The U.S. Department of Justice is scrutinizing CAA’s acquisition of ICM, digging into the major agencies’ proposed merger and its impact on the entertainment industry, multiple sources familiar with the matter tell The Hollywood Reporter.
The acquisition, unveiled in September, initially planned to close by the end of 2021, but is now targeting a Q2 2022 close, sources say. If the deal goes through, the agency and representation landscape would have three major players in Endeavor-owned WME, CAA, and UTA, along with other competitors like APA, Gersh and Paradigm.
According to one source, the DOJ’s antitrust division, led by assistant attorney general Jonathan Kanter, has interviewed top executives at the two agencies, as well as some outsiders like APA CEO Jim Gosnell. The Department of Justice did not immediately reply to a request for comment.
This source said that concerns from some Hollywood unions such as the Writers Guild of America or SAG-AFTRA may have triggered the close review. After the deal was initially unveiled, SAG-AFTRA national executive director Duncan Crabtree-Ireland said in a statement that the union would “carefully scrutinize this combination of two storied talent agencies to ensure that performers will benefit from, and are not disadvantaged by, the deal.” SAG-AFTRA and the WGA did not reply to a request for comment for this story.
When asked about regulatory concerns by THR after the deal was announced, CAA co-chairman Bryan Lourd said he was “very confident” the deal would pass muster. “We obviously have gotten great advice from our advisors at [law firm] Wachtell Lipton and [investment bank] Allen & Co., and everyone is very confident about that part of this,” Lourd said. “We don’t know if they will want to talk to us or not, in the scheme of things this is not a major deal like some of the other deals we are all watching and reading, but we are very confident.”
Both the DOJ antitrust division and the Federal Trade Commission have been grappling with a barrage of M&A activity since President Biden took office a year ago.
In the TMT (technology, media, and telecommunications) sector alone, Discovery is in the process of merging with WarnerMedia, Univision is merging with Televisa, Amazon has proposed to buy MGM, and Take-Two Interactive struck a deal to buy Zynga. Meanwhile, Kevin Mayer and Tom Staggs’ Candle Media has struck several deals to buy stakes or entire companies in the sector, including Reese Witherspoon’s Hello Sunshine, CoComelon producer Moonbug Entertainment and Fauda maker Faraway Road Productions.
The DOJ has already acted in the sector, suing to block ViacomCBS’ sale of the book publisher Simon & Schuster to Penguin Randomhouse, citing monopsony concerns. That suit was filed before Kanter was confirmed, though the attorney did raise monopsony concerns in his confirmation testimony.
Kim Masters and Borys Kit contributed reporting.