No longer content to simply service talent, ten percenters are now aiming to compete with the studios: "This is really a play to become media content companies."
The agencies are tired of just serving the indie industry. These days, they want to own the store.
The ten percenters have always been a key part of the indie business, finding and grooming talent and putting together packages for sales companies — the FilmNations, Sierra/Affinities and Voltages of the world — to hawk to distributors in the corridors of the Loews at the American Film Market. But increasingly, the agencies are moving from the sidelines to center stage, becoming directly involved in the financing and sale of indie films, particularly the big-ticket items that drive the buzz and business at AFM.
The evolution, in part, has been one of necessity: As the studios have shifted toward making fewer, bigger tentpoles, it has become harder to get mainstream indie films made — and for the agencies to sell their packages. “To do their job, to get their clients’ films made, agencies have had to take a bigger stake to help bring together financing on these projects,” says Elissa Friedman, vp production and development for sales outfit Covert Media. "The agencies have definitely helped us to put together financing, or help find financing, for our titles."
The trend has been underway for a while now, but it was kicked up a notch this summer with Endeavor Content (the rebranded entity comprising WME Global and IMG’s fiim and scripted series finance and sales groups, WME-IMG) taking a majority stake in Ken Kao and Alex Walton’s Bloom, the first time an agency has owned a global sales outfit.
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Bloom has one of the hottest slates at AFM this year, with a lineup that includes the Hugh Jackman-starrer The Front Runner, Jake Scott’s The Burning Woman with Christina Hendricks andDestination Wedding, starring Keanu Reeves and Winona Ryder.
"It’s all about revenue," says one industry insider regarding the agencies’ strategy. "The agencies are not making enough money to sustain growth by just being service providers and collecting fees, they want to be the owners of their films, to be the distributors — essentially to sell their projects to themselves."
CAA is moving in a similar direction. Though it hasn’t yet become a direct investor in a sales group, it frequently is a co-financier on projects it brings to market and often handles the domestic sales side. UTA, for the moment at least, is mainly holding back and sticking to the traditional fee-based approach.
David Garrett of Mister Smith Entertainment sees this shift as a “natural step” by the agencies and says it “only helps our side of the business” if agents get more involved, leveraging their “in-depth understanding of the global marketplace and its players” to get projects made outside the studio system.
But others see an inherent conflict of interest in this model, since the agencies, with their insider access to talent, would be in a position as buyers to pick up the best new projects at below-market value. "If a talent agency bought a studio, it would never be allowed, it would be considered a violation of antitrust laws," says a veteran industry player, “but these sales outfits are essentially the same thing, they are financier/distributors, they just have a lower profile. They aren’t Paramount, so the agencies are getting away with it.”
The agencies also have been escalating their presence and engagement with the expanding China market. In June 2016, Endeavor partnered with Chinese tech giant Tencent to establish the Beijing-based joint venture WME-IMG China. CAA followed in April, pacting with venture capital firm CMC Capital Partners to establish CAA China.
"This is really a play by the agencies to become media content companies,” says one industry observer. “Endeavor doesn’t want to compete with FilmNation. That’s the short-term goal. The longer-term goal is to compete with Fox and Universal.”
Patrick Brzeski contributed to this report.
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