You will be redirected back to your article in seconds

CAA China May Need to Remake the Talent Business Model

The rationale for the joint venture announced this week between Creative Artists Agency and China Media Capital is very much about growth. But to unlock that potential, CAA may need to change the way it normally works and adjust to China’s particular circumstances.

The partnership will see CAA fold its existing China activities into a new entity called CAA China. CMC will buy a stake in the new venture, as well as a strategic minority stake in the CAA parent company.

Neither party has disclosed the implied valuation of the new company or the size of CMC’s minority stake in CAA. Nor have they said whether CMC’s shares in CAA are new equity or existing shares being sold by a current investor.

But the new CAA China indisputably links up two powerhouses. CAA is majority-owned by TPG, a U.S. investment group with a wealth of interests in China. CMC boasts a portfolio of nearly 100 companies, including the multi-billion-dollar Dream Center entertainment hub being built in Shanghai, film and TV production companies, broadcast TV and Flagship entertainment, a film joint venture with Warner Bros.

CMC’s chairman, Li Ruigang, who joins CAA’s board, is a strategic thinker, prodigious dealmaker and probably the most connected Chinese businessman in Hollywood. His position in China’s ruling Communist Party will no doubt open doors for CAA China, especially as the new company scales up its operations.

With staff numbers currently at about two dozen, CAA China is much smaller than global management company IMG, which has some 70 staff in China, mostly focused on sports. “CAA China will progressively add additional senior management to help expand the business into new entertainment and sports areas,” the two founding companies said in a statement.

Current Beijing chief Jonah Greenberg will continue to lead the company’s efforts in motion pictures in China. Roeg Sutherland, co-head of CAA’s global film finance and sales group, will continue to lead the agency’s film finance business.

Up to now, CAA has focused its China operations on crossover talent (including Zhang Yimou, Lin Chi-ling, and Donnie Yen) and film finance, notably cross-border co-productions. But the more closely its works with CMC, the more CAA may need to modify its usual pure agency business model to fit with the realities on the ground in China.

Chinese talent groups operate in distinctly different ways from Hollywood’s fee-based agencies with their 10% fees. The Chinese groups include husband-and-wife management teams (in the cases of director Chen Kaige and actor Chow Yun-fat, for example), offer workshops built around a superstar (such as actress Fan Bingbing) and run businesses that are essentially extensions of production and distribution studios. Still others are focused on developing new talent.

Lee Wei Choy, who shepherded the new joint-venture deal for CMC, confirmed that CAA China would be open to consider taking positions in content productions. That is something currently prohibited for American talent agencies. But as an entity that is legally separate and has different ownership from the CAA parent company, CAA China would be more able to blur the lines.

“CAA Beijing has had good success to date with packaging co-productions and cross-over talent,” said Lee. “We see more co-productions and China’s growing importance in the global entertainment landscape as long-term macro-economic drivers. And as China grows, the business will get more structure.”

Li, the CMC chairman, could also smooth CAA China’s passage onto the financial markets. He played such a role at IMAX China, where CMC and a small consortium paid $80 million for a 20% stake in April 2014 and helped it to an IPO the following year. Including a $47.5 million special dividend, the investors’ returns were estimated at more than 230% within a year. CMC and partner Fountainvest sold their remaining 5% stake in IMAX China just last week.

But Lee said it was too early to be talking already of exit strategies from CAA China. The first order of business, he said, is to get the new joint venture off the ground.

More Biz

  • Superman

    DC Lays Off 3% of Staff in Structural Reorganization

    DC Comics has laid off about seven staff members — 3% of its 240 employees — as part of a structural reorganization that will result in a three-group system for the Warner Bros. division, Variety has confirmed. Those who have left the company include senior VP of sales trade marketing John Cunningham, VP of consumer marketing [...]

  • Ice Age Twentieth Century Fox World

    How a Kuala Lumpur Theme Park Became a Fox-Themed Fiasco

    Twentieth Century Fox executives looked around in 2013 and decided it was finally time for the historic studio to get into the theme park business. Fox had seen Disney and Universal expand into Japan and China, slowly conquering the globe with their resort businesses. So they came up with a bold idea to grab a [...]

  • ally billboard a star is born

    Oscar Campaign Spending Reaches New Heights in Competitive Season

    The escalating cost of awards campaigning may reach an all-time high this season as heavyweights such as “Roma” and “A Star Is Born” battle for Oscar gold. The quest for an Academy Award has always been expensive, but Netflix’s hunger to nab its first best picture win, coupled with the presence of legitimate studio contenders [...]

  • Brian Graden and Brad Grey

    'It Boy' Seeks to Drop Salacious Suit Against Brad Grey and Brian Graden

    A self-described Hollywood “It boy” has asked for permission to drop a salacious lawsuit that asserted sexual misconduct claims against the late Paramount CEO Brad Grey and former MTV executive Brian Graden. Rovier Carrington, who filed the suit last May, notified a federal court on Jan. 18 that he was withdrawing his claims. Judge Katherine [...]

  • Former movie producer Harvey Weinstein (L)

    Harvey Weinstein Hires New Lawyers Who Repped Kobe Bryant and Rose McGowan

    Harvey Weinstein has hired a new legal team to handle his rape and sexual assault case in New York, including attorneys who represented one of his most prominent accusers, actress Rose McGowan. Weinstein has hired Jose Baez and Ronald Sullivan, of the Baez Law Firm in Miami; Pamela Mackey of Denver, Colo.; and Duncan Levin, [...]

  • Bryan Singer: New Allegations of Sex

    Bryan Singer Hit With Fresh Allegations of Sex With Underage Boys

    UPDATED: Bryan Singer, the director of “Bohemian Rhapsody,” has responded to new allegations published in the Atlantic on Wednesday that he engaged in sexual misconduct with underage boys. In the report, four men allege that Singer had sexual encounters with them when they were teenagers in the late 1990s. One of the men, Victor Valdovinos, [...]

  • 'Zootopia' Land Coming to Shanghai Disneyland

    Disney to Open 'Zootopia' Land at Shanghai Theme Park

    The Shanghai Disneyland theme park is to be expanded with the construction of a themed land based on the “Zootopia” animated film and its characters. It will be the first “Zootopia” land at any Disney park worldwide. “The rapid rate of expansion at Shanghai Disney Resort demonstrates our confidence and commitment to the company’s future [...]

More From Our Brands

Access exclusive content