UTA in Talks With Paradigm for Potential Merger

Courtesy of UTA
       

The deal would strengthen UTA's music department and augment Paradigm's film and television business.

Executives with United Talent Agency are in talks with reps at Paradigm about a potential acquisition or merger, Billboard has learned. 

More than a half-dozen sources, including two with direct knowledge of the deal, have confirmed to Billboard that UTA is exploring buying a controlling stake in Paradigm or merging the two companies. The terms of a deal are still under discussion and either side could still walk away.

Paradigm’s chairman Sam Gores and UTA chief executive Jeremy Zimmer have been in talks for a number of months, but the recent IPO of Endeavor, which owns agency WME and is seeking to raise $500 million through a public offering, has accelerated the discussions. Neither agency returned requests for comment. 

A deal between the two Los Angeles-based firms would play to each company’s strengths and weaknesses: UTA has a deep roster of comedians and Hollywood actors including Chris Pratt and Kevin Hart, but has not made significant gains in the music industry in the years that followed its 2015 purchase of The Agency Group. Music is Paradigm’s strength, with a roster of arena and stadium acts including Ed Sheeran, Shawn Mendes and now Kenny Chesney and Old Dominion, as well as a deep lineup of festival headliners such as Major Lazer, the Black Keys and Kacey Musgraves. Sources tell Billboard that Paradigm’s relatively small film, TV and comedy divisions would benefit from integration into UTA’s stronger film and TV operation.

Now led by head of music Marty Diamond, Paradigm is known for having a music-centric vibe with an executive team that includes a diverse collection of entrepreneurs who started their own agencies -- Tom Windish with the Windish Agency, Paul Morris with A.M. Only and Dan Weiner from Monterey Pennisula Artists. Jonathan Levine, Sam Hunt, Corrie Christopher Martin and Lee Anderson are also on the company's music leadership team.

UTA in contrast is known for having a more traditional Hollywood agency culture, that some describe as more corporate and high pressure. The company’s music department is led by former Live Nation executive David Zedeck.

Sources tell Billboard the logistics of combining the two firms has been a challenge to getting a deal done -- decisions about leadership of the music department are still being worked out. Gores has reportedly resisted an offer to break off and sell the company's music divison, or share the CEO role and has never had a co-head of Paradigm in the more than 20 years he's run the agency.

There's also the issue of real estate -- Paradigm recently moved into new offices on Wilshire Boulevard in Beverly Hills, down the street from UTA's Civic Center Drive offices -- and questions about what to name the merged entity. 

Both firms have grown their businesses through acquisition in recent years. Paradigm’s former head of music Chip Hooper, who passed away in 2016, is credited with creating the company’s music department starting with the purchase of Monterey Peninsula Artists in 2005, followed by Little Big Man, Third Coast, Ellis Industries, AM Only and most recently The Windish Agency in 2015. 

UTA has also made a number of strategic acquisitions, buying Neil Warnock’s The Agency Group in 2015 and last year acquiring Circle Talent Agency, which brought powerhouse artists like Marshmello, Kaskade and Illenium over to UTA. 

Last year, UTA sold minority stakes in the agency to Investcorp, which describes itself as a "global provider and manager of alternative investments” with $22 billion in assets under management, and the Public Sector Pension Investment Board, Canada's largest pension investment managers with $153 billion of net assets. Both Endeavor and CAA have fueled recent growth with private equity investments from backers as varied as Silicon Valley fund Silver Lake Partners, Japan’s SoftBank and Texas-based TPG Capital, and Endeavor's recent IPO has many wonder if a new phase of high-level agency mergers and acquistions will soon begin.

“Endeavor's public offering will make it easier for other talent agencies to go public, take on outside investments and make acquisitions," Matthew Kennedy of Renaissance Capital, a manager of IPO-focused exchange-traded funds, told The Hollywood Reporter on June 6. "Importantly, they'll have a direct public comp, so they'll be easier to value. And new private investors now have some assurance that an IPO/liquidity could easily be on the table."

The talks come as Live Nation and AEG are increasingly striking deals directly with artists like Celine Dion, Madonna, Jay-Z and Taylor Swift, that’s led to some music agents reducing their commissions or dropping their fees altogether in order to keep music stars on their rosters. 

Paradigm is currently the number three agency in the music space, based on its share of artists on Billboard Boxscores’s 2018 Top Tours chart, and it’s unlikely that a merger with UTA would push it ahead of CAA, who topped the chart in 2018, closely followed by WME. But still, experts say the merger’s ability to play to both company's strengths has kept both sides at the table to see if a deal can be reached.

Rebecca Sun from The Hollywood Reporter contributed to this story.