The WGA is on the brink of ushering in a sea change in Hollywood
The already clamorous dispute between the Writers Guild of America and Hollywood's top talent agencies took a turn for the litigious last week when the WGA and eight of its writer members filed a lawsuit against the top four agencies: CAA, WME, UTA and ICM Partners.
The WGA and the Association of Talent Agents have been at an impasse for months over a 43-year-old agreement dictating how writers and their agents do business. At the crux of the dispute is the escalating practice of agencies packaging projects, bringing together multiple members of the creative team (more on that later), and the fees agencies collect from doing this.
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The failure of talks April 12 prompted thousands of guild members to fire their agents, a move that could complicate the future hiring of writers (especially for the upcoming TV season) and lead to more legal steps if agents are shut out of the process.
Here's what we know as Hollywood marches steadfast into uncharted territory.
What the hell is packaging anyway?
This is the WGA's main bone of contention with agencies. Packaging enables an agency to start a film or TV project by bundling talent it represents and bringing that multi-pronged project to a studio or network. The practice has become a major source of income for top Hollywood agencies, effectively making them producers on a movie or TV show.
The agency who puts the package together receives fees directly from the studio in lieu of commissions from actors, directors, showrunners and yes, writers -- often for the life of the project.
So why do writers object to their agents packaging projects?
WGA West President David A. Goodman argued in a speech to members in late February that the practice creates a "conflict of interest." With money guaranteed from studios, Goodman said, the agency is more invested in the total success of a project (and keeping overall costs down) and have less incentive to negotiate better wages for writers and other clients involved.
Do agencies make more money from packaging fees than commissions?
The answer seems to be yes, a lot more. According to the WGA, the top four agencies now receive more than 80% of the packaging fees paid by Hollywood studios and networks. (The ATA has not disputed this.)
Agents typically receive packaging fees on each episode of a TV show, and those fees often far outweigh what the agency would make on the standard 10% commission for a writer (or other talent's) earnings.
According to "Cold Case" creator Meredith Stiehm, who is listed as one of the plaintiffs in the WGA's lawsuit, "For every dollar that I made, (CAA) made 94 cents. They should make 10%." That's the typical fee agencies collect from their clients on work they book for them.
In addition, Stiehm said she wasn't even aware her agent was collecting a packaging fee from her show until the network told her seven years in that she needed to cut the budget -- and she said that led to compromises on her long-running CBS show. "If an agency is taking $75,000 out of the budget every episode, that is money that can be spent on actors or sets or music," she said. "We had to take out music, we had to cut down to 17 episodes and we couldn't shoot in Philadelphia. Season 7 was less of a season than it could have been."
Does the guild have a legal case here?
In the civil lawsuit filed on April 15, the WGA argued that package fees are illegal under California and federal law. The lawsuit claims that packaging fees violate California fiduciary law by "severing the relationship between writers' compensation and what the agency receives in fees." Basically, the guild argues that agents have a conflict of interest if they're collecting fees on an overall project (where the motivation may be to keep overall costs down for more profitability) and also negotiating for their clients (where the motivation is to get the highest possible salary, and therefore commission).
Lawyers for the WGA also argued during the press conference last Wednesday that packaging fees violate the Taft-Hartley Act, which says that any representative of an employee cannot receive money from the employer. If you're an agent, the guild says, you should collect money only from your client -- and not from a studio or network. (It's unclear why the guild chose a civil lawsuit instead of seeking relief through the National Labor Relations Board, which enforces the Taft-Hartley Act.)
"All of the writer plaintiffs have been hurt financially by packaging deals. They are creators and writers of television shows that have shaped a generation, yet their agents have profited at the expense of their own clients," WGAW general counsel Tony Segall said in a statement. "The plaintiffs will seek a judicial declaration that packaging fees are unlawful and an injunction prohibiting talent agencies from entering into future packaging deals. The suit will also seek damages and repayment of illegal profits on behalf of writers who have been harmed by these unlawful practices in the past."
The ATA, in a response to the lawsuit, found the WGA's stance ironic "given that the Guild itself has agreed to the legitimacy of packaging for more than 43 years," ATA Executive Director Karen Stuart said in a statement. "Even more ironic is the fact that the statute the WGA is suing under prevents abuses of power and authority by labor union leaders, even as the Guild has intimidated its own members and repeatedly misled them about their lack of good faith in the negotiating room."
Wait, did you say writers fired their agents?
Yes. The WGA on Monday said "over 7,000" guild members have signed the letters terminating their agents -- and the guild has forwarded the first batch of those letters to various agencies.
Once the guild and the ATA failed to reach a new agreement when the deadline expired earlier this month, the guild implemented its new code of conduct for Hollywood agencies demanding an end to packaging fees. Since all the major agencies refused, writers repped by those agencies were asked to stand with the WGA and fire any agent who didn't agree to the guild's new code.
Prominent writers such as Andy Richter, Peter and Bobby Farrelly, John August, Natasha Rothwell, Patton Oswald and Stephen King all publicly announced they had signed letters notifying their agents they could no longer represent them until the dispute is resolved.
