It’s a swampy August night in Las Vegas, temperatures simmering in the mid-’90s. Inside the air-conditioned T-Mobile Arena just off the Strip, a different sort of heat is rising. Fans wrapped in the orange, green, and white of the Irish flag sway in unison, chanting for Conor McGregor, the Dublin-born star of Ultimate Fighting Championship, the mixed-martial-arts league. He is facing off against Nate Diaz, a Mexican-American who surprised the fight world in March when he knocked McGregor out. The Irish fighter, whose pale skin is fully inked in elaborate tattoos, has made racially derogatory remarks about Diaz, and at a joint press conference a few days ago Diaz ended up hurling water bottles and storming out.
Amid the arena’s Bud Light–infused fervor, the two most powerful dealmakers in Hollywood sit cageside as if they own the place. Which they do: Patrick Whitesell and Ari Emanuel, co-CEOs of über–talent agency WME-IMG—backed by a number of financial heavyweights, including Silver Lake Partners, which is a significant investor in the agency—completed the final paperwork on a $4 billion acquisition of UFC just 48 hours earlier. “Nine days of hell” is how Emanuel describes the complex, into-the-night negotiations. “We just kept grinding. Patrick and I were not letting go of the ankle.”
Whitesell, 51, and Emanuel, 55, are no strangers to confrontation, usually on behalf of their clients, who include megastars like Matt Damon and Serena Williams. Increasingly, they’ve expanded their ambition—from the 2009 merger of their upstart agency, Endeavor, with the venerable William Morris Agency to their bold combination with sports-and-marketing empire International Management Group three years ago. What the UFC deal represents, though, is something entirely different, a new and even more audacious strategic strike that aims to challenge the core assumptions of the entertainment industry. Because this time, instead of just helping others create projects, they’ve made a major, multibillion-dollar leap into owning content themselves.
Whitesell, a lanky Iowan with all-American good looks, stares at the Octagon, the cage-enclosed ring where the fights take place. It’s a mobile-screen-friendly 750 square feet, he notes. He then scans the millennial-filled crowd and declares flatly that UFC is “going mainstream. We just gotta, kind of, turbocharge it.” The fact that mixed martial arts might be considered lowbrow by the Polo Lounge set is less important to them than UFC’s unexploited global potential. And UFC is only the beginning of where they want to go.
Emanuel, typically a whirling dervish known for his speed phone calls, remains seated alongside Whitesell, transfixed by the action in the cage. Such stillness is uncharacteristic (Emanuel has treadmill desks installed in all his offices), but he is enraptured by the drama of two human beings tearing each other apart. His attention is diverted only once: when he swings around in his $8,000 seat to introduce onetime heavyweight champion Mike Tyson to his teenage son Ezra.
During the final few minutes of the marquee bout, as McGregor and Diaz collapse on each other in a bloodied huddle, Emanuel is finally on his feet with the rest of the crowd, his hands cupped around his mouth as he screams into the cage, the veins on his neck standing out like cables. McGregor, who ultimately landed more blows, is declared the winner. A slurred rendition of the Irish national anthem cascades through the crowd, as Emanuel grabs his black-and-white-check blazer and rushes for the exit. I divert him momentarily: What was he yelling at the end? He practically chirps, “I wanted him to kick him in the body!” He wasn’t rooting for McGregor or Diaz. As always with Emanuel, whose career has been defined by sticking it to doubters, all he wanted to see was a great long fight.
A few months before the UFC fight, Emanuel and I have lunch at Jack & Ben’s, the restaurant (named after Whitesell’s and Emanuel’s fathers) in the lobby of WME-IMG’s Beverly Hills, California, headquarters. Emanuel, who is notably relaxed and unguarded on this bright spring day, leans back in his booth. As a waiter obsequiously serves him a paleo lunch, he tells a story about another CEO. This executive, he explains, came to him looking for advice on how to fix his company, but couldn’t help spending most of the conversation rhapsodizing about its glorious history. Emanuel’s expressive face—a weather map whose shades range from jokey amiability to don’t-mess-with-me intensity—folds into a grimace as he says, “I don’t want to end up like that guy.”
