The fallout from the WMA-Endeavor merger has hit the highest level: WMA topper Jim Wiatt.

On the eve of the holiday weekend, word spread that WMA’s chief exec will segue to an emeritus role rather than the post of chairman at WME Entertainment as stated when the merger agreement was announced April 27. His seat on WME’s nine-member board is expected to be filled by Mark Itkin, the longtime head of WMA’s prosperous nonscripted TV department.

The decision on Wiatt’s role in the new entity came together during the past few weeks as WME’s leaders began the process of melding the agencies. Reps for WMA and Endeavor declined comment.

As a result, the new board decided that WME would be better off without the exec who initiated and helped orchestrate the mega-merger.

Informed sources said it became clear to WME board members that Wiatt would come with baggage from his decade-long tenure as WMA topper — particularly evident from how WMA handled the merger considerations during the past few months. It didn’t help Wiatt’s cause that the WMA ranks last week endured the morale blow of seeing pinkslips handed to about 120 staffers, many of them longtime employees, as the consolidation with Endeavor began in earnest (Daily Variety, May 19).

It was already understood that Wiatt would have no operational responsibilities in the role of WME chairman. The management reins were handed to WME’s board and to the troika of co-CEOs: Endeavor’s Ari Emanuel and Patrick Whitesell and WMA prexy Dave Wirtschafter (Daily Variety, April 28).

WME leaders are said to want to get through the shakeup of the layoffs and Wiatt’s departure in order to allow the agencies to quickly begin functioning as a unified entity after the merger formally closes early next month.

It’s expected that WMA’s agents, other than those in the music division, will soon relocate to Endeavor’s offices, while business and administrative staff will be housed in WMA’s building. WME won’t be operating under the same roof in its entirety until some time toward the end of next year, when the new Beverly Drive building initiated by WMA more than two years ago will be ready.

Even before the Endeavor merger talks began last year, Wiatt’s push to move the agency into new digs and sell its long-held Beverly Hills office buildings raised eyebrows among some at the agency.

Ownership of the buildings had been bequeathed by WMA elders from generations past, and for decades, WMA had been spared the cost of leasing pricey BevHills office space. The sale last September of the two HQ buildings on El Camino Drive and another nearby office building brought in $143 million, according to the Los Angeles Times. It was taken as a signal that Wiatt was thinking about his exit plan.

Meanwhile, the board shuffle between Wiatt and Itkin firms up the lingering question of where Itkin would land. (As of Monday, sources stressed that the WME board had yet to formally vote on Itkin’s appointment to the board.)

Itkin’s absence from the initial WME board configuration was a surprise given the huge contribution that his department makes to WMA’s bottom line. He’d been a member of WMA’s 20-member board of directors, and it’s understood that he voted in favor of the merger despite the board snub.

Itkin had considered a number of options after the merger became official — including a move to CAA — but in the end he decided to stay with the business and the staff that he’s built up during more than 25 years with WMA.

Insiders stressed that the WME board seat was not a quid pro quo for Itkin remaining with the agency; Itkin had made up his mind to stay before it became clear that Wiatt would move on.

An important factor in Itkin’s decision was said to be his longtime strong working relationship with Rick Rosen, the Endeavor co-founder who now heads all of WME’s TV operations and is a WME board member.

Wiatt’s pending departure has spurred speculation that one of his top lieutenants, WMA chief operating officer Irv Weintraub, was poised to resign, but that could not be confirmed.

Wirtschafter also has been closely aligned with Wiatt, having joined WMA from ICM shortly after Wiatt made the same move in September 1999. Wirtschafter’s long-term fate at WME had been questioned by some inside WMA and Endeavor given that the Endeavor alums are clearly steering the WME ship. But insiders say Wirtschafter has been highly engaged in his co-CEO role and hands on in managing the transition.

“He’s committed to making this work. He’s energized,” said one WME insider of Wirtschafter.

The timetable for Wiatt’s exit is still unclear.

During his tenure at WMA, Wiatt oversaw the expansion of the company’s international operations, including opening offices in Miami and Shanghai and beefing up the ranks of its London outpost. He bolstered WMA’s client roster by recruiting a number of former ICM colleagues, including publishing mavens Jennifer Rudolph Walsh, who is a WME board member, and Suzanne Gluck; and top-tier talent reps George Freeman and Steve Dontanville and, most recently, Ed Limato.

Wiatt in recent years became active in the venture capital arena. He spearheaded WMA’s involvement in the $100 million deal with Screen Capital Intl. to create the Incentive Film Entertainment, a fund to finance up to 50 movies during the next five years (Daily Variety, May 19, 2008). He also put together a partnership for the agency with AT&T, Venrock and Accel Partners to create the Mail Room Fund, designed to help Internet startup shingles with potential for showbiz-friendly applications (Daily Variety, March 4, 2008).

Before moving to WMA, Wiatt spent more than 20 years at ICM, rising to co-chairman and co-CEO.