-up — which has been rumored for some time — no other agency can touch CAA.

A decade ago, Ovitz and Ron Meyer sold CAA to its new leadership of Richard Lovett, Bryan Lourd, Kevin Huvane, David O’Connor, Rick Nicita and Lee Gabler. (Music agent Rob Light joined them in an ownership capacity later on.)

Ovitz and partners got no cash but were given a substantial cut of receivables for five years. It was a smart deal, considering properties the agency had packaged, such as “ER.” Their deal added up to tens of millions of dollars.

For several years after the 1995 change of hands, onlookers wondered whether rivals would loot the film-talent empire Ovitz and Meyer had built.

The result has been the opposite. A concentrated client list has given CAA the ability to package films from top to bottom.

New Regency’s “Mr. and Mrs. Smith,” for example, features helmer Doug Liman, star Brad Pitt, writer Simon Kinberg and producer Akiva Goldsman — all CAA clients. Though Angelina Jolie wasn’t a client when the project came together, she subsequently signed with CAA.

To gain traction on the bigscreen comedy frontier, CAA crashed the party. United Talent Agency had develop an enviable roster of comedy stars, writers and directors, and packaged a growing number of moneymaking laughers like “Dodgeball” and “Wedding Crashers.” (UTA clients include stars Vince Vaughn and Owen Wilson and helmer David Dobkin.)

UTA partners Jason Heyman and Martin Lesak signed at CAA. Heyman’s longtime client, Ferrell, also moved over. Word around town is that each of the two agents received a five-year deal worth close to $2 million annually; CAA counters that those figures are inflated.

The agency can afford to spend big. It is flush with cash from its sustained film dominance and TV packages like “American Idol,” “ER” and “CSI.”

One film producer says the plan is smart, even if the new agents don’t assimilate into the CAA system: “Even if the agent leaves, there’s a good chance the client will stay. As a business model, it’s genius.”

Several of Ferrell’s upcoming paydays will stay with UTA, including a sequel to “Elf.” Same goes for Gore Verbinski, whose windfall for directing two “Pirates of the Caribbean” sequels will remain at Endeavor, where rep Spencer Baumgarten worked when that deal was struck.

Now, rivals aren’t even trying to compete with the giant, instead choosing to establish themselves as the clear alternative to CAA.

Other tenpercenters grumble that their rival has become a Wal-Mart for one-stop talent shopping: Studio execs are able to populate their films by simply going to CAA. While some in Hollywood may wonder how big is too big, nobody is griping that the agency is force-feeding second-tier talent into star packages, as the Ovitz-led CAA was known to do.

Arguably the biggest challenge facing CAA is the delicate merging of dealmaking styles from incoming agents. Departments at many of the other big percenteries tend to remain separate. And individual agents are intensely protective of their star clients, guarding them even from their colleagues.

That creates fiefdoms and inhibits cross-pollination between divisions of agencies that might exploit a client’s earning potential. CAA has worked to eradicate those barriers, emphasizing this strategy in the agency training program — a key to its sustained growth.

The agency’s owners are heavily involved in signing new clients, because there is a strong backup team to monitor the agency’s big stars.

CAA agents — there may be as many as 60 profit participants — are rewarded according to annual company profits, not just from a portion of the commissions from their clients. With a thriving business, CAA has minted more millionaires than any other agency, but its corporate model is more like a Wall Street firm than a traditional talent agency.

Agents signing on at CAA may be nonplussed at the idea that fellow CAA agents will be working with the star clients they brought in. Some incoming agents find this assimilation difficult.

Other outsiders, though, have been known to flourish.

Since Tracy Brennan joined CAA from ICM in 2003, she’s been promoted to co-head of the motion picture talent department. Beth Swofford, who came several years ago from WMA, has one of the best rosters of director clients in town.

One top rep at a rival agency bristled at the client-sharing prospect:
“My identity is based on who I represent. It is my strength and creates my own value. To me, the security that you get from CAA with a long-term contract is not worth jeopardizing that. Some of those agents might have made more and been bigger stars had they not gone there.”

Does CAA’s aggressive growth strategy signal goals beyond money and power? Agents a few years ago protested that managers could sign production deals, while agents’ hands were tied. And, with technological changes and distribution systems expanding (satellite and cell phone outlets, etc.), everyone wants to be the dominant provider.

These may be factors. Or the goal may be simple business acumen.

“On its face, it’s easier going after agents and their four-to-12 clients than going after each of those clients individually,” says one talent rep.

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