They Urged, They Merged: William Morris and Endeavor Agree to Become One

There’s been a ton of inside-the-industry conjecture about what the newly merged William Morris/Endeavor agency will be worth once the deal is formally done. Some insiders are saying $300 million. Well, here’s a little perspective: Back in 1995 when Michael Ovitz was negotiating with Edgar Bronfman Jr. for the top job at MCA (now Universal Studios), CAA was valued at $250 million. So what are the biggest agencies worth now, given that factors such as Big Media’s consolidation, lower TV-packaging fees, fewer TV-syndication deals and movies being made, must be measured against receivables?

A very smart guy I know in film-financing circles offers this opinion: “The business world is loathe to give personal-service businesses a value based on a multiple of current year or future years’ cash flows or profits because the future is so speculative. This is, in large part, why talent agencies have had a very hard time figuring out ways to create liquidity for their partners. The reality is that talent agencies (like law or accounting or management firms) are worth the hard assets (office furniture, cash in the bank, real estate owned, etc.), plus the receivables (the commissions to which you are contractually entitled as a rep for the talent or on TV packages, etc.), minus your liabilities (overhead, loans, etc.).”

Next, the new WME has to obtain the approvals needed from the Guild, ATA, and the state and federal governments for the two agencies to legally combine. So that’s still at least 2 1/2 weeks away. What’s a little wait amongst frenemies. ...