Writers Guild Seeks Critical Information From CAA, WME as Talks Continue

The Writers Guild of America West released a new memo on Wednesday to its members outlining the progress in its talks with William Morris Endeavor and Creative Artists Agency, saying that they have requested more information on the nature of their ownership of affiliate production companies. “In short: our conversations continue,” the Guild’s negotiating committee said. “For there to be an agreement with CAA and WME, we must negotiate divestment terms that absolutely protect writers’ interests.” Despite a major setback for the WGA early this year when several key elements of their lawsuit were dismissed, the damaging financial effects of the COVID-19 pandemic have brought the agencies back to the negotiating table as they seek to end a more-than-year-long walkout of writer clients. United Talent Agency and ICM Partners have signed a new franchise agreement requiring them to phase out packaging fees — payments from a studio to an agency in exchange for packaging talent for a project — within the next two years. While packaging fees were the key issue in the guild/agency standoff, it is affiliate production companies that remain the final hurdle between the WGA and CAA and WME signing a similar agreement. The Guild has accused affiliate studios of being a conflict of interest, warning that agencies could favor projects and talent connected to those studios as it would give them a greater financial benefit. The favored nations clause in the UTA/WGA deal increased the amount of permissible ownership of an affiliate studio by an agency to 20%, but the Guild has publicly stated that it will not raise the percentage further for WME and CAA, the two agencies most involved with affiliates. “Our concerns with each of these agencies center on how they and their private equity investors will limit their ownership of production affiliates to 20% and how they will prove over time that they remain in compliance,” the guild said. “As you would expect, reaching agreement with the two agencies most conflicted in these ways requires the utmost care. We are, therefore, consulting experienced corporate merger and acquisition counsel.” Two weeks ago, CAA announced that they had signed a version of the WGA franchise agreement and sent it to the guild for approval, but the WGA insisted that they would not franchise the agency until further reviews were made. To this end, the Guild says it has requested further details on the agencies’ ownership of affiliates, including:

• The agencies’ and their investors’ current ownership of affiliated production entities;
• The current direct or indirect ownership of the agencies, and the agreements that govern their relationship with entities such as Silverlake and TPG;
• Copies of existing agreements between any affiliate production entity and its direct or indirect owners;
• Copies of any certificates of incorporation or corporate bylaws or similar documents of the affiliated production entities.

“This information will enable the Guild to evaluate any proposals WME or CAA may make regarding the changes necessary to bring them into compliance with the terms of the franchise agreement,” the Guild says. Representatives for the two agencies did not immediately respond to requests for comment.