Hollywood’s Agency Landscape Reshaped by Battle to Be No. 4

Jonathan Handel
·6 min read

The closing of CAA’s closely watched megadeal for rival ICM last June and the reverberations of the Writers Guild’s years-long standoff with agencies over packaging fees and affiliate production have reshaped Hollywood’s representation landscape. With only three majors left — CAA, Endeavor-owned WME, and UTA — there’s now a race among midsize firms to become the de facto No. 4.

One of the firms eyeing an expansion is A3 Artists Agency, which had its outside counsel send letters of purchase inquiry to three of its rivals — Verve, APA and an undisclosed agency — in mid-January. A3 chairman Adam Bold says the Bill Weinstein-led Verve dismissed the offer to open discussions (Verve had no comment), while APA president Jim Osborne tells The Hollywood Reporter that “a sale to anyone, much less A3, was never entertained and simply not true.”

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Bold says he’s in early talks with a third agency. “The big three have gotten bigger,” he says of the agency landscape. “In order to be competitive, the second tier has to scale. I reached out to several competitors in the space and expressed an interest in acquiring or merging.”

When Bold and a management team, CEO Robert Attermann and president Brian Cho, bought the agency then known as Abrams Artists Agency from founder Harry Abrams in 2018, it boasted about 40 agents, says an A3 spokesperson, adding that the agent complement is now about 84. For comparison, Verve has 52 agents and APA 170.

Bold declines to name the third agency that A3 reached out to regarding an acquisition, but says he met for lunch with its leadership and exploratory talks continue. As to which agency that may be, many potential targets — including Gersh, Paradigm, Kaplan Stahler, Buchwald, Innovative, Rothman Brecher, Culture Creative Entertainment and commercials agency Coast to Coast — did not reply to THR’s request for comment.

Bold says the acquisition target would add to A3’s existing divisions — which include digital/influencers, unscripted, TV/motion-picture literary, voiceover and Broadway — and touts the diversity of A3’s employees and clients. Its roster includes Fred Hechinger (The White Lotus), Kim Joo-ryoung (Squid Game), Carl Weathers (The Mandalorian), singer/hyphenate Lance Bass and former Writers Guild West president David A. Goodman. Bold says he expects to self-fund an acquisition unless the deal size merits bringing in investors.

But A3 is just one of multiple midsize firms jostling for position. On Feb. 16, APA (which counts Yucaipa Companies mogul Ron Burkle as an investor) inked a strategic alliance with Europa Content, a literary and production label founded by Marc Gerald, aimed at broadening its intellectual-property and media rights options. Said an APA spokesman, “We have achieved our goal of being the top full-service alternative to the big three.” The firm has become a notable landing spot for name-brand stars — clients include Regina Hall, William H. Macy, John Cusack and Donnie Yen — looking to launch a second act.

And last September, the Sam Gores-founded Paradigm bought three talent firms — Napoli Management, 3 Kings Entertainment and Two Twelve Management & Marketing — expanding its reach to TV news anchors and onscreen culinary stars. (Billionaire Tom Gores, the brother of Sam, took an ownership stake in the agency in 2020.)

The agency business as a whole, and particularly the revenue models of the largest three or four agencies, came under scrutiny from the Writers Guild starting in 2018, when the guild buttressed its demands for an end to packaging and affiliate production by instructing its members to part ways with their agents en masse. At least 7,000 writers did so in support of the guild’s ask for a return to 10 percent-commission business models.

Guild members maintained solidarity in a campaign that separated them from the agents who would normally find and/or negotiate their employment and script sales. (That same solidarity may be on display again this spring as WGA negotiations with the studios approach in advance of a May 1 contract expiration and possible strike.)

The battle evolved into complex litigation that seemed at times to favor the agencies. But the arrival of a global pandemic in 2020 dramatically weakened the economics of the large agencies, and the fortresses began to crack, with the Writers Guild successfully signing small, then medium and finally large agencies to its desired agency agreement. (WME and CAA both had to divest their majority-ownership stakes in affiliated production companies to make a deal with the scribes.)

The fallout not only turned ICM into an acquisition target — the $750 million CAA-ICM deal built a combined firm of around 3,200 employees led by CAA’s Bryan Lourd, Richard Lovett and Kevin Huvane — but also meant that many writers who had been signed with larger agencies before walking ended up moving to medium or boutique shops while waiting for the big firms to reach agreements with the guild — or because they weren’t welcomed back to their former large-agency berths. Some agents switched too; at least 12 decamped from ICM to APA and others left for management firms like Range Media, which launched in 2020.

And as big as they are, even the big three have been seeking growth, the better to compete with each other and stand toe-to-toe with the largest studios as well as the giant tech firms that increasingly drive Hollywood. The Ari Emanuel-run Endeavor went public in 2021 (after a failed attempt in 2019) and has aggressively built a sports and entertainment conglomerate in addition to the representation division led by WME and IMG.

Similarly, CAA’s majority owner, private equity firm TPG, went public in January 2022. Meanwhile, fellow major UTA has also been scaling up, acquiring U.K. literary and talent agency Curtis Brown Group and literary agency Fletcher & Company and taking an infusion of cash from Swedish private equity firm EQT to fuel growth. (UTA also underwent its first notable round of layoffs since 2020, disclosing on Feb. 8 that it was cutting a single-digit percentage of a workforce that totals 2,000 employees.)

And not to be ignored is the state of the entertainment business itself. With streamers and studios in cost-cutting mode and the likelihood of a writers strike increasing against a backdrop of challenges to theatergoing and linear TV, it has become harder to be a seller. These macro-shifts have led midsize agencies to explore M&A as a bulwark for stability in a turbulent business — and find ways to sign new, and more, clients.

This story first appeared in the Feb. 22 issue of The Hollywood Reporter magazine. Click here to subscribe.

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