Over the past several months, writers and?talent agents have settled into warring camps in a fight over television packaging fees and agencies’ move into affiliate production. On April?13, if a deal is not made between the Writers Guild of America and the Association of Talent Agents, the consequences of failure are potentially calamitous for the industry.
Amid talks, agencies are said to have been flooded with messages from writers expressing appreciation for past representation coupled with a note that the writer will fire the agent anyway should the worst come to pass, sources say. Often, the notes express hope that when the dust settles, the client and agent can resume business as though nothing had intervened. But for many, that confidence may be misplaced: Writers at the middle and lower levels may find themselves personae non gratae at their?former homes.
In the absence of an agreement, the WGA has pledged to impose a Code of Conduct just after midnight April?12 that will bar packaging fees and affiliate production. The major agencies won’t sign, nor will most or all of the medium-size ones, meaning?that thousands of writers would be ordered by the guild to fire their agents in order to comply with WGA Working Rule 23 — which prohibits a member from being represented by a non-signatory agency.
As a result, a brutal Darwinism may ensue as TV staffing season begins. The WGA says that its writers will find jobs through networking, an online submission system, managers and agents, while observers outside the guild are skeptical that this patchwork will be an adequate substitute for agents with an intimate knowledge of the needs of showrunners and outlets. But whether the increased difficulty in staffing shows will lead to production delays is unknown, as the situation — and the guild’s solution — are unprecedented.
At the core of the fight, both packaging fees and affiliate?production are but two approaches to the same thing: agents acting as producers and wanting to be compensated as such rather than as percenter representatives of talent. With packaging fees, agents bring together elements of a project and are paid by the studio for doing so, forgoing a commission from clients. With affiliate production, a company affiliated with the agency brings together elements and financing, and actually owns the resulting content or shares ownership with the creators.
Although one of these practices has lost some luster — packaging fees in TV have less upside in a world where aftermarkets are giving way to global streaming deals — both can be far more lucrative than simply commissioning clients. But in both cases, the agency or its?affiliate is doing what producers customarily do, and that puts them on the employer side of the table, adverse to their own clients.
That’s a conflict of interest the WGA has vehemently opposed. Packaging fees are “illegal kickbacks,” says the guild, and the agencies that implement them are a “cartel,” a word more often associated with drug kingpins than besuited executives.
That language makes it hard to see how the guild — led in negotiations by WGA West executive director David Young — could pivot to an agreement with anything less than a 100 percent victory. The ATA, led by executive director Karen Stuart, has been more restrained in the language it has made public, but is no less firm in its position. Conflicts of interest are a matter of principle, protests the guild, and “there are basic?principles that are not subject to compromise,” WGA West president David Goodman has said.
But while the guild decries affiliate production, it has accepted WME’s and CAA’s affiliate entities — Endeavor Content subsidiaries and Wiip, respectively — as signatories to the WGA collective bargaining agreement that applies to studios and production companies. (“We always want more producers, more competition for writers’ services and more jobs for writers,” said the WGA West. “We want Endeavor Content to be in business, we just want it to spin off its agency.”)
In addition, although the guild remains firm on the issue of TV packaging, it has conceded that agents be allowed to take fees (rather than commissions) for feature film financing and sales. And it acknowledges in the Code of Conduct that agents can represent multiple, competing clients, declaring that this is not a conflict of interest. Of course it is, but as the code reflects, it’s a conflict that needs to be managed.
The industry, in other words, is filled with conflicts that parties agree to manage rather than prohibit, and agents have always been conflicted. During the 1930s heyday of the studio system, as author Tom Kemper recounts in his history of Hollywood agenting titled Hidden Talent, agents were packaging projects for a fee and establishing production companies. That reached its height when agency giant MCA created a television production company in 1949 and then bought Universal Studios 13 years later.
That proved a bridge too far, resulting in a 1962 Justice Department order to separate the studio from the agency. Through it all, the guilds registered their objections. Litigation in the mid-1970s led to the 1976 WGA agency agreement that is now terminating, while a Screen Actors Guild dispute in 2002 left SAG effectively without an agency agreement.
It’s a tangled history, and whether the two sides can move past their differences before causing industrywide disruption is very much an open question. One agency source says he expects a deal, but another cautions, “Don’t confuse a productive meeting with progress.”
This story also appears in the April 11 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.