UPDATE: Sources tell Deadline that UTA sold an equity stake in the 40% range, with the cash infusion in the vicinity of $200 million. Some of the majority of that money will be used to further diversify the agency, and that some of the money will be spread around to the dealmakers who’ve put the agency in this position. Everyone who works for the agency, down to assistants and kitchen staff, will be cashing a check of some kind in the near future, sources said.
BREAKING, 11:33 AM PST: In a major move that gives United Talent Agency a chance to further diversify its businesses, the agency has completed a minority equity sale stake to Investcorp and the Public Sector Pension Investment Board (PSP Investments). Deadline revealed in June that UTA had Moelis & Company exploring a 40% Equity Sale designed to raise revenue primarily to continue to aggressively broaden its businesses, something that has already been happening organically. And it might enter into the content creation arena as WME and CAA have done.
At the time, Deadline reported that the agency turns an annual profit north of $50 million on revenues north of $325M, with UTA CEO Jeremy Zimmer driving the sales process along with co-presidents Jay Sures and David Kramer. The agency was not disclosing how high the stake was and how much capital was realized, but said that it retains majority control.
Zimmer, who with UTA Chairman Jim Berkus and co-founder Peter Benedek, founded UTA 27 years ago, called the move “a transformative event for UTA. There has never been a greater moment of change and opportunity in our industry for artists, creators and companies like ours. We were deliberate about finding the right investment partners who recognize UTA as a business that puts clients first, exemplifies a collaborative and diverse culture, and is focused long term on capitalizing on the unique opportunities that disruption and transformation provide. We found that in Investcorp and PSP Investments.”
David Tayeh, Investcorp’s Head of Private Equity, North America, stated: “We are thrilled to have the opportunity to support UTA’s leading franchise and partner again with PSP Investments. We believe UTA’s client-centric business model has strategically positioned the company to capitalize on the ongoing convergence of talent, content, distribution, and marketing. Investcorp has been impressed with UTA’s market position, the long-term growth it has enjoyed, and recognizes that its future success will be driven by the continued excellence of its partners in providing superior services for its clients.”
“The entertainment industry is experiencing tremendous evolution,” said Simon Marc, Managing Director and Head of Private Equity, PSP Investments. “As demand for high-quality content is greater than ever, UTA is uniquely positioned to benefit from the transformation in the sector. We are excited to partner with Jeremy Zimmer and UTA’s world-class management team and look forward to backing UTA in the next phase of its growth. We also welcome the opportunity to team up once again with Investcorp. Our investment in UTA is a great example of PSP’s ability to partner with top-tier entrepreneurs and like-minded investors.”
The agency has been growing organically over the past few years, much of it through strategic acquisitions. While the mass exodus of 11 CAA comedy agents to UTA loudly brought a slew of clients including Will Ferrell and Chris Pratt in 2015, most of the agency’s expansion has been accomplished at a quieter volume level. That includes last year’s expansion into new New York headquarters on 888 7th Avenue, and a more recent plan to take over the entire space of UTA Plaza on Civic Center Drive in Los Angeles. The agency shared the sedate grounds there with Playboy Enterprises, but that company exited the premises.
UTA has already broadened from its core business of talent representation in film and television by acquiring several niche agencies. That includes NS Bienstock, the agency that reps news and broadcast talent that includes Anderson Cooper, Chuck Todd, Don Lemon, Dana Bash, Margaret Brennan, Bill Whitaker, Gloria Borger, David Muir and Nora O’Donnell. UTA acquired the music and touring talent agency The Agency Group, and established its presence in the electronic music space with the acquisition of Circle Talent Agency. The acquisition of Greater Talent Network last fall gave UTA a presence in the live speaking space. UTA last year also acquired an equity stake in AGM Partners investment bank, a company run by Alan Mnuchin, the brother of Treasury Secretary Steven Mnuchin.
The agency has in a few years doubled its size to more than 1000 employees, and has bolstered a UTA Marketing division and now reps clients that include GM, Coke, LinkedIn, Lyft and Delta. Its strongholds continue to be above- and below-the-line representation of talent in film (beyond Pratt and Ferrell, the list includes James Gunn, F. Gary Gray, Phil Lord & Christopher Miller, Jordan Vogt-Roberts, Judd Apatow, Angelina Jolie, Joel & Ethan Coen, Seth Rogen & Evan Goldberg, Ted Melfi, Channing Tatum, Amy Schumer, Frances McDormand, Harrison Ford) and TV, where its recent packages include Brooklyn Nine Nine, Rick & Morty, Modern Family and Roseanne (now relaunching as the spinoff The Conners).
UTA also acquired a minority stake in CORE Media and guided the relaunch of American Idol. The latter could provide a hint of where a potential cash infusion might take the agency. That is, to fund entry into the content creation business, a growing sector for CAA and WME.
UTA dipped a toe in the production business with CORE and American Idol, but content creation is a seemingly obvious place to expand in a time of unprecedented upheaval in Hollywood. CAA (through Wiip) and WME (through Endeavor Content) are growing more aggressive in packaging and financing content, even acquiring material from other agencies. The thinking at UTA is the agency could find itself at a disadvantage if it doesn’t get into that game, and be unable to get directly involved in helping clients find ways to get projects funded.
UTA last year sold a minority stake to activist hedge fund manager Jeffrey Ubben to help with some of those boutique agency acquisition deals, but the sale of a 40% stake marks new ground.
CAA and WME have both sold majority equity stakes and used it to build out areas like sports, investment banking and content creation divisions. TPG escalated a 35% stake in CAA to 53% in 2014, and WME’s parent company Endeavor has a major stakeholder in Silver Lake Partners, among other investment funds that allowed it to make bold sports industry acquisitions like the $2.4 billion acquisition of IMG and the $4 billion purchase of UFC.