NEW YORK, United States — Not so long ago, Great Bowery, a collective of agencies representing the fashion world’s top image makers, was touted as a modern solution to the problems facing an antiquated industry.
By gathering different types of talents all under one roof — retouchers, filmmakers, stylists, makeup artists, et al. — the entire creative and commercial process from conception to delivery would now be owned by one entity, taking advantage of back-end synergies that not only help to streamline costs, but to also deliver a more diverse, impactful suite of products that position fashion as a pillar of entertainment rivalling film, television and music.
However, after a tumultuous year — which included the departure of mastermind Matthew Moneypenny amid disagreements with its investor, the asset management firm Waddell & Reed, which sunk north of $150 million into the business — Great Bowery is now set to merge with a rival. MAO Management Artists, a global agency that represents creatives including stylist Lotta Volkova and photographer Gregory Harris, is its new partner.
The intent to merge was announced internally in early April, according to sources familiar with both businesses. A letter of intent is still being developed, and the two companies are still in preliminary discussions regarding how the deal, and the new business, will be structured. It may take up to a year to complete the merger.
The announcement happened shortly after the March exit of Great Bowery chief executive Richard Companik, Moneypenny’s longtime operator and finance-side partner. Just this week, Howard Bernstein, founder of creative management agency Bernstein & Andriulli — one of several properties acquired by Great Bowery earlier in this decade — announced his resignation. (Founded in 2015, Great Bowery’s other subsidiaries include the image licensing firm Trunk Archive and the agencies Camilla Lowther Management, Streeters, Wenzel & Co and M.A.P.)
The new entity could result in an even bigger super-agency, perhaps better set up to compete against rival IMG.
Liz Sands, an independent advisor to Waddell & Reed who assumed the role of chairman of Great Bowery's board when Moneypenny exited one year ago, is said to be advising the company closely during this period, according to three people familiar with the business. The move would also bring MAO chief operating officer Melissa Kelly back into the Great Bowery fold. Kelly is the former chief executive of Lookbooks, a digital marketing firm acquired by Moneypenny in 2013.
If and when the transaction is completed, the new entity could result in an even bigger super-agency, perhaps better set up to compete against rival IMG, which owns Art + Commerce, the Wall Group and Lens, an agency for emerging talents. In the past year, Great Bowery has lost some of its top talent to IMG, including Grace Coddington. IMG also has a partner in celebrity talent agency WME; together they live under parent company Endeavor, which received a $1.1 billion cash infusion in August 2017 that valued it at $6.3 billion.
According to multiple sources familiar with the negotiations, IMG made its own play for Great Bowery at the end of last year but pulled the offer after the two entities could not agree on a price.
In 2016, Moneypenny said he believed that a super-agency in the same vein of Hollywood’s CAA or WME would allow his talents to make more money and realise more brand extensions. The idea was to transform stylists into designers, photographers into directors, and everyone into a star.
“There’s a lot to be learned from that business model and how Hollywood works with its creatives, and there’s a reason Hollywood agencies grew into the sort of superpower format that they have today,” he told BoF. “Over time, their [roster of ] clients became these vertically integrated, multi-billion dollar entities that controlled networks and theme parks and film studios and distribution and content creation. Pushing back against Disney or Paramount or Warner Bros. is hard when you’re an agency representing 25 talents.”
But while Great Bowery is still generating a “healthy” income, according to two people familiar with the finances, it is not booming, thanks to shrinking fees and overhead costs, including the lease of its 190 Bowery space from real estate tycoon Aby Rosen.
Even before Moneypenny's exit, the company was "scrambling to cut costs," one employee said. "When Rich became CEO, we continued down the same path, radically changing internal structure, firing older employees with higher salaries and hiring employees right out of college at lower salaries.” However, another source familiar with the business refuted these claims. They said that the resignation of Bernstein was a personal choice, not one associated with the current state of the business.
Brands are now their own image-makers, often hiring an entire creative team in-house instead of outsourcing creative work.
Regardless, a MAO-Great Bowery merger could help to further shave costs by eliminating redundancies on both sides, the agency world at large will continue to reckon with a new reality that makes their services less essential.
Brands are now their own image-makers, often hiring an entire creative team in-house instead of outsourcing creative work project-by-project. That shift, combined with the professional decline of several of the fashion world’s top photographers — in some cases related to sexual misconduct accusations, in other cases simply due to their age — has made hiring expensive star talents increasingly unappealing.
Instead, brands are using Instagram as a sourcing tool. Why pay an old-guard photographer $50,000 to $100,000 per day when commissioning an up-and-coming, Instagram star with plenty of engaged followers costs less and offers a clearer ROI?
This all helps to explain why Waddell & Reed may be eager to exit its investment in Great Bowery. The asset management firm, which is based in Overland Park, Kansas and has invested significantly in retail and other consumer goods stocks, from Under Armour and Urban Outfitters to Nike and Apple, is closing its fund focusing on the entertainment industry.
In 2016, film production company Legendary Entertainment, in which it had taken a $443 million equity stake, sold to Chinese entertainment conglomerate Dalian Wanda Group for $3.5 billion in cash. Waddell & Reed also invested $120 million in super-manager Scooter Braun’s music investment fund, SB Projects, in 2013. Waddell & Reed did not respond to a request for comment.
According to one source, the lesson here lies in the fact that Moneypenny raised money from an investor unfamiliar with how the fashion and entertainment industries work, and therefore was not able to properly advise on how to allocate funds. “Let it be a cautionary tale,” they said.
Whether or not Moneypenny’s vision still has legs will be tested by the new entity.