Cannes: Will the Writers Guild Fight Impact Dealmaking at the Festival?

Illustration by Greg Kletsel

While the standoff mostly affects TV packaging, insiders predict a ripple effect on film.

On April 17, the WGA filed a lawsuit against WME, CAA, UTA and ICM Partners, claiming that the practice of collecting TV packaging fees represents a breach of fiduciary duty and is an illegal kickback under federal and California statutes.

Why would a Hollywood feud over TV fees affect a vaunted film festival on the other side of the Atlantic Ocean? Consider that the Cannes Film Festival runs parallel to one of the industry's most important markets. And that said market happens to rely heavily on scripts penned by writers repped by the four major agencies. Now that nearly all of those writers — 7,000-plus — have fired their agents in an April 22 show of solidarity with their guild, a ripple effect is expected to ensue.

Still, most of the producers, sales company executives and distributors that THR spoke with anticipate that the fallout will be limited (Endeavor Content, CAA, UTA and ICM are sending sales teams to the festival as usual). "It could be a challenge going forward — to navigate and continue to hire writers," says Glen Basner, CEO of film production and sales outfit FilmNation.

The future looks especially murky for business at fall markets like Toronto and AFM. "We might have a real slowdown of new material" later this year, notes David Garrett of sales group Mister Smith Entertainment.

The WGA initially proposed prohibiting agencies from collecting film financing fees, but it backed off and suggested a compromise that would allow agents to engage in financing and sales of some indie films.

While sales agents and financiers are loath to take sides in the spat given that they have to work with both writers and agencies, the vast majority privately say they support the WGA. The expansion of the agencies into production and international sales (think WME sibling company Endeavor Content taking a majority stake in international sales company Bloom) has put them, as Stuart Ford of AGC Studios puts it, referring to WME and Endeavor's move into international film sales, "in a very obvious conflict of interest."

Several international sales agents speaking to THR on condition of anonymity report cases of talent agents killing projects if they don't land with their in-house production company or threatening to pull a client off a film unless they "get a piece of the action" on the domestic sale. "It's a very serious issue — that of the agencies packaging, producing and selling content all under one roof," notes a veteran sales agent. "It's further restricting the talent available and making it harder to get films made."

As the WGA's war against the talent agencies plays out in the California courts, the indie film business will position itself for what comes next, with most hoping the WGA can permanently change how the agencies do business.

"But they won't go down easily," says one financier with more than two decades of experience on the indie film scene. "We're talking about their whole business model and their future expansion plans. They'll do anything to keep it from falling apart."

But one person's loss could be another's gain in the competitive world of screenwriting. "I had a discussion with some German and British authors, and they told me that they see this as an opportunity to get a part of the 'pie' that is now taken by WGA-repped authors," says Polina Schlicht, who buys for Ukraine. "In other words, a part of the market might slow down, whereas another part will become more mobile."

This story first appeared in the May 8 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.