Hello and happy July 4th weekend from L.A.! If you’d like to celebrate America by gifting a Puck membership to your favorite patriot, click here. You’ll be sharing what so many of the C.E.O.s of the Fortune 100 are reading.

Reminder: I’m doing a mailbag issue on Monday (not Sunday) and there’s still time to submit a question. Thanks to the dozens of ideas I’ve already received. You can submit yours by replying to this email.

Let’s get started…

–It’s not actually a three year extension. It’s an entirely new deal, replacing his initial three year contract, which would have ended in February. So it’s essentially a 2.5 year extension.

–Notice how board chair Susan Arnold’s statement begins: “Disney was dealt a tough hand by the pandemic…” Very true, and yet it serves as a qualifier, of sorts, to the “full confidence” line. The Disney stock is in the toilet and the P.R. bungles are many, but Chapek’s tenure as C.E.O. has been during a “tough” time, so now he’s getting a chance to prove himself by more normal standards.

–Two words for anyone thinking a rich new 3-year deal means job security: Peter Rice.

–And, of course, Bob Iger peed on Chapek’s parade: I’m told it was just a coincidence that Random House picked the same day to announce that Iger’s second book, about “leading in times of crisis and disruption,” will arrive in 2024—just before Chapek’s new deal expires in 2025.

–Box office over-under: Minions: The Rise of Gru tracking is a surprisingly low $75 million, considering the last Minions opened to $115 million over the four-day holiday in 2015. So I’ll take the over for the long weekend. My kid already has reserved tickets.

–Programming note: I had producer Jason Blum on my podcast, The Town, yesterday. He made some fascinating comments about the connection between the streaming financial model and the quality of movies (among other things). Check it out on Spotify or elsewhere, and I might run a rebuttal in a future episode.

It’s happening. At the Allen & Co. mogul retreat next week in Sun Valley, the CAA contingent will be perhaps the most intriguing executive pair strolling that traditional resort-casual perp walk past the gawking media. Lourd, who now runs Hollywood’s largest talent agency (with Richard Lovett and Kevin Huvane), is set to attend with his longtime rival and new colleague Silbermann, whose $750 million deal to sell ICM Partners to CAA finally closed on Tuesday. Let’s hope they can find matching half-zips.

At this point—after nine months of waiting for the U.S. government to fumble through its review, ask tons of uninformed questions, and finally bless what is, in the grand scheme of corporate America, a pretty unremarkable transaction—it’s not worth rehashing the economic and personality forces that led CAA to inhale its lesser rival and burp out 105 unemployed staffers.

The entire entertainment industry is consolidating. The Writers Guild cut off a key source of revenue. Endeavor C.E.O. Ari Emanuel took the private equity firm Silver Lake’s money and used it to leapfrog his nemesis in both size and scope, adding everything from a gambling platform to art fairs to the UFC. CAA took the private equity firm TPG’s money and used it to… not do that. (Disclosure: TPG is an investor in Puck.) Then Ari accomplished what the CAA guys kept telling the town was either improbable or imprudent, taking the whole cobbled-together Franken-company public.

All of a sudden, CAA looked like a second-banana. So its messaging changed. Rather than going vertical like Ari, the CAA guys would double-down on being, you know, agents. “We’re in the representation business. We believe in artists, we believe in athletes, we believe in getting them paid well. That’s our business,” Lourd told me.

Mission accomplished, though it’s questionable whether CAA is ultimately a more alluring potential I.P.O. with the ICM assets, if that’s the route it ultimately takes. Bigger and more diversified? Sure. That soccer division alone may end up worth the $750 million price of the entire deal. But CAA is still mostly a talent agency whose core assets drive their Porsche E.V.s home at night. Most investors think of Endeavor as a mixed martial arts company with some other stuff attached. That’s not CAA, and its reported $5 billion value is still a little more than half the $9 billion or so market cap of Endeavor these days, even after its recent stock dip.

Plus, as I wrote last fall, ICM, despite its rich legacy, was a wounded animal. Silbermann had admirably rescued it from Jeff Berg and maintained for a decade the fiction of the “Big 4” agencies when in reality it was CAA, WME, UTA, and then everyone else. But coming out of the pandemic, the future of the mid-tier talent shop was looking increasingly bleak, at least as a growth engine. It’s fitting that the new Writers Guild rules forbidding TV packaging fees go into effect today. Those edicts, banning agencies from taking a piece of the license fee for shows they “package” with talent, in lieu of commissioning clients on those shows, will likely act as a long-term revenue tourniquet for the agencies, and they are a major reason why Silbermann was so open to selling. The writers, it seems, essentially drove an agency out of the business.

I know a lot of ICM people are pissed at Chris. They think he sold them out to enrich himself when ICM was chugging along just fine—and, indeed, I’m told Silberman will reap nine figures of CAA equity in the deal. Then he failed to protect his people when CAA either fired them this week, nudged them out over the past few months, or are squeezing them at the new company. Most transitioning agents are being offered less money, shorter deals, and bonuses contingent on CAA’s standard of success, not ICM’s. (Come bonus time, say agents, the CAA leaders are great at saying things like, This year was tough, but next year you’ll get what you want, so just imagine how they will handle all the ICM people.)

And once CAA gets its hands on marquee clients like Shonda Rhimes, Ellen DeGeneres, and Samuel L. Jackson, who knows what will happen. If I’m an ICM agent, I definitely want to take advantage of the better information and leverage at my new company, but why would I let a CAA colleague develop a relationship with my star client? That’s an Economy Plus ticket to irrelevance, and it’s why service businesses are notoriously difficult to merge. Hollywood service businesses—with all the egos, anxieties, and obsessions with status and appearances—might be the most difficult. Different situation, but just ask Jim Wiatt and his old William Morris team.

