Writers-Agents War: Are Labor Strikes Next?
It has been more than half a century since actors and writers simultaneously staged walkouts, but the current fight between the guild and the ATA could domino into a summer 2020 sequel.
The battle between the Writers Guild of America and Hollywood talent agencies has captivated the entire industry — but it could turn out to be merely a preliminary skirmish in a larger labor war that may see the guild go on strike next year, and could see SAG-AFTRA walk as well. Both unions have deep grievances, as rank-and-file members fight stagnating salaries and declining residuals in an era of peak TV that has meant a bounty for companies, agencies, top showrunners and CEOs but has left middle- and working-class creatives waiting for their share.
The two guilds' contracts expire within two months of each other next year at a time when legacy studios — desperate to compete with digital media companies — are content-hungry and particularly vulnerable to a work stoppage. As the mid-2020 contract expirations approach, the stars are aligned for an even bigger fight that could involve side deals with streamers and a crushing blow to the guilds' traditional adversaries.
The WGA membership has already been mobilized by the campaign against the agents and is ready to deploy against other targets in a quest to redefine revenue sharing in Hollywood: likely managers, maybe entertainment lawyers, but also quite possibly the source of the money, the studios. That's if the leadership can maintain solidarity for another 12 months, which may not be easy as writers endure an agent-less existence.
The union's likely demand is obvious: If studios will no longer be paying packaging fees on new shows to agencies next year (because most agencies have been fired by their clients and have no writers to package), the WGA will insist that the studios shift the would-be packaging money to TV writers through outsized increases for the lower and middle tiers. It will probably also want packaging fees on existing shows to be conditionally redistributed to writers if it prevails in its lawsuit against the agencies. (The WGA on April 17 sued the four largest agencies, claiming that packaging fees are a violation of fiduciary duty and an illegal kickback.)
But the guild's demands are unlikely to end there. It may also seek to enhance streaming residuals; achieve further protections regarding short-season issues such as span (a concept that relates to the number of weeks a TV writer works on a script before overages kick in), holds and exclusivity; end single-step deals in film so that feature writers are guaranteed more income; and make other changes to enhance the stature of writers in film like eliminating competitive "sweepstakes pitching," which pits gaggles of writers against one another in what sometimes amounts to uncompensated development sessions. All of these things are unfinished business from recent negotiations.
Writers aren't the only Hollywood creatives unhappy with salary erosion and short seasons. Actors are as well — and their contract expires on June 30, 2020. So it may prove enormously tempting for performers to join scribes on the picket line, or to strike solo. The possibility of a walkout could be even higher if Membership First-backed candidate Matthew Modine wins his recently announced bid for SAG-AFTRA president over moderate incumbent Gabrielle Carteris when the union election concludes this fall.
Meanwhile, changing consumption patterns are bestowing more power on digital video giants Netflix, Amazon Prime, Hulu and the rest. As Netflix inks nine-figure overall deals with creators, legacy studios Disney, WarnerMedia and Comcast are scrambling to launch competing streaming services, while others, from CBS and Showtime, struggle to keep pace.
The legacy studios' services can't take on Netflix without quality content (beyond their legacy libraries), which makes them even more vulnerable to a strike. And they're bound together in the Alliance of Motion Picture and Television Producers, a bargaining unit consisting solely of traditional media companies. There's nothing to prevent Netflix or other streamers from making a side deal with the WGA or SAG-AFTRA on terms more favorable for labor than the AMPTP would be willing to offer. It's clear the streamers can afford it: They are flush with cash thanks to mountains of debt and booming stocks, while the traditional studios are less so. Netflix loves nothing more than appearing friendlier to talent than traditional studios.
Admittedly, a side deal faces a roadblock: The guilds' pain is caused in part by shorter TV seasons with fewer episodes, a specialty of the streamers. And if the guilds struck everyone, that could likely freeze Netflix's dominance of the streaming market in place, or it could allow studios with legacy libraries to catch up.
Studios and networks papered over past walkouts with reality TV and live programming, but those options would likely be less appealing now. Stockpiling is difficult in an era of peak TV, with already high levels of production activity and no agents representing writers to efficiently close deals. While Disney, for example, can draw from a deep library of scripted content, it remains unseen whether the fledgling Disney+ could grow its subscriber base as fast as needed without the promise of fresh material.
The last time the writers and actors struck concurrently was 1960. Back then, the technological disrupter driving conflict was television. For a dozen years, the studios had struggled with and adapted to a decline in cinema-going and an increase in TV viewing, but management and labor remained largely at odds over whether creatives would get paid for reuse of theatrical movies on TV. Side deals had been reached in the early 1950s with smaller studios, but an industry-wide agreement proved elusive until the overlapping writers and actors strikes in 1959-60.
Those walkouts were a victory for labor that yielded residuals and union pension plans. Whether strikes would be as fruitful this time is impossible to know, but the likelihood that union leaders are considering that strategy seems high. Labor relations in 2019 have been tumultuous, but the sequel may be even more action-packed.
Anatomy of a Labor Disaster
The melee between WGA and talent agents was at least a decade in the making.
TPG Capital buys a 35 percent stake in CAA, at which time the agency is valued at $700 million, beginning a trend that will also see WME and UTA bulk up with outside money and raising Writers Guild concern as agencies diversify their focus and move deeper into production. (CAA's valuation will jump to $1.1 billion in 2014 when TPG ups its stake to 53 percent.)
WME Global and IMG, valued at $6.3 billion, merge their entertainment finance and sales groups under the Endeavor Content banner, heightening WGA anxiety as the prospect of agencies becoming media conglomerates takes concrete form.
WGA fires a warning shot, issuing a 12-month notice that it intends to end a 1976 agreement with the Association of Talent Agents over packaging fees, affiliate production and other issues.
The WGA and ATA begin a series of at least seven unsuccessful negotiations.
95.3 percent of WGA members who voted approve a Code of Conduct that prohibits agents from taking packaging fees or engaging in affiliate production.
The new code takes effect after negotiations fail. Several dozen small agencies sign, but none of the ten largest do so, representing the bulk of WGA writers. The WGA and eight individual writers sue WME, CAA, UTA and ICM, charging that packaging fees are a breach of fiduciary duty and unfair competition, allegations that the agencies dispute. More than 7,000 writers fire their agents, which is about half the WGA membership and 80 percent of the guild's members who actually had agents.
Writers and Actors on Strike: A Timeline of Tumult
The industry unions have picketed a combined 16 times over seven decades, usually fighting for residuals as new technology sparked more revenue. Some of the walkouts include:
Actors: 11 weeks
Nearly 20 years after the Screen Actors Guild is formed, the group has its first strike over television commercials. The result: the creation of SAG's first residuals contract, giving actors payments for TV reruns for the first time.
Writers: 21 weeks
The Writers Guild of America goes on strike over the same concerns that the actors have — residuals for movies shown on television — and achieves similar gains.
Actors: 6 weeks
Under the leadership of SAG president Ronald Reagan, the actors strike over residuals for feature films licensed to TV. The producers pay $2.65 million, which is used to create and fund SAG's first pension and health plans.
Writers: 22 weeks
The WGA's longest strike delays the fall broadcast TV schedule as writers fight for higher residuals and more creative control. This walkout is credited by some with sparking the boom in reality TV as networks seek to fill airtime.
Writers: 14 weeks
The most recent guild strike centers on new-media residuals and reportedly costs the L.A. economy an estimated $2.5 billion. Writers leave the fight with a share of revenue from digital downloads and ad-supported streaming.
This story first appeared in the May 8 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.