CAA brings tenpercentery to Asia

Agency has built up an enviable client list

China and its population of 1.3 billion have been a tantalizing but elusive market for Western entertainment companies. However, in the space of two years, CAA has built up an enviable client list and a position of significant influence by introducing a business that’s largely new to the Chinese film industry.

The Beijing office of CAA, headed by American Peter Loehr, boasts a staff of 20 and more than 50 clients, including more than 20 directors and a dozen writers.

The office has made Hollywood deals for its clients, who include Ang Lee, Jet Li and John Woo, but much of the emphasis is on creating work for the clients within China and other parts of Asia.

CAA brought with it the Western ideas of packaging and agency commissions, radical twists to the Asian way of doing business.

This “new” approach has worked to the agency’s benefit. Many Western media companies have set up offices in China, only to be frustrated by bureaucracy and red tape from a government that is wary of losing control over the levers of mass communication.

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But media ministry State Administration for Radio, Film & Television, as well as the Film Bureau (the government body that executes policy in the movie industry), were receptive to the Hollywood agency: CAA is a business-to-business service supplier, not a broadcaster, distributor, publisher or exhibition company that connects with the public.

The government welcomed a way to modernize and expand the industry. And China liked the fact that CAA, with its roots in Hollywood, could help local talent find a worldwide audience.

The business plan is in sharp contrast to the usual scenario in many Asian territories, where writers and directors have little or no representation and are responsible for creating their own deals.

Actors, meanwhile, are subject to variable conditions across Asia. In some instances they are signed to (by western standards) extraordinarily long and onerous contracts. In others, they are akin to employees of their management companies, which pay “clients” a wage or give them a much smaller share of the revenues: Asian managers regularly hold onto more than 80% of talent’s earnings.

In other cases, talent is repped by relatives, a practice that has tinges of amateurism but has the virtue of keeping much more of the star’s earnings within the family.

While other agencies are keeping an eye on CAA’s moves, so far none has jumped in.

For example, WMA has a Shanghai outpost and remains more specialized, linking its Chinese clients with such corporate sponsors as Nike. Most other Hollywood agencies are looking after their handful of Chinese clients from the U.S.

CAA made a smart choice when the agency approached Loehr in 2005. He was already based in the city and knows the Chinese film business like few others. Not only does he speak fluent Mandarin (and Japanese), he was arguably one of the country’s first independent producers of any nationality: He set up an arthouse production company Imar Film Co., and later a more commercially oriented shingle Ming Prods.

The idea of a Beijing office “started in L.A. with people thinking about the region,” he says. “I was already working with CAA as a producer. And then I was offered the amazing resources of the agency. The model that the agency works off of is something so novel and different for this market, that it was a really interesting opportunity.”

He says what convinced him, over nearly a year of negotiations, was a common recognition of the huge talent pool in China and the importance of having a physical presence in the country from which to create opportunities for that talent.

Loehr says what CAA in China does is very similar to its work in L.A., Gotham and elsewhere. “Our business is very much built on representation of talent. We work with fantastic artists, help them capitalize on opportunities that exist or that we create and we work with them on their careers. Our goal is to emulate the U.S. office in any way we can.”

It helps that the agency can count on star names of Chinese cinema. But the Beijing-based unit also represents helmers who have not yet had much influence beyond the Middle Kingdom. That list includes Ning Hao, helmer of genre-defining hit “Crazy Stone”; up-and-coming female director Ma Liwan; and Zhang Yibai, a prolific helmer of commercially oriented movies.

The actor roster ranges from the likes of Hong Kong establishment Karen Mok to Yu Nan, star of Berlin Golden Bear winner “Tuya’s Marriage” and who recently appeared in “Speed Racer.”

“We represent some clients who we feel have tremendous international potential and we work with them in that space, but we also represent those who are totally local. We have the resources to go either direction,” says Loehr, who estimates he spends two hours per day on the phone with his Stateside colleagues.

Although operated from Beijing, CAA has also signed up the cream of South Korea’s helmers. These include “The Host” director Bong Joon-ho; Kim Jee-woon, whose “The Good the Bad the Weird,” just enjoyed a $15 million opening weekend; John H. Lee; and Kang Je-gyu, pioneer of the Korean modern age with “Shiri” and “Taegukgi.”

“At the initial stages we took a decision to focus on directors because directors were not represented in China. We strongly believe that directors and writers lead to material and packages that create opportunities for all our clients,” says Loehr.

Although the notion of a pro-active talent agency putting people, projects and coin together is relatively new in China, packaging has quickly become a significant part of the CAA model. It comes at a time when the majority of state-run studios are becoming irrelevant to the marketplace and a handful of private companies such as Huayi Bros. or Chengtian or aggressive state-owned enterprises such as China Film Group and Bona are redefining the production scene — often using the coin of wealthy investors from other sectors.

“We find that because the marketplace in China is so new and growing and there are so many new players in the marketthat the concept (of packaging) is embraced,” says Loehr. “We are taking a lot of the strain off the financier. Instead of saying ‘Here’s this script, what do you think?’ we are saying ‘Hey, here’s a finished package you can evaluate from an investment perspective, script, genre; this is the performance of similar movies, these are the cast, director, this is the budget and this is how we will help you recoup it.’ ”

The agency was involved in packaging more than 20 films last year, with budget ranges from $300,000 to $8 million, and mobilized some $50 million of finance — 90% of which was Chinese sourced.

Loehr says, “Most companies in this (area) are management companies rather than agencies. They are really producing movies for their clients. We think that is a very difficult model to sustain, because even the most prolific production companies are making four to five movies a year, where we can package together 20-25 movies a year.”

Still, Loehr welcomes the launch of high-profile management companies, such as Bona Yinglong (a joint venture among the Bona group, Jackie Chan and Hong Kong’s Emperor Motion Picture) and Stella Entertainment, which is headed by John Woo’s producing partner Terence Chang and thesp Michelle Yeoh. “We think that the China market is going to grow by 30%-40% per year for many years to come,” says Loehr.

“In Asia as a region there is tremendous growth in B.O. on a year-in, year-out basis. Eventually the economics of that will be a tremendous tool for casting Asian actors in roles that were not initially written for them,” says Loehr. “Will there come a day when a lot of the great Hollywood roles open up? We believe that is going to happen.”

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