LOS ANGELES — Creative Artists Agency announced Monday that it was buying its smaller rival ICM Partners for an undisclosed amount, the largest talent agency consolidation in more than a decade and one that could have significant ripple effects in the entertainment and sports worlds.
The agencies’ top executives — Bryan Lourd at CAA and Chris Silbermann at ICM — positioned the deal as a supercharging of the representation business and an opportunity for CAA to expand in both publishing and sports. ICM has a substantial books division and sports assets that include the recently acquired National Football League agency Select Sports Group and the London-based soccer agency Stellar Group.
“We realized that the timing was right for us to join forces, and to not compete against each other, to build a company with resources that could serve clients in a much broader and, hopefully, more effective way,” Mr. Lourd said in an interview. “It’s us thinking about what an agency of the future should look like.”
To some degree, consolidation among talent agencies was inevitable. As tech giants have aggressively colonized Hollywood, spending billions of dollars to build streaming services like Apple TV+ and Amazon Prime Video, big traditional media companies like Disney, Discovery and Warner Media have sought to compete by getting even bigger. Smaller companies — Metro-Goldwyn-Mayer, which sold itself to Amazon in July, and now ICM Partners — have found themselves vulnerable.
“ICM lacks those big, franchisable names,” said Stephen Galloway, dean of Chapman University’s film school and a former executive editor of The Hollywood Reporter. CAA’s client roster includes Tom Hanks, Steven Spielberg, Zendaya, Ava DuVernay, Ryan Murphy and Reese Witherspoon, while Shonda Rhimes, Ellen DeGeneres, Samuel L. Jackson and Pete Davidson are among ICM’s marquee clients.
For the heavyweight Creative Artists, the acquisition adds leverage as actors, directors, writers and producers spar with studios over compensation in the streaming age. If studios are no longer trying to maximize the box office for each film but instead shifting to a hybrid model where success is judged partly by ticket sales and partly by streaming subscriptions sold, what does that mean for how stars are paid — and where they make their movies?
Scarlett Johansson, a Creative Artists client, is suing the Walt Disney Company over pay, for instance. She contends that Disney’s decision to simultaneously release “Black Widow” in theaters and on Disney+ gutted her compensation for starring in the film — at the same time bolstering Disney+ and thus the company’s standing on Wall Street. “They have very deliberately moved the revenue stream and profits to the Disney+ side of the company, leaving artistic and financial partners out of their new equation,” Mr. Lourd, her agent, said over the summer.
Disney has said her complaint had “no merit.”
Creative Artists, bolstered by ICM’s client roster, may now be even better equipped to chart how stars’ compensation will be determined. “CAA already had very effective leadership and strength, but this creates a talent agency of historic scale and scope,” Mr. Galloway said. “Studios had better play nice, because the domino effect of not being nice could affect so much of their business.”
SAG-AFTRA, the powerful actors union, said in a statement that it welcomed “any change that results in increased negotiating power for talent as they bargain individual deals with the multibillion-dollar corporations that produce content.”
It added, “We will carefully scrutinize this combination of two storied talent agencies to ensure that performers will benefit from, and are not disadvantaged by, the deal.”
This deal is the industry’s largest since the William Morris Agency merged with Endeavor in 2009, essentially turning Hollywood into a two-agency town. (The mini-major United Talent Agency is the next biggest behind Endeavor and CAA. ICM was behind UTA, having atrophied from its heyday in the 1990s, when it represented Julia Roberts — long since a CAA client.) In the years since, the major agencies have expanded into fresh lines of business involving finance, podcasting, sports and even content production as a way to keep growing, compensate for declining businesses like sitcom syndication and maintain a grip on forms of entertainment that are still taking shape.
Endeavor made its public trading debut in April; it announced a $1.2 billion deal on Monday afternoon to buy the sports-betting company OpenBet from Scientific Games. Even without ICM’s assets, CAA has also built itself into a top sports agency, representing more than 2,000 athletes including Dwyane Wade, Aaron Rodgers, Chris Paul and Cristiano Ronaldo.
CAA and Endeavor recently had a setback in the fast-growing content-production business, however. In negotiating a new agreement with agencies, the Writers Guild of America succeeded in forcing CAA, Endeavor and other agencies to cap their ownership in content-production divisions to 20 percent. In July, CAA sold most of its upstart content studio Wiip to the South Korean-based JTBC Studios.
Mr. Lourd insisted that the forced divestiture played no role in CAA’s decision to buy ICM. He also poured cold water on one of Hollywood’s immediate assumptions about the ICM deal — that CAA was bulking up to prepare for a public offering of its own.
“Does this make that more possible? Sure,” Mr. Lourd said. “But going public — or not — has not driven any of this.”
CAA and ICM have flirted with linking arms for some time, according to Mr. Lourd, noting that he and Mr. Silbermann, ICM’s chief executive, have long met for lunch three or four times a year and that Mr. Silbermann’s children and those of Richard Lovett, CAA’s president, attend the same school. Acquisition talks became serious in July at Allen & Company’s annual media retreat in Sun Valley, Idaho.
As part of the deal, the ICM name will cease to exist, a decision Mr. Lourd called “not easy.” ICM was founded in 1975 through the merger of Creative Management Associates and the International Famous Agency.
“It was an obvious decision from the beginning,” Mr. Silbermann said by phone. CAA is “the right thing to call the company.”
Mr. Silbermann will join the CAA board upon completion of the deal, which the agencies said they expected before the end of the year. CAA is majority-owned by the private equity firm TPG Capital, which also has stakes in Univision, Spotify and STX Entertainment, among other companies.
In the near term, the combined agencies must deal with a melding of disparate internal cultures and the attention of competitors hungry to pick off prime agents and clients. Mr. Lourd and Mr. Silbermann declined to discuss the inevitable layoffs that will come from the merger. The two agencies are a few blocks from each other in the Century City area of Los Angeles.
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