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Hollywood’s bitter standoff is drawing to a close. CAA and the Writers Guild of America have made a deal to end a 20-month impasse and allow the firm to once again represent scribes. Additionally, the guild says that both sides with withdraw legal claims.
“CAA and the WGA have concluded and signed a franchise agreement confirming CAA can resume representing writers and continue the important work of helping them realize their ambitions. We end this year of unprecedented global challenges with the optimism and energy that today’s news brings, starting now, and for the years ahead,” a CAA spokesperson said Wednesday.
The Writers Guild, in a note to members from its agency negotiating committee, confirmed the deal and said: “CAA may once again represent Guild members for covered writing services. WGA and CAA have also agreed to withdraw the legal claims each has brought against the other in federal court.”
The guild revealed a side letter agreement with CAA that states that the agency, and its private equity owner TPG, will divest its stake in film and TV studio wiip to 20 percent and will need to provide evidence of the sale. The timeline for the divestiture wasn’t disclosed.
The guild had emphasized throughout the talks that it would only sign a deal with agencies that adhere to a 20 percent ownership cap in affiliated production companies. Unlike talent firms such as UTA and ICM Partners, which made deals with the Writers Guild in July and August respectively, both CAA and WME have significant corporate affiliation with such content studios. Those firms haven’t been able to rep writers since April 2019, when thousands of writers parted ways with their agents.
In reply to CAA’s announcement of a deal, a WME spokesperson said: “We have reached out to the Guild to learn more about the specific terms of their agreement with CAA, but we think today’s news is a positive development and suggests a path forward for WME to reach an agreement as well.”
CAA has financially backed wiip, a studio that has produced Apple TV+ series Dickinson and is co-producing HBO’s upcoming The White House Plumbers, among other projects. Endeavor, the parent company of WME, fully owns film and TV firm Endeavor Content, which backs titles like BBC America’s Killing Eve, Mark Wahlberg’s latest film Joe Bell and many other projects.
The guild has called such ownership structures a conflict of interest for agencies and has worked to sign up more than 100 smaller and midsized talent firms to franchise agreements over the past year and a half.
Another issue for CAA and WME throughout the talks is that the guild — which represents around 16,000 members who haven’t been able to be represented by the firms since April 2019 — had requested details about the privately held talent agencies’ corporate ownership structure.
CAA’s majority stakeholder is private equity firm TPG Capital and minority shareholders include Singapore-based investment company Temasek and China-based CMC Capital Partners. Private equity firm Silver Lake Partners holds the majority stake in Endeavor, which, in addition to WME and Endeavor Content, also owns IMG Models, mixed martial arts league UFC, Professional Bull Riders as well as live-events company On Location Experiences.
On Sept. 14, Century City-based CAA went public with its offer to the writers, saying that it had “signed” the “same deal” as ICM made and pledged to drop its ownership stake in wiip to 20 percent at an unspecified “commercially practical time.” The Writers Guild replied the same day, saying: “CAA has proposed changes to the agreement that the WGA has not — and cannot — agree to.”
Since that time, the Writers Guild’s agency negotiating committee issued notices to its members Sept. 30 and Oct. 16 detailing its efforts to seek detailed corporate information from CAA and WME on the companies’ ownership structure. As of Oct. 16, the Writers Guild said that request had been “only partially satisfied.”
But, in revealing the details of the agreement with CAA on Wednesday, the guild’s negotiating committee noted that the new deal “insures that CAA and any TPG entity will not jointly have a greater-than-20 percent ownership interest in any other affiliate production company. In addition, the TPG fund that owns CAA agreed that it will not have a greater than 20 percent ownership interest in any affiliate production company, regardless of whether CAA also has an interest in the entity.”
The full WGA negotiating committee memo to members on Dec. 16 is below:
The WGA and Creative Artists Agency (CAA) have reached a deal on a franchise agreement. Therefore, effective immediately, CAA may once again represent Guild members for covered writing services. WGA and CAA have also agreed to withdraw the legal claims each has brought against the other in federal court.
The CAA agreement contains the same terms as those set forth in the ICM/UTA deal, and protects writers in the three fundamental areas that the Guild has emphasized since the beginning of the campaign:
— Contract, deal memo, and invoice information will be provided to the Guild, allowing the WGA and the agency to partner in systematically addressing late pay and free work.
— Strict 20% limitation on agency ownership of production entities.
— A sunset period that ends the practice of packaging by June 30, 2022.
Over the past several months, the WGA, CAA, and its private equity owner TPG negotiated the steps the agency must take to come into compliance with the franchise agreement (i.e., the divestiture from wiip) and protections to address the unique conflicts of interest presented by CAA’s ownership by TPG. There are three layers of additional protection for writers that have been negotiated in the side letter. Here’s a brief summary of these additional terms:
— In compliance with the Franchise Agreement, CAA and TPG placed their ownership interests in wiip in an irrevocable blind trust with a clear mandate for the trustee to sell that interest down to the required 20% or less. CAA and TPG further agreed to relinquish operational oversight over wiip while their ownership interests are in the blind trust. The side letter provides a reasonable deadline for the sale of CAA and TPG’s interests in wiip, and for serious consequences if the sale is not completed by that date, including the right for the WGA to suspend CAA’s ability to represent writers, and the requirement that CAA place any wiip-related fees or commissions it receives during the suspension period into escrow until the sale is completed. The Guild has agreed to keep the date confidential so as not to impact the trustee’s negotiations with potential buyers.
— The side letter insures that CAA and any TPG entity will not jointly have a greater-than-20% ownership interest in any other affiliate production company. In addition, the TPG fund that owns CAA agreed that it will not have a greater than 20% ownership interest in any affiliate production company, regardless of whether CAA also has an interest in the entity.
— The side letter also has precautions for situations that involve TPG entities –i.e., investment funds –that have no ownership interest in CAA but have a greater than 20% interest in a production company. TPG has agreed, going forward, to disclose the identities of all such entities. As of today, there is only one such company, and it is not an MBA-signatory. If CAA negotiates a deal with any such entity, even if CAA does not, itself, have an ownership interest in it, the agency must disclose to its writer clients the existence of TPG’s ownership. CAA must also provide the Guild a copy of the offer and final deal points. This transparency will allow the Guild to make sure that CAA is negotiating appropriate deals for writers in these circumstances, and that TPG’s ownership interest is not suppressing the value of writers’ services. If there are irregularities in the writer deals—such as depressed pilot script fees, for example—the Guild will have the information it needs to investigate and take any necessary corrective action with CAA.
The Guild appreciates the hard work of both CAA and TPG in working through the complicated issues involved in this negotiation.
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