The heads of the major talent agencies speak publicly about possible IPOs, poaching and rumors of private-equity discord as THR reveals the industry's hatred, secret depositions, shrink visits and the Matthew McConaughey rant that rattled CAA.

This story first appeared in the June 12 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

On the afternoon of May 11, top CAA agents Richard Lovett and Kevin Huvane headed to the Four Seasons in Beverly Hills on a mission to make the best of a bad situation. Smaller rival UTA had just jolted the powerful, seemingly invulnerable firm headquartered in the Century City building infamously nicknamed the Death Star, pulling off a dramatic raid of its comedy division, taking 12 agents and their major clients, including Chris Pratt, Will Ferrell, Zach Galifianakis and Ed Helms. But one key player — arguably the most valuable — still was in play, and Lovett and Huvane prepared a pitch that could help CAA signal that it still reigned when it comes to the all-important matter of representing big movie stars.

That day, Melissa McCarthy, 44, was winding up press interviews for her upcoming movie Spy. The importance to CAA of keeping her was obvious: An established star of television and film, McCarthy also has a potentially gigantic franchise in her future with the Paul Feig reboot of Ghostbusters. In her suite that day, Huvane, 56, and Lovett, 54, made this argument: If McCarthy sees herself not just as a comedian but as a star who enjoyed her more serious role in St. Vincent with Bill Murray and wants more of the same — and sources say she does — then CAA is the place to be. Meryl Streep and Sandra Bullock are clients who have Oscars, and CAA represents many of the major directors with whom McCarthy might like to work. And they added that none of the defectors — led by Jason Heyman, former head of CAA's comedy department — had experience with major female stars.

Having given it their best shot, Lovett and Huvane were followed by a team from UTA, including Heyman and fellow agent-defectors Martin Lesak and Gregory McKnight. Their pitch to McCarthy: They really understood her and had been deeply involved in her career since 2010, after she started on Mike & Molly on CBS and just after the first test screening for Bridesmaids (sources say she was paid only $65,000). She had been in eight movies since then, including Identity Thief and The Heat.

On the Friday following those Monday meetings, McCarthy phoned to say she had made her choice: She (and her husband, Ben Falcone) would remain at CAA. It undeniably was a big win for Lovett and Huvane, but a key question remained as they flew to New York to be by her side at the Spy premiere on June 1: Did McCarthy make the right choice in picking the agency over the agents?

That question of agent versus agency also came up at a 2014 CAA retreat in Carlsbad, Calif. There, star client Matthew McConaughey took the stage in a giant conference room to be interviewed by Maha Dakhil, a senior literary agent. McConaughey was fresh from winning an Oscar for Dallas Buyers Club and living proof of everything the agency was doing right. He had a big endorsement deal with Lincoln, had been chosen by director Christopher Nolan for Interstellar and had earned raves for HBO's True Detective.

During the conversation, Dakhil said: "So let me ask you a question: What's more important, your agent or the agency?" McConaughey, 45, whose longtime agent, Jim Toth, was sitting in the audience, then began what a source who was present says was a palpably uncomfortable monologue. "Are you kidding me?" McConaughey is said to have answered. "My agent, not my agency. My agent is the one who fights for me every day." As the crowd shifted awkwardly, the source says the actor went further, saying: "Don't think I don't know what's going on here. You guys represent my competition — Brad Pitt, Tom Cruise, George Clooney. They're all fighting for the jobs I want, and my agent is fighting for me." (Others present refute this account, and McConaughey couldn't be reached for comment.)

Of course, McCarthy and McConaughey stayed at CAA. Nonetheless, the incidents reveal the tensions simmering in the sleek corridors of Beverly Hills and Century City as the decadeslong agency wars deliver a fresh round of subplots of betrayal, money and power — these tales with higher stakes than ever before, more gripping than most summer tentpoles. UTA's "midnight raid" (as it was described in litigation filed by CAA on April 2), complete with secret meetings, resignations-by-letter and allegations of conspiracies, provided an unusual peek into the usually private agency world. Now, some of Hollywood's most feared and influential players have been deposed — in the past few weeks, CAA's Lovett, Huvane and Bryan Lourd, 54.

But these dramatic scenes merely are tremors along the actual San Andreas: With private financier TPG Capital now holding a majority stake in CAA and Silver Lake Partners owning 51 percent of larger rival WME|IMG, the agencies are on track for either untold riches or, as their rivals might assert (or hope), eventual ruin. In either case, this shift could put an agency's internal culture and its relationships with its clients at risk — as the defection to UTA illustrates to some degree.

