Last weekend, when the ATA (Association of Talent Agents) asked for six more days to offer a proposal addressing the WGA (Writers Guild of America) concerns, there was hope that the two sides were ready to find common ground, especially on the contentious issue on agency packaging. Today, the WGA blasted the ATA’s most recent proposal and is walking away from the negotiating table, notifying its members that at midnight it will allow its agreement with agencies to expire and be replaced by a new Agency Code of Conduct.
One of the key ingredients of the new Code of Conduct, which WME, CAA, ICM, and UTA have stated they will not sign, is it bans the practice of agency packaging, which the WGA believes has become a significant conflict of interest that has resulted in stagnating writers’ salaries. If agencies do not agree to this new code, the WGA will revoke an agency’s ability to represent its members.
In call for solidarity — which, in labor negotiation, would result walking the picket lines during a strike — the WGA Negotiating Committee called on writers to quickly sever ties with any agency that won’t agree to the new code.
“In this situation there are two actions required of all members: First, do not allow a non-franchised agent to represent you with respect to any future WGA-covered work,” wrote the WGA Negotiating Committee in a letter to guild members this afternoon. “Second, notify your agency in a written form letter that they cannot represent you until they sign the Code of Conduct.”
The WGA will need writers to fire their agents, and quickly, if they wish to maintain leverage. The guild has supplied writers an online form to fire their agent, avoiding the painful personal call and, it hopes, accelerate the rate of firing.
WGA members voted overwhelmingly to approve the Code of Conduct 12 days ago. Prior to that vote, over 800 writers and showrunners, including prominent WGA members like JJ Abrams, Shonda Rhimes, and Tina Fey, announced they would vote for the new Code of Conduct. For now, however, it is unclear if the WGA has anything close to that murderers’ row of writers prepared to actually terminate their representation. Although many big-name TV creators despise the practices of WME and CAA making millions off their IP (and, for years, behind their backs and without their knowledge), many consider their agents a close professional partner and, in many cases, a friend.
Writers may be more motivated to fire their agents, though, when they hear the details of the ATA’s most recent proposal, which offered the WGA only one percent of the contentious packaging fees at the heart of the disagreement.
“You are still receiving money from our employers for access to us, and keeping 99% of the profits of your backend,” wrote WGA President Goodman in a letter to the ATA in response to its proposal. “It does not change your incentives at all. It is not a serious proposal and we reject it.”
While many in the WGA dislike the decades-old practice of agency packaging — bundling a project/script with talent from its ranks to sell a movie or TV show — it is the rise of “packaging fees” that spurred the current standoff. These are fees being charged to producers, networks, and studios in addition to earning the clients’ 10 percent.
In particular, the industry standard of packaging fees during the rise of the “peak TV” boom has led to the loudest cries of conflict of interest. The WGA estimates that close to 90 percent of scripted series in the 2016–2017 television season were packaged, with WME or CAA involved in 80 percent of those packaged series.
According to the WGA, the standard packaging fee for TV consists of three parts: an upfront fee of approximately $30,000 to $75,000 per episode that is paid out of the production budget; an additional $30,000 to $75,000 per episode that is deferred until the series achieves “net” profits, and a percentage (usually 10 percent) of the “modified gross” a show can make down the road. All told, a successful TV show can result in tens of millions in pure profit for a big agency.
The WGA believes these packaging fees lead to conflict of interests that hurt writers. Specifically, agencies are more financially motivated to negotiate their own lucrative packaging fees than they are to fight for their clients receiving a higher salary, both of which come from the same source.
In its proposal to WGA to share one percent of the fees, the ATA called for one-fifth of that money to go toward a fund to promote diversity. Based on Goodman’s letter, it was move that only added salt to the wound of the lowball offer.
“While we applaud your willingness to confront issues of diversity and inclusion, it shouldn’t be used as a bargaining chip,” wrote Goodman. “You should know the comment of the diverse members of this committee upon hearing your proposal, was ‘We’re not pawns.’ We also reject that proposal. And if you really feel that the program you proposed would make a difference, you are free to spend the money you pledged outside of this negotiation.”
Since taking private equity investment, packaging fees are not the only way Hollywood’s big agencies have grown their business beyond the 10 percent commission of talent representation. CAA and WME have also made aggressive steps toward owning and producing content, which leads to the ultimate conflict interest: How can you be both the employer and represent the best financial interests of the employee?
Goodman blasted the ATA for not even addressing the guild’s concerns over these producing wings, which CAA and WME argue is kept separate from its talent representation business. In particular, Goodman was insulted that the WGA found out about the ATA’s “wait and see” approach to this subject by reading about it in the trades.
“Despite your protestations to the contrary, these production companies are not independent of your agencies, your private equity investors openly talk about how your leveraging representation of clients to create a production business is why they invested,” wrote Goodman. “While we acknowledge that you have made favorable talent deals, they are clearly a loss-leader strategy. We do not need to ‘wait and see’ to know they will disappear when the business settles in. We reject this proposal.”