Antitrust Action Against Big Talent Agencies

     LOS ANGELES (CN) – United Talent Agency and International Creative Management Partners threaten the existence of smaller agencies by luring talent with lucrative package deals, their competitor Lenhoff & Lenhoff claims in a federal antitrust complaint.
     In its Feb. 13 lawsuit, Lenhoff & Lenhoff accuses UTA and ICM of poaching two of its clients by promising to waive the customary 10 percent commission.
     Lenhoff & Lenhoff claims that through package deals, the big four “uber” agencies UTA, ICM and nonparties William Morris/Endeavor and Creative Artists Agency receive a lucrative stake in film and television projects. This makes the big agencies de facto producers or employers, rather than talent agencies, Lenhoff says.
     “Plaintiff alleges that the packaging opportunity, which is, effectively, unavailable to smaller agencies (because the uber agencies have poached top-tiered talent), allows the largest agencies to engage in predatory ‘pricing.’ In other words, plaintiff alleges, the smaller agencies, who charge ten percent (10 percent), are undercut by the largest agencies, including UTA and ICM, who can offer to charge the prospective television client zero.”
     UTA denied the claims in an email to Courthouse News.
     “These allegations have no merit whatsoever, and beyond that we have no comment,” UTA spokesman Chris Day wrote.
     Alleging that the agencies “stockpile talent,” Lenhoff says the big four have a grip on film and television series projects, from story development to production, financing, distribution, marketing and “even the technology for content delivery to the consumer.”
     Lenhoff claims that concentrating power in a handful of agencies will discourage the next generation of filmmakers, actors and writers and ultimately rob movie and television audiences of “diversity and creativity.”
     It claims that an “increasing number” of artists in Hollywood are finding it harder to get on an agency’s books.
     In the past 13 years, Lenhoff reckons 39 agencies have been merged into other agencies, moved into management instead, or have “simply disappeared.”
     “(F)ar too many talented individuals within the state of California and elsewhere are either not working or they find their work is being stifled where they are not the ‘marquee’ element driving the package,” the lawsuit states. “(I)f artists want their idea to get financed, produced and distributed, they must agree to the agency receiving a packaging fee or else there will be no ‘traction’ from the agency packaging team.”
     The big four had a hand in more than 90 percent of television market deal agreements with the Association of Motion Picture and Television Producers, the trade union that negotiates nearly all industry-wide union contracts, according to the complaint.
     The big four’s share of television market deals in 2002 was 62 percent, the complaint states.
     In a 2014/2015 survey, WME represented 116 talent deals; CAA 88; UTA 82; and ICM 35.
     “Plaintiff alleges that this domination of the market would not be possible without the ability to ‘package’ a group of the major talent or star components of a television program or series,” the complaint states.
     Lenhoff attributes the agencies’ monopolization of the market to a “choreographed ‘planned implosion'” of a decades-old rule in a franchise agreement with the Screen Actors Guild and the Association of Talent Agents.
     After the term of that 1939 agreement expired in 2002, the talent agencies negotiated for and won a greater financial stake in television and film projects – an interest that the franchise agreement had previously forbidden, according to the lawsuit.
     That change created “financial investment opportunities that defendants UTA and ICM knew would be coming their way as a result,” the lawsuit states.
     Alleging violations of the Sherman Act, unfair business practices, intentional interference with contract and intentional interference with prospective economic advantage, Lenhoff & Lenhoff wants the court to enjoin the agencies from poaching clients, punitive damages, restitution and costs.
     The agency is represented by Phillip J. Kaplan.
     ICM Partners did not respond to an emailed request for comment.

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