It used to be well known in Hollywood: no one ever leaves CAA voluntarily. Why would they? There’s nowhere to go but down from from the biggest agency in town. But over the past three months, no fewer than five high-profile agents have left the Century City talent behemoth: three to Resolution, one to Paradigm and one to the Schiff Company.
Four of the agents who left CAA — Adam Kanter (pictured below), Martin Spencer, Rich Green and Bob Bookman — represent major writers and directors. The fifth, Dianne McGunigle, is a comedy agent who left for what individuals said was "a life change."
Also read: Reese Witherspoon, Husband Jim Toth Arrested After DUI Stop in Georgia
Kanter represented Doug Liman, director of "The Bourne Identity," the Farrelly brothers and "Entourage" creator Doug Ellin. Spencer represented "X-Men: First Class” writer Simon Kinberg and "Paranormal Activity" co-creator Oren Peli.
Musical chairs ensued. Kinberg remained at CAA while Peli promptly left for WME, abandoning both CAA and Spencer. Liman joined Kanter at Resolution for his film business, but left his TV business at CAA.
So what’s changed?
Multiple industry insiders from both inside and outside the agency world, all of whom requested anonymity, point to fallout from an outside investment in the agency. In 2010, CAA sold a 35 percent, non-controlling stake to private equity firm TPG Capital, a deal worth a reported $165 million to $245 million, as well as debt financing from Bank of America. The parties also committed to the creation of a $500 million pledge fund.
“It changed the culture significantly,” one individual with knowledge of internal CAA dynamics told TheWrap. “It became a tad impersonal in terms of how management interacted with rank-and-file agents."
While agents said they understood why CAA took the money, they chafed at the leadership's insistence that it wouldn't affect business. "They were pretending as if TPG was nowhere in sight when they were everywhere,” the individual said.
The TPG investment made CAA even more strict about money coming in and money going out, basing an agent's effectiveness on numbers above all else, according to these individuals. The outside money also increased pressure on leadership to make the place as lean as possible, a word almost everyone used to describe rival agencies but not CAA.
Also read: WME Sells 31 Percent Stake to Silver Lake Partners For 'Strategic Partnership'
CAA declined to comment for this story. But one highly-placed insider denied that the TPG investment had changed the agency's culture, and pointed to a recent company retreat that left the troops fully energized, with a string of 16 promotions.
This insider noted that Hollywood has as a whole has become extremely bottom-line oriented. Years ago, said this insider, no one needed to know what quarterly results were. "It never came up," he said.
Yet outside investment in the agency world is neither hidden nor unique to CAA. Silicon Valley private equity firm Silver Lake took a stake in WME last year, the same year ICM Partners bought out private equity firm Rizvi Traverse to become a partnership. Several agents have also left that shop since then, some of them, such as David Unger and Robert Lazar, joining their former boss at Resolution.
There is also generational change going on at CAA, say knowledgeable insiders. The agency has traditionally eased out underperforming agents or those who are unlikely to rise further by finding them positions elsewhere, but contraction in the industry has made this harder.
Also read: CAA Veteran Ken Stovitz Leaves Will Smith's Overbrook for Paradigm
Some of those insiders said that CAA expedited the departure of older agents like Bookman (above right) since they earned huge salaries and represented film writers and directors — an area of the agency less lucrative than in the past. Studios are making fewer movies, and those that do get made are often built around a brand rather than talent.
“For the last two-plus years, the powers that be at CAA made it very very clear to get the f— out,” one individual told TheWrap about the treament of such senior agents. They were not given raises or bonuses, a sign that their value to the agency had crested.
This latest string of departures mimics the flood of exits a year earlier, which began a year after the TPG investment. The departed included high-powered Dan Aloni, Shari Smiley, Rand Holston, Isabella Brewster and Jeff Speich. Between them, they boasted clients such as Christopher Nolan, "Air Force One" director Wolfgang Petersen and Antonio Banderas.
Aloni (left) brought most of his clients (including Nolan) over to WME while Holston took Petersen to Paradigm as the likes of Rob Reiner and "Fried Green Tomatoes" director Jon Avnet stayed at CAA. Some of those agents, including Smiley and Brewster, have joined Jeff Berg’s new agency, Resolution.
CAA still has what many in Hollywood dub a bloated middle – a large number of veteran agents with clients that are well-respected but don't bring in money commensurate to their rep's salary.
“A lot of the guys leaving are senior in some capacity – a little older or have been at CAA for awhile,” one rival agent told TheWrap. “They have pretty fat salaries, and while no one is saying there have to be cutbacks, they are not up and comers.”
Bookman represented directors Paul Greengrass and Cameron Crowe and writer Tom Stoppard while Green worked with authors like Jonathan Franzen ("The Corrections") and Matthew Quick ("Silver Linings Playbook"). Greengrass and Crowe remained at CAA while Stoppard joined Bookman at Paradigm.
While well-respected film directors were once the hallmark of a great agent, in today’s Hollywood they bring in a fraction of the cash that a TV showrunner does. TV packaging is where the real money is. "These are people who make really good money but don’t have the business to support [their salaries]," the rival agent told TheWrap.
CAA’s current leadership also took major payouts from the TPG deal, according to several sources, and while they have maintained they are signed to long-terms deals, the recent departures also speak to the matter of succession. Richard Lovett, Bryan Lourd, David O'Connor and Kevin Huvane have been running the agency for more than 15 years, leaving other agents pondering their future.
The current leadership made clear to the senior agents who have left that they were not in line to succeed the partners, paving the way for them to leave of their own volition.
“These are guys who read the writing on the wall: 'My career here is not going to be long-term,'" another rival agent said. "They are in their mid-40s, expendable and need to support their families. So they go some place that will overpay them."
Indeed, several individuals pegged Spencer’s new salary at $1.5 million and that of Steve Alexander, another former CAA agent at Resolution, at $1 million – large paydays for agents at any shop. Resolution declined to comment on their agents' salaries.
The real question is what these departures portend for CAA. No one suggests that CAA is struggling. But it does suggest an agency facing pressure from investors and embracing the need to slim down.
"You can't just use quarterly earnings reports to judge what someone is worth," one individual told TheWrap. "But it's healthier for the business when something as powerful as CAA is thinned a little and I'm not convinced — as good as these guys are — that it’s a blow to CAA."