Money, obviously, has redefined the marketplace and played a huge role in defections and dynamics within the agencies. Put simply, many agents just want to go where they can make the most. A talent rep says that the very top people in the agency business earn close to eight figures. The next tier down makes mid-seven figures. A day-to-day agent in his or her early 30s is looking at mid-six figures but possibly a short shelf life — and at big shops, a sense that there's no big payday looming anymore. And with the possibility that the largest agencies may go public, many in the middle tier think the odds are slim that they ever will get as rich as their leaders.

With CAA and WME|IMG having sold large stakes to equity partners who may be in a rush to cash in, there's even the possibility that an agency could be sold. For his part, Lovett says there's no talk of a sale. Rather, he says, CAA's management "feels the excitement, urgency and passion to grow a great company without the distraction of having to have a specific outcome." With respect to speculation that the agency's preferred endgame is to go public, Lovett adds: "We have no need to go public. Is it an option? Of course."

WME|IMG co-CEO Patrick Whitesell is equally bullish on the opportunities afforded by private equity. "When you look at our position in film, television, music, books, commercials, and you add that with golf, tennis, international sports, media rights, fashion, food — it's a unique proposition for our clients and partners," he says. "There aren't many companies that touch all of those things like we do."

CAA's Lourd (right) with client Clooney.

The tensions and frustrations that arise from the agency wars aren't lost on the clients. "I feel sorry for agents," Better Call Saul star Bob Odenkirk, a WME client, said at a recent Hollywood Reporter Roundtable. "They work in these companies that have grown and expanded. They start with a genuine love of the work, and it gets beaten out of them. They get so swamped with the extraneous needs of the company, it's hard not to lose touch with what they cared about when they started. The agencies are so huge now, I think they also represent onions and flour now, too. … I don't know if they represent other vegetables yet, but they will."

CAA and WME now are global enterprises, each claiming primacy according to different metrics (with more than 5,000 employees, WME|IMG is bigger in staff and revenue). CAA had $647 million in revenue and $121 million in profits in 2014, according to internal documents obtained by THR. Both agencies have far exceeded whatever vision lurked in the mind of Michael Ovitz, now 68, in the '80s and '90s when he made waves by taking on Coca-Cola as a client. "CAA and WME are diversified, multiplatform, multibillion-dollar entities," snipes one CAA agent. "And then there's a bunch of boutiques."

UTA would bristle at being called a boutique, especially after executing its late-March raid. But the agency does occupy a separate tier, far smaller than the two biggest players yet larger than other agencies in town and very much in the mix in television and, to a lesser extent, movies. If agency success is in part an optics game, UTA certainly made a splash when it added a vibrant A-list comedy division and some marquee stars. What's not yet clear is the bet the agency was placing. Some competitors and industry observers say the move was expensive for UTA; the cost of bringing in the defectors is said to be far more than CAA was willing to pay them. And they say UTA will have a long wait to make money from its new relationship with emerging star Pratt, since CAA can expect to collect a big chunk of commissions on deals he already had in place, including possible sequels to Marvel's Guardians of the Galaxy or the upcoming Jurassic World.

Some (from rival agencies) note UTA has met with outside financiers and believe its real motive was to make noise to attract money and jump into the race to expand and diversify — a notion UTA CEO Jeremy Zimmer, 57, disputes. "My goal is not to figure out, 'Oh, they have 8,000 clients or 12,000 clients, so we need 8,000 or 12,000 clients; they have six offices, so we need six offices; they have sports, so we need sports,' " he says. "That has nothing to do with how we're thinking about the world." Instead, he says the focus is on growing organically, serving clients thoughtfully and maintaining a "super-collaborative" culture.

"Culture can be the reflection of an outsized leader or the vestige of history," says co-founder and chairman Jim Berkus, 69, taking subtle swipes at Ari Emanuel at WME and the legacy of Ovitz and Ron Meyer, now 70, at CAA. "In our case, it's the product of a clear idea that we really focus on, building a great service organization and believing in that as a mission."

So what was the motive for the raid? UTA cannot address its strategy due to the litigation promptly filed by CAA against UTA and the defectors. (The morning of the defection, the new UTA agents were greeted in the lobby by attorneys to take their CAA phones and any other materials back in an effort to make sure they were totally buttoned up.) But a UTA source says the goal was simple: to bring in agents (in total, UTA has about 200) to add to its roster of stars who can be incorporated into projects packaged by the agency.

