CAA’s ICM Buy Suffers Deal Fatigue as Agents Defect While Feds Take Long Look

“Never leave a deal open” is a phrase agents know too well. The longer it stays open, the more it invites scrutiny, and the more chances there are for it to go sideways or south. The CAA acquisition of rival agency ICM Partners has now been open since September, when the mega agency first unveiled its plans, at the same time signaling its expectation that the buy would close by the end of the year, if not by the beginning of this one.

Cut to … spring. The deal still hasn’t closed, and fatigue is setting in. “Every week that goes by, it becomes a concern,” notes one agency partner, who was not authorized to speak publicly.

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Morale is low at ICM, sources inside and outside the agency say. In early May, Dan Baime, a veteran agent who specialized in below-the-line representation, sent a shock wave when he left to form a management shingle. He took his superstar client John Cena with him, promptly nesting him at rival agency WME. Next, Christina Bazdekis, who represents John Turturro and Liz Garbus, among others, said she was also leaving, heading to UTA. Then unscripted agent Denise Draper joined Range Media.

This drip-drip-drip follows the exit of John Burnham, who represents actors (John Cusack, William H. Macy) and directors (John Woo); he left in April after being there for 25 years, joining Atlas Artists. Rumors abound of other defections. “As you sit and wait, your ability to be an agent is being compromised,” notes another insider. “You can’t sign anyone. You can’t even tell anyone where you work with any certainty.”

The newest wrinkle? Dishearteningly low offers. Sources tell The Hollywood Reporter that in May official employment offers began coming in from CAA. Normally that would be a positive sign that the deal is progressing but alas, most offers were “not robust,” to put it mildly. “People were despondent,” says the insider. Another insider counters that the difference is institutional — CAA agents’ pay is structured in a way they have lower salaries but higher bonuses; ICM’s, the opposite.

These distractions occur as the Department of Justice continues its regulatory oversight of the deal. In March, the DOJ sent out questionnaires to rival agencies big and small, sending company legal departments into overtime as it questioned them on the business itself and the impact the CAA-ICM deal could have; some companies are having to provide details on three to five years’ worth of TV business, for example.

Under the Hart-Scott-Rodino Act, companies are required to provide federal antitrust enforcers notice of mergers of at least $101 million. After an initial 30-day review period, the agencies can follow up with a request for information, which puts the deal on hold, and that’s what happened to CAA and ICM. The DOJ said 2021 was a record year for mergers, which might partially explain the delay.

Top CAA brass also are dealing with a DOJ antitrust division that is open about the fact that it wants to make a statement. “I am here to declare that the era of lax enforcement is over, and the new era of vigorous and effective antitrust law enforcement has begun,” Assistant Attorney General Jonathan Kanter declared April 22 in a speech at Chicago Booth’s Stigler Center.

Despite an enormous backlog of mergers and acquisitions, the regulators want courts to weigh in on the antitrust arguments they plan to make, giving companies (and regulators) clarity as they look to decide what cases require intervention. To that end, they’ll likely pursue novel theories of antitrust law that are largely untested in the courts, which have traditionally taken a loose approach to merger enforcement, potentially delaying the deal more, or even blocking it outright.

“It is not our role to micromanage corporate decision-making under elaborate consent decrees. It is our job to enforce the law,” Kanter added in his speech. “And when we have evidence that a defendant has violated the law, we will litigate to remedy the entire harm to competition. That will almost always mean seeking an injunction to stop the anticompetitive conduct or block an anticompetitive merger.”

Federal antitrust enforcers, tasked by the Biden administration to reinvigorate competition amid unprecedented consolidation of various industries, are also in the process of rewriting merger guidelines. In January, the DOJ and FTC launched a joint public inquiry aimed at strengthening enforcement against illegal mergers in a move that signaled stricter oversight of dominant firms.

“Illegal mergers can inflict a host of harms, from higher prices and lower wages to diminished opportunity, reduced innovation, and less resiliency,” said FTC Chair Lina M. Khan. “This inquiry launched by the FTC and DOJ is designed to ensure that our merger guidelines accurately reflect modern market realities and equip us to forcefully enforce the law against unlawful deals.”

Alex Weprin and Winston Cho contributed to this report.

A version of this story first appeared in the May 17 issue of The Hollywood Reporter magazine. Click here to subscribe.

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