We've Got Hollywood Covered
|

WGA Renews Attacks on Endeavor IPO in Warning to Potential Investors

Writers Guild criticizes corporate structure that “favors company insiders” and includes an all-male board of directors

The Writers Guild of America has renewed its attack on Endeavor’s attempts at an initial public offering, publishing a new “warning” to potential investors on Thursday as to why they should not invest in the parent company of William Morris Endeavor, one of the agencies the guild is suing over packaging fees and conflict of interest claims.

In the statement, the WGA accuses Endeavor of setting up a corporate structure that would curtail public investors ability to oversee the company and would put a great deal of control in the hands of “company insiders” like CEO Ari Emanuel.

“Endeavor’s dual-class stock structure gives CEO Ariel Emanuel, executive chairman Patrick Whitesell, and affiliates of private equity owner Silver Lake Partners control of most of the company’s non-traded Y shares, which carry 20 votes compared to the single-vote public Class A shares,” the guild said.

The guild also claimed that with such votes, larger investors could block public investors from approving the sale of Endeavor to a larger company, even if that led to a larger stock price. The WGA connected this possible conflict of interest to the ones it has claimed in its lawsuits against Hollywood’s top agencies when it comes to packaging fees. Those fees — which are paid by a studio to agencies in exchange for packaging various types of talent for a film or TV project — are being called a violation of fiduciary duty on the agencies’ part in the new lawsuit.

“Endeavor’s conflicts of interest with its clients are currently having an impact on the company’s representation segment, where it has lost 1,400 writer-clients since April,” said the guild, referring to a walkout of thousands of WGA members after they empowered the guild to enforce a new Code of Conduct to eliminate packaging fees in order to represent writers.

The WGA also attacked Endeavor for not adding any women to its board of directors, something it must do by the end of the year in order to adhere to a California law passed last year.

“Endeavor has thus far chosen five men to sit on its board despite the recent controversies over diversity in Hollywood and the recent sexual assault scandals involving not only top executives such as Harvey Weinstein but also talent agents, one notably a former operating board member at Endeavor’s talent agency.”

The agent being referenced appears to be former WME partner Adam Venit, whom the agency demoted from his department head position but did not fire after actor Terry Crews accused him of sexual harassment at a Hollywood party. Venit retired in September 2018, ten months after Crews came forward.

Endeavor, who is required to not make any public comments that might affect its stock price, declined to comment.