Paradigm chief Sam Gores told employees of the agency on Sunday that he has shut down acquisition talks with UTA. Gores said in his note that UTA offered to buy the music and literary divisions of Paradigm but he opted not to sell, and with it a client roster that includes author Stephen King, and musical acts such as Coldplay, Imagine Dragons, Halsey, and Shawn Mendes.
“There are reasons why a combination like this would have made sense for both agencies,” Gores wrote. “But in the end, what is more compelling for us is how unique the culture at Paradigm is and how powerful our independent path can be.”
Rumors have been swirling around Hollywood in recent weeks that a merger between the two agencies was in the works. The acquisition talks unfolded at a tumultuous time for the agency business. Endeavor, which owns WME, one of the Big Four agencies along with CAA, UTA and ICM Partners, has filed to go public, a move that could inject capital into its operations and leave its rivals punching up.
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But there are other storm clouds on the horizon. The agencies are locked in a fierce standoff with the Writers Guild of America over packaging fee, industry-speak for the money that agencies make for bundling talent for television programs. That fight has led to mass-firings of agents by writers. They argue that agents are incentivized under the current structure to put their own financial interest over those of their writer clients.
In a statement, UTA CEO Jeremy Zimmer said, “We admire Sam and the business he and his colleagues have built. We are disappointed we didn’t come to an agreement. But we wish him and everyone at Paradigm the best.”
Gores called off the talks with UTA because he believed it was causing instability inside Paradigm, especially among rank and file agents, according to insiders.
The two companies have flirted with joining forces on and off for more than a decade — in 2008 there were a flurry of rumors about Paradigm buying UTA — but talks intensified a few weeks ago. At that point, UTA presented an offer for Paradigm’s lucrative music division and its literary units. Gores was open to the idea, including the option of selling UTA a controlling interest without surrendering the entire agency and its film and television businesses.
One big consideration was how Paradigm and UTA’s corporate cultures would mesh, a source close to the situation said. In 2008 talks broke down over the issue of post-merger leadership, but that was not a stumbling block this time.
Gores and UTA brass met as late as Sunday, according to a source, and ended the discussions on good terms. It’s unclear of what kinds of figures were discussed, but in his note to staff, Gores wrote that, “UTA made an offer to acquire Paradigm that would have represented one of the largest talent agency transactions in the history of our business.”
UTA’s clients include Judd Apatow, Kevin Hart, Jake Tapper, DJ Khaled, and Elizabeth Banks.
Read the staff memo below:
Dear Colleagues:
I want to address the events of the past week and the press reports surrounding a potential transaction between Paradigm and UTA.
The fact is that our industry is in an era of significant change and also unprecedented opportunity.
The complexion of what the agency business will look like has led all of the major agencies including ourselves to look at ways to strengthen their platforms and provide more resources to clients.
UTA made an offer to acquire Paradigm that would have represented one of the largest talent agency transactions in the history of our business.
The offer was made for both the Talent/Literary and Music divisions. This offer is a tribute to the work that all of us have done and the quality of the asset we have created together.
After careful consideration and in consultation with leaders of both the Music and Talent/Literary executive groups, I have made the decision to shut down discussions and not make this deal.
There are reasons why a combination like this would have made sense for both agencies, but in the end, what is more compelling for us is how unique the culture at Paradigm is and how powerful our independent path can be.
For obvious reasons, it is not possible to communicate with the entire company when a conversation like this occurs. Those who know me and the history of how we have built Paradigm know that I always make decisions regarding the future of the business by considering what is ultimately in the best interest of our agency as a whole and all of our clients.
The past week has given us the opportunity to make us stronger both internally and externally. We should be proud of what we have built and be proud of our courage to bet on ourselves.
Let’s all get back to work and continue to do what we do so well.
For the Art For the Artist.
Sam