April 27, 2009 / 9:48 PM / 10 years ago

Two big Hollywood talent agencies poised to merge

* Deal would create larger rival to powerhouse CAA * Merger seen as boosting revenues amid industry slump * Morris’ Wiatt would chair, Endeavor’s Emanuel run day-to-day

By Alex Dobuzinskis

LOS ANGELES, April 27 (Reuters) - Two of Hollywood’s top talent agencies, William Morris Agency and Endeavor, were poised on Monday to finalize a merger that would enable them to weather a production downturn and challenge their powerful rival Creative Artists Agency.

The board of William Morris and the partners who run Endeavor were meeting on Monday, amid anticipation the two private companies would soon announce a merger.

A combination of the 111-year-old William Morris and the 14-year-old Endeavor would create a company with more than 300 agents, and combine the former’s strength in reality TV, music and books with the latter’s edge in film and TV, experts said.

“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.”

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, Handel said.

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.

Larry Gerbrandt, a principal at Media Valuation Partners, tied the possible merger to the downturn in Hollywood.

“You simply don’t need as many agents running around town pitching projects,” he said.

Agencies earn additional money from grouping their actors, directors and writers in a “package” of talent for a movie or TV show. Creative Artists Agency, or CAA, has for years been a leader in “packaging,” so a merged William Morris and Endeavor would have more clients to challenge CAA’s lead.

ROSTERS OF STARS

CAA boasts a client roster that includes director Steven Spielberg and actors Brad Pitt and Will Smith.

William Morris boasts of representing Kanye West, Britney Spears and Russell Crowe, while Endeavor has actors Matt Damon, Robert De Niro and Adam Sandler.

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.

“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,” Gerbrandt said.

Jim Wiatt, chief executive officer at William Morris, is expected to chair the newly merged company. Endeavor founder Ari Emanuel would have a role running day-to-day operations.

Emanuel 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.

The U.S. Justice Department would have to approve a merger between the two companies, and several Hollywood unions would have to sign off on the deal. (Reporting by Alex Dobuzinskis: Editing by Bob Tourtellotte and Cynthia Osterman)

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