So much of this drama is driven by rivalries among the top agencies that are intensely personal and idiosyncratic. For years, Emanuel, now 54, left a daily message with Lovett's office to ask him to return his call (Lovett never did) — just to get under his rival's skin. And one top partner at another firm got so fed up by CAA's endless poaching that he was driven to see a psychiatrist.

Emanuel with Anna Wintour at Fashion Week in February. He has attempted to become a fixture in the fashion world since WME merged with IMG.

For now, the jury is out on whether UTA's moves will keep up momentum. At this point, consensus in the industry is that, yes, the raid was bold, but it is neither the devastating event for CAA some would hope nor a coronation for UTA. A high-level CAA insider shrugs off the defections. "You never like to have a lot of people leave," he says. "But this was not a big deal." If the impact of the infusion of private-equity money and expansion was so negative for CAA, asserts the insider, perhaps too confidently, "wouldn't you see more people heading for the door?"

As the entertainment industry morphs in the digital era, studios have squeezed fees paid to actors, directors, writers and producers. Since agencies have been squeezed, they've looked to diversify — some more than others. UTA's Zimmer argues that the anxiety is overblown. "It's become a common refrain that the business is really dismal," he says. "It's just not true. It's not as great as it used to be, but it's still a phenomenal business. A successful movie is still a massive worldwide phenomenon and a great platform for artists."

But during the past five years, CAA and WME have followed a path of major expansion, CAA more slowly, through investment from Fort Worth, Texas-based private-equity firm TPG ($67 billion in assets). With the backing of Menlo Park, Calif.-based private-equity firm Silver Lake Partners (more than $26 billion in assets), WME moved fast with the massive $2.4 billion acquisition of IMG. From the private-equity side, TPG co-founder Jim Coulter explains the appeal of investing in an agency, which some consider a tricky proposition. Coulter, whose firm has investments in companies as diverse as Cirque du Soleil and J.Crew, was well aware of the rap on "these people-based businesses" where the assets go home at night, but he didn't buy that reasoning.

"If you look at the history of businesses like that — advertising agencies, equity firms, investment banks — there are periods of time when industries that used to be smaller private partnerships become larger companies and some consolidation occurs," he says. While other aspects of the entertainment business are in flux, Coulter asserts that one thing remains constant: "Content is sorting its way through the marketplace in ever more complicated and interesting ways. The agencies sit at the nexus of that." So if you're not sure how content will sort itself out, he says, it makes sense to invest "through the agencies that are serving all these distribution outlets and all the different content creators."

From the agency side, getting big can raise big questions. The minute an agency's leadership takes outside money, some believe that top partners will start gaming for an exit strategy that makes them even richer. That type of suspicion can be bad for an agency's sense of unity. Then there is the question of whether those top managers, presiding over multiple global businesses, will lose touch with colleagues and the clients who generate the all-important content, leading to defections and departures.

Reports of a $610 million loan arranged by CAA in December led to concerns that much of the money would go to its managing partners, especially when the loan document showed that CAA's owners would receive $399 million. Insiders say that a large number of agents since have been given an ownership stake, but CAA declines to provide specifics.

From left: Will Smith, Cruise and CAA's Lovett, who recently was deposed in the agency's lawsuit against UTA over a dozen agent defections.

And an overriding, existential issue is how those top managers will deal with pressure from outside investors hungry for profit and lacking in patience. "I'm very skeptical of private equity," says Sam Gores, 60, chairman and majority owner of Paradigm Talent Agency. "I have two brothers [billionaires Tom and Alec] who are in it, and I love them dearly and would do anything with them. But equity has a goal in mind. They often focus on exits. I never want to focus on exits. I want to focus on growth and agility."

No agency has suffered the pitfalls of outside money as much as ICM, still rebuilding from the devastating consequences that flowed from selling to Rizvi Traverse in 2005. "It's a terrible idea to let private equity into your company," says a former ICM agent. "The horror of [Suhail] Rizvi was that he took all the receivables on day one." When the agency packaged two of the biggest hits in recent television history, Modern Family and The Big Bang Theory, there was nothing to prevent him from draining away those profits, too. Devastating defections followed before a group of senior agents bought Rizvi out in 2012.

At this point, ICM partner Chris Silbermann, 47, says his agency may be smaller than its three-letter rivals, but he's very content with a partnership that feels in control of its destiny. "We like building empires for and with our clients," he says. "We have a great culture here; our clients are doing great, we've grown every year. We wouldn't even put feelers out there right now." Size isn't everything — but note those last two words.

