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William Morris–Endeavor's Urge to Merge

The rumors of a William Morris-Endeavor merger had been around for months and months, and some phone calls between the two major agencies were exchanged after the end of the writers’ strike a year ago. But the reality is that these deals aren’t done overnight. Like everything in Hollywood that involves ego and money, they’re complicated because they combine different agency cultures, as well as partners and personnel.

Who else remembers back to 1992, when William Morris acquired Triad? The two agencies had been talking for 17 months; and, even when those chats became serious, the deal points took five months to broker. And let’s not forget the back story behind the ICM-Broder merger.

Last year, I was the first to report that talks had heated up between upstart Endeavor and venerable William Morris to the point where I was being told by mid-February the odds were “70/30” that the two agencies would do a deal.

Endeavor’s Ari Emanuel (the prototype for Entourage’s Ari Gold) has been on the prowl. He even had several meals with ICM’s investor Rizvi Traverse, but they didn’t go anywhere. Even so, Endeavor-WMA looked to be a great fit: William Morris has a powerhouse music division but also a motion-picture talent department that needs more marquee names, and a television department that except for its unscripted fare is flagging.

Endeavor, on the other hand, has been signing marquee names and packaging prime-time series galore, and would love that music money. One agency is strong where the other is weak.

But the problem is what it has always been. The alpha-male owners of major agencies always want to be in charge. So Ari Emanuel would run the combined agency as long as WMA CEO Jim Wiatt gets a fancy title and an über-lucrative contract. Besides, if Wiatt doesn’t make this move, then WMA will turn into a music agency, and he could be sidelined.

One of the first hurdles to overcome was the tax consequences. It all had to do with “LLC” and “S” corporations, which could have meant writing checks in the millions of dollars to the feds. Also, at one point, a third company was involved. Then on March 13, I learned that the tax issues had been resolved.

It became clear that the deal was proceeding, when the founding partners at Endeavor phoned their clients to formalize their often-unsigned contracts, pre-merger. One screenwriter, who had been there a while, was surprised that, two hours after a partner called, the contract was messengered to the scripter’s office for a signature. (This also happened right before Broder merged with ICM, and when WMA was about to merge with United Talent in a deal that never closed.)

But, for the past two weeks, meetings between partners of William Morris and Endeavor have been fraught with tension. The reluctance is from Endeavor’s side, which fears there is too much risk. On March 26, the designated partners met to discuss the deal’s economics and to decide whether to continue negotiating.

The meeting proved inconclusive, and negotiations continue. From what I’m told, the merger hangs on the numbers disclosed. Do they make sense? Do the rewards outweigh the risks? Is more financial information needed?

And there’s the question of whether Wiatt will behave. I hear he was “shaking” at the confab, angry at how he’s being portrayed during these talks. (But, c’mon, what kind of leader doesn’t officially inform his staff until March 26 of merger talks under way even though they’re being played out on my Web site?)

Now, even his WMA colleagues are worried Wiatt’s gonna blow a deal they need. Could a coup d’état be in the offing?

Wiatt has been obstinate in a debate over who should stay and who should go if the two 10-percenteries merge. Emanuel has been screaming at Wiatt, and battles have broken out among some subordinates. “Wiatt is trying to sell the group on his judgment and his leadership to save his people,” one insider tells me. “Because Jim knows this deal will dismantle his company. So when Ari pushes Jim’s buttons, Wiatt panics and goes on the defensive. “

Both sides realize that any newly merged company must consist of only 150 core movie/TV agents — at most. The mantra is “make it smaller.” That means, of WMA’s 150 agents, and of Endeavor’s 100 agents, about 100 will have to be let go. And since CAA’s Richard Lovett has pursued a policy of “100 percent market share” by going after all the talent, the new WMA-Endeavor’s focus would be to represent only the elite Top 2 percent.

The prospect of consolidation has turned both agencies into Rumor Central, each denying that wholesale layoffs have begun, when, in fact, they haven’t. Whispers persist of a pre-merger shakeup at WMA involving motion-picture talent-department head Gaby Morgerman. (I’ve been receiving nonstop complaints about her from inside WMA for almost a year now.)

“It’s one of many conversations about examining our talent department and how to make it work more efficiently. Some of these conversations have included Gaby, yes. We have to make things better,” a WMA insider confirmed to me.

Endeavor partner Patrick Whitesell especially has expressed frustration with WMA’s attempt “to pump its chest like crazy” over its talent department even though Hollywood knows it’s been weakened by agent layoffs and client defections. At one recent meeting, WMA agents were boasting about having just signed Sex and the City’s Kristin Davis. The Endeavor agents were seen rolling their eyes, and Ari and Patrick were overheard saying quietly to the other, “Didn’t we fire her?”

I also hear that the Endeavor side has not tried to hide the fact that its TV agents think WMA’s Aaron Kaplan should be “on top of the list” of people to be let go once a deal is consummated. Hollywood is well aware that, under Kaplan, the Morris TV department has plummeted in prestige, power and packages, whereas these days, Endeavor is a juggernaut. But Wiatt is Kaplan’s mentor, and Jim has been wheedling, and even begging Endeavor to keep Aaron. It’s such a nonstarter that even Kaplan probably realizes the ax is about to fall.

It’s weird, too, that Endeavor has signed three William Morris clients in a row recently. Usually, when there’s a deal in the works, the two agencies agree not to poach. Then again, I’m told Jim Wiatt said at a WMA staff meeting on March 11 that a merger deal wasn’t happening right away and the 10-percentery should stay focused on its clients.

After another particularly ugly meeting took place recently between the two agencies, a depressed Emanuel started using the phrase, “We all need a bigger boat.”

Repeated battles also have broken out over what to call the new agency. WMA is fighting tooth and nail to keep its name on top, citing its long-standing brand. Endeavor is arguing that brand is a moldy oldie. “Morris is trying to hold onto anything to keep their respect and pride,” one source tells me.

There’s no question Endeavor is in the driver’s seat with regard to this deal. Says an insider, “If they decide to walk away, they know William Morris is going to chase them and acquiesce to some of the areas that are in conflict because Morris wants it so badly.”

I’ll let you know as soon as anyone knows the next move.