For years, Hollywood talent managers have complained about a California law that puts them in danger of losing their commissions if they are caught engaging in activities related to obtaining work for their clients.
The issue concerns the Talent Agencies Act, a licensing scheme originally enacted to regulate agents and ensure they act in the best interests of their clients. The law says only licensed agents can “procure” work in the entertainment industry and that managers caught doing the same can have their contracts canceled and commissions forfeited. While the intent of lawmakers was to prevent unscrupulous business dealings, such as conflicts of interest, it has become a sword largely wielded by talent to evade commission payments. At least $250 million in compensation has been forfeited over the past 55 years, according to the trade group that represents entertainment industry executives.
But in 2020, a former CAA employee recognized a quirk in the law that managers could take advantage of. In his opinion, it was not necessary to obtain a license to provide work opportunities for clients if one could tolerate the risk of being sued and losing the commission.
“There appears to be a 'gray area' as to how managers should technically procure materials since they do not have a license from the California Labor Commission,” this unidentified former CAA employee wrote in an email. “However as long as the artist doesn’t sue the manager… it seems like the managers are fine?”
The theory outlined in that message became the central business model for Range Media Partners, a brand management and development firm founded later that year by departing partners at a number of agencies, according to a lawsuit filed Monday in Superior Court of Los Angeles by CAA against the company. Seeks a court order barring Range from further violating the TAA by engaging in activities restricted to licensed agents and representing members of the Writers Guild of America without the guild's permission, which would effectively preclude its core opportunities-securing functions of work for talents.
The crux of the complaint is based on Range's alleged theft of confidential information to defraud customers, but its scope cuts to the heart of the company's business relationships. CAA claims that Range, which did not respond to a request for comment, is really just a rival talent agency masquerading as a management company, allowing it to circumvent laws and guild agreements that give it an unfair advantage over competitors. In practice, Range performs all the duties of a talent agency, even structuring deals in ways that agencies cannot, the lawsuit says. One example: The company may offer high-profile clients the option to avoid paying a commission in favor of a production fee or credit on their project.
“Range's founders told at least some of these CAA clients that they didn't 'need' a talent agent to get them work, because Range could do it all,” says the complaint from the major talent agency, which reports the theft of confidential information about clients' deals, revenue, preferences, interests and upcoming projects, among other things.
In an investor presentation, Range billed itself as the “game-changing” successor to CAA and Endeavor, according to the lawsuit. He touted plans to “recruit high-end representatives away from their current incumbent” and to “rethink the representation system,” with “production services as a cash cow.”
Since its inception four years ago, Range has emerged as a competitor, albeit a small one, in the talent agency landscape that has consolidated into three major players after CAA closed its 2022 acquisition of ICM Partners. It has attracted investments from hedge fund billionaire Steve Cohen's Point72 Ventures, media mogul John Malone's Liberty Global, TPG founder David Bonderman's Wildcat Capital, family entertainment company Playground Productions and A+E Networks, which serves as co-producer of scripted television projects. at the company.
Range's emergence coincides with a time when talent is wondering whether they really want an agent. After the Writers Guild of America sued Hollywood's four largest talent agencies in 2019 in a battle over packaging fees and production entities owned by the agencies, thousands of writers fired their agents, and some Powerful actors, like Damon Lindelof, have never summed them up. Some, including Jennifer Lawrence and Leonardo DiCaprio, have not had agents for years. These two megastars have their interests represented by Rick Yorn of business management firm LBI Entertainment as Hollywood evolves into a business where there are often overlapping responsibilities between agents and managers. In practice, both provide professional advice and engage in activities related to client work.
In this change, agents are increasingly turning to management. Theresa Kang-Lowe and Phil Sun both left WME in recent years to start their own management companies. Dave Bugliari, Mackenzie Condon Roussos, Rich Cook, Michael Cooper, Susie Fox, Sandra Kang, Rachel Kropa, Chelsea McKinnies, Peter Micelli, Mick Sullivan and Jack Whigham have left top agencies to become founding partners of Range. Some of the former CAA employees who left for Range are in arbitration with the agency over the canceled capital.
“Before, the agents were the most powerful. Period,” said UTA CEO and co-founder Jeremy Zimmer Vanity Fair last year of the rise of management companies. “Now there could be a division of power.”
However, the move could backfire on management companies involved in “procuring” work for clients. Deftones filed a complaint with the California Labor Commission in 1997 seeking to void agreements with former manager Dave Park over TAA violations. A commissioner later quashed the fees on the grounds that Park had secured 84 shows for the band. Marathon Entertainment owner Rick Siegal subsequently sued the state attorney general in a lawsuit claiming it is unconstitutional to enforce the talent manager law. After losing that case, nearly 200 talent managers supported his appeal to challenge the TAA, which still stands.
In its lawsuit, CAA argues that the TAA's orders range from engaging in activities related to obtaining work for clients and that civil lawsuits against talent cannot be the only recourse. But it remains to be seen whether the agency has the right to pursue a court order blocking further violations of the law since it may not have been directly harmed by the conduct.
In that scenario, it may be up to the WGA, which did not respond to a request for comment, to take action against Range if he is found to have violated rules relating to job security for clients. The CAA alleges the company is violating a corporation rule that bars agencies from acting as packing agents or owning a major stake in a manufacturing entity.