Paradigm Signals It Won't Sign Writers' Code of Conduct in Note to Clients (Exclusive)

Alex Berliner
Paradigm chairman Sam Gores

With "fierce pride," agency chairman Sam Gores defended his firm and the need for packaging, even amid indications that such revenue may wane thanks to streamers’ business models.

The chairman of entertainment’s fifth-largest talent agency, Paradigm, sent a two-page letter to his clients Friday attempting to calm the waters as a roiling dispute between talent firms and the Writers Guild of America counts down to an April 7 deadline that could see writers under orders from the union to fire their agents en masse.

Meanwhile, the guild and the Association of Talent Agents met Thursday afternoon for a sixth (nonconsecutive) day of talks in a session that was apparently devoid of rancor and that saw the ATA presenting its response to the most recent WGA proposals, which among other things would prohibit packaging fees and affiliate production.

“We take fierce pride in helping our clients achieve all of their goals,” writes Paradigm chairman Sam Gores in the missive. “The television packaging model has never distracted us from making the client’s creative and financial goals our fundamental priority. This is true for any client on a packaged show. … We have never packaged a writer against their wishes not to be packaged, nor have we ever benefited financially to a greater extent than our client who is the key element.”

The letter goes on to argue that packaging revenue is needed because it is “readily apparent that the agency business has become far more overhead intensive, as we provide more business affairs, public relations, market research, film sales representation, and other services, than ever before.”

Gores says that Paradigm agrees with “many of the proposals presented by the WGA, notably, more transparency, support for more diversity, getting writers paid on time, and prohibiting free work,” but he adds that “a number of the WGA proposals are, however, simply unreasonable and unworkable.” According to an agency source, the letter signals that Paradigm has no intention of signing the WGA’s proposed “Code of Conduct” and is looking for a negotiated agreement between the guild and the ATA.

Paradigm is among the top six or so agencies that engage in packaging, while affiliate production is so far limited to the top three, which have deep reservoirs of invested capital from private equity and other sources. Paradigm has no plans to move into affiliate production, said the agency source.

Assuming (as is considered likely) that the guild membership approves its code in a March 27-31 vote, the guild says it will impose the new rules when the current WGA-ATA agreement terminates April 7, unless a deal is reached before then.

“We had an extensive dialogue with the Guild today,” said ATA executive director Karen Stuart, speaking of the Thursday meeting. “We presented its leadership with our formal counterproposals in a draft agreement, and we hope they will follow-up in good faith to move this process forward.” The WGA declined to comment. Sources confirmed an improved tone in the room.

The counterproposals (read them here) would permit packaging fees and affiliate production with informed consent of the client. In packaging, an agency forgoes commissioning the client and instead receives a fee from the television studio, which can amount to massive sums if the series has a long run and is sold into aftermarkets such as syndication, DVD and foreign broadcast or cable.

That’s the way the business worked pre-Netflix, but out-of-the-park hits are rarer today. The advent of streaming services, which often make long-term or perpetual worldwide deals has reduced the value of aftermarkets and diminished the value of back-end profit participations, leading some observers to speculate that the agencies might accede to guild demands and end packaging.

If that left affiliate production untouched, it could be a boon for the biggest three agencies — Endeavor/WME, CAA and UTA — as it might enable them to pull further ahead of firms like ICM, Paradigm, APA and others without similarly deep pockets. Large agency sources, however, have thrown cold water on such suggestions, and ultimately only time will tell where and how the agency business will shake out.

For more on this subject, visit THR‘s labor page.