SATURDAY AM: Sources tell me Mark Itkin, WMA’s unscripted television chief who was being wooed by CAA but now appears to be staying at the merged agency, may go on the WME board to fill the vacant Morris seat.

8PM UPDATE: I’ve just been told that WMA COO Irv Weintraub is next.

I’d heard speculation for at least 3 weeks that WMA CEO Jim Wiatt would be pushed out, and then it intensified starting last weekend as details of the plan started to emerge. It’s heated up since Wednesday. And then I informed my William Morris sources that I was going to post about Wiatt’s future, actually his lack of one, with the new WME Entertainment that was being formalized. (I was told to wait until this weekend, and I was begged not be brutal. Because they hoped to spin Variety today that this was all Wiatt’s idea.) According to my insiders, Wiatt, who was supposed to take over the merged company’s chairmanship, will be politely eased out with a statement that he made the decision to leave.

My information is that at least two WMA members of the new WME 9-person board (supposedly Peter Grosslight and John Fogelman and possibly others) are joining with the Endeavor members to ask Wiatt to jump before he was pushed in exchange for a meaningless title of “Emeritus”.

UPDATE: I’ve just heard that Jim’s close pals, Hollywood lawyer Skip Brittenham and former Viacom mogul Tom Freston, warned Wiatt, “You have to resign, or you’re going to be fired.”

No WME announcement is forthcoming today.

Let me make clear: this is not a mutiny. Rather, it’s a recognition that Wiatt had no place in the new company because of the leadership problems at William Morris that forced the venerable 111-year-old agency to seek out Endeavor in the first place. Nor did it help that Wiatt mishandled the negotiations and aftermath. As I reported on Wednesday, the WMA-Endeavor merger was looking increasingly like a takeover. Now it is obvious to everyone.

Whenever anyone outside the entertainment industry mentions talent agents, the conversation inevitably turns to Canon Drive. Yes, there really was a William Morris who in 1898 stopped selling ads for a garment-industry trade newspaper and started selling talent. The agency hearkens back to the early days of vaudeville, through flickers (silent movies) and talkies into the Golden Era of Radio and then the Golden Age of Television and then the nickel era of the Internet. But Morris’ greatest strength as an institution — its enduring constancy in the face of flux — would become the agency’s greatest weakness for decades. Close-knit to a fault, the group of elders who long ran the agency with one eye on the dotted line and the other on the bottom line viewed agenting not as a career but as a religion. For young agents, the feeling you were almost working for your parents was at times odd, even humorous, and stood in contrast to the cruel realities of show biz. It was assumed that the Morris elders would finish their careers at the Morris office and be carried out the door feet first.

Wiatt was brought in to shake up all that. With a father in the shmattah business, Wiatt was a Beverly Hills High brat who loved politics but never thought he’d make a good candidate. That’s why he believed he’d make a good agent because he never wanted to be the star. Wiatt rose at ICM to co-chairman because he could massage egos, put out fires, translate boss Jeff Berg “vision” into everyday concepts and, most importantly, get Sam Cohn on the telephone. But for years, Wiatt had lived the high life (literally) and, after two divorces and a third marriage, found himself deeply in debt to ICM. With reportedly over $1.5 million worth of loans outstanding, and most of his compensation tied up in company stock, Wiatt made no secret of the fact that he needed cold hard cash to keep his gilded lifestyle. After looking around, he jumped to Morris in a decision all about the money.

An argument could be made that Wiatt had a near-impossible task ahead of him to change the Beverly Hills agency from stuck-in-place-by-tradition to the cutting edge by effecting a generational transfer of power. A lot of egos were hurt, resulting in some surprising exits, when altercocker board members were pushed out to make way for fortysomethings. And then the board had to be configured again and again to make way for thirtysomethings and reward the most successful agents and departments, like Grosslight’s music.

But it was also under Wiatt’s watch that scripted television, once the cash cow at Morris, weakened to such an extent that the agency is more known now for its unscripted division. Sure, this coincided with the TV syndication market tanking, but WMA went from the undisputed No. 1 agency seller of scripted primetime TV shows to maybe 5th today. And the motion picture department, which Wiatt was specifically hired to strengthen, faltered even further.

The problems reached critical mass last October shortly after some layoffs inside the agency were rumored and then enacted. And then I wrote this posting:  What’s Really Happening Inside Morris?. I was stunned by the overwhelmingly negative comments that began flooding in to DHD about the William Morris Agency. I wasn’t able to post 50% of them because they contained such unsavory allegations of personal and professional misconduct, including sexual harassment, hostile workplace, inter-office sexual liasons, bullying behavior, etc. Sure, the Morris office had always been dysfunctional. But this hate-spewing was far worse than anything I’d received about an agency previously and came from many different people inside and outside WMA. At its core was a huge schism between who was inside Wiatt’s, Irv Weintraub’s and Dave Wirtschafter’s cliques, and who wasn’t. This divide was based more on cronyism than merit. WMA was being run amok.

I suggested that Morris management take a long hard look at itself. I can now report that, soon after my post appeared, Wirtschafter, WMA’s president, organized several staff meetings where personnel were encouraged to air their grievances. The amount of angst, and the level of animosity, stunned the agency’s management. WMA realized its leadership under Wiatt had failed. A plan was conceived to make the TV and movie department start operating more like the very successfully led music department.

But that was backburnered when Ari Emanuel and Jim Wiatt began their merger talk. It didn’t help matters internally at Morris when I reported last month that Wiatt had inexplicably given worldwide head of scripted television Aaron Kaplan a no-mitigation, $11 million, 5-year contract even though Kaplan’s department had been so underperforming. This news became a source of consternation during the merger negotiations when it became clear that Wiatt was saving the jobs of his clique members to give him a power base in the company. Then, on Monday, 100 WMA people were laid off.

It’s ironic that Wiatt came to WMA for the money, and now will exit with a hefty payout. (I hear $25 million.) But it’s a high and humiliating price he’s paying for his behavior. He’s not a bad guy. He just wasn’t the right guy to lead WME.