Within the entertainment industry, talent agencies took a turn that will go down in history. Over the past two to three years, the WGA (Writers Guild of America) has been fighting against the top Hollywood agencies. After many long negotiations and legal battles, Verve was the first agency to comply with WGA in May of 2019, then Kaplan Stahler and Buchwald in July of 2019, the Gersh Agency and the Agency of Performing Arts in January of 2020, Paradigm last March, UTA in July, ICM Partners in August and finally, WME a couple of months ago in February.
All of these abbreviations of major companies and unions can be intimidating. That is why I turned to the Deadline article “WME Signs WGA Franchise Agreement, Giving Guild Historic Win In Campaign To Reshape Talent Agency Business” by David Robb. This article not only reported the ins and outs of WME signing the deal with WGA but the previous history of the situation, and why this signed deal was such an important moment in entertainment history.
WME was the last major agency to sign a deal with the Writers Guild of America after the two to three year battle. The battle was for agents who have writers as clients to put the writers first and not be able to create a production that contains conflicts of interest. Agents would bring creative elements to a production by taking a writer, a producer and actor, etc. that were each a client. The agent would not charge their clients for a percentage of the profit they were making off of the production (which is traditionally how agents make their money) but make a profit off of the production as a whole. This would give agents the incentive to low ball writers in productions they have a financial interest in. It was also appealing to their clients because they would not have to cough up a chunk of their income to their agents. From the agents point of view, they were putting all of the creative elements together, packaging it up and handing it over as if it was a premade hit. This is called packaging.
The guild claimed that the packaging fees paid by the studios to the agencies were a violation of state and federal labor law because they amounted to “illegal kickbacks” from an employer to an employee representative. Now, this deal between WGA and all of the major talent agencies, will return agents to a 10% commissioning business that the entertainment industry has not seen in decades. This will put an end to the desire for agents to create productions that are fully staffed with their clients because there will be no financial interest in the production as a whole but in their clients individually.
WGA President David A. Goodman stated, “I’m very pleased that we’ve achieved our goal: the agencies who represent us now have their financial interests aligned with their writer clients, and the agency’s problematic business practices such as packaging fees and agency owned-productions entities are at an end.” The agreement that was made on February 5th allowed WME writer-clients to return to the agency for the first time since 2019. In 2019 the West and East chapters of WGA ordered their fellow members to fire their agents if they would not comply and sign the new Guild’s Code of Conduct.
Although labor disputes come and go, this dispute will forever have an impact on not only writers and their agents, but on the industry as a whole. By WGA members firing their agents in 2019 it took the labor dispute from a phase that will die out to a war that would not end until changes were made. WGA’s victory could also open the door for the DGA to negotiate new franchise agreements. The DGA recently weighed in on the dispute between WGA and WME. The DGA showed their support when the national executive director Russell Hollander reached out to WME president Ari Greenburg stating that they had been following the dispute closely and that they believed it was the right time to communicate their strong support for the WGA. This could have instilled fear in talent agencies that more than one union was going to go in for the fight.
“The issue of talent agencies owning production entities is, and always has been, an issue of great concern to the DGA,” Hollander wrote. “Affiliated ownership carries with it inherent and obvious conflicts of interest. Agents should be free and unencumbered to carry out their duties to their director-clients with only the directors’ interests in mind, and should procure work for directors without the incentive to make cost-effective deals with production companies owned by the same parent company as their agency…”. Directors should be able to trust that their agents have their best interest in mind- not the writer, the actor, the producer in mind all at once for the cost-effective deal. You should be able to trust the people that you’re working with. Agents are being called out for being money hungry and making the best business move for themselves, even though it might not be the best move for their clients.
The WGA sent out a letter to its members on February 5th outlining the deal of the franchise agreement that they signed with WME, which matched the same agreements that were reached with UTA, CAA, and ICM Partners. Some key factors were a strict 20% limitation on agency ownership of production entities, a sunset period that ends packaging by June 30th, 2022, a mutually chosen third party to monitor, and a plan to ensure the agency sells down its interest in Endeavor Content to the required 20%. That could be 20% from the agency alone or a combined 20% between the agency and a production company. Production companies like Silver Lake that are owned by the same mother company as WME would be perfect for an agent to partner with because it would be cost effective. Agents will no longer have this luxury to the extent that they previously did.
Since agents are the people that book and up until now, basically put together and created productions they are extremely important characters within the industry. If we change the rules for agents and the way that they operate, it will trickle down and effect the way the industry as a whole operates. Packaging was where the real opportunity to make money was for agents. Could this change the income for agents? Could this affect how many people pursue careers as clients now that the opportunities are the same?
All of these changes are major not only for agents but their clients and the industry as a whole. It sets an example that just because something has been in practice for years does not mean that it is the best practice and that it should be challenged. This has been a positive outcome of this past year full of twists, turns, ups, downs and forced pivots. All of the major Hollywood agencies, including WME, were forced to pivot. Not only did they have to pivot, they agreed to drop legal charges that they put against the WGA. This outcome will set an example and give other unions in Hollywood alike to do the same. It’s only getting started!