My agent of 20+ years is a great friend and fighter for my career. I would give him a kidney tomorrow. But this isn’t about him or any single agent. Until agencies put #ClientsOverConflicts we can’t work together. Simple as that. #IStandWithTheWGA
— John August (@johnaugust) April 13, 2019
Couldn't agents just share packaging fees with their clients?
The ATA proposed such a deal, actually. After the two sides agreed to extend the deadline and there appeared to be hope they might reach a deal, the ATA offered to share an unspecified percentage of packaging fees on any given film or TV project with that project's writers, 80% of which would be shared with writers who are not already participating in profits. Further, ATA offered the money regardless of who represents a writer, with the remaining 20% invested in efforts to increase diversity among writers.
The WGA negotiating committee rejected the proposal, calling the ATA's offer "unacceptable" and said it only continued "a major conflict of interest."
"You are still receiving money from our employers for access to us, and keeping 99% of the profits of your backend," WGA West David Goodman said in a letter at the time. "It does not change your incentives at all. It is not a serious proposal and we reject it."
How will writers find work now? Will all my favorite shows now be improv?
Writers who are already staffed on a TV show are fine; nothing changes for them, unless a network decides to cancel a show. But new shows -- including any picked up by broadcast networks at next month's upfronts announcement of the fall season -- will face a more challenging task of filling their writers rooms.
In truth, this dispute likely could not have come at a more critical time for writers, especially those who write for TV. Once the fall season is announced next month, showrunners will have to start staffing -- and could turn to the people they know rather than lean on agencies to suggest talent. That could hurt less established writers (at least those with representation at major agencies).
Writers in the guild, however, are attempting to make an effort to democratize this process. Twitter has become a haven for writers looking for work, to make connections or simply boost their profile; and for showrunners to find new talent. The hashtag #WGAStaffingBoost has been one of the big drivers of a screening process for new writers that bypasses the agency system.
Thanks to #WGAStaffingBoost, so far I've:
-Met a buncha writers I wanna consider for @AdamRuins someday
-Connected w/ 2 writers over comedy & grief
-Set up several coffee dates
-Received Yale syllabus of reading that will help w/ project I'm developing on the concept of MEMORY
— Alison Zeidman (@alisonlzeidman) April 19, 2019
The WGA has also set up a system where writers can submit their work and showrunners and producers can comb through submissions to find staffers, but it's unclear how workable that system will be in practice.
What about film writers?
The dispute will likely have less of an immediate impact on film projects, depending on how long it carries on. While it could make it harder for studios to attach a writer to a project to pen a script in development, film projects have a much longer lead time and there is seldom a rush to sign a new writer to a project.
Do writers still need agents to negotiate their deals?
There is a question about how writers will be able to negotiate and sign new deals without agents. Last week, the ATA sent a letter to the WGA board and council members disputing the guild's assertion that writers' lawyers and managers would be able to represent them in employment negotiations.
The association said it would consider legal action against those who engage in what it deemed "unfair competition." This question has sparked a side dispute between the WGA and ATA, with both threatening to take legal action.
What are the other Hollywood guilds doing?
As the dispute between the WGA and ATA has escalated, the other Hollywood guilds have been in a wait-and-see mode. Insiders at SAG-AFTRA and the Directors Guild of America have told TheWrap that both guilds are closely monitoring the situation, but won't be taking any action of their own anytime soon as dueling lawsuits are expected to be filed soon. (Last Monday, the DGA said its writer-directors could still retain their agents for directing-only work -- at least for now -- even if they dropped their agents for writing assignments to abide by the WGA.)
In the meantime, SAG-AFTRA has released a public statement of support for WGA, applauding its efforts to improve wages for its members.
But if the WGA is successful in any way in changing how agencies represent writers, the ripple effects could soon affect all aspects of the industry. This would have been true even if the WGA had agreed to ATA's counterproposal last week, in which it offered an unspecified percentage of packaging fees on a film or TV project to the WGA to be shared with its members.
If packaging fees were opened to writers, it would only be a matter of time before other guilds called for their own share of those fees.
How long will this go on?
Who's to say? It appears that both sides are settling in for a long fight. In the ATA's response to the guild's lawsuit, ATA Executive Director Karen Stuart noted that this dispute could potentially drag on for years.
"Knowing that it could take months or even years for this litigation to be resolved, WGA leaders are unnecessarily forcing their members and our industry into long-term uncertainty," Stuart wrote. "While the legal process runs its course, we strongly believe that in the interim it remains in the best interests of writers to be represented by licensed talent agencies."
But the WGA has had enough. In the guild's eyes, this could have been settled 11 months ago, so what would be another 11 months?
"This matter is very simple. If the major agencies would abide by existing law -- antitrust and racketeering law -- this deal would have been done 11 months ago," the WGA said in a statement. "The ATA's repeated use of anti-union rhetoric illustrates how much in denial the big agencies are."