This is an update on my blog post regarding the face-off between the Writers Guild of America (WGA) and the major talent agencies, through the Association of Talent Agencies (ATA).
The WGA issued an ultimatum requiring the agents to sign their Code of Conduct forswearing package commissions. This is the practice by which agencies are paid directly out of the budget of television shows rather than by taking 10% of their clients’ gross earnings. It’s not disputed that this practice sometimes results in agents making more than their clients on a show. The agents see this as a win-win, since the writers save the commission on their fees. The WGA sees it as creating a conflict of interest that ultimately harms writers. For the last several months, Hollywood held its breath in the hope that the parties would bridge this divide. This did not happen. The WGA directed its members to fire their agents, which over 7,000 have done so far.
The result makes compelling water cooler conversation but is otherwise a bloody mess. Here is the latest.
- The WGA has filed suit against the ATA and the Big Four agencies (WME, CAA, ICM and UTA), alleging that the practice of collecting package commissions constitutes breach of fiduciary duty and unfair competition under state and federal law.
- The entire ecosystem under which writers found jobs is upended. Under the California Talent Agencies Act (TAA), only licensed talent agents can “procure” employment for writers. The WGA has issued a statement delegating authority to managers and lawyers to find work for writers notwithstanding the statute, but many (including the ATA) question the union’s authority to do so. The WGA has offered to indemnify lawyers and managers against TAA claims. So far, however, no one has taken it up on this offer.
- Lawyers, but especially managers are in a tight spot. They have writer clients to service without agencies to back them up and provide cover. They can procure employment for their clients in violation of the TAA, at risk of being required to disgorge any commissions received if their client files a claim with the State Labor Commissioner. Meanwhile, the big agencies have made it clear that they will not look kindly upon managers and lawyers who encroach upon their territory, and will remember who their friends are when this dispute is finally resolved.
- No one knows how open writing assignments will be filled, since this was a central role of the agencies. The WGA has set up an online database to facilitate matchmaking, and showrunners are falling back on their personal networks. These are early days, however. There will undoubtedly be loss of efficiency in staffing but how serious it will be and who will suffer remains to be seen.
- The endgame is far from clear. The consistent position of the WGA has been that it will simply not tolerate packaging any longer. It even rejected out of hand an eleventh-hour offer by the ATA to negotiate a split of package commissions. On the other hand, package commissions have comprised a major part of agencies’ revenues for over forty years. It is hard to see the Big Four giving them up, and they have the financial strength to function without commissions from writer deals indefinitely. If both sides insist on playing out the litigation option, we are in for years of stalemate. Without venturing any predictions, here are some possible outcomes, some likelier than others:
- Midsized and smaller agencies break ranks, sign the Code of Conduct and poach Big Four clients.
- New staffing mechanisms develop that work so well that writers wonder why they ever thought they needed agents in the first place.
- Writers become frustrated and exhausted, abandon the union and go back to their agents.
- The WGA turns on the managers, asserting that their practice of producing on their clients’ projects is a breach of fiduciary duty and conflict of interest.
- The ATA sues the managers for violating the TAA and for unfair competition.
- The ATA and WGA make a deal and bury the hatchet. (This is actually bound to happen eventually.)
Worried? Confused? Me too. I need a break. What’s on TV?