CAA Talent Agency struggles in recession

CAA, Hollywood's biggest talent agency representing actors such as Will Smith and George Clooney has sold a 35% stake to TPG Group.

The firm, well known for investing in large corporations such as MGM and Burger King is now the single largest owner of CAA, which holds a monopoly of the top actors in America.

Creative Artists Agency has faced difficult economic times and changes in technology which has altered the entire film industry.

Commissions for agents are down, and so are paychecks as fewer studio movies are released and more lesser name actors are used instead. One prime example of a major film that didn't use big name talent was the recent 'Social Network' directed by David Fincher.

As more studio films turn to 3D as opposed to big names to make up for the loss of DVD sales, the film industry will continue to adapt to the changes, including talent agents.

Hollywood's pay or play system is also controversial and not widely supported in Europe, as it creates a divide between producers and name talent. The pay or play system requires that a producer must pay upfront to have a name actor cast in a movie before production starts. If the financing falls through, the actor still receives a paycheck.

The pay or play system has created a monopoly over name talent by preventing indie productions access to top names without money on the table. This practice, although a form of protection for CAA and other agencies such as ICM, will inevitably force talent agencies to sign actors to projects before they are fully financed as the economy worsens.

Film financing is also tremendously difficult for indie film productions as without a name star attachment, a distributor and funder are unlikely to back a multi-million dollar movie. However, should the pay or play system be relaxed or reversed, talent agencies have the opportunity to help indie productions attach name talent, leading to investment.