What I’m Hearing… About CAA & the D.O.J., Zucker-mania, and Sarah Palin

Welcome back to What I’m Hearing...

Good evening, and a big welcome to new Puck author Eriq Gardner. As I’ve mentioned, Eriq covers how the law impacts media and entertainment. He’ll be contributing occasionally to What I’m Hearing at first, before we launch his own thing, and today I’ve excerpted (at the bottom) part of his piece about the First Amendment implications of Sarah Palin’s trial against the New York Times. Welcome, Eriq!

But first, on to the story of the week, and then my own reporting on one of the most talked-about deals in town…

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Thursday Thoughts (Jeff Zucker Edition)...

My Puck colleague Dylan Byers has been all over the surprise resignation of CNN president Jeff Zucker, including publishing a pretty extraordinary transcript of the shiny new asshole that WarnerMedia C.E.O. Jason Kilar was ripped last night by angry CNN staffers. Dylan’s latest piece tonight will tell you everything we know, including the fact that the investigation by the Cravath law firm is complete. But I’m also focused on what we don’t know, which is a lot. Here are my top five questions.

First, is this it? Zucker said he stepped down because he failed to disclose his new-ish romantic relationship with communications chief Allison Gollust. But many people—including lawyers for Chris Cuomo, whose CNN firing sparked the investigation that led to Zucker’s downfall—believe there may be more to the story. Team Cuomo recently sent CNN a litigation hold letter, demanding that they preserve any communications between Zucker, Gollust and Gollust’s former boss, New York Governor Andrew Cuomo. Letters like that are often fishing expeditions, but Chris’ team believes Zucker may have also been cozying up to Andrew, including when he faced harassment claims—the exact reason Chris was fired in the first place.
Everyone in the media, myself included, seems to think they knew Zucker and Gollust were a couple looooong before their relationship “changed” during Covid, as they say. But what did we actually know? Not a single person has come forward to say they witnessed kissing or something obvious like that. I once co-hosted a Sundance party with Zucker. Gollust was there in our VIP booth, they seemed cozy, and they left late together. I definitely gossiped about it afterward, but…what did that prove? Maybe they were just work spouses. Either way: we don’t know.
What was Kilar’s motivation here? He and Zucker were never pals, and Zucker went nuts and threatened to quit when Kilar changed the reporting structure to take Gollust and other functions away from him. Kilar wouldn’t say last night whether the investigators told him to fire Zucker, so maybe he took the opportunity to sack an enemy before the whole company was taken away from him?
Who will incoming Warner Bros. Discovery C.E.O. David Zaslav pick to run CNN when the spinoff from AT&T closes in the next few months? Zaslav was given a heads up before the Zucker news became public, but he wasn’t involved in the decision to fire his golfing buddy. However, that doesn’t mean Zaz would bring his friend back. (“That’s silly,” one person in the Discovery inner circle told me.) In fact, given CNN’s current ratings troubles and an expected change in editorial direction under Discovery, perhaps Kilar did Zaslav a favor in cleaning the slate.
And finally, who decided it was a good idea to put Kilar in front of multiple firing squads of CNN journalists right after he terminated their beloved boss? (Answer: I’m told it was Kilar’s own brilliant idea.)

When the Antitrust Police Poke Around Hollywood Agencies

CAA, ICM, and the inside conversation about whether the Feds will crack down on Bryan Lourd and Chris Silbermann's starry merger.

MATT BELLONI

Last time I was at the ICM Partners headquarters, a few years ago, for a very nice book party for Sherry Lansing, I remember being struck by the odd space it occupied, both physically and metaphorically. ICM was once arguably Hollywood’s most powerful talent agency, but it had long been outgunned by rivals CAA, WME, and UTA in size, revenue and glamourous clients—the accepted units of penis measurement with which agents typically judge each other.

By 2012, ICM was in pretty bad shape, saved only via a buyout led by C.E.O. Chris Silbermann. He pared it down, relaunched it as a “partnership,” and ran it as essentially a large boutique, with a few marquee creators (Shonda Rhimes, Bill Lawrence), a solid books department (Ta-Nehisi Coates, Walter Isaacson), and a couple legitimate stars (Samuel L. Jackson, Ellen Degeneres) to talk about in signing meetings. A good business, for sure, and starrier than the dozens of smaller agencies that pepper the peripheries of Hollywood, but hardly the power center its legacy might suggest.

