Talent agents straining at the leash

LOS ANGELES, Jan. 22 (UPI) -- In a little discussed but potentially historic turn of events in Hollywood, talks are continuing between actors and talent agents on a new set of rules governing the ways in which agents may represent their clients -- and the outcome could fundamentally change the entertainment industry business model.

The basic agreement between the Screen Actors Guild and the Los Angeles-based Association of Talent Agents and the New York-based National Association of Talent Representatives expired Sunday, but SAG and the agency associations have agreed to keep negotiating terms of a new deal.

The 63-year-old agreement includes provisions intended to prevent conflicts of interest, by precluding agents from becoming producers and forbidding studio ownership of talent agencies with whom they negotiate for the services of actors, directors and other talent.

Agents have been trying to eliminate those restrictions, arguing that they are outmoded and unfair. The agents also argue that by being permitted to grow financially stronger, they'll be in a better position to help their clients prosper.

SAG issued a statement Monday indicating that it presented a "comprehensive set of proposals" to ATA/NATR on Jan. 16, and that representatives of the union and the agents' associations have had substantive discussions "every day since."

SAG said all of its proposals are premised on three principles -- that an artist is entitled to uncompromised representation, that agents must not become actors' employers, and that "any change to existing restrictions must benefit artists as well as agents."

If the union and the agents' associations do not come up with a new agreement to replace the expired deal, there is a possibility that talent agencies would be able to expand their business horizons by partnering with corporations or financial entities in ways that are prohibited under the existing compact.

Analysts anticipate that financial institutions such as American Express and Fidelity, advertising agencies and major corporations -- including Coca-Cola, McDonald's, PepsiCo and Procter & Gamble -- would enter into a competition to acquire the major Hollywood talent agencies, in a rush for pre-eminence in the new world of the entertainment industry.

Other suitors for the big Hollywood agencies -- Creative Artists Agency, Endeavor, International Creative Management, United Talent and William Morris -- would likely include high-tech firms Apple, Gateway and Microsoft.

The big five represent the most recognizable -- and most bankable -- names on Hollywood's A-list of actors, directors, producers and writers.

According to a report in the New York Post, the agencies are closely held companies run by small groups of partners with private stock distributed among a wider group of agents. Their respective values are not publicly known, but insiders told the paper that CAA is worth about $300 million and ICM about $250 million.

"Every major advertiser and every major corporation in America today is in the media business, whether they know it or not," said the head of one major agency who did not wish to be identified. "But if you look around the world at the cost of entry for the Viacoms, the Time Warners, the Sonys, it's in the $20 billion to $80 billion category. Agencies became a very cheap entry point."

The agencies are recognized as experts in the fields of branding, marketing and maintaining client relationships. Leading agencies have also developed expertise in financing and distribution of entertainment products.