The full service agencies APA and Innovative Artists have signed the Writers Guild of America’s new agency franchise agreement. As a result, each will be free to resume representing writers but with some critical restrictions. (For background on the long-running battle between the WGA and the agencies, see our earlier posts here and here.) This may be the the WGA’s most significant victory to date in its fight to end the practice of agency package commissions. APA and Innovative are both prominent agencies, and APA’s CEO, Jim Gosnell, was president of the Association of Talent Agencies (ATA) until just before his agency agreed to sign.

The agreement, which is favored nations for all signatories,  requires agencies to refrain from producing projects or from collecting package commissions. The prohibition on packaging will be phased in and is not triggered completely until July 15, 2021. Until then, writers have a choice whether to be included in a package or to pay commission out of their fees. Moreover, this sunset period will be extended if at least two of the Big Four agencies (WME, CAA, UTA or ICM) have not stopped packaging by that date, either by signing a franchise agreement or as a result of legal action.

APA’s and Innovative’s concession came just days after Gersh, another full service agency and ATA member, agreed to sign the franchise agreement. Four other ATA members had previously signed the franchise agreement: Buchwald, a smaller full service agency, and three literary boutiques, Rothman Brecher Erlich Livingston, Kaplan Stahler and Pantheon. The Verve Agency, a non-ATA member, signed on in May of 2019, shortly after the WGA called on its members to fire their agents who refused to sign the new franchise agreement.

Although these developments represent significant progress from the WGA’s standpoint, there are currently no indications that the Big Four agencies will be signing a franchise agreement any time soon. WME, CAA and UTA are deep in litigation against the WGA in federal court in which each side has accused the other of numerous bad acts including antitrust violations. The court is currently considering the agencies’ motion to dismiss the union’s antitrust claims. These agencies have deep pockets and diverse revenue streams, but if more of the mid-sized agencies sign franchise agreements and the lawsuit heads for trial, the big agencies will face increased pressure to resolve their dispute or risk being shut out of the writer business.

Looking ahead, we can expect these developments to have an impact on the forthcoming negotiations of the new collective bargaining agreement between the WGA and the Association of Motion Picture and Television Producers (AMPTP). An early sign of this impact was manifested in the preliminary pattern of demands that the WGA sent to its members as a blueprint for those negotiations. One of the WGA’s demands is to require the studios to negotiate only with agencies that have franchise agreements with the WGA. The WGA had made a similar demand in March of last year, which the AMPTP rejected as tantamount to an illegal group boycott.

The current WGA collective bargaining agreement expires on May 1, 2020. Rumors are flying that the negotiations will be contentious and Hollywood is bracing itself for a writers strike. Having learned the lesson in their struggle with the agencies that solidarity can achieve results, guild members may feel more emboldened to support a strike.