Creative Artists Agency is buying its smaller rival, ICM Partners, for an undisclosed amount. It’s the largest industry consolidation in more than a decade, and one that could have significant ripple effects in the worlds of entertainment and sports. While the two agencies have flirted with a deal for some time, they became serious in July, at Allen & Company’s annual media retreat in Sun Valley.
It’s a union of marquee names. CAA’s client roster includes Tom Hanks, Steven Spielberg, Zendaya, Ava DuVernay, Ryan Murphy and Reese Witherspoon, while ICM represents Shonda Rhimes, Ellen DeGeneres, Samuel L. Jackson and Pete Davidson. The deal was brokered by the agencies’ top executives, Bryan Lourd at CAA and ICM’s Chris Silbermann.
Talent agencies are competing with entertainment Goliaths as much as with other agencies. Tech giants like Apple, Amazon and Netflix have muscled in on Hollywood, while traditional media companies like Disney and Discovery have bulked up. The growing power of these companies and the economics of streaming have changed the way actors are paid, and made it harder to bargain on their behalf. (Scarlett Johansson, a CAA client, is suing Disney over its move to release “Black Widow” on streaming the same day as in theaters.) That had made it tougher for a smaller agency like ICM to compete. But ICM has value for CAA, namely in its sports assets and the intellectual property in its substantial books division.
It’s not clear the deal will be good for all creatives, given that it means one less player to represent them at the highest levels. (Hollywood is now essentially a two-agency town after the deal, since William Morris merged with Endeavor in 2009.) And combining star-powered, TPG-backed CAA with independent ICM has the potential for a culture clash. SAG-AFTRA, the actors union, said it “welcomes any change that results in increased negotiating power for talent as they bargain individual deals with the multibillion dollar corporations that produce content,” but plans to “carefully scrutinize” the deal. — Lauren Hirsch
In other entertainment news: Endeavor announced a $1.2 billion takeover of the gambling company OpenBet yesterday. “I find it ironic that in the morning they announced adding another talent agency to a talent agency, here we are adding on a major business in the hottest sports and entertainment sector,” Endeavor’s president, Mark Shapiro, told DealBook.
HERE’S WHAT’S HAPPENING
Washington edges closer to a government shutdown and debt default. Senate Republicans blocked a spending bill that would have funded the federal government through mid-December and raised the debt ceiling through the end of 2022. Congressional Democrats are rethinking their approach to the structure and timing of bills as deadlines loom.
Top economic policymakers say that the Delta variant is slowing the recovery. Treasury Secretary Janet Yellen and Fed chair Jay Powell are testifying at the Senate today, and in prepared remarks they will warn about the risks of a resurgent pandemic. Yesterday, Fed officials said that the labor market needed more time to heal.
Ford will hire 11,000 workers in a big electric vehicle push. The automaker said that it and a supplier plan to spend $11.4 billion on new battery plants and an electric-vehicle assembly factory in Kentucky and Tennessee. Ford said it was the biggest investment in the company’s 118-year history, and would enable it to produce more than one million electric vehicles a year in the second half of this decade.
Fed officials retire early amid trading controversy. Robert Kaplan, the head of the Dallas Fed, and Eric Rosengren, the president of the Boston Fed, both announced yesterday that they would leave their positions. They became embroiled in controversy for trading securities that could have benefited from the Fed’s emergency market interventions last year.
China is suffering from major power outages. Environmental restrictions, the rising price of coal and other factors have led to extensive electricity shortages. This has forced some factories to shut down, snarling global supply chains and leading economists to cut their forecasts for China’s growth.
The fund-raising that has everyone talking
DealBook’s phone has been ringing off the hook about Ozy Media. That’s the buzzy digital media company that was trying to raise $40 million from Goldman Sachs in February, until its co-founder and chief operating officer, Samir Rao, was caught impersonating a YouTube executive on a conference call with Goldman investors about the outlet’s video reach. “We stand completely behind our numbers and performance,” Carlos Watson, Ozy’s C.E.O., said in a statement addressing the call and the outlet’s audience metrics.
Here are a few more things on our mind the day after The Times’s Ben Smith broke the news on the conference call gone wrong:
Being part of the “in club” is a powerful draw. Goldman Sachs may have passed, but the bank’s co-chief information officer, George Lee, invested in Ozy, as did its former co-head of investment banking, Gregg Lemkau, DealBook hears. Other big names who have invested in Ozy since its founding in 2013 include Marc Lasry, the billionaire co-owner of the Milwaukee Bucks; Laurene Powell Jobs, in multiple rounds via her Emerson Collective; and LionTree, whose founder Aryeh Bourkoff is considered one of the most plugged-in investors in media.
A few weeks ago, Ozy named Lasry chairman of the company. Watson told Axios at the time that Lasry, who already sat on the board, was “very hands-on and helpful.” About the Goldman conference call, Lasry told The Times: “The board was made aware of the incident, and we fully support the way it was handled.”
