03.25.09

Hollywood's Coming Culture Clash

Legendary talent agency William Morris is likely to seal a deal this week with its hot rival Endeavor, packager of The Office, Gossip Girl, and Curb Your Enthusiasm, but many insiders at both firms are leery of the union. Here's why.

If all goes according to plan, in the next couple of days the die will be cast on the merger between two of Hollywood's leading agencies—William Morris and rival Endeavor, which would—at least, in theory—create a powerful challenger to dominant Creative Artists Agency.

Speculation about the mammoth merger has been bubbling in Hollywood for months but reached a crescendo last week. Then another rumor spread that disagreements between the two agencies had almost scuttled the deal. As of yesterday, some sources said the merger was back on track after a series of tense exchanges between heavyweights at both agencies. If the union goes forward, there will be four major agencies left in Hollywood: CAA, the as-yet unnamed offspring of William Morris and Endeavor, International Creative Management and United Talent Agency.

One top agent notes the last huge merger in the entertainment world that he can remember was between Time Warner and AOL. And look how well that turned out.

Observers at other agencies expect that a merger would lead to a massive collision of cultures. "Endeavor is aggressive—overly aggressive at times," says a source at one of the remaining firms. "William Morris is so inchoate that you can't even really describe their culture."

While most industry observers expect the deal to happen, there are so many outsized egos and competing agendas involved that it is still not a sure thing. Thanks to those egos and agendas, rivals who might be threatened by the merger seem genuinely confident when they assert that they expect to benefit from the infighting at the combined agency. “I think it’s going to be a total fucking mess,” predicts a top man at another agency with more than a hint of anticipatory schadenfreude.

Given such disparities, why would the two agencies merge in the first place? The view among many in Hollywood is that Endeavor's exceptionally aggressive co-founder Ari Emanuel has been the driving force behind the negotiations. “He just wants to be big, big, big,” says a top agent at another firm. William Morris, under the leadership of Jim Wiatt, is perceived to be a collection of disparate assets that could use a jolt of new leadership. Hollywood sees Wiatt as increasingly disengaged from the day-to-day affairs of the business—a man who'd be content to be chairman of a combined agency, leaving Emanuel to run things.

There are many reasons why a merger of the two companies makes sense on paper. William Morris’ once-vaunted television business, which once counted Dick Van Dyke and Andy Griffith among its clients, has diminished in recent years, while Endeavor is cooking, having packaged such highly lauded (and commercially successful) shows as Heroes, Gossip Girl, The Office, Entourage and Curb Your Enthusiasm. The situation is the reverse in so-called reality programming, where William Morris has the upper hand (the agency has represented the creators of Big Brother and Survivor).

William Morris could also use a boost on the movie side, where it has been unable to match Endeavor's A-list stable of stars, including Christian Bale, Matt Damon, Amy Adams, and Shia LeBeouf. “William Morris has not been able to revive its motion-picture business, and that’s the sexy part of any agency's business,” says a source familiar with the agency. “Even if you make your money in other areas, that’s the shiny object that gets people in.”

A top agent thinks the perceived ossification at William Morris explains why some Endeavor insiders, despite Emanuel's fervent support for the merger, are still are leery of the idea. “Endeavor is cool and hip and has a great brand,” this observer says. “They think this is going to ruin their thing.”

On the other hand, William Morris has a booming music division that reps such stars as Amy Winehouse and Rihanna, which Endeavor lacks. Its also has a vaunted literary division. A competitor says Endeavor, which relies heavily on its film and television business, got hammered when business slowed during the writers’ strike. Since then, he says, “Ari’s been desperate to diversify so he never finds himself in that position again.”

To this end, says one well-placed observer, Emanuel has been all but stampeding William Morris into the deal by making it seem inevitable. He suspects that Emanuel has been widely leaking news of the talks while they were still in a gestation stage. More recently, the source claims, Emanuel has repeatedly called William Morris clients to say, “I’m looking forward to working together,” even though the merger has not yet been approved. (Both Emanuel and Endeavor declined to comment on any aspect of this article.)

Endeavor insiders have other reasons to oppose the deal. Emanuel is such an outsized personality that another competitor says leading agents within his own shop are already nervous that he’s identified as the face of Endeavor. Emanuel has made news by publicly calling for Hollywood to boycott Mel Gibson because of his anti-Semitic slurs. In 2007, he championed then-HBO executive Chris Albrecht after he was busted for assaulting his girlfriend.

Emanuel would be expected to blow into William Morris like a gale-force wind. And some members of the William Morris board would be risking their futures if they vote for the merger. “How good does that feel—to vote yourself out of a job?” asks a competitor.

What really has rivals drooling is the idea of the fratricidal battle that will ensue if the deal gets done. Many agents are expected to lose their jobs at once. And one competitor predicts that the resulting agency would be “ungovernable,” adding, “If it happens, it’s great. It’s just going to be chaos.”

“Ari’s going to lead the charge up Pork Chop Hill toward CAA, and I don’t know that his troops will all be marching in the same direction,” said another leading agent.

Indeed, there will be lots of clients and agents and turf to poach or protect if this deal goes through. And one competitor says his agency will try to do some cherry-picking. It’s clear what line of attack will be used on the talent: Who wants an agent distracted by infighting at the office? “Clients want to be completely looked after, especially in this market, which is contracting,” says a source at one of the big agencies not involved in the discussion. “So for two agencies to merge and for agents to spend a lot of time dealing with agency stuff creates opportunities.”

Jeremy Zimmer, a top agent at United Talent Agency, says he believes his shop could benefit from a fight that would pit CAA against the product of a merger in a battle for dominance. “If they're bashing each other, we become the clear alternative,” he observes, noting archly that the last huge merger in the entertainment world that he can remember was between Time Warner and AOL.

And look how well that turned out.

Kim Masters is the host of The Business, public radio's weekly show about the business of show business. She is also the author of The Keys to the Kingdom: The Rise of Michael Eisner and the Fall of Everybody Else.