Talent Agencies Face Conflicts of Interest as Parent Companies Storm Into Production Arena!!!




Variety Talent Agencies Cover Story Illustration

By Cynthia Littleton

Steve Harvey was not happy.

The comedian and talk-show host was coming to the end of his five-season deal in 2016 on “The Steve Harvey Show,” the syndicated daytime TV series launched by NBCUniversal and Endemol Shine North America four years earlier.

In reviewing his renewal options, Harvey was annoyed to learn that Endemol Shine was taking an estimated 25%-30% of his show’s earnings, even though NBCUniversal Domestic TV was the lead producer, in his view. Then he got a compelling proposal from his representatives at WME/IMG, the powerhouse talent agency whose parent company, Endeavor, has been rapidly diversifying into content ownership and distribution.

He was offered the chance to partner with the growing IMG Original Content production unit and part ways with NBCUniversal and Endemol Shine as producers of his show. IMG guaranteed Harvey a larger ownership stake, lower overhead costs, more creative control and a big salary boost. It was an easy call for the host.

Inside NBC, there was disbelief bordering on outrage. Nobody foresaw IMG entering the picture, even as executives realized Harvey’s desire for change. There was shock that an affiliate of a talent agency would make such a play against NBCUniversal, a huge source of employment for WME clients. There was talk of lawsuits and questions about the legality of an agency producing a client’s series.

The notion that Hollywood’s two largest agencies — WME and CAA — are aggressively moving into production is fraught with the potential for conflicts of interest that arise when the same company represents the creative talent on one side of the table and is the employer on the other. The practice, known in industry jargon as double-dipping, was expressly banned by the Screen Actors Guild for nearly 60 years.

The level of conflicts can range from questions about how compensation and commission terms are set to how inevitable creative troubles will be handled. Then there’s the issue of which clients get offered the hottest properties — although that’s nothing new for agencies the size of WME and CAA.

“On every show and every movie, there’s always a problem where the producer has to call and yell at somebody’s agent,” says a veteran producer. “What are you going to do in this case — call and yell at yourself?”

Discussions around potential conflicts of interest are such a volatile, thorny issue for agents that the heads of major agencies declined to be interviewed for this story.

Industry insiders are keeping a close watch on the expansion from packagers to producers and how it impacts the fierce rivalry between the industry’s two superpowers. Moreover, tensions with studios and networks are sure to intensify in the cutthroat chase for talent, as the agencies move into the realm of production rivals. Of course, the push into production has ratcheted up the already bitter animus between WME and CAA.

“There is cause for some concern. You have to ask, ‘Who gets advantaged and which show gets hurt by this,’” says Daniel Green, head of the Heinz College entertainment industry management program at Carnegie Mellon University. “You have to wonder if the client is getting the best deal, or does now the company get the best deal?”

For more info on this story check out the Variety website!


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