Hollywood Sign
Gary Minnaert
Hollywood Sign
The entertainment industry is feeling the squeeze of the recession and shifting revenue models; as margins and revenues decline, stars lose their power. The latest impact of Hollywood's new economic reality is the potential merger of two talent agencies that sit at opposite ends of 'the biz.'

The William Morris Agency and Endeavor Agency are readying to vote on whether to merge to create an Entertainment Behemoth, utilizing economies of scale to better negotiate with studios and media conglomerates.

William Morris and Endeavor are just about as different as you can get within the industry. William Morris is traditional, established, and big, while Endeavor is smaller, hip, new, and edgy. The clash of their corporate styles and areas of expertise is the reason why rumors of this merger were dismissed. But it's also the very reason these two opposites may very well attract. Considering the industry pressures, it seems it would be in the best interest of these two forces to recognize the ways in which they're complementary, and join forces to push costs down.

If you've ever watched HBO's "Entourage," you have a pretty good sense of what the Endeavor agency is like; chief Ari Emanuel is the basis for Jeremy Piven's Ari Gold character. The agency was founded in 1995 by four agents who left another agency, International Creative Management (ICM). Emanuel is known for being pushy, demanding, and effective. The agency also has a reputation for being very protective of a high-profile but smaller list of clients, which includes big names like Adam Sandler and Ben Affleck. Emanuel is known for being able to snag rising stars, whether it's Shia LaBeouf or "Slumdog Millionaire" director Danny Boyle.

In contrast, William Morris was founded in 1989 and has diversified clients from musicians and chefs to sports stars. It was also the first agency to start a corporate consulting division, which was responsible for the highly profitable pairing of General Motors [GM Loading... () ] and Transformers for the 2007 film. WMA is run by Jim Wiatt, an industry veteran, who previously ran International Creative Management (ICM) for a decade. (Full disclosure: I'm represented by William Morris). WMA's books and reality television divisions are particularly strong, and would be a great complement to Endeavor's strength in feature film and scripted TV. In addition to names like Ryan Seacrest and Regis & Kelly, William Morris also has a strong legacy television business, which means they represented shows like Dynasty that continue to generate revenue.

Talent agencies don't really have assets. A client list isn't worth anything tangible if a star can jump ship for a competitor on a whim. Fewer TV pilots and movies are being made, which means less revenue, and the whole DVD business, once a cash cow for clients and the agencies, is on the decline. Agencies should do whatever they can to become more efficient -managing more clients with fewer agents and less overhead. And a merger seems like a natural way to do that.

Creative Artists Agency (CAA) is currently the biggest agency, so has the most juice when it comes to negotiating with corporate giants. If a merger between WMA and Endeavor goes through, the combined company would be able to demand better terms from studios and give CAA a run for its money. There are a lot of hurdles before this deal is approved, but the fact that it's now a real possibility speaks volumes to the challenges the industry is facing.

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