Yet ICM still clung to that old image as one of the “big four” agencies, like your Cornell friend who constantly references his “Ivy League” education. Around town, Silbermann and his crew positioned ICM as competitive with the majors; they bought multi-page trade ads, even though ICM sometimes had to repeat client names to fill the space; they slapped “ICM PARTNERS” on a large Century City tower a block from CAA, despite renting only a small fraction of the building; and they commissioned a beautifully designed office suite with an art-filled, two story lobby, where parties like that Sherry Lansing event could be thrown—a showcase space, I remember thinking, just like at the other top agencies.

But these days, ironically, Silbermann and those same ICM leaders who insisted on the “Big 4” fiction are pushing the exact opposite narrative. They’re trying to downplay the agency’s size and minimize its influence, portraying a merger of the second and fourth largest talent shops as small potatoes, a minor transaction, nothing to be concerned about. All to convince the federal government to bless its planned sale to the much larger CAA. Agents, man.

It’s now been four months since the planned all-stock transaction was announced, and the U.S. Department of Justice is still reviewing it. What’s actually going on here? And is there a chance in development hell that the Biden administration and its newly emboldened antitrust enforcers would intervene to block the sale of a 500-ish employee Hollywood talent agency? After all, there are plenty of much larger media deals on the docket: Discovery taking AT&T’s WarnerMedia assets for $43 billion; Microsoft buying Activision for $69 billion; Amazon gobbling up MGM for $8.5 billion. Talent agencies—even the big ones—just aren’t the movers and shakers they once were, relatively speaking, compared to the nearly trillion-dollar tech companies (Apple, Amazon) and media behemoths (Disney, Netflix) that agents are negotiating against these days.

Still, representatives from the major talent guilds, as well as rival agencies like UTA and Gersh, have all been interviewed by D.O.J. attorney Deborah Roy and the others charged with investigating whether the CAA-ICM combination violates antitrust law. (WME declined to participate, I’m told). This transaction was supposed to be a fait accompli. Now it could possibly drag on for close to a year.

I’ve spoken to several people who have been quizzed by the Feds, and the sense I get is that this review isn’t just lip service. The investigators are asking probing (if somewhat uninformed) questions, trying to figure out both the larger media business landscape and the true impact of this deal, if any, on agencies big and small, their clients, and other areas of the talent representation business. The I.P.O. of WME parent company, Endeavor, and the majority ownership of CAA by TPG, the private equity firm, have come up, as has ICM’s role as a “gatekeeper” agency, where talent can still be discovered and developed—a function mostly ignored by its larger rivals. (Disclosure: TPG is an investor in Puck.) Antitrust cases typically hinge on the definition of the “market” and how that market is impacted by consolidation. Here, in short, the D.O.J. seems to be focused on whether the market for talented people to find and keep a good agent will be harmed by this deal.

I know, those of us inside Hollywood have mostly scoffed at this scrutiny. Really? ICM? Given the size of real tech and media companies these days, it’s a version of the old “Who invited APA?” line from Entourage. Sure, a CAA-ICM team-up would lead to a major drop-off between the size and influence of the top 3 agencies and everyone else. It’s pretty obvious that CAA is only interested in ICM’s top clients, the book department, and some soccer-related synergies overseas. The combination will almost certainly result in dozens of agents and hundreds of support staff being let go, which could mean that actors, writers, and directors at the beginning and end of their careers will suddenly find themselves agent-less. Fewer choices, worse terms, etc. The D.O.J. has asked specifically about job losses.

But the other smaller agencies—APA, Verve, Paradigm, etc.—are already starting to pick up those displaced agents. And the representation community isn’t just agents, of course. Let’s not forget the recent explosion of talent management companies, which, according to one person who spoke to the D.O.J., didn’t seem to be on their radar at first. New management firms keep popping up, with fresh players like the Steve Cohen-backed Range Media Partners, Phil Sun’s m88, and Theresa Kang-Lowe’s Blue Marble, all spun out of the major agencies. Managers aren’t licensed and regulated by the state, and that’s an important distinction from agents, but the notion that truly talented people won’t be able to find anyone to represent them seems laughable.

Certainly, Silbermann and CAA’s Bryan Lourd are telling people they’re confident there’s nothing to be worried about. The two had lunch recently–that’s allowed; they’re friends and grew closer during the recent losing battle with the Writers Guild over packaging fees, the end of which likely contributed to Silbermann’s realization that he should sell. And Silbermann is expected to join CAA’s ownership board when the deal closes, which could now be as late as this summer. (CAA and ICM both declined to comment, citing the pending review.)

