If there was one piece of major news from 2021 that could have ramifications for decades to come, it was the announcement of the planned merger of two of the ‘Big Four’ Hollywood talent agencies, ICM and CAA. We now hear that the planned merger will be back at least in the second quarter of 2021. Amid heightened scrutiny from the Justice Department. Brandon Blake, the entertainment lawyer at Blake & Wang P.A, unpacks the known facts for us.
This comes amid reports that “some outsiders” have been interviewed by the Ministry of Justice along with the top managers of both agencies. Apparently, this is all part of a wider attempt to understand the ramifications of the merger and the impact (no doubt resounding) it will have on the entertainment industry as a whole. With both agencies holding many A-list players, that can’t be understated.
Unveiled in September 2021, the merger was initially set to close at the year-end, so this setback will be of at least 6 months. Should it close, the landscape it leaves behind- with WME. The CAA/ICM merged entity, and UTA the remaining ‘Big Three’ alongside other key competitors- will look very different as we move forward.
The Department of Justice themselves have been slow to come forward with a statement on the matter or the reason for the delay, but it appears to be primarily driven by their antitrust division.
Needless to say, the close-mouthed stance leaves a lot of speculation around exactly what has triggered the deeper scrutiny. Currently, it’s theorized that concerns from one of the key Hollywood Unions, possibly SAG-AFTRA or the WGA, have been raised.
We certainly saw SAG-AFTRA speak out shortly after the announcement. Although it was a rather neutral statement reiterating that they would look out for the interests of their affected members and ensure that they would not be disadvantaged by the merger. To date, we have no official statement from them, either.
At the time the merger was announced, CAA co-chair Bryan Lourd was ‘very confident that the deal would be approved without question, going as far as to claim that the merger was ‘not a big deal compared to other announcements we’d seen in a tumultuous year. Clearly, the DOJ doesn’t quite agree. But for now We can’t know if it’s too serious, or simply slow procedure grinding along.
There can be little doubt that the DOJ antitrust division has had its work cut out for it after the spate of M&A announcements last year in the entertainment sector. Nor are they afraid to block sales where they have concerns, as we saw in a major book publisher merger that was declined last year.
For now, we can do little but wait and see what happens. With no one yet speaking on record on the matter. We can’t know where the concerns came from that piqued their antitrust interests. Nor whether there’s any real reason to believe it will do more than delay the merger. It will, however, be incredibly interesting to see how the matter develops further. We will, as always, keep you informed as matters progress.