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Playing the Percentages

When Jim Wiatt jumped to the William Morris Agency after twenty years at ICM, the message was clear -- when the studios' profits dwindle, it's every agent for himself.

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The whole point of amassing power in Hollywood is to use it. An industry player stores it away over the years, like a miser hoarding gold, until he just can't contain himself any longer. Such is the claustrophobic state of the industry's top talent agents: Constrained by razor-thin profit margins and reduced production slates at the studios, agents today no longer have that Michael Ovitz-like ability to shake entertainment moguls from the tips of their hair plugs to the soles of their Pradas. Now, instead, they're shaking down the competition, cannibalizing their own ranks in the latest Hollywood blood sport.

"It's self-slaughter," says a former agency head. "The profit margins are going to shrink, and, what's worse, the agencies are going to have to eat it."

Despite the persistent and uncharacteristically generous importunings of International Creative Management chairman and CEO Jeff Berg, his affable No. 2, Jim Wiatt, took just a weekend to sever his two-decades-long connection to ICM. He jumped to the chief-executive's suite at the rival William Morris Agency with Eddie Murphy, Nora Ephron, and Lorne Michaels in tow (and, according to a Morris source, a guaranteed annual minimum of $5 million). While the studios may shuffle the decks as often as blackjack dealers at the Bellagio do, such high-level change at the top agencies is rare. For one thing, the cultures are incompatible (it's often joked that WMA is the Jewish family you want to escape, Creative Artists Agency the Corleone family you can't escape, and ICM the Addams Family you try to escape). For another, these guys really loathe one another. And they all have golden handcuffs in the form of company stock, investment plans, interest-free mortgages, etc.

Still, Wiatt, virtually invisible to the outside world, had not exactly been shy about his unhappiness at ICM. He lived in the perpetual shadow of the brainy, aloof "Ice" Berg, not to mention ICM's rainmaking media darlings like Nancy Josephson (whose clients include Bright/ Kauffman/Crane, the trio responsible for Friends, Jesse, and Veronica's Closet) and Ed Limato (who represents Mel Gibson, Winona Ryder, Michelle Pfeiffer, Denzel Washington, and Richard Gere, among others). After WMA tried to throw money at Limato three years ago, Berg -- already paying him a fortune -- ultimately named him co-president. But there are only so many titles, and dollars, to go around. And now it seems inevitable that the Wiatt move will touch off the biggest round of agency shifting (and, consequently, client poaching) since 1995, when Michael Ovitz, Ron Meyer, and Bill Haber cashed out of CAA, which they'd created, and handed it whole to the hyperambitious Young Turks.

Some of the issues as the agencies slouch toward 2000: Manhattan-based agent Elaine Goldsmith-Thomas -- whose clients include $20 million gal Julia Roberts, along with Tim Robbins, Susan Sarandon, and the red-hot Jennifer Lopez -- is, as Wall Street would say, in play. According to sources at the agency, she won an extension on her ICM contract, which was up in June. Where will she alight? She's as close to CAA's Kevin Huvane as she is to Berg, but Endeavor and United Talent would also kill to have her. Meanwhile, Hollywood presumes that David Wirtschafter will follow Wiatt to William Morris when his contract is up at the end of the year. (But ICM is already moving Heaven, earth, and nameplates to keep him.) And can CAA hang on to Patrick Whitesell and clients Matt Damon and Ben Affleck without expanding its partnership ranks? Will ICM's George Freeman shoot for the moon when his contract expires, now that Catherine Zeta-Jones is a major star and Russell Crowe may get nominated for an Academy Award?

The latest upheaval comes at a time, unlike ten or even five years ago, when the agencies can least afford it. As privately held companies, they don't have to disclose their financials, but they're all hurting, as evidenced by the not-so-quiet downsizing taking place throughout the business. ICM, in the aftermath of a brutal leveraged buyout, loudly slashed its agency roster last December after Berg confided to pals that "there were times I didn't know how I was going to make the payroll." (ICM insists it will finally return to profitability next year.) CAA, on the other hand, has been shrinking more subtly. A number of its agents have been prodded to find work elsewhere in the industry, as managers, producers, and consultants, among other non-agenting jobs.

Not so long ago, when the agencies faced rocketing overhead (all those fancy buildings along Wilshire Boulevard, with their butterscotch marble, private screening rooms, waterfall fountains, and Pace Gallery art), they just passed along the extra cost of doing business to the studios. But what goes around comes around. Today, with networks paying lower license fees and pushing for more and more in-house production, agencies have had to cut commissions on their once-fat TV packages. Ditto their movie packages: Once green-lighted by new studio executives scrambling to buy themselves time before their own slate of films made it to the big screen, the majority of those films turned out to be expensive box-office bombs. Moreover, out-of-control above-the-line and marketing costs have prompted the studios to trim their production schedules by a third, which translates to fewer paychecks from which agents shave their 10 percent commissions.

Such changes make for major Maalox moments in Hollywood, where show business in general is already seen as too chaotic. There was something comforting in the knowledge that star prices may rise and fall and studio executives may come and go, but agents were forever. Sam Cohn and Martha Luttrell at ICM, Rick Nicita and Fred Specktor at CAA, Lenny Hirshan and Fred Westheimer at WMA have all been around for twenty-plus years, and they'll probably only leave their offices feet first. Top agents can boast more seniority in their jobs than almost any of the studio heads on the other side of the negotiating table. (Today, CAA's Bryan Lourd, modeling himself after Ovitz and ignoring the obvious conflict of interest, moonlights brokering new jobs for moguls.)

Yes, agents still wear Armani (although the Generation Xers are partial to Hugo Boss). Yes, they still drive BMWs (souped-up SUVs run a close second). Yes, they still sport headsets (while compulsively e-mailing). Yet beneath these superficialities, a profound transformation has occurred. Where once CAA had a stranglehold on the industry, no single agency is that dominant anymore.


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