MEDIA RIGHTS CAPITAL: ENDEAVOURING TO SHIFT POWER BALANCE TO AGENCY CLIENTS (NYT)

By Nancy Vialatte

Why should a star or director work for low pay on a labor of love only to see a film studio or foreign sales company strike it rich if the movie thrives in worldwide theatrical and video markets? That�s the question the folks at Endeavor asked about six years ago, says today�s New York Times. Wouldn�t it be better to get that cash to their clients and the agents themselves?

By late 2003, Mordecai Wiczyk, under the wing of the Endeavor partners Ariel Emanuel and Patrick Whitesell, joined with Asif Satchu, to answer the question by forming Media Rights Capital.

The NYT examines the state of play at Media Rights Capital and notes that the company today has the ability to invest $400 million a year into movies, television shows and broadband Internet episodes. That�s a lot of cash, even during Hollywood's current private equity boom.

Why? The Media Rights guys are dreaming of financing 10 films, five or six television shows, and 20 mobile or broadband shows annually. That's more than DreamWorks.

The NYT posits that Satchu and Wiczyk could be in the process of shifting Hollywood�s balance of power by increasing opportunities for diverse films like �Babel,� and by giving talent more earning power and ownership of their projects.

Despite the new money and the seven Oscar nominations for �Babel,� the company has yet to convince a skeptical film business that it is not just a stalking horse for Endeavor and its clients. To expand its reach, Media Rights must overcome a widespread sense that the company is playing loose with restrictions on agencies employing their own clients or that it is somehow beholden to the agency that helped create it. �Everyone who is not in the bus, we�re going to keep stopping by the house and opening the door,� Mr. Wiczyk said in an interview this month.

A financier�s connection with a talent agency is not a novelty in Hollywood. Stung by the studios� continuing retreat from star-driven films, talent companies like Creative Artists Agency, the William Morris Agency, International Creative Management and the United Talent Agency have all sought to connect their clients with alternative financing.

Still, nearly all of the company�s projects have been built around an Endeavor-backed participant, such as Jude Law in �Sleuth,� or Hugh Jackman, in �The Tourist.� Wiczyk and Satchu say the agency owns a minority, nonvoting stake in their company, which they declined to specify.

Still, those at other agencies would like to know more. Requesting anonymity because of general industry reluctance to speak publicly about a rival�s business, some agents last week questioned whether Media Rights could be trusted not to put their proprietary information in the service of Endeavor. Others wondered if the Endeavor�s ownership stake ran afoul of regulatory provisions in California law or contracts with guilds.

Media Rights has been careful to distinguish itself as a financier rather than a producer. Representatives of Endeavor and Media Rights said the two companies became involved only after a legal review, conducted by an outside labor lawyer, persuaded them that agency law and guild regulations permitted the venture.

But studios are also wary because they have only so much appetite for films in which they are not the principal owners. After a bidding war, Universal famously paid $42.5 million for English-speaking and some European territories for Sacha Baron Cohen�s �Borat� follow up, �Bruno.�

Many in town feel that was an excessive amount to cough up especially given the limited scope of the rights but Universal co-chair David Linde told the NYT, �From my perspective, this kind of deal is only bad for the business if you did it all the time.�

Paramount Vantage�s John Lesher said a similar arrangement was ultimately sound, if not spectacularly lucrative, for his company as was the situation on �Babel.� Paramount Vantage took rights in English- and Spanish-speaking territories, and left the rest. �I�m not going to make a tremendous amount, but I�m going to make money on the film,� said Lesher.

Still, Endeavor had a jolt last week when �Babel� director Alejandro Gonzalez Inarritu jumped to CAA. People associated with the director said his departure had nothing to do with Media Rights, and in a statement on Friday, Mr. I��rritu said he hoped to find a new project with the financier, notes the Times.

Meanwhile, Endeavor�s Patrick Whitesell said he believed that the information-sharing tack taken by Media Rights would persuade other agencies to embrace its projects, though he suspected that some might foster similar financing entities rather than signing on. �I have mixed feelings about other people getting into it,� Whitesell said, �But that will just create more opportunity for clients.