BREAKING NEWS… 2ND UPDATE: Is this the beginning of the end of another Hollywood agency era? My sources tell me that, after months and months of negotiations with potential financial partners pursued by CAA, the agency has focused on KKR — Kohlberg Kravis Roberts & Co, the NYC-based private equity firm. The deal being bargained is for KKR to invest a whopping $200M in Hollywood’s most powerful agency. That’s a huge cash infusion considering that CAA’s revenues were around $300M in 2007 before the financial crisis struck. So why does CAA need so much money? This isn’t just for CAA’s sports business, despite the fact it’s a notoriously expensive enterprise (because of the size of upfront investments in players that don’t pay off for many years) and the powerhouse sports agents which the agency has assembled in recent years (who are already not-so-quietly complaining about their compensation packages). And this isn’t just an alternative to self-financing their growth into other businesses like sports production, video games, and other entertainment arenas. No, this is much more about CAA needing to raise additional cash as a liquidity event for its partners.

They say that CAA’s 2nd generation of owners — one-time Young Turks: Bryan Lourd, Kevin Huvane, Richard Lovett, Doc O’Connor — are upfront about their desires to cash out of the agency business. That doesn’t mean they are going to leave right away — because of my story CAA today was busy denying any exits are imminent — but they’ve expressed that desire often enough of late. Lourd has always said he wanted to move to NYC as soon as his daughter with Carrie Fisher turns age 18, which she does this year, and to leave the agency biz for the corporate world. Huvane has always talked about wanting to put his own life before his clients’ in the not-so-distant future, and the ever-partying agent thinks that time is near. O’Connor has been complaining about how tired he is of the agency business and its constant demands. Lovett, whom many have thought might be a lifer in the tenpercent biz, has pressing financial needs because of his still-not-final divorce and is blamed by his partners for over-spending and thus over-extending CAA’s financial resources. (Expanding into the sports biz was his idea because he hero-worshipped IMG founder Mark McCormack.)

And there’s always the next generation of younger agents coming up through the ranks who want more of a stake in the agency than the partners want to give them. The same thing happened in 1995 when CAA founding partners Mike Ovitz, Ron Meyer and Bill Haber turned over the agency to Lourd, Huvane, Lovett, and O’Connor who were threatening to leave. Meanwhile, the four were once seven, but the partner ranks have been thinned by eliminating first Tom Ross (once head of music), then Lee Gabler (once head of television), and most recently Rick Nicita (senior talent agent). CAA has shown it can navigate the rough seas of the agency biz after principals exit.