Writers Guild at Impasse With WME, CAA Over Deal

David A. Goodman - Getty - H 2020
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Writers Guild of America West president David A. Goodman.

After agreeing to terms with ICM and UTA, the union's talks with the Endeavor-owned talent firm broke down on Tuesday.

More than a year after thousands of Hollywood scribes cut ties with their agents amid a standoff between the Writers Guild of America and talent firms, talks have not progressed with two major holdouts.

WME and the guild hit an impasse on Tuesday after the guild told the agency that it would have to accept the terms agreed to by ICM and UTA. WME had reached out to the guild last month, in the wake of WGA's Aug. 5 agreement with ICM, offering to negotiate with all issues on the table, a source with firsthand knowledge tells The Hollywood Reporter. According to this person, Endeavor, the parent company of WME, was willing to give up more than 50 percent of its ownership in Endeavor Content, taking its stake to 49 percent, and would sunset packaging — with some exceptions for talent that didn't want to pay commissions and was willing to be packaged — in two years. Still to be negotiated were WME's concerns about ongoing partnerships and programs.

Packaging fees (in which reps are paid directly by a studio for attaching talent to a writer's pitch) and affiliate production (parent or adjacent companies of agencies producing film and TV content) remain a point of conflict between the guild and the holdout agencies.

Following a Zoom meeting with WME's Rick Rosen taking the lead, the agency felt the guild seemed receptive to negotiation. Then there was a nine-day silence before the guild circled back, at which point there was another meeting of the factions on Tuesday in which the guild told WME that it had come to the table late and would have to accept the terms of its deals with ICM and UTA. Those would have called for WME to reduce its ownership of Endeavor Content to no more than 20 percent and to sunset packaging with no exceptions.

In a note on Tuesday, the Writers Guild's negotiating committee signaled to members that a deal with WME and CAA won't be imminent, despite progress made in signing up fellow major agencies ICM and UTA to deals that would allow the firms to once again represent scribes. "We’ve had cordial discussions with both WME and CAA. We wish we could say we’re close to a deal, but we’re not," the Writers Guild letter reads. A CAA source says there have not been negotiations but the agency is open to talks when the guild's leadership is willing to have a substantive discussion.

The negotiating committee for the union goes on to claim the major holdout agencies sat on the sideline of talks over the last year even as the writers signed up smaller and mid-sized firms like Paradigm, APA, Gersh, Verve and A3 Artists Agency to agreements.

"WME and CAA chose to sit out the negotiation for well over a year, hoping members would give up, and relying on a lawsuit that won’t even go to trial, if at all, until summer 2021. To be blunt, we’re not going to give them a different and better deal because they waited; we’ve now gone about as far as we can go," the letter adds. "We’re not going to keep pushing back the sunset period on packaging. We’re not going to allow more than 20% ownership of a production studio."

WME and CAA did not immediately comment on the note. The two agencies have been locked in litigation with the Writers Guild since April of last year, when the union sued the majors over packaging fees as a breach of fiduciary duty. The source close to the talks with WME feels the guild is giving the agency no choice but to go all the way with the lawsuit.

CAA financially backs the film and TV studio Wiip, which produced Apple TV+ series Dickinson and Facebook Watch's Queen America, among other projects. WME has been seen as reluctant to agree to terms with the guild given that its parent company owns film and TV company Endeavor Content. The guild has called such affiliate ownership a conflict of interest.

"Because of their corporate structures and private equity investors, WME and CAA have to make decisions about the future of their affiliate production companies," reads the Guild's Sept. 1 letter. "We’re happy to hear their plans and proposals, but ultimately it is their responsibility to find a way out of their dilemma. The fact that they began this negotiation more deeply conflicted than other agencies does not mean they can resolve it by remaining more conflicted."

All of Hollywood's major agencies have undergone cost-cutting amid the pandemic as the representation business has taken a financial hit amid a monthslong film and TV shutdown this year. Century City-based CAA said in late July it would be laying off 90 agents and furloughing 275 other staffers, while Beverly Hills-based WME said in May it would lay off or furlough roughly 20 percent of its staff.