Powell Jobs is distancing herself from Ozy, and Emerson did not participate in Ozy’s latest investment round. LionTree’s investment in 2019 was small and the firm does not have an ongoing relationship with the company.
The big remaining questions: Who invested in Ozy’s latest fundraising round, after the faked conference call with Goldman Sachs — and were they told about it? Did the new investors speak with YouTube? We’re searching for answers. Drop us a line if you know.
“Every day is frightening.”
— Peter Naughton, a Walmart cashier who is paid $11.55 an hour, on going into the store where he works in Baton Rouge, La., throughout the pandemic. As many white-collar workers contemplate returning to the office, The Times is profiling people like Naughton for whom remote work was never an option.
Coinbase’s latest move into banking
The cryptocurrency exchange Coinbase announced yesterday that it would soon allow U.S. customers to deposit money from their paychecks directly into their crypto accounts. They can keep that money in dollars or automatically convert it into Bitcoin or other cryptocurrencies. This means that users can “more easily make regular crypto trades,” Prakash Hariramani, Coinbase’s senior product director, wrote in a blog post.
Crypto companies are creating an alternative banking universe. Coinbase is one of many blockchain businesses aiming to offer services similar to those of traditional banks, like loans, savings accounts and debit and credit cards. Allowing direct deposits could make it easier for Coinbase customers to migrate their financial lives away from old-school financial institutions. “Customers tell us that making frequent transfers is time-consuming and inconvenient,” Hariramani wrote.
The industry’s rapid move into banking is causing alarm in Washington. Last week, Coinbase said that it would drop a proposed interest-generating product, called Lend, after the S.E.C. threatened to sue because the service could violate securities laws. Notably, Lend would have been based on USD Coin, a stablecoin whose value is pegged to the dollar but was recently found not to be backed one-for-one with dollars, as claimed. U.S. financial regulators will soon issue a report on regulating the fast-growing stablecoin sector.
More regulation seems inevitable. Officials fear that crypto firms without the same reserve requirements and capital controls as traditional financial institutions will lure users with high yields and low fees without revealing the risks that come with these accounts. Big banks and their trade associations have also made that case, all while striking deals with the upstart competitors to get in on the action.
There’s no instant solution for Instagram Kids
Yesterday, Facebook said it was pausing work on its “Instagram Kids” product. Critics spoke out after news of the project first leaked back in March, and their objections grew after a Wall Street Journal investigation surfaced internal research showing that Instagram had found its app exacerbates body-image issues in teenage girls.
Now, a Senate hearing prompted by the Journal investigation is scheduled for Thursday. Facebook is disputing that its research shows a negative impact on young people, while sticking to its position that, despite the pause, Instagram Kids is “the right thing to do.”
The conflict highlights the challenge of how to moderate social media content for young people, reflecting the platform’s wider struggles addressing its flaws. Here’s why:
Kids are already on Instagram. Like most social media services, Instagram requires users to be 13 or older because of a 1998 law. But as Facebook has acknowledged, young users often lie about their age and join the app anyway. That leaves them open to data collection and targeting practices that even many adults struggle to understand.
But a separate app has its own complications. It would likely rely on Facebook’s ability to identify and filter harmful content, which in the grown-up version of Instagram and Facebook has hit all sorts of snags. One potential risk is that the app could be overly restrictive, cutting children off from information about, for instance, L.G.B.T.Q. or health issues. “Young people aren’t immune to the need for both privacy and the ability to look online for information,” Jason Kelley of the digital rights group Electronic Frontier Foundation told DealBook.
THE SPEED READ
Blackstone is selling the Cosmopolitan casino and hotel in Las Vegas for $5.65 billion. (WSJ)
Merck is reportedly in advanced talks to take over Acceleron Pharma in a deal worth $11 billion. (WSJ)
Al Gore’s clean-energy investment fund bought a stake in Octopus, a British energy firm, for almost $600 million. (BBC)
Rolls-Royce sold its Spanish aircraft engine manufacturing business for about $2 billion to a private equity-led consortium. (FT)
Janet Yellen, the Treasury Secretary, has reportedly declined to return calls from Kristalina Georgieva, the head of the I.M.F. who’s at the center of a scandal. (Bloomberg)
California gas company Sempra will pay $1.8 billion as part of a settlement related to the nation’s biggest natural gas leak, in 2015. (NYT)
Activision Blizzard, the video game publisher, will pay $18 million to settle a workplace misconduct complaint made by the Equal Employment Opportunity Commission. (NYT)
Best of the rest
TikTok now has more than a billion monthly active users. (Axios)
“These Health Care Workers Would Rather Get Fired Than Get Vaccinated” (NYT)
Jony Ive, Apple’s former top designer, is teaming up with Ferrari to develop an electric vehicle. (FT)
“Is Going to the Office a Broken Way of Working?” (New Yorker)
How Covid misinformation online created a run on a deworming drug for animals. (NYT)