Two big Hollywood talent agencies merge

Mon Apr 27, 2009 8:00pm EDT

* Deal creates larger rival to challenge powerhouse CAA * Merger seen as boosting revenues amid industry slump * New firm to have three co-CEOs

(Recasts with announcement of merger)

By Alex Dobuzinskis

LOS ANGELES, April 27 (Reuters) - Two of Hollywood's top talent agencies, William Morris Agency and Endeavor, agreed to merge on Monday, creating a show-business powerhouse that will challenge rivals as the entertainment industry grapples with a recession.

The 111-year-old William Morris and 14-year-old Endeavor will become William Morris Endeavor (WME) Entertainment with more than 300 agents combining the former's strength in reality TV, music and books with the latter's edge in film and TV.

William Morris represents Kanye West, Britney Spears and Russell Crowe in its stable of stars, while Endeavor has actors Matt Damon, Robert De Niro and Adam Sandler.

"You've got one agency that predates the existence of movies and another one that's a scrappier, hipper upstart," said entertainment attorney Jonathan Handel, who is not involved in the deal. "They really do complement each other in terms of their strengths."

Industry watchers said the deal will reshape the talent agency landscape in Hollywood and send a signal to rivals such as Creative Artists Agency (CAA) and International Creative Management (ICM) that the new WME Entertainment plans on being a powerhouse in "packaging" actors, directors, writers and other creative talent for films and television shows.

Agencies also make big sums by grouping actors, directors and writers in a "package" of talent for a movie or TV show. CAA has for years been a leader in "packaging," so WME Entertainment will have more clients to challenge CAA's lead.

"This is actually a lot more about agency economics than anything else, and the realities of doing business in Hollywood in the middle of a recession," said Larry Gerbrandt, a principal at Media Valuation Partners.

The merger could also lead to layoffs and departures at both agencies as the two shed duplicate employees and as agents leave to pursue their own interests.

In a joint statement, the agencies said Jim Wiatt, chief executive officer at William Morris, will chair the new company. Endeavor co-founder Ariel Emanuel will serve as co-CEO, along with his business partner Patrick Whitesell and William Morris President Dave Wirtschafter.

DOWNTURN SPURS DEAL

A deal between William Morris and Endeavor has been talked about for months as talent agencies have grappled with how best to increase revenues in the face of tough times in Hollywood.

Declining DVD sales, slumping TV advertising and growth in reality TV, which has resulted in fewer opportunities for actors in scripted TV dramas and comedies, have all led to fewer job opportunities and, as a result, lower fees generated from actors who pay agents roughly 10 percent of their salary.

CAA boasts a client roster that includes director Steven Spielberg and actors Brad Pitt and Will Smith. ICM, another major agency, represents Beyonce and Chris Rock.

William Morris is the larger of the two merging agencies, with 800 employees, including more than 250 agents, while Endeavor has some 280 total employees, including 80 agents.

WME Entertainment will have a nine-member board with five seats from William Morris and four from Endeavor.

Emanuel, the Endeavor co-founder, is the brother of Rahm Emanuel, U.S. President Barack Obama's chief of staff, and he was the character model for Hollywood power agent Ari Gold in fictional TV show "Entourage" on cable channel HBO.

(Reporting by Alex Dobuzinskis; Editing by Bob Tourtellotte and Cynthia Osterman)

((bob.tourtellotte@thomsonreuters.com; 1 213-380-2014))

(please visit our entertainment blog via www.reuters.com or on blogs.reuters.com/fanfare/) Keywords: WILLIAMMORRIS/ Keywords: WILLIAMMORRIS/

(C) Reuters 2009. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nN27610951