Mass sacking of Hollywood agents as recession bites

They are notorious for taking a slice of the profits, but now it's the 'tenpercenters' who are getting cut

Some of Hollywood's biggest power-brokers are being forced to cancel power lunches, trade in their Porsches, and get used to life without a personal assistant to shout at, as LA talent agents become the latest breed of white-collar superheroes to fall on hard times.

More than 100 employees at William Morris, the venerable Beverly Hills firm that represents some of the biggest names, were made redundant this week, in one of the greatest bloodbaths this cut-throat industry has ever seen. The move came as the US Federal Trade Commission approved a merger between William Morris and its former rival Endeavour, creating a "super-agency" which represents more than a thousand of the world's most famous actors, writers and directors.

Lay-offs were expected ever since the two firms announced plans to join forces to ride out the economic downturn and challenge the dominance of CAA, Hollywood's long-standing market leader. However, the scale of the redundancies surprised many observers.

Rival agencies are now hungrily circling clients of both businesses, hoping to lure away their most lucrative stars. William Morris represents the likes of Kanye West, Britney Spears and Russell Crowe; Endeavour's stable boasts Robert De Niro, Matt Damon and Adam Sandler. "The fallout hasn't really begun. There's been a trickle, but I expect a waterfall in the coming months," said Frank Wuliger, a partner at the Gersh Agency. "When agents get fired, the actors they represent think again, because the agent-client relationship is intimate; it's like a marriage."

Even before this week, William Morris had already lost agents David Lonner, whose clients include the Star Trek director JJ Abrams, Aaron Kaplan, its head of scripted television, and Steve Rabineau, who took 27 clients to rival firm UTA. Recent reports suggested that William Morris sports agent, Lon Rosen, who represents basketball star Magic Johnson and baseball's Alex Rodriguez, may also leave. The future of the firm's ex-chief executive, Jim Wiatt, is also unclear.

At Endeavour, co-founder Tom Strickler, who represents a host of prominent screenwriters, as the merger was announced.

"Tenpercenters", as agents are known, are notoriously sharp-elbowed, and many small firms such as Gersh now hope to convince former Endeavour clients that the new firm, WME Entertainment, will no longer offer the "boutique" service they had enjoyed.

Kevin Spacey was among the first casualties of the new era. He announced this month that, after years with William Morris, he was joining CAA. This week, by way of response, WME announced its first new signing, stealing the Lost star Matthew Fox, inset below, from ICM.

The turmoil comes as agencies weigh the cost of the recession. Box-office revenues remain robust but DVD sales have slumped and fewer films and TV shows are getting the green light. Owing to difficulties securing finance, the once extortionate salaries offered to actors and writers are being slashed. "All you ever need, to do to know what's happening in Hollywood, is to follow the money," said an agent at a leading Beverly Hills firm, who was not authorised to speak publicly. "Look at this year's box office: fewer hit films are star driven. People are buying into concept movies like Terminator and Transformers. The days when $20m-a-film deals happened each week are gone. Bluntly, that means fewer jobs for agents."

In an industry obsessed by pecking-orders and status, the culture clash between agents left behind at the newly merged WME Entertainment is also providing endless material for Hollywood's gossip mill. Endeavour was founded in the mid-1990s by Ari Emanuel, the brother of Barack Obama's chief of staff, Rahm. Before the merger, it had the likes of Keira Knightley, Shia LaBeouf and Danny Boyle on its books – and a reputation for lavish corporate spending. William Morris, by contrast, had a more staid image, and a prestigious 111-year history. However, some of its biggest stars, including Mel Gibson, Denzel Washington and John Travolta, are considered to have passed their commercial peak.

The tension isn't helped by the fact that the merged firm's new office, an eco-friendly Beverly Hills building, is not expected to be ready until 2010. When it does move in, disputes will rage over everything – from who gets the most convenient underground parking space, to who lands the best office.