Private equity is interested in the agency business, most likely because of their spin-off businesses in sports - is sports the new Hollywood model? - and less due to the changing value of talent in the media marketplace.
Via Deadline: Is this the beginning of the end of another Hollywood agency era? My sources tell me that, after months and months of negotiations with potential financial partners pursued by CAA, the agency has focused on KKR – Kohlberg Kravis Roberts & Co, the NYC-based private equity firm.
Via WSJ: The KKR investment would come at a tough time for Hollywood talent agencies, whose commissions have faltered. Plummeting DVD sales and the credit crunch have left studios cutting back on the number of shows and films they produce. This has limited work for actors and directors that agents represent, leading the agencies to explore new avenues of growth.
With studios and agencies equally torn on the economics of film, and the tightening of releases and more controls on the IP versus original production, the model potentially is shifting towards higher percentage deals in sports.
A KKR investment in CAA would pit the firm’s co-founder, Henry Kravis, against his old rival, Ted Forstmann. Mr. Forstmann, a veteran deal maker who helped pioneer the private-equity business, owns sports agency IMG Worldwide, which represents athletes and manages sporting and entertainment events. When Mr. Forstmann’s firm paid $725 million for IMG in 2004, it outbid KKR and Providence Equity Partners.
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