Nostalgia has long been a hallmark of Hollywood, but Emanuel and Whitesell—who first partnered with Emanuel in 2001 and helped push Endeavor beyond its boutique origins—show no hint of it. They don’t talk about the simpler days, when a handful of stars commanded $20 million a movie and a hit TV show could gush syndication revenue for decades. They don’t pine for what had been the ultimate promotion for an agent back when they started their careers in the mailroom in the 1980s: to be picked to run a movie studio. Instead, what they talk about is forging “a media company that is built for where the world is going.”
With nearly 6,000 employees, WME-IMG (yes, a name change is in the works) already controls arguably the most important piece in the creation of movies, TV shows, and sporting events in today’s tech-flattened entertainment business: the talent. “Their proximity [to stars] and that relationship capital gives them power,” says Peter Guber, a former studio chief who now runs Mandalay Entertainment Group, the film, TV, and sports conglomerate that co-owns the Los Angeles Dodgers and Golden State Warriors. “They are now coming in the back door, the side door, over the top.”
“If we do it right, this is the best platform,” Whitesell says, meaning that he believes that the collection of assets that he and Emanuel now control give them the best possible tools to navigate every shift roiling their industry, from the rise of China to megamergers such as the proposed AT&T–Time Warner deal. WME-IMG not only represents such Hollywood luminaries as Claire Danes and Jimmy Kimmel, but also sports stars, fashion designers and models, and chefs. It sees potential in using IMG’s business selling media rights to events such as Wimbledon and Chinese soccer to sell TV shows around the world without having to go to a studio to do it for them. The events in which it has equity—fashion weeks in New York, London, Milan, and Sydney; contemporary art fairs in New York, London, and Berlin; Professional Bull Riders and UFC; a new e-sports league via a joint venture with Turner Broadcasting—give it a stake in the booming live-event business. Everything holds appeal for major brands looking to reach customers in new ways, and WME-IMG also owns a 49% stake in one of the most highly regarded ad agencies, Droga5.
These pieces may seem eclectic and even random. But to Whitesell and Emanuel, there’s a unifying theme: They all can be entertainment. “They all have that connective tissue,” Whitesell says, they are all platforms to create content. They can then sell all these forms of entertainment directly to fans interested in going deep in their niches. “There will be more disruption, across all of [media and entertainment],” says Whitesell, who’s known as the deeper strategic thinker of WME-IMG’s co-CEOs. “But that will be good for us.” As traditional distribution models continue to shift, “No one part of our business will suffer so much that the company is hurt.”
Although Whitesell and Emanuel’s traditional agency rivals, notably CAA, have also diversified, “I don’t think anyone’s taken the leap that Ari and Patrick did, and so quickly,” says CAA cofounder Michael Ovitz. “Their scale in such a short time is amazing.” It’s as though Whitesell and Emanuel looked at conglomerates such as Fox and Disney and thought, What if you could build one of those from the ground up for the 21st century? “Their ambition is pretty big,” says James Murdoch, CEO of 21st Century Fox, choosing his words carefully. “They’ve committed to [becoming] an owner and a creator of content, much like us. They believe in the value of investing upstream, as do we.”
Bull riding and ultimate fighting and Miss Universe (which WME-IMG purchased from former client Donald Trump) might seem a world away from controlling, say, Pixar, Marvel, and Lucasfilm. And it is. But it’s the textbook definition of disruption to start with something people consider to be folly and work your way up. Whitesell and Emanuel’s approach, as their former Endeavor partner David Lonner described it to me, has always been, “We just have to give ’em little body blows, again and again. Then we knock ’em out.” WME-IMG knows the assets it now controls, often from having been their agent before acquiring them. They’re relentlessly focused on making these properties better, and if they do, they will reap all the rewards rather than an agent’s traditional 10%.
