CAA's PE Deal With KKR Falls Through


LOS ANGELES (CelebrityAccess MediaWire) — The deal Creative Artists Agency's had been working on with private equity investment firm KKR (Kohlberg Kravis Roberts & Co) may be on the rocks. As previously reported in CelebrityAccess, CAA had reportedly been in talks with a number of private equity shops, including the aforementioned KKR and TPG Capital over a possible joint venture to serve as a vehicle to help CAA continue to develop their sports division and invest in other revenue-generating arenas.

KKR had been on track to invest as much as $250 million in the agency, giving them minority ownership while allowing CAA's partners to partially liquidate their stakes. Now, according to Deadline Hollywood's Nikki Finke, the deal between CAA and KKR appears to be kaput, with one KKR exec telling Finke that, "The town (Hollywood) is too complex for me."

Finke noted that another reason for the deal's breakdown may lie in KKR's July 15th IPO, which proved to be a significant flop, leading Bloomberg's news service to characterize it as 'botched.'

CAA's sports division has become an increasingly important component for the agency after they started to focus on it in 2006, when CAA lured a group of major sports agents away from their rivals at IMG. In addition to representing players, their sports division gives CAA access to creating lucrative sponsorship deals between corporate clients, athletes and teams. However, it is also an expensive business, with steep initial investments and deals that can take years to start producing. CAA, like other major agencies, has been facing increasing pressure from slowing DVD & CD sales and fewer 'greenlit' projects, making diversification all the more important.

Thus far, CAA has been underwriting their own efforts in the sports arena, but KKR's buy-in would have given them substantial liquidity to continue their sports expansion, as well as giving them latitude to invest in other arenas such as the increasingly lucrative video game world. – CelebrityAccess Staff Writers