French billionaire acquires majority stake in Hollywood talent agency
François-Henri Pinault, the CEO of luxury and fashion group Kering, has agreed to buy a majority stake in Creative Artists Agency (CAA), one of the most influential talent agencies in Hollywood. The deal, which was announced on Thursday, values CAA at $7 billion, including debt. Pinault’s holding company, Artémis, will acquire the 53% stake owned by private equity firm TPG, which first invested in CAA in 2010. TPG will retain a minority stake, along with Singapore’s Temasek Holdings and China’s CMC Capital.
The acquisition gives Pinault access to a vast network of celebrities, athletes, and media professionals, who are represented by CAA across various sectors such as film, television, music, sports, and digital media. CAA’s clients include stars like Brad Pitt, Beyoncé, Steven Spielberg, Ariana Grande, and Zendaya, as well as sports icons like Cristiano Ronaldo, LeBron James, and Naomi Osaka. CAA also has a presence in content production, live events, branding, and marketing.
Pinault said in a statement that he was impressed by CAA’s “exceptional insight, relationships, and access across key sectors”, as well as its “level of collaboration and innovation”. He added that he looked forward to working with CAA’s leadership team, led by Bryan Lourd, Kevin Huvane, and Richard Lovett, who have been running the agency since the mid-1990s. The trio will remain in charge of CAA’s operations and strategy.
A strategic move amid industry challenges
The deal comes at a time when the entertainment industry is facing multiple challenges due to the pandemic, the rise of streaming platforms, and the strikes of Hollywood actors and writers.
The traditional business model of talent agencies, which relies on commissions from their clients’ projects and deals, has been disrupted by the changing landscape of content creation and distribution. Talent agencies have also faced criticism from some of their clients and competitors for expanding into new areas that may pose conflicts of interest.
By selling a majority stake to Pinault, CAA hopes to gain more financial stability and flexibility to pursue its growth plans and diversify its revenue streams. CAA has been one of the most aggressive agencies in acquiring rival firms and expanding into new businesses. In 2020, it bought ICM Partners, another major Hollywood agency. It also owns a stake in media company Skydance Productions, which produces films and TV shows for Netflix and Amazon. CAA also operates a venture capital arm that invests in startups such as Spotify and Airbnb.
Pinault, on the other hand, sees CAA as a way to tap into the cultural influence and global opportunities that celebrities offer. The French billionaire is the head of Kering, which owns luxury brands such as Gucci, Saint Laurent, Balenciaga, and Alexander McQueen. He is also married to actress Salma Hayek, who is represented by CAA. Pinault’s family also controls Christie’s auction house and several wineries through their holding company Artémis.
Pinault said that he believes that “the convergence of content creation and distribution across all platforms will continue to drive significant growth opportunities for CAA”. He also said that he shares CAA’s vision of “creating value for its diverse and culture-defining clients”.
A rare deal in a secretive industry
The deal between Pinault and CAA is one of the rare instances of a foreign investor buying a major stake in a Hollywood talent agency. The industry is known for its secrecy and competitiveness, as well as its resistance to outside interference. Talent agencies are often seen as the gatekeepers of Hollywood’s power structure, with access to the most sought-after talent and projects.
However, some analysts believe that the deal could signal a new trend of consolidation and globalization in the industry. As the demand for content increases worldwide, especially from emerging markets like China and India, talent agencies may need to partner with investors who can provide them with more resources and reach. Moreover, as technology disrupts the traditional ways of creating and consuming content, talent agencies may need to adapt to new forms of entertainment and media.
One example of this is Endeavor Group Holdings Inc., another major Hollywood talent agency that owns WME. Endeavor has been the most ambitious agency in diversifying its portfolio beyond representation. It owns properties such as UFC (Ultimate Fighting Championship), WWE (World Wrestling Entertainment), Professional Bull Riders (PBR), Miss Universe pageant, and IMG Models. Endeavor also went public earlier this year after several failed attempts.
Another example is United Talent Agency (UTA), the third-largest agency in Hollywood. UTA sold a stake to Swedish private equity firm EQT AB last year to fund its expansion plans. UTA represents clients such as Seth Rogen, Kevin Hart, Tiffany Haddish, and Gwyneth Paltrow.
The deal between Pinault and CAA is expected to close by the end of the year, subject to regulatory approvals. The terms of the deal were not disclosed, but sources told Bloomberg that Pinault will pay cash for the stake. The deal will also give CAA an enterprise value of $7 billion, which includes debt.