Although not every part of WME-IMG’s burgeoning empire is successful (critics are quick to point to the underperformance of IMG College, which sells media rights for university-sports powerhouses), growth is under way. WME-IMG’s earnings before interest and taxes are expected to increase 20% this year to $480 million, and its private valuation has hit $5.5 billion (more than Vice Media and augmented-reality pioneer Magic Leap). When WME-IMG goes public, which sources say could be as soon as 2017, all those shots will have added up—certainly as far as Whitesell’s and Emanuel’s personal net worth is concerned. “Now 50% of our business we own, and it’s ours to lose,” Emanuel says, taking a bite of broccoli. “We can only fuck it up. We can no longer say, ‘The client didn’t do that. The buyer didn’t do that.’ It’s ours. We either win, or we lose.”
“The dirt looks really good, by the way.” It’s early June, and Barnett Zitron, the managing director of Made, an edgy counterpart to New York Fashion Week, stands in a cavernous space in downtown Los Angeles, which in 48 hours will host Made L.A., the company’s first West Coast event. Right now, though, we’re surrounded by stacks of crates and tangles of multicolored cords, and then there’s the two bulldozers’ worth of earth that’s been dumped in a far corner of the room. Zitron, an affable New Yorker wearing a black T-shirt and patent-leather sneakers with no socks, explains to a group of WME-IMG executives and sponsorship partners that the dirt, which cost $7,000, is for a fashion show by the clothing brand Hood by Air. It will involve, he says, “flying car parts.”
Before WME merged with IMG, fashion was a “stepchild” for the private-equity firm that then owned IMG, says Catherine Bennett, SVP and managing director of IMG’s fashion events. Her sole focus, she tells me as we survey the Made L.A. site, was to produce runway shows. But Whitesell and Emanuel want her “to be disruptive,” and soon after the merger, WME-IMG acquired Made as part of a broader mandate to groom up-and-coming designers and fuse fashion with entertainment. (Bennett, a soft-spoken blonde with a law degree from Georgetown, was also tasked with making sure Emanuel sat still during his first fashion show. “I was like, ‘You know you can’t get up, right? You have to stay seated.’ ”)
This fashion-as-pop-culture effort is on display when I return the following night and find the space transformed. Cool kids with rainbow-colored hair gather around an outdoor bar and wander through pop-up shops peddling clothing by Made designers—including some that debuted during the event—custom energy elixirs, and even complimentary manicures and haircuts. Tickets cost $55 to $400 (for a VIP pass). Ten bucks confers access to just the pop-up stores.
The apotheosis of the night comes after the (delayed) arrival of Kanye West, who’s here to cheer on fellow rapper Tyler, the Creator’s runway debut for his Golf Wang label. The event opens with WME client Tyler miming waking up in his pajamas on a giant revolving bed, then segues into an X Games–style exhibition with models careening down a half-pipe on skateboards. Tyler then launches into his latest single, “My Ego,” before loping around the raised runway and delivering a Moth-style confessional. “Growing up as an inner-city black kid, I wasn’t the most masculine. I wasn’t into sports,” he says, dressed only in baggy shorts. “I liked pink and shit.” As a finale, West (who isn’t repped by WME-IMG) steps forward and hands Tyler an envelope. Tyler opens it and announces a new sneaker line, saying that everyone in the tent will receive a pair. “You’ll get a shoe! You’ll get a shoe! Yes, n——-, yes!” Tyler booms while pumping his fist in the air. Then he tells the screaming crowd to “Go the fuck home . . . Seacrest out,” and drops the mic.
Made L.A. may be a bit of a “Frankenstein,” admits Zitron, but by mixing “fashion with music [it] creates an entertainment environment that consumers want to buy tickets to.” WME-IMG is actively looking for how it can create more mashups across its business. In 2015, WME-IMG arranged for country music star Brad Paisley, a client, to tour colleges that it sells sports rights for, performing concerts during football weekends to enhance the experience and introduce the singer to a younger audience. “The first event we did was Virginia Tech,” says Jason Lublin, WME-IMG’s COO. “It’s raining, but 80,000 people show up. They were expecting 8,000. The next day, every one of the schools called us.” (Paisley did another college tour last fall.) In August, the Professional Bull Riders’ Built Ford Tough series in Nashville included a Steven Tyler concert. Yes, he’s a WME client: The company enlisted him to perform the new PBR theme song, which appears on Tyler’s recent album. The Nashville event also featured a screening of the Netflix rodeo documentary series Fearless, which was packaged by WME and features PBR riders. As Whitesell tells me later, “We’re just scratching the surface of what a weekend around an [event] can be. And we have everything: music, fashion, celebrities, food.”
