Magazine article Variety

The Great Escape

Magazine article Variety

The Great Escape

Article excerpt

It may not have registered on the Richter scale, but Hollywood is still reeling from the earthquake whose epicenter originated on Avenue of the Stars last week.

From the top down, CAA insiders were stunned by the mass defection of 11 agents, most of whom represent comedy talent, to smaller rival UTA. The move marked the biggest blow to CAA's image as showbiz's most powerful talent agency in 20 years, since the 1995 turmoil created by the departures of co-founders and rainmakers Michael Ovitz and Ron Meyer.

The decamping of the agents and such high-profile clients as Chris Pratt, Zach Galifianakis and Will Ferrell will take a significant financial toll on CAA down the road, but the more immediate and potentially lasting damage may be to its reputation as an elite place that talent and their reps rarely leave. The projection of the agency's storied power is symbolically reinforced by the imposing polished-steeland-glass edifice of its Century City HQ.

Beyond the specific impact on CAA and UTA, a shakeup of this magnitude is sure to have a ripple effect across Hollywood's talent houses. One veteran manager noted that in addition to bolstering UTA, the move gives WME/IMG momentum in narrowing the competitive gap with CAA. He likened it to simple math: "The No. 2 agency just got closer to No. 1, and No. 3 just got strengthened."

As with any major disruption, expect more client poaching and agent shuffling to ensue - not just between CAA and UTA, and not just among megastar clients. "It becomes something in the air at a time like this, and people suddenly start to feel restless," said a seasoned agent.

Perhaps the biggest surprise, industry insiders said, was that the defection caught CAA's leaders unaware. Industry sources said it was no secret that the top agents who left had been unhappy and were making quiet inquiries into opportunities at other shops. That CAA was caught offguard was a sign, according to industry observers, that its top brass hasn't been minding the store as closely as it should have been amid a push to expand and diversify.

Two days after the first wave of agents left for UTA, CAA responded with a lawsuit filed April 2 in Los Angeles Superior Court accusing UTA and two agents of conspiring to interfere with CAA's contractual relationships. Arbitration claims against three other agents, whose contracts mandated arbitration rather than a civil lawsuit, have been initiated.

The aggressive legal strategy underscored the outrage at CAA over the PR damage inflicted by the shakeup. Execs at TPG Capital, the private equity giant that has owned a majority stake in CAA since last year, were said to be unnerved by the revolt in the ranks. These are not the headlines TPG wants to see as it mulls the possibility down the road of an initial public offering for CAA.

According to two CAA insiders, TPG brass was livid with the agency's managers after learning of the defections last week, demanding to know how it could happen at an agency thought to be impenetrable - though a different CAA source disputes this characterization. Sources said CAA's top leaders, including Richard Lovett, Bryan Lourd and Kevin Huvane, took a coolheaded approach to addressing the issue in small-group meetings with the departments most affected by the hasty departures.

"This is not the first time that agents have changed and taken clients with them; however, the underlying causes are new," said entertainment consultant Seth Willenson. "Any time the economic model of a business changes, the institutions change along with it. As private financing came in, the way institutions have run has changed. (The largest) agencies are not seeing pure talent representation (as) having room for growth."

Compensation Issues

The mood of discontent among some at CAA opened the door for the exodus, led by the five agents who were the first to confirm their departures on March 31: Jason Heyman, Martin Lesak, Greg McKnight, Greg Cavic and Nick Nuciforo. …

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