11:25am PT by Eriq Gardner
Talent Agencies Blamed in Lawsuit for Lack of Diversity in Television
Diversity has been a hot topic of late in Hollywood. How much responsibility for a lack of progress falls upon the shoulders of Hollywood's biggest talent agencies? The subject is now being addressed in an ongoing antitrust lawsuit brought by Charles Lenhoff, who runs the boutique firm Lenhoff & Lenhoff.
Lenhoff is suing UTA and ICM, and what started off as a lawsuit focused on the poaching of a few of his clients has slowly evolved into an examination how UTA and ICM, along with non-defendants WME and CAA, are dominating the scripted television market, whether they've impeded fair competition and what has been the impact of what's occurred. As the litigation has played out, with Lenhoff amending his complaint three times, the focus of his ire has been directed squarely on "package" arrangements.
For many years, talent agents charged clients a flat commission, but as the Big Four have grown bigger and bigger, they've dabbled more and more in packaging the key talent for a project before bringing it to a studio — and taking fees and backend profit participation in lieu of commissions.
Lenhoff traces the evolution to the 2002 expiration of Rule 16(g) of the franchise agreement between the Screen Actors Guild and the Association of Talent Agents. Upon the elimination of a rule requiring agents "to be independent" and not "possess any financial interest in a production or distribution company or vice versa," he asserts that outside investors, private-equity hedge funds and wealthy individuals rushed in to take a stake in the "uber" talent agencies. With newfound billions, the agents then "stockpiled" talent to the detriment of smaller agencies, according to Lenhoff.
And how does this impact diversity?
According to the lawsuit, "an increasing number of writers, actors, directors etc., especially in the diversity category, are finding it more difficult to obtain adequate representation."
Lenhoff's lawsuit suggests that minorities are finding their work is "being stifled where they are not the 'marquee' element driving the package."
He adds, "Despite being the gatekeepers in the television development process, the Uber Agencies have not produced scripted series packages that promote significant advances in television diversity, and indeed, representation of minorities in between the 2001-2002 and 2014-2015 television seasons has fallen even further. This dismal record with respect to diversity can be attributed to the Uber Agencies shifting their focus from representing the artist/person to 'the package,' in part to further their co-packaging agreements and fee splitting with each other and to further the exclusion of non-Uber Agencies from the market."
The talent agencies no doubt take umbrage to the suggestion they're to blame for diversity woes and will point out their role in staffing shows like Empire and Scandal and winning good roles for minorities like Corey Hawkins in 24: Legacy. (ICM reps him.)
Truthfully, though, the lawsuit isn't about discrimination. At least not directly. It's an antitrust lawsuit geared towards addressing supposed impingements to fair competition. If systemic biases are now being discussed, it's only as the alleged effect of some root cause. By bringing up the entertainment industry's lack of diversity, Lenhoff can jump upon the topic du jour and frame his lawsuit about being more than just about the loss of some clients to larger rivals. Of course, he's still challenged in showing a conspiracy between UTA, ICM, WME and CAA. And as much as these talent agencies will probably hate being tarred as anti-diversity, they have and will object foremost to the allegation of any collusive arrangement between them. (In fact, CAA and UTA continue to be engaged in their own war with each other over defections.)
Yes, the lawsuit says that the "uber agencies" control 94 percent of scripted television, but do they really deserve to be labeled a "cartel" as Lenhoff claims?
To make the case, Lenhoff has added to his legal team. He's hired Maxwell Blecher, an antitrust attorney who once worked at the Justice Department and prosecuted the likes of General Motors on the competition front. Later in his career, after going into private practice, Blecher had headline-making wins against Eastman Kodak, AT&T, Johnson & Johnson and the National Football League. (He represented the Los Angeles Memorial Coliseum Commission when the Oakland Raiders wished against the league's wishes to move to Los Angeles in the 1980s.)
Despite the impressive résumé, Blecher has an uphill road ahead of him in a case that's seen a judge respond dubiously to the claims. In December, in granting a motion to dismiss, U.S. District Court Judge Beverly Reid O'Connell wrote, "The Court concludes that Plaintiff has not proffered sufficient factual details surrounding the alleged conspiracies or agreements between Defendants and the other Big 4 Agencies."
She gave Lenhoff another opportunity to amend.
The new version, filed on Friday, alleges that the "conspiracy was hatched by the ATA’s Strategic Planning Committee," consisting of leaders of each of the big agencies who wanted to cause the demise of Rule 16(g), that "UTA and ICM have agreed and conspired with the intent to form an oligopoly for the unlawful purpose of allocating amongst themselves the scripted TV relevant market" and that a boycott of non-Uber agencies is supported by agreements to restrict co-packaging scripted deals amongst each other and the "use of veiled threats" against studios, networks and producers.
It's also alleged that “packages” result in "horizontal integration between the Uber Agencies, who, by virtue of the packages, essentially own overlapping 'stock' in each other’s packaging products."
UTA and ICM had no comment.