The Writers Guild of America released a new report on Tuesday outlining “conflicts of interest” by Hollywood talent agencies, hours before they are set to meet with the Association of Talent Agencies for a new round of negotiations.
The report cites lawsuits surrounding specific TV shows, including AMC’s “The Walking Dead,” and the game show “Who Wants to Be a Millionaire?” as examples of how the agencies’ packaging fee system harms writers and showrunners.
The report also argues that private equity investments from outside of Hollywood have shifted the major agencies’ top priority away from client representation and toward expanding into content creation and ownership.
“The result of this outside investment and expansion is a representation business dominated by talent agencies that are focused on increasing agency and affiliated operations’ revenue and profit for the benefit of private equity owners, a pursuit that is far afield from the fiduciary duty owed to agency clients,” the report read.
Much of the report repeats the arguments made by WGA leadership in recent weeks in favor of a restructuring of the Hollywood agency system, eliminating packaging fees for agencies and returning to a system where agents receive a commission from their clients for deals.
The guild will hold a vote on March 25 where members will decide whether to authorize leadership to enforce a new Code of Conduct mandating the removal of packaging fees from any agency that represents writers. If authorized, the Code of Conduct would go into effect on April 7.
The report includes emails sent between the Creative Artists Agency (CAA) and AMC over packaging fees for “The Walking Dead” when its first season was in development in 2010. The WGA says that the packaging fees were being negotiated before a contract was finalized with show creator Frank Darabont, who was represented by the agency. The agency also negotiated packaging fees for potential spinoffs such as “Fear The Walking Dead,” which premiered in 2015.
“The emails lay bare the conflict inherent in packaging. Not only does CAA get to benefit from a profit definition that is based on its client’s MAGR [modified adjusted gross receipts] definition, but the agency’s share of profits is actually paid before its client’s as an ‘off-the-top deduction,'” reads the report.
“This means that CAA’s share of profits reduces the pool of profit available to its client. Further, CAA’s client receives no benefit if the agency negotiates a packaging fee on a spinoff of the series,” it continued.
The report also outlines concerns over the major agencies’ recent foray into content production, which the guild says could create even more conflicts of interest as major agencies’ production outlets compete against each other and against the studios it makes packaging deals with to grant access to talent.
“Talent agencies launching production companies that employ their own clients creates an indefensible conflict of interest,” the report adds. “Acting as an employer and representing a client in salary negotiations are fundamentally at odds: an employer’s incentive is to maximize its profits and keep labor costs low, while the agency is duty-bound to get the best deal it can for its client.”
The WGA held a conference call with reporters ahead of the release of the report on Tuesday. WGA leadership was vague about the actual status of negotiations and what they hope to accomplish at today’s meeting with the ATA.
WGAW president Chris Keyser said he was confident the guild would succeed in changing “the world in which writers operate so that it’s fair for writers.
TheWrap has reached out to the ATA for comment to the new report.