Writers Guild Rejects Agencies' Proposal on Packaging Fees

David Goodman WGA Video - H - 2019

"We will not counter on revenue-sharing," Writers Guild of America West president David Goodman told members, "because any percentage we respond with, even 98 percent, suggests the answer is somewhere in the middle, and it is not."

More than two months after thousands of scribes left their agents after talks broke down over a new franchise agreement — upending long-standing business practices in Hollywood and leading to an acrimonious lawsuit — the Writers Guild of America is now switching tactics and plans to negotiate with individual agencies. 

"We remain at an impasse, and involved in a difficult but necessary struggle," said Writers Guild of America West president David A. Goodman in a video emailed to the guild's members with a subject line "Agency Campaign Update" sent near midnight PT on Wednesday. He added, "We are making changes in our approach." 

Central to the dispute between the major talent agencies and writers is the practice of packaging fees, in which agents are paid directly by a studio for attaching actors and/or a director to a writer's pitch.

The WGA has, thus far, maintained that it seeks to end the practice altogether, while the agencies have upped their offer to cut scribes in on the practice, proposing 2 percent of such fees. On June 7, at the start of negotiations with the guild that day, CAA co-chairman Bryan Lourd described the increased offer as "specifically designed to benefit the large group of writers who contribute to packaged shows but do not have backend/ownership positions. Our proposal benefits the working writer."

Goodman, on Wednesday, signaled that compromise on packaging fees remains a no-go. "The negotiating committee, after thorough deliberation, made the decision to take revenue-sharing off the table," he said, claiming that writer income negotiated by agencies has gotten "worse" while agency compensation has "skyrocketed." 

"The simplest way to address this imbalance, and align our agents' interest with ours, is to insist that we return to a commission-based system of compensation," Goodman said, adding that "revenue-sharing, by contrast, ignores this entirely."

He went further, saying that revenue-sharing "does nothing to combat the abusive practice in which agencies seek to control access to lucrative packaging fees by manipulating who works on any given project, which is the dirty open secret of this business." 

"We will not counter on revenue-sharing," Goodman said, "because any percentage we respond with, even 98 percent, suggests the answer is somewhere in the middle, and it is not." 

Amid the heated negotiations between writers and agencies, Endeavor, the parent company of WME, filed its intention to go public on May 23, noting in its disclosure with the Securities and Exchange Commission that the length of the dispute is "unknown" and "that outcome of the dispute, including the commercial landscape that will exist in the future between writers and agents, could have an adverse effect on our business."

In the Wednesday video, Goodman referenced the IPO filing when discussing affiliate production, in which companies that own agencies, like Endeavor/WME, CAA and UTA, also produce their own film and TV content through entities like Endeavor Content. 

He said the agencies "took a step backward from their original proposal" in talks surrounding affiliate production. "Now, in their June 7 offer, they told us that because the agencies and their production arms are 'legally separate entities, the agencies cannot make substantive offers in these areas,' and they suggested that the guild meet with their production companies separately to discuss our concerns." 

Added Goodman, "In other words, because of the WME IPO, it is now the position of the agencies that they have no relationship with their production companies, but they are willing to help us make an appointment. I'm not kidding — this was said in the meeting."

The WGAW president said that instead of negotiating with the organization that represents the agencies, the Association of Talent Agents, the guild will now look to talk directly with individual agencies, naming UTA, CAA, ICM, WME, Gersh, Paradigm, Rothman Brecher, Kaplan Stahler and APA. Goodman said, "We're willing to meet with every agency that is willing to meet with us." The ATA did not immediately respond to a request for comment. 

The WGA is also in the midst of a lawsuit that it filed on April 17 that seeks to end packaging fees, with WME, CAA, UTA and ICM as named defendants in the case. "The guild will continue the legal and political strategies which constitute additional pressure we will use to reach an agreement," Goodman noted in his video.

He ended his remarks by addressing a potential endgame but did not give a timeline. Asserted Goodman, "No one wants this over more than me."