It’s not just the ICM people who are apprehensive. Beyond the CAA leadership, and their visions of scale and margins, I’ve picked up some mixed feelings internally about the deal. If you think about it, outside of sports and books, what did CAA actually want from ICM? Probably 20 clients and 10 agents? Along with that came thousands of new clients, 425 new employees, and a big task in assimilating them all. Retreats, mixers, and plans for collaboration can only do so much. I’d bet on a massive herd-trimming in the next year. CAA is very good at quietly exiting people that don’t perform. It’s not show friends, yadda yadda.

1. The Barbell Effect

When a disruption in any business causes players to adapt, they will often expand or consolidate at the extreme ends. Everyone else in the middle either contracts or goes away. The Big 3 agencies are now on one side of the barbell; getting bigger, busier, more sophisticated, more focused on growth, and less tolerant of talented clients that don’t deliver. At the same time, the small agencies, the ones breaking new voices and hoping to hit paydirt before those voices are poached, are taking many of those abandoned clients (and agents).

This has been happening since Vaudeville, of course, but the middle is disappearing fast. Signing with ICM used to be like sending your kid to the great public school in your neighborhood. It wasn’t elite, and you probably wouldn’t name-drop the place in mixed company. But it was fine, totally normal, often scrappier, home to some amazing people, and, importantly, a super-high performer could credibly be there without embarrassment.

Now, with exceptions, it’s increasingly tough to see one of ICM’s big names—Vince Gilligan, Spike Lee, Chris Rock—staying with an APA or a Gersh if the big shops come calling. Which furthers the barbell effect, of course.

2. The Manager Conundrum

This question comes up all the time at lunch and drinks: Are there too many talent managers? That’s a more urgent question now as all these ICM agents look for jobs, and many are—shocker—considering management. (If you don’t know the difference between an agent and a manager, you need to re-watch Entourage.)

Already, over the past few years, there’s been a boom in management-production start-ups: Range Media, backed by hedge fund impressario and Mets owner Steve Cohen; Michael Sugar’s Sugar23, Phil Sun and Charles King’s M88; Julie Darmody’s Rise Management; David Stone and Ben Jacobson’s Framework Collective, just to name a few. Plus all the individual outfits.

It’s easy to see why. The cutthroat and hierarchical agencies can be tough places to work, with individual agents servicing dozens of clients. And with so much financial pressure, agents often focus on the biggest-ticket talent, or the most pressing deals. So managers can step in to actually service their fewer clients. They’re now often the primary mover in the discovery business, the staffing business, and the surprisingly robust business of getting an agency to actually pay attention to its own client.

Here’s an example: Back in the day, a film writer might have a diligent agent who would call on the dozens of open studio writing assignments. Now, the studios have a few OWAs a year. Instead, they rely mostly on spec scripts and pre-branded I.P. that they assign to a small number of established mega-writers that can command $3 million to $5 million per project. The motion picture lit agents thus focus on those top performers, or ignore writers entirely and handle directors, who can make $5 million, $8 million, $12 million per studio film at the upper level. Hence: Fewer Big 3 agents who care about film writers, and more opportunities for managers to step in.

On the TV side, add the increased discovery opportunities of hundreds of scripted series and the end of packaging fees into the mix. Agents used to hunt packages like wild game. The agency made its money representing writers or directors or stars that could generate a package, the clients were happy to not pay the commission (unless the show became huge and the agency ended up making more money), and other agency talent could often be slipped into the show. Those package fees also helped to offset the cost of the young agents who covered the studios, kinda like a research arm of an investment bank.

Now, without package fees, a midlevel writer who once felt like a potential package to a place like CAA—a gold mine waiting for the right strike, and worth hustling for—is now just a mid-level staffer. She’s potentially worthwhile, still, but less so in the eyes of Big 3 agents culling their lists and deciding who to call back today. This is not the result that the W.G.A. wanted when it went after packaging, but it’s the reality of the business now.

3. I Really Want to Produce

Of course, a major allure of management is that managers, unlike agents, can produce with their clients. And while that practice is often the subject of jokes and derision, thanks to managers who simply attach themselves as producers to anything their clients do, it’s a big factor in the growth of the profession in the past two decades. (Disclosure: My wife is a manager, and yes, she has produced with clients.)

But it’s actually not that simple. Management companies that produce successfully at scale are actually pretty rare and good at what they do. Entertainment 360, Anonymous Content, 3Arts; there are more, but not that many. I asked Darin Friedman, a partner at Entertainment 360 (they’re producing the upcoming Ripley at Showtime and The Fall Guy movie with Ryan Gosling), what he thought of the recent influx of management-production companies. “The institution of management has never been stronger,” he told me. “But producing isn’t easy to just jump into. It comes with legacy and experience and the ability to originate high value I.P.”

Exactly. So all these newbies and ICM people who think they’ll just flip the manager-producer switch might be surprised that the room doesn’t immediately light up. And that’s probably good for the overall Hollywood economy. Anyone can be a producer, but very few can do it successfully.

It used to be surprising to me how many agents I talked to who were thinking about getting out of that business. Like many things in Hollywood, it seemed glamorous, and where else in white collar America can you start in the mail room and reliably end up in a position of power and influence by 35? But it’s still a service business. Someone else’s problems are your problems, always. And for most, it’s tough knowing that you will never be an owner, you’ll always have to prove your value, and you’re fragile unless you have a book of business that matters today. Bryan Lourd, for all his immense power, is still negotiating hair and makeup perks.

That’s never been more true in the agency business than it is today, where the ends of the barbell are under incredible pressure, and the middle is, like ICM, just going away.

Got a question, comment, complaint, or the keys to your Malibu place this weekend? Email me at Matt@puck.news or call/text me at 310-804-3198.