At New York Fashion Week this September, WME-IMG made a conscious effort to open the shows up to the public and new sponsors—and create opportunities for designers to adopt the “see now, buy now” model that consumers are starting to demand. WME-IMG installed the Shop, a lively pop-up boutique, not far from one of the runway locales, where passersby could watch live streams of the shows and purchase jewelry and accessories created by NYFW designers. Further uptown, Target turned a bar across from the second runway-show venue into a piano lounge where Paul Shaffer banged away on a bright red piano and Queen Latifah crooned. Neither are clients, but a number of the models that WME-IMG represents, including Kendall Jenner, Christie Brinkley, and Chanel Iman, attended—elevating the sex appeal of this respite from the shows.
“More and more, Fashion Week is turning into a consumer experience,” says WME-IMG’s head of content and co-president Mark Shapiro, “and we want to lead that charge.”
Emanuel refers to Shapiro as “my little brother,” and it’s easy to see why. Both are fast-talking Chicago natives, and they became fast friends years ago on a red-eye flight where Shapiro was furiously, and noisily, typing a memo. He looked up to see Emanuel ordering his seatmate to scram before saying: “What the fuck are you doing?”
Shapiro, 45, who was a brash programming wunderkind at ESPN and then served as CEO of Six Flags and Dick Clark Productions, acts as WME-IMG’s storyteller-in-chief. He surveys the company’s properties for new TV shows, digital series, documentaries, apps—anything, really—that can be turned into content, packaged, and sold.
“Ari and Patrick, they get that content is the driver,” Shapiro says when I meet with him in his slate-gray New York office. It sets everything else in motion, from viewership to sponsorships to ticket sales to pay-per-view subscriptions. In the fragmenting media world, “Everywhere you look, someone’s looking [for content] and is willing to pay. And they were like, ‘Look, we have access to everybody, and we have content coming out of all of our pockets—whether we own it, represent it, license it, distribute it, create it, produce it.’ ”
Shapiro’s job is to package it, whether it’s a digital series on bull riding or a fashion show, which Shapiro hopes to one day bring to network TV. “If you could do the Chanel show in prime time, I just think so many people would watch that,” he says, posing a thought experiment. “You could turn that into a huge red carpet, [do] interviews beforehand with Beyoncé . . . Gwyneth Paltrow goes . . . Karl Lagerfeld’s got the gloves on and you’re behind the scenes as he’s putting them on and he’s getting ready to go out there. And then you’ve got the show itself, and then you’ve got the post.” He slaps his hands on his knees and beams. Shapiro’s enthusiasm is infectious, but some people are skeptical about his desire to transform everything into entertainment. “He seems to have done his homework,” says Brian Phillips, who runs the fashion consultancy Black Frame. “But it’s like everything in Hollywood: Yeah, man! This is amazing! It’s going to be great! The reality is, they talk a big game, but they haven’t delivered yet.”
In the more traditional Hollywood areas, they’re starting to see benefits from putting different assets together. One of Emanuel’s favorite things to say is that WME-IMG is “going from a B-to-B business to a B-to-B-to-C-to-D business,” which means going from idea to screen with, increasingly, no other middlemen involved. The prototype for this model is The Night Manager, the TV adaptation of the John le Carré novel that started off as a WME-IMG package (the company represents stars Hugh Laurie and Tom Hiddleston as well as the production company, the Ink Factory). Typically, at that point, the agency’s role ends and the show is bought by a studio like Sony or NBCUniversal, which sells it to networks. But in this case, WME-IMG did the selling itself.
