Writers Guild Claims WME, CAA Won't Say How They'll "Actually Comply" On Deal Terms

David A Goodman Writers Guild Awards
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Writers Guild of America West president David A. Goodman.

The union says the holdout firms have "only partially satisfied" an information request on ownership structure.

Hope for a late summer breakthrough on a deal between the Writers Guild of America and two major Hollywood agencies has turned into a fall waiting game.

The negotiating committee for the union says it has presented WME and CAA with a proposal on Friday on terms for a new agreement for the holdout talent firms to represent any of its estimated 16,000 members for the first time since April 2019.

A sticking point for the deal: Both WME and CAA are sister companies with film and TV content production companies owned by their corporate parents. The Writers Guild has called such affiliate production a conflict of interest and has asked agencies that work with its members to comply with request to cap ownership in such ventures to 20 percent.

WME has been seen as a holdout given that it is part of entertainment and sports conglomerate Endeavor, which fully owns film and TV firm Endeavor Content, backers of BBC America's Killing Eve and other projects. Meanwhile, on Sept. 14, CAA claimed its leadership "signed" an agreement with the Guild and said it would agree to cap ownership in its production entity, wiip, which has produced Apple TV+ series Dickinson, but do so at an "commercially practical time."

That rationale appears to have been a non-starter for the union, whose franchise agreement states: "No Agent shall have more than a 20% non-controlling ownership ... any entity or individual engaged in the production or distribution of Motion Pictures." Over the past year, the guild has successfully signed up dozens of smaller, mid-sized and larger firms that don't have such ties to affiliated production entities.

In its note to members on Friday, the guild's negotiating committee claimed that both agencies had arrived at terms for a deal, in theory, following fellow major talent firms ICM Partners' agreement in August and UTA's deal in July. "What they have not done is spell out how they will actually comply," the guild stated.

WME and CAA reps did not immediately reply when asked for comment.

The guild's full note to members on Oct. 16 is below:

Today, the WGA sent both WME and CAA a proposal that outlines the steps each of them must take in order to be in compliance with the 20% ownership cap on production affiliates in the franchise agreement. At the same time, we sent them a renewal of our initial information request, which they have, up to this point, only partially satisfied.

As a reminder, both CAA and WME have agreed, in theory, to the 20% cap provided for in the UTA/ICM agreement. What they have not done is spell out how they will actually comply. WME says it wants until 2022; CAA has given no specific timeline, saying that it will sell when “commercially practicable."

As we communicated to you in our previous correspondence (Sept 1, Sept 14, Sept 30), CAA and WME enter these negotiations more deeply conflicted than any of the other agencies.  But that does not give them the right to come out on the other side of this process still conflicted. We have been clear with them from the start that we will not make a deal with them that undercuts the gains this campaign has achieved.  Everything we ask from them today is necessary to ensure that writers are protected: which means that the agencies divest to the 20% limit in a timely fashion - that they remain divested – and that we can verify their compliance.

All of this begins with transparency over their corporate structures and private equity ownership.  Earlier this month, at the request of both CAA and WME, the WGA agreed to confidentiality regarding certain corporate information that might be disclosed to us during the course of negotiations.  While both agencies have now provided some corporate structure information, much of it was already publicly ascertainable, and most of our requests have gone unanswered.  Any agreement must start with openness and full disclosure. We cannot protect writers from conflicts that are deliberately hidden from us.

You can read the complete correspondences from the WGA to WME and CAA, which includes the following terms these agencies need to meet to protect your interests:

The limitations in the franchise agreement on 20% ownership of an affiliate production entity must apply to all the agency’s parent entities, investors, shareholders, and affiliates. Those are the terms of the UTA/ICM deal and there can be no exception for CAA and WME. To allow otherwise would permit the agencies to execute an “end run” by shifting ownership to another related entity while remaining conflicted.

Neither agency will be permitted to sign the franchise agreement until it can demonstrate that it has properly divested according to the terms of that agreement. The Guild will not be in the position of sending writers back to their agencies on faith and waiting for compliance from agencies who have been relieved of their greatest pressure to do so. Nor will we be faced with telling writers to terminate their agency a second time, should that agency fail to comply.

Preexisting projects cannot be exempted from the limitations on financial interest beyond 20%.  We allowed preexisting packages to survive because requiring all writers to pay back commission in order to undo already packaged projects would not have been a tenable solution. There is no such parallel with affiliated ownership.  What’s more, this requirement of full divestment to 20% ensures that there is no residual conflict inherent in agency-owned studio projects.

The agency’s restructuring – and its continued compliance - must be subject to third-party oversight and verification.  This is necessary because the agencies are privately held companies whose structures are entirely obscured from public view. Unlike packages, which can at least be ascertained in show budgets and profit statements, the Guild would have to take compliance on faith alone. That we will not do. We need to be assured that the divestment is complete and enduring. We’ll also need appropriate sanctions spelled out in the event of noncompliance.   We are not insisting on auditing the agencies; however, there must be third-party monitoring to protect writers’ interests.

We will update you with any significant developments.