From the very moment WME expanded in early 2014 by acquiring IMG, the chatter began: Co-CEOs Emanuel and Whitesell were going to be spread thin and (it was hoped) lose the client relationships that helped build their empire.

Going back to the agency's origins as upstart Endeavor in March 1995, the firm that would morph into WME|IMG has had something competitors lack, for better or worse: a truly outsized personality in Emanuel to provide some old-school color — or, in the unflattering words of Mike Dolan, ousted as IMG's CEO after the acquisition, "Hollywood bullshit."

Emanuel and Whitesell, 50, have been expanding ever since Endeavor swallowed William Morris in 2009. In May 2012, two years after TPG first invested in CAA, Silver Lake acquired a 31 percent stake in WME; that has been upped to 51 percent. In early 2014, WME made its dramatic move into sports and fashion by acquiring IMG. The combined company is overseen by an executive committee that includes Emanuel, Whitesell, Silver Lake managing partner and managing director Egon Durban and a senior investment professional representative from the firm, Stephen Evans. WME and IMG are run as two distinct businesses.

In a vintage piece of mischief in 2013 — the year after Silver Lake's initial investment in WME — the agency was found to be responsible for posters that appeared in Hollywood and Century City parodying the CAA logo but reading "Caan't." Following the UTA raid on CAA agents at the end of March, WME reprised the prank, sending framed copies of the poster to some of the defecting agents as well as Zimmer. "Ari is singularly obsessed with CAA," says a top partner at one of the less diversified agencies, "which seems to me a foolish waste of time." (Indeed, it seems unlikely that this type of behavior would be tolerated in other areas of the business; imagine Warner Bros. putting up "Aloha, Aloha" signs outside of Sony.)

From left: ICM Partners board members Ted Chervin, Chris Silbermann, Adam Schweitzer and Greg Lipstone.

A story in Vanity Fair's March issue rained skepticism on many aspects of the IMG deal — especially the soundness of the numbers. Competitors point out that WME offered several hundred million more for IMG than the next highest bidder, the Chernin Group. (CAA also was interested in IMG, but at about $1.7 billion.) Competitors hope that WME|IMG's $2.4 billion in debt will weigh heavily. The story suggested the loan was based on wildly optimistic projections of cash flow to be generated by the combined company. Emanuel and Whitesell committed to trim more than $150 million from IMG, which a former insider depicted as an unachievable goal.

So far, it appears progress has been slow, though a Silver Lake source says the cuts are on schedule and can be achieved without bloodletting. In a recent lender call, WME|IMG CFO Chris Liddell said the company was performing strongly in first-quarter 2015, with $76 million of EBITDA, up 27 percent from the previous year. In that same call, WME|IMG noted that it had revised its projections for its college-sports business downward and taken a noncash charge, though that did not impact its debt rating. A source with ties to the company says that with that done, WME|IMG "will continue to progress toward a forecast for 30 percent EBITDA growth in 2015." (There are those internally and externally who believe or hope that Silver Lake's Liddell intends to eventually run WME|IMG.)

Industry sources say Emanuel and Whitesell gave an undisclosed number of partners equity in the merged company but have been asking WME agents to take less in cash in exchange for more equity. That's voluntary, says a source with knowledge, and taking advantage of the opportunity just "proves these individuals believe in the business model and the upside potential." So, no pressure, right?

Competitors assume that with Silver Lake inevitably looking to cash in and WME agents awaiting a payday from their equity, WME|IMG will have to go public. A source with ties to Silver Lake says there is no impatience and pressure to do that, noting that Silver Lake invested in GoDaddy in 2011 and held on to it for four years, during which it grew dramatically, before it went public. (Silver Lake still owns a significant stake in that company.)

If WME|IMG does go public, one veteran with experience at an agency that was publicly held in the past says the idea is a bad one. "I don't think talent agents have any business being in the public marketplace," he says. "The earnings fluctuate too greatly, are too dependent on nonrecurring events. Your expenses are almost unexplainable. If somebody's looking to cash out in a significant way, maybe. But as a working business, being scrutinized by the Street? It's a terrible idea."

A senior partner at one of the smaller agencies points to the challenges that Jeffrey Katzenberg has faced at the helm of publicly held DreamWorks Animation, which has been subject to more than one SEC probe. "Jeffrey's just had the toughest learning curve ever, and he's half the crazy of Ari," jokes this person. Adds a seasoned television producer (who is not a WME client): "My idea of a great comedy is Ari Emanuel on an earnings call. Ari thinks he's the most important guy in the room? He's never met a fund manager from a large mutual fund in Milwaukee who doesn't give a shit. A publicly traded company is something that none of these people is remotely equipped to handle."

