WGA Releases Report on Talent Agency Conflicts of Interest

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The union is seeking "meaningful changes," says a former WGA West president.

Hours before a scheduled meeting between the Writers Guild of America and the talent agencies, the guild held a press conference and released a report again blasting the agencies for conflicts of interest in two key practices: packaging fees and affiliate production.

The 17-page report, entitled “No Conflict, No Interest,” argues that the influx of private equity investment into the top three agencies — Endeavor/WME, CAA and UTA — has pushed them to focus ever more on their own bottom lines at the expense of clients’ interests.

“Hollywood talent agencies today engage in pervasive practices that place the agencies’ interests in conflict with their clients’ and rarely, if ever, disclose the existence or extent of the conflicts, thereby violating their fiduciary obligations,” says a key portion of the report.

One of those practices is television packaging — generally, putting together a showrunner with one or more star actors and perhaps another writer. In return, the agency receives a fee from the studio and waives its commission. This decades-old practice saves the clients money (at least initially) but, says the WGA, creates divided loyalties for the agency and can result in agencies making more on a show than their clients, or killing a project if a studio refuses to pay a packaging fee. The agencies argue that these situations are outliers, and that writers and other talent benefit from avoiding commissions. (The guild also objects to feature-film packaging, which works somewhat differently but, says the union, raises similar issues.)

The other practice, affiliate production, is much more recent, and involves sister companies to the agencies that actually finance, produce and own content, displacing the role of traditional studios. The WGA says that’s a blatant conflict of interest — the agent becomes the employer — while the agencies point out that the affiliated production companies offer writers better deals than traditional studios do. But the WGA says that won’t last.

Moreover, says the guild, combining production and agenting is an antitrust violation, citing the Justice Department’s 1962 settlement that required MCA/Universal to choose between the two businesses. (The company exited the agency business.)

The WGA is seeking to prohibit packaging fees and affiliate production, and plans to impose a new code of conduct on April 7 if a negotiated agreement isn’t reached first. At that point, writers would be required to leave their agents if the agency doesn’t sign on to the new code. The guild declined to say whether it would offer writers a grace period or require an immediate en masse exodus. The code is subject to a member vote March 25, but the guild declined to say what percentage threshold would be required for approval, offering only that “overwhelming support” would be required.

Said writer-producer and former WGA West president Chris Keyser, “I’m confident that we’re going to make meaningful changes.”