Talent agencies William Morris and Endeavor are expected to vote today on a merger creating a new giant in Hollywood at a time when the longtime role and power of the firms that represent actors, directors and writers are coming under severe strain.
The combined entity -- easily the most talked about hook-up in town since Angelina and Brad -- would be better positioned to survive the shrinking economy of the entertainment industry, in which fewer films and scripted television shows are being made and studios are squeezing the salaries paid to talent. Reliant on commissions and fees for income, Hollywood's talent agencies are competing for scarcer top clients in a contracting market.
A unified William Morris and Endeavor -- WME Entertainment is currently the favored name -- hopes its new heavyweight status will give it added leverage to counterbalance a power shift that in recent years has tilted back toward the studios. WME would boast more than 300 agents, a formidable client roster and combined annual revenue of about $325 million.
Although that's a modest sum in an age of billion-dollar government bailouts, it belies the outsized influence an agency wields by virtue of its position at the nexus connecting talent with producers and distributors.
"This is a somewhat historic reset in the industry. I don't think we have seen anything quite like this," said Larry Gerbrandt, head of Media Valuation Partners and a media analyst. "It's more than just a merger of two agencies; it's about what all of this implies."
The deal could trigger a new wave of consolidation, putting pressure on other smaller agencies to combine or find larger partners. The last significant talent agency merger was in 2006 when International Creative Management bought the smaller Broder Webb Chervin Silbermann Agency in a move to inject new life into ICM's television business.
Blending the disparate cultures of William Morris and Endeavor -- the former rooted in vaudeville, the latter only 14 years old -- will entail upheaval and numerous layoffs.
Rival agencies will seek to exploit this period of disruption by pursuing talent or disaffected agents, who would bring with them valuable clients. Others may leave the combined firm to form new management companies or agencies, just as Michael Ovitz did when he broke away from William Morris Agency in 1975 to found CAA.