Streep with CAA's Huvane, whose A-list actress clients helped keep McCarthy in the fold.

At a CAA gathering held two years ago, after TPG had entered the picture, sources say agent Tracy Brennan lit out at colleagues, complaining bitterly about cliquishness within the agency. "That day, Tracy comes right out and says: 'I am just going to address the elephant in the room. You guys are hoarding information and not sharing it,' " says one witness. "Everyone knows this is happening, but in the CAA culture, no one ever talks about what's really going on." Her words divided those present, adds this person: "Some acted ignorant and others jumped in and said, 'It's the truth.' " In the end, tempers are said to have gotten so heated that two top agents nearly got into a fistfight.

A CAA partner acknowledges the Brennan incident, saying, "There was a moment in time when a lot of resentments boiled over." Since then, he says, those issues have been "very aggressively addressed."

On the surface, CAA's culture hasn't changed drastically from its inception in 1975. Ovitz was known for imposing lock-step discipline and creating an aura of invincibility (he exited in 1995). Lovett — as low-key as Emanuel is over-the-top — is said to be fiercely competitive and to maintain an obsessive focus on the agency's market share. "It used to be an amazing culture," says one former CAA agent. "It used to be all about 'we' and 'us,' not about 'me' and 'I.' " Some say the TPG investment and accompanying expansion have brought unwelcome change.

Lovett says TPG has only helped CAA. "Every single person who worked here benefited from the transaction in 2010," he says. "TPG and CAA had four years to get to know each other. In that time, we gained each other's trust." TPG began with a 35 percent stake in CAA in a deal that was said to value the agency at as much as $700 million. In October, TPG upped its stake to 51 percent, with an option to increase to 60 percent. The recent rise of TPG's investment values the company at $1.98 billion. "When they approached us to increase their investment, we felt very comfortable," says Lovett.

CAA has diversified into sports, investment banking, film finance and venture capital. It now has offices in Beijing and Mumbai. CAA's board now includes TPG's Coulter and principal David Trujillo; CAA managing partners Lovett, Huvane, Lourd, Steve Lafferty, David O'Connor and Michael Rubel; and John Donahoe, eBay's outgoing president and CEO. The CAA board is likely to expand soon to represent its varied business interests as well as to add more independent voices and diversity.

As comfortable as CAA's leaders say they are with TPG — there's no hint that the PE firm ever has interfered with the agency's managing partners — there have been murmurs that TPG is frustrated CAA has not expanded faster. That would be a case of private equity being true to its nature. There even are rumors that TPG might be weighing a sale, but Coulter says there is no truth to that. "People outside of our industry often think that we wake up one day with a plan for when we might sell this or that company," he says. "Our plan is actually how we add value." Coulter adds that "there is no timetable" on TPG's investment in CAA.

One former agent says agencies smaller than WME|IMG and CAA will have to expand if they want to flourish, and the biggest obstacle to that is that none of the heads of those agencies is willing to report to the head of any competitor. Certainly none is willing to say there is any such imperative.

Gersh, with 75 agents, has always operated as a smaller business, dominated by the legacy of its founder, Phil Gersh, and now run by his sons, David and Bob. Its art-lined offices speak to its own special culture, closely connected to that family's history. Senior managing partner Leslie Siebert (the third person with an ownership stake in the company) says Gersh is cautious about getting too big. "We don't want to be beholden to outside shareholders who may dictate something we don't want," she says. "We don't spend our time raiding other agencies. We're more focused on our clients and our core business. There is a specific culture here and we don't want to disrupt that; but we're not naive to the fact that we need to grow and that is our goal."

Paradigm, with 160 agents, is more interested in acquisitions than mergers. "We are very comfortable playing our own game," says Gores. "We have never strayed from being true to artist representation. I don't think we'll ever get so far away from that that we start working for a corporate entity." Other smaller agencies are content to stick with representing their clients. Agency for the Performing Arts now has 210 agents and no plans to merge. "Looking at the landscape, I don't see that as a possibility," says its president and CEO, Jim Gosnell, 60.

Despite the anxiety over the future of Hollywood and agencies in particular, UTA's Zimmer says that future is bright. "All of these businesses are incredibly solid," he says. "They have very stable revenue streams. They have great executives. On a given day, someone's going to be hotter, someone's going to be colder. Someone's going to lose a client, and we'll spend five minutes talking about that. And then we'll go back to work."