“I wanted to prove the point that we have all this incredible leverage and a wealth of relationships with broadcasters around the world,” says Ioris Francini, the Italian-born, London-based co-president of WME-IMG who Whitesell calls the company’s “intelligence network,” because of the relationships Francini’s team has built globally. Francini tapped IMG’s global sales force to sell The Night Manager the same way it does Wimbledon, and the show debuted in 188 countries earlier this year. The revenue that might have accrued to a studio or distributor all flowed to WME-IMG. The agency has gone on to make similar deals for the sci-fi detective series Dirk Gently and comic travelogue The Grand Tour, featuring the Top Gear stars.
WME-IMG is also creating its own digital-streaming services. Whitesell and Emanuel “view technology as a wedge that lets them insert [themselves] into businesses that otherwise maybe an agency wouldn’t be able to get into,” says Marc Andreessen, cofounder and general partner of the VC firm Andreessen Horowitz. Last year, WME-IMG launched M2M (Made to Measure), a fashion-focused digital network that was the first to launch exclusively on the new Apple TV. Whitesell says that M2M has been a crash course. “How do you program a [digital-streaming] channel, and what are all the pieces? As other opportunities beckon, we’ll be ready.”
One of those ripe possibilities came with UFC, which owns Fight Pass, the Netflix of MMA fighting. At the time WME-IMG acquired UFC, the $9.99-a-month network had just 450,000 subscribers. World Wrestling Entertainment, by contrast, has almost 2 million. Conveniently, WME-IMG represents the WWE, and it has tapped its content-strategy team to improve Fight Pass’s programming. “You could do a show as simple and gratuitous as How to Pick a Ring Girl,” Whitesell says. “You can go to the dojos—the training facilities—and follow the journey of these fighters.”
By expanding Fight Pass, they add direct value: If the streaming service accrues as many subscribers as WWE’s, that’s $240 million in annual revenue. And a robust Fight Pass also gives WME-IMG more leverage with broadcasters when it renegotiates UFC’s TV rights. UFC’s U.S. television deal currently averages $115 million annually from Fox Sports; UFC has reportedly told investors that it could quadruple when the next contract begins in 2019. “There’s nobody in the world better to lead the negotiations for the U.S. television rights deals than [Emanuel],” says UFC COO Lawrence Epstein. “I know Ari works hard for all his clients, but he’s working for himself now.”
“What the fuck are we doing here, Patrick?”
The line is typical Emanuel: jokey, crafted to startle, and, yes, profane. He and Whitesell are sitting onstage at the Cooper Union building in Manhattan, offering a state-of-the-company address to their international team. (Many join via live stream.) Junior agents have been firing swag into the crowd with T-shirt cannons, and jokes about bull riders abound. The irony of using this venue—home to historic speeches about equality from Abraham Lincoln, Frederick Douglass, and Barack Obama—isn’t lost on the co-CEOs.
For the company, though, this is a momentous occasion. There is a sense that WME-IMG’s transformation from a collection of interesting but disparate assets into a single-minded machine is finally starting to feel real. When a slide goes up saying EVERYONE SAID WE’D FAIL. WE WENT TO WORK, the room erupts in applause.
WME-IMG’s aggressive reinvention of its business has spawned a predictably intense backlash in some corners of Hollywood. “I’m surprised the clients are willing to accept the agents growing as big as they are,” says one industry source. Adds a rival agent: “Focus is undervalued.” The WME-IMG retort: Today’s talent clients are “entrepreneurs,” and by giving them access to the company’s many divisions, they can broaden their own brands and portfolios. Clients like Mark Wahlberg and Dwayne Johnson have greatly benefited from this approach. WME-IMG has helped Wahlberg build a hamburger chain (and a reality show about it), a purified-water brand, and a nutritional-supplement business. Johnson received a “brand review” by ad agency Droga5, leading to a lucrative deal with Under Armour and his own motivational app.
