Why Are Agents Producing Shows? Writers Guild Would Like to Know

David Young - Getty - H 2017
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At play are key ways that agencies now make money.

The expanding scope of the talent agency business may motivate the Writers Guild to take action.

WGA West executive director David Young is planning to initiate an April renegotiation of a key document — the "franchise agreement" between the guild and the Association of Talent Agents — that governs the relationship among writers and agents, a well-placed source tells The Hollywood Reporter.

The focus of these talks, according to this source: packaging fees and "ownership," a buzzword that covers scenarios in which talent agencies engage in production or financing or are affiliated or owned in whole or in part by companies that do.

These issues aren't new, but the formation of WME-affiliated Endeavor Content in October may have lit a fire under the guild, whose leadership met with showrunners the following month. An April notice also would start a one-year clock running on termination of the agreement itself if the parties can't craft acceptable revisions. Exhibit A: the SAG franchise agreement, which lapsed in 2002 in the wake of disputes over the ownership issue.

"We're at an exploratory stage," Young insisted to THR. "There is no date set for anything. We're just talking with members."

Those conversations included two meetings in mid-February with showrunners and screenwriters. Exploratory or not, ATA executive director Karen Stuart tells THR that she is surprised she hasn't heard directly from the WGA, which she considers an industry partner, but adds that she anticipates "thoughtful conversations" if the guild seeks talks.

At play are key ways that agencies now make money. The archetypal 10 percent client commission isn't so typical anymore. Instead, a different, decades-old model prevails, especially in television, where the most powerful agencies demand a 3-3-10 packaging fee: 3 percent of the license fee up front, 3 percent deferred (and paid out of 50 percent of net profits) and 10 percent of modified adjusted gross receipts, if any.

The studio pays the packaging fee, but writers say that on a successful series, the agency can end up making more than the client. That also can happen if an agency-affiliated company is the project's financier or even producer, which happens more now that agencies are starting companion businesses like Endeavor Content to package and produce projects with clients. Says Violaine Roussel, author of a recent book on the agency business called Representing Talent, agencies today have so many divisions and subsidiaries, “they’re like this Hindu goddess that has seven arms.”

The WGA calls the whole thing a conflict of interest, which is pretty much what then-attorney general Bobby Kennedy told agent-mogul Lew Wasserman in 1962 (the exec dropped the talent biz and kept Universal Studios). But veteran agent Chris Barrett, former head of the boutique Metropolitan Talent Agency, rebuts that the increasing size of the studios and diminishing commissions have forced reps to diversify. And, add others, getting a project made at all is a win — and if the money's good, who's harmed? 

This story first appeared in the Feb. 28 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.