As corporate deals go, it was hardly CBS/Viacom. But when talent/literary powerhouse Creative Artists Agency (CAA) took a 40% stake in New York-based PR, advertising and corporate consulting firm Shepardson Stern + Kaminsky (PRWeek, Oct. 4), it was big news in the normally cloistered Hollywood agency business.
As corporate deals go, it was hardly CBS/Viacom. But when
talent/literary powerhouse Creative Artists Agency (CAA) took a 40%
stake in New York-based PR, advertising and corporate consulting firm
Shepardson Stern + Kaminsky (PRWeek, Oct. 4), it was big news in the
normally cloistered Hollywood agency business.
This was the first instance of a major talent agency buying a stake in a
PR firm, but it won’t be the last. With the studios and networks cutting
back, Hollywood talent agencies have watched their profit margins shrink
to alarming levels, leaving the more forward-thinking to broaden their
core business beyond the 310 area code.
It’s happening at International Creative Management (ICM), where
chairman Jeff Berg has been actively pursuing relationships in Silicon
Valley - although no official alliance has been struck. And the William
Morris Agency has worked to expand designer Tommy Hilfiger’s presence on
television shows, feature films and concerts through sponsorships.
Alliances like this are seen as the perfect way to marry access to
talent and ’cultural information,’ with corporations looking to expand
their customer bases and brand names. An early tip on what the
’tent-pole’ summer film of 2002 will likely be could be of incredible
value to a company trying to build or reconstitute a brand.
The deal is also significant because it marks CAA’s first direct equity
investment in an outside company and represents one of the biggest moves
the agency has made since the 1995 departures of founders - and seeming
Sun Gods - Michael Ovitz, Ron Meyer and Bill Haber. After four years
focused on retaining clients and paying off the founders, the young
management team has emerged debt-free and is itching to grow.
Enter SS+K. The firms first came together two years ago when CAA hired
SS+K to conduct an internal audit. Such introspection by a Hollywood
agency is rare, particularly for CAA - whose guiding principals over the
years seemed more The Art of War than I’m OK, You’re OK.
CAA execs say that while they don’t want to replicate the corporate
advisory business that Ovitz achieved with headline-grabbing aplomb,
they were tired of watching opportunities to help clients expand their
brands just pass them by. Their focus is expected to be on corporate
sponsorships, particularly in music and sports.
And the alliance has another side benefit for CAA. ’There was definitely
a fear of getting bored with the traditional agency business,’ one
partner confesses, but a ’measured expansion’ into other areas serves as
’a kick in the pants.’