It’s been a wild year at the talent agencies, with CAA and ICM Partners merging, WME installing new leaders, and UTA selling a big chunk to a Swedish private equity firm. All while the ground shook under the talent community as the streamers that have fueled the Hollywood economy re-assessed their spending amid a market turn. UTA C.E.O. Jeremy Zimmer jumped on a Zoom with me Thursday to break it all down. This interview has been edited for length and clarity. 

Matt Belloni: UTA represents Ellen Rapoport, the creator of Minx. HBO Max renewed the show and then this past week un-renewed it amid all the Warner Bros. Discovery cost-cutting, even though it’s almost finished shooting its second season. As the head of her agency, how do you respond to that? 

Jeremy Zimmer: You respond by saying this kind of action creates a level of distrust within the creative and representation community. Having these relationships, building a brand, connecting to an audience—all of the things that go into the decision of making a show seem to be thrown out the window for the expediency of a tax write-off, and that’s really unfortunate. It takes years to build the trust of artists, the brand of Warner Bros., and it doesn’t take long to destroy that. 

So you think the Warner brands are being destroyed? 

I don’t want to say they’re being destroyed, but decisions like this certainly put people on edge. If I have [a project] that is very desired, what’s the place that is going to stay in love until there’s absolutely no reason to be? In moments of consolidation and chaos, it becomes difficult to have a full-on “Oh, we can’t do business with them” [conversation] because that’s not fair to a bunch of other clients that may be excited to sell their show to HBO or Warner Bros. 

We’ve had a booming environment for the past 10 years or so. Now we’ve seen the complete market rejection of the streaming model over the last 8 to 10 months. How has that trickled down to your world? Ari Emanuel says “we haven’t seen it,” but that’s bullshit, right? What do you see for talent right now and how these companies are pulling back? 

The revenue for now has remained pretty strong, but the cost basis of running businesses has skyrocketed, so profitability becomes much harder to achieve. And Netflix looks like a genius when its stock was at $700, and it looks like an idiot when it’s at $250. 

But are the streamers buying less? It certainly appears that way.  

The streamers are definitely slowing down, evaluating what they have, what they need, what they want. It doesn’t yet seem like a systemic slowdown because there’s a very aggressive market for the best stuff. What I imagine will occur is the second tier—where Netflix would need everything, they’re being much more discriminating, it seems. I think you’ll see more of that across the board. 

Who’s the “A” buyer right now? 

Right now, Apple seems very aggressive, and Amazon remains very aggressive about the A-List projects, the things that seem undeniable. Hulu is a place that our clients love to work, they’re in the mix as well. But so much of it is relationships. For people who have a relationship with HBO and the specific way they do things, how they market their shows so incredibly, it’s never as routine as “this one, not that one.” 

Let’s talk about backends. You’ve been critical recently of the Netflix model of paying premiums up front in exchange for no backends. But you and the other agencies enabled this model by putting your clients into these situations. Why the change of heart, or is it one? 

I’ve been saying for a couple years that the destruction of backend is something we all have to be worried about. I believe backends are better for the participants and also for the streamers to have more of an alignment with artists—to not have to pay so much up front, to have artists and buyers aligned on how we manage costs more effectively. 

Backends are just an incentive alignment, which makes sense. 

And Netflix changed the rules. The bargain was: Come to us, you get an order for a full season, you’re gonna live in this perfect ecosystem, not worry about reviews or ratings, we’re gonna market the show through the algorithm to the people who are most likely to watch your show, and there’s not gonna be commercials that interrupt the creative flow. 

And now they’ve changed the rules. They will have ad breaks, they’re getting additional revenue from outside the original bargain, and it’s only a matter of time before all the streamers start selling not just the shows they don’t want, like Warner Bros. Discovery [which has taken dozens of shows off HBO Max to put elsewhere], but also the shows that are most successful, because there will be a revenue model that will be very successful. 

And because they own your clients’ shows, they sometimes don’t have to pay the talent anything to do that. 

Exactly. The bargain has been changed. So not only are backends an alignment of incentives, it’s also a fair reimagining of the bargain. 

Your writer clients are very upset and are threatening to strike in May. But you and the other talent agencies are just coming off your own battle with the Writers Guild over packaging fees and ownership. Where does that put the agencies in this battle? 

We went through our issue with the writers. I don’t believe it was the right fight at the right time, but I do understand this fight. For a solid, working writer, the economics of the business, as it currently stands, is not commensurate with what their value would be and should be. Whether this is the right way to do it… the damage of a strike and whether the damages will actually be recovered as a result of the strike? I don’t know. Is the damage you do going to be worth the victory you have? That’s the concern I have, and sometimes that seems to get lost. 

Do you think the damage to the writers in the 2007-08 strike was worth it? 

I definitely don’t. Studios really re-thought a lot of their relationships, they canceled a lot of overall deals. They said “Oh, we have all this I.P., let’s just lean on I.P., remakes, sequels, let’s lean on unscripted television.” Opportunities disappeared and many of them haven’t come back. 

But if the writers just let this go and focus on higher minimums and increases in residuals and better benefits, the things they traditionally settle for, that doesn’t change the fundamental problems. The entire value proposition of professionally produced content has changed in the past decade. Yet the pay system is still stuck 15 or 20 years ago where you could be a writer on a show and make your annual living. 

It doesn’t pencil out for a lot of the writers. It pencils out for a few. There’s always been a pretty significant inequity [within the guild]. The problem is both sides become extremists. But in the midst of a crisis, can we sit down and be thoughtful about solutions as opposed to being focused on problems? 

UTA has had an active few years. You did a partnership with Klutch for sports, you brought in MediaLink for brands, Curtis Brown in the U.K., you got private equity money from EQT. But ultimately you’re in the service business—your assets go home at night. WME has bought a number of tangible assets like UFC, Bull Riding, etc. For UTA to continue growing, do you need to buy assets? 

For the right asset—something that is I.P.-grounded and potentially good for us and beneficial for our clients—of course we would. Honestly, when they bought UFC, I didn’t get it, I thought it was ridiculous, and I was wrong. They did something incredible, which has become an important basis for a lot of their businesses. It’s allowed them to build a tremendous sports and sports marketing business. I admire it. 

Do you think CAA buying ICM Partners this year was a smart acquisition? 

It was a super smart acquisition, it helped them profoundly in a couple areas where they really had a need: publishing and television. And CAA had not really done a transaction like this at scale and had to go through the complexities of merger and integration. If they do that successfully, it’ll be really good for them in terms of their ability to grow.

So that leads to the question: What are you looking to buy? You went after Paradigm. Gersh? APA? 

I’m certainly not gonna tell you. ICM was a great acquisition, we would have loved that. There aren’t a lot of other opportunities underneath that that make sense for us. We need to look outside that core area. 

It’s pretty clear that a recession is coming, if it’s not already here. How do you navigate that? 

Having been through a few rocky times, the first thing is that on the other side of rocky times is tremendous opportunity. You don’t allow the choppiness to freak you out and start making bad decisions. When there’s a lot of consolidation, a lot of valuable things get thrown out the window because people don’t have the time or attention to figure out how to make them work. And those things then reconstitute into growth-oriented entities. Our job is to be part of that reconstitution.