Still… did you see those comments by Jonathan Kanter to the New York Bar Association last month? Biden’s assistant attorney general for the antitrust division, echoing the rhetoric of Lina Khan, his counterpart at the F.T.C., laid out a much more hostile stance toward M&A, with a focus on “market realities” rather than just the letter of the law. “We and our law enforcement partners are committed to using every tool available to promote competition,” Kanter warned. Big Tech is said to be the target, of course, but it’s still scary stuff if you’re Lourd or Silbermann. This administration has a mandate, and what better way to generate headlines than to halt the merger of Brad Pitt and Ellen?

Does it matter if just three agencies represent nearly all the big stars in film, TV, music, books, touring entertainment and more? Big picture, probably not. But the D.O.J. seems concerned about actors being able to find a quality agent, not just anyone, and the ability to make a fair deal with that agency. SAG-AFTRA, for instance, has about 160,000 members, only a fraction of which would be repped by the Big 3. Even with about 350 talent agencies franchised with that guild, actors already don’t think there is enough representation.

On the other hand, the guilds aren’t necessarily opposed to scale. Would Lourd have dared to sue Disney in July on behalf of Scarlett Johansson if CAA didn’t also represent Chris Evans, Chris Hemsworth, a bunch of other Avengers, and a sizeable chunk of the studio’s stars? Disney ain’t blacklisting CAA. The clients know this and like it. Some stars do stay with their smaller agency. I remember back when Kathryn Heigl was a big deal. She remained at Paradigm, it seemed, because she enjoyed being the largest fish in that pond, and she and her mother were able to treat her agent at the time, Norm Aladjem, like shit.

But most in-demand talents—either for reasons of business or vanity—end up recognizing the value of the larger agencies for access to material, collaborators and, yes, scale in negotiations. That doesn’t always play out as planned, of course. Remember when WME client Michelle Williams was asked to do reshoots for nothing on the ironically titled All the Money in the World when her co-star, Mark Wahlberg, also a WME client, got $1.5 million? Yeah… Williams later left WME for CAA and Wahlberg was forced to donate that fee to Time’s Up. But that’s the exception. Lourd and Silbermann can’t actually say this to the D.O.J., but they want to achieve a certain size because it helps them to be better at their jobs.

So despite Kanter’s rhetoric, few believe the D.O.J. will actually sue to stop the CAA deal. But it’s possible it will ask for concessions. Stuff like guaranteeing the merged agency will employ as many agents as before (i.e.; no mass firing on day one), or agreeing not to use the new size and leverage to enter specific new businesses. Lourd, Richard Lovett and Kevin Huvane have been telling people, including me when I interviewed Lourd last summer, that this deal reflects CAA’s clear focus on talent representation as a business. Not production finance, or sports ownership, or God knows what else Ari Emanuel is buying this week. Lourd and Co. are likely doing this deal to A) leap-frog WME as the largest agency, and B) demonstrate a growth narrative for a possible I.P.O. If that’s the case, the combined CAA-ICM entity will be under pressure to diversify into other businesses, just like Endeavor did before it went public. Talent representation may not cut it.

That’s always been the blessing and curse of CAA’s management. TPG bought in thinking it could turn the top talent agency into a hybrid of Goldman Sachs and Liberty Media, with a strong representation and finance business, plus stakes in other companies, wholly owned businesses, etc. But it turned out the CAA guys really liked being agents and are great at it, for better and worse. And TPG is making plenty of money. It has had several chances to divest, and it has chosen to stay in CAA.

Meanwhile, ICM is stuck in a terrible purgatory. People are nervous, some have jumped ship, others are trying to leave, and neither Silbermann nor Lourd is allowed to make official job offers until the damned D.O.J. blesses the deal. There’s a small list of high-priority ICM agents that CAA will keep—it’s pointless to name names here because so many variables are in play; don’t believe those lists you see floating around—but it’s safe to say most will be let go, and insiders are already taking bets on how long Silbermann, who owns a big chunk of ICM, will stick around once his bank account swells from the transaction and he catches a whiff of the cutthroat CAA culture.

But that’s business—and relatively small business, all things considered. Let’s just hope the Feds aren’t star-fuckers.

Now, on to Eriq’s first Puck piece…

The Hockey Mom vs. The Gray Lady

It’s a strong possibility that Sarah Palin’s embarrassment makes First Amendment history, but not for the reasons you think.

By Eriq Gardner

Today, at a federal courthouse in downtown Manhattan, in one of those Brutalist buildings made famous by Law & Order, Sarah Palin finally stepped into court to prove to a jury that The New York Times defamed her with an editorial that partially, and nevertheless incorrectly, blamed her for inciting a 2011 shooting that injured a member of Congress. The showdown, as the advance hype goes, may achieve a MAGA dream: Making it easier to sue over Fake News...

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