Relative unknowns quietly craft celebrity contracts behind the scenes
Young, maybe, but callow? Never. Well-trained, aggressive and deeply immersed in a culture driven by the media, Hollywood’s new dealmakers are ready to take the reins when their mentors step aside.
While the Eisners and Redstones remain safe fodder for Hollywood power lists, this next generation is putting its stamp on transactions that are reshaping a rapidly changing industry.
As studio heads and other traditional industry heavyweights focus on the overall management of far flung media conglomerates, a younger group of agents, lawyers, managers and bankers are dotting the I’s and crossing the T’s.
“Historically, the entertainment business has been localized and insular. Over time the community is becoming a greater part of the larger economic picture,” said Ron Silverman, managing director of investment banking firm Gerard Klauer Mattison & Co. “More than in the past, this new generation has to understand the larger economic environment.”
Of course, personal relationships remain the key to making things happen in Hollywood. But besides cultivating the relationship side of the business, dealmakers must be able to understand the technical and legal intricacies of video-on-demand and Asian distribution rights.
Working effectively, and often behind the scenes, these emerging power brokers are young (late 20s to mid 40s), motivated, highly educated, business-oriented, mostly white and male and more likely to identify with Silent Bob than Bob Hope.
They are people like Clark Hallren, vice president of J.P. Morgan’s Entertainment Industries Group, who raised $1 billion dollars for DreamWorks SKG to help get that studio off the ground; Daniel Aloni, an agent at United Talent Agency who represents 25 film directors; and Joseph Berchtold of McKinsey & Co., who has made himself invaluable as a consultant to studios on digital media.
“It’s a more expansive and complicated world. You’re dealing with technology issues that didn’t exist a few years ago,” said Henry Holmes, of Weissmann, Wolff, Bergman, Coleman, Silverman and Holmes. “The old sitting down for lunch and writing down a deal on a napkin doesn’t work anymore.”
New economics
Precipitating this subtle changing of the guard in Hollywood has been rapid consolidation in the media world. Most major studios are appendages of enormous international conglomerates. Those that remain independent, like Disney, have grown their businesses to tap into multiple revenue streams to stay competitive.
The handful of moguls mostly in their 50s and 60s who sit atop these corporations generally have neither the time nor inclination to negotiate how much an actor or director will get paid.
“What I find in this business is that there are the gray beards and there is that layer underneath them that are doing the heavy lifting and keeping the industry moving,” said Hallren, who, in addition to DreamWorks, counts House of Blues, Savoy Pictures and Hallmark Entertainment among his clients. “When the gray beards decide to retire, there is a whole group of people ready to take over.”
Matthew Velkes, who is leaving his position as senior vice president of motion picture finance and business development for 20th Century Fox this week to join Pandemonium Films, said it’s impossible for News Corp. boss Rupert Murdoch to stay on top of every development at Fox, which is just one division of a corporation that “stretches across every time zone.”
“Does Rupert get involved in the film business on a day-to-day basis? No. Does he know what we’re doing? Absolutely,” Velkes said.
When Metro-Goldwyn-Mayer Inc. was looking for a distribution partner, Fox got involved through a phone call from MGM head Kirk Kerkorian to Murdoch, Velkes said.
“(Murdoch) was interested in making the deal but he said ‘you go figure it out,'” Velkes recalled. “You hire the people you trust and in terms of the execution it’s the people in the trenches getting it done.”
One young executive at another large production company ventured that top executives no longer have their finger on the pulse. “The older generation in Hollywood tends to be out of touch with the new way of doing business,” he said. “They’re the last flag bearers of a studio system that is becoming irrelevant.”
Changing of the guard
The transition is not just happening at the studios. At Hollywood’s most well-connected law firms, talent agencies and investment firms, it is often the younger associates and partners whose fingerprints are on the most important deals.
Kenneth Ziffren and Skip Brittenham of Ziffren, Brittenham, Branca & Fischer may remain two of Hollywood’s ultimate power brokers, but when a client has an important deal to cut, it’s a younger partner, Cliff Gilbert-Lurie, who might be negotiating the deal.
“Skip was always there as a senior tactical advisor, but as we’ve both gotten older it’s turned into a friendship rather than a business relationship,” said “Law & Order” producer Dick Wolf.
Joe Roth, the former Disney studio chief who now heads Revolution Studios, said Hollywood’s younger dealmakers tend to view the entertainment business on a global level and not just within the confines of the United States.
“People in their 30s have to see things in a much broader way,” Roth said. “When I was coming up there wasn’t even home video. Now there’s DVDs and video and foreign markets. There’s a lot more to deal with.”
For Roth, the person handling those issues is Robert Moore, who was lead negotiator when Revolution raised $250 million in cash and $3 billion in commitments from partners Sony Corp., Fox Entertainment Group and Starz Entertainment Group.
“I’d worked with him for six years at Walt Disney and I thought he was a terrific businessman and a terrific dealmaker,” Roth said. “He understands both (the personal side) and the dealmaking aspects of the business and it’s hard to find a person who is good at both.”
Happy clients
A more obvious explanation for the rise of Hollywood’s new generation is the youth-oriented nature of the industry itself. Developing young talent is a maxim in show business, so it’s not surprising that younger actors, musicians and directors are more comfortable working with advisors closer to their own age.
The motivation isn’t strictly generational. Younger lawyers and agents are credited with taking a more creative approach to structuring deals for their talent, trading cash up front, for example, for a piece a share of the profits down the road.
“I doubt very much you’re going to have Internet clauses in (an early) Sylvester Stallone contract, but you’re definitely going to have them in Angelina Jolie’s contract,” said Nathan Kahane, vice president of motion pictures for The Canton Co. “The younger dealmakers are more knowledgeable of what’s available when it comes to creative opportunities and financing options for their clients.”
Combining that knowledge with a bit of old-fashioned schmoozing has proven to be the road to success for many of Hollywood’s new dealmakers.
“These people are playing a very important role in identifying and processing new, young talent, and they are making deals for this new talent and established players alike,” said Silverman. “Over time, these people will become the power brokers on the scene.”