The flip side, as even some clients joke privately, is that talent’s role at the company has become “to feed the machine.” Is sending Paisley out to perform in college towns on football weekends what’s best for him, or for the company’s struggling IMG College division? When UFC announces a carefully curated roster of 23 celebrity investors—from Conan O’Brien to Guy Fieri, many of whom are WME-IMG clients—does the greater benefit accrue to those stars or to WME-IMG and UFC? And what happens when the company’s content creation puts it in conflict with the same businesses that it sells to? “It’s a brave new world,” says one manager. “Now they’re competing with studios.”
For the moment at least, studio chiefs appear unruffled, largely because, as Fox’s Murdoch tells me, “We do a lot of business with WME-IMG.” Adds Leslie Moonves, chairman and CEO of CBS, “Of our new shows, they’re involved with 75% of them. All our big comedy stars—Kevin James, Matt LeBlanc, Joel McHale—are all their guys. And our biggest movie that just finished shooting in Boston (Patriots Day), about the Boston Marathon bombing, was packaged by Ari.” Last spring, TV networks acquired or renewed more than 90 series repped by WME-IMG—more than twice as many as any competitor.
Perhaps Ovitz, the superagent of the 1980s and 1990s who shocked Hollywood by expanding into investment banking and advertising, puts it best: “I had a slogan I used: ‘No conflict, no interest.’ We were constantly getting the back of our hand slapped with a ruler and told, ‘Hey, you can’t be a principal. You can’t produce commercials.’ But we did. We got around it. I don’t believe that today’s environment is hostile to that. Creating jobs is all anyone cares about.”
WME-IMG executives are only slightly perturbed when these friction points are raised. “Conflict is unavoidable in this business,” says Rick Rosen, a partner who runs WME’s television department.
“We just have to be open and transparent.” Executives react more strongly to the contention that they aren’t as focused on being agents. “When Dick Wolf wants to talk to me about the negotiation on his NBC deal,” Rosen says, “I have to make that happen.” Emanuel’s response is an eye roll. “I do service my clients,” he says, clearly annoyed. “Do I have to be in an office to service them? Most of Hollywood stays in Hollywood. No one’s getting on a plane and going to Argentina for three meetings. Flying 14 hours for three meetings. And then getting on a plane and flying to London. Or going to China for a lunch and a dinner and coming back. I don’t give a shit. I did it last weekend.” He holds up his iPhone to indicate it’s all he needs.
The company’s combative striving comes from Emanuel, who as a child was diagnosed with dyslexia and ADHD. In grade school, his mother hired a tutor to help him, and he recalls having to “sit by a windowsill; we had this window that looked down on the street. And I had to be there for three hours. This fucking tutor, this old lady, she was a witch. But she got me to read.” Now, Emanuel says, “Thank God I’m dyslexic. You know, when you’re dyslexic, you gotta work really hard. You’re okay with failure, because you feel it every day. You see things differently because you have to.”
When we meet up before New York Fashion Week, I ask Emanuel why he keeps up the fight when WME would have been just fine operating as a traditional talent agency, or at least as a slightly—as opposed to hyper—diversified agency, and he stops. He drums his fingers heavily on the table, as he does when he thinks. Emanuel now swears by the meditation practice One World, and for a moment, he reveals his newfound pensive side. “My brother turned 59 today. Zeke,” he says.
Zeke is Ezekiel Emanuel, an oncologist and the chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania and the founding chair of the Department of Bioethics at the National Institutes of Health. Emanuel’s other brother, Rahm, is the mayor of Chicago and Obama’s former White House chief of staff. Ari, the baby brother, has been trying to keep up with those two his whole life.
“And I called him up yesterday, said, ‘How ya doin’?’ He’s a guy that, he’s so unemotional. And he kind of got a little emotional on me,” Ari says. “I go, ‘You’ve done unbelievable work. You’ve helped the world.’ He goes, ‘We’re on this fucking planet for two seconds. Two seconds! And snap, it’s over.’ He goes, ‘I cannot believe I’m 59.’
“So I would say to you, why not? You know what failing is? Not doing it. Not that I did it and failed. Failing for me is not doing it. For me, I have these ideas, I want to do it. Let’s do it. And guess what? What happens if it doesn’t work? You just have to keep on working until it works. Okay, let’s work! Who cares? We’re here for a pimple.”