An ongoing contract dispute is sending shockwaves through Hollywood, and it's going to have an interesting effect on what stories get told on your favorite show.
Variety reported on Friday that the Writers Guild of America has called on its members to fire their agents. A months-long negotiation between the WGA and the ATA (Association of Talent Agents), the union representing agents, over revising a 43-year-old franchise agreement had broken down after the two organizations had failed to come to terms.
Over the past few decades a number of the larger talent agencies had developed the practice of negotiating their own contracts with studios that created conflicts of interest between the agents and their putative clients.
Friday represented a last-ditch effort to work out a compromise, but the WGA’s negotiating committee announced late in the afternoon that it had not been able to reach a deal with the ATA. “So there is no settlement,” the committee said.
“So what happens now?” the committee said. “In a strike situation, we all know that we are to refrain from crossing the picket line or writing for a struck company, and we’re asked to show our solidarity by picketing, which is the public and moral face of our dispute.”
“In this situation there are two actions required of all members: First, do not allow a non-franchised agent to represent you with respect to any future WGA-covered work. Second, notify your agency in a written form letter that they cannot represent you until they sign the Code of Conduct.”
Not all talent agents were fired on Friday - a number of smaller agencies had already agreed to the new terms - but all of the major agencies have lost clients. In fact, the ex-clients have taken to posting their severance letter on Twitter.
— Patton Oswalt (@pattonoswalt) April 13, 2019
The reason the WGA walked out of the negotiations is that the major talent agencies no longer serve the best interests of their writer clients. In some cases they have launched or invested in production companies, and in others cases they have negotiated production deals with studios. This means that when a writer's agent sits down to negotiate a deal with a studio, the agent's boss is effectively sitting on the other side of the table.
Clearly that is a conflict of interest, and it's not the only one.
Amy Berg explained on Twitter last month how talent agencies now negotiate packaging deals with studios where the agency gets paid and their clients do not. You can find her tweet chain on Twitter; here are ten tweets that concisely sum up the issue at hand.
"In 1976, an agreement was entered into between the WGA and the ATA called the Artists' Manager Basic Agreement (AMBA). The AMBA hasn't been renegotiated since that time. That's 43 years ago. Even I can do that math. As you can imagine, the industry has changed a lot since then. Since then, the major agencies have essentially become an oligopoly of four: CAA, WME, UTA, ICM. Three of them have sold stakes to private equity funds. Undoubtedly these investors are seeking higher than usual returns and are demanding a renewed focus on the bottom line."
"Packaging and producing fees. That's where the money is for agencies these days. Both of which are illegal practices representing huge conflicts of interest. The big four are using their monopoly control of top writing talent to demand to be paid directly by the studio rather than working off commission. In television, they do this through a formula called 3-3-10 (3%, 3%, 10%). They're calling these packaging fees. "
"The first 3% is from the network license fee and is taken directly from the budget of a series. Typically that amounts to 30K to 100K of the budget per episode. That's money that could be spent on hiring more writers that the showrunner now no longer has to work with. The second 3% is also from the license fee, but deferred. The kicker is the 10%... they receive 10% of the gross profits for the life of the series. Yes, gross. Yes, for the life of the series. Even if their clients leave and they no longer represent anyone on the show."
"Agencies are making more money than their clients, aka the ones doing the work. All this for a few phone calls and emails before a writing staff assembles, and then nothing thereafter."
"Agencies have blocked deals from going through before their package fee is in place. They've not negotiated in good faith in trying to secure overscale for clients because... why bother? Their money is coming straight from the studio, not the client. And some won't even fight to get their clients on projects they're packaging – it better serves them to place them on projects where they don't have a package so they can get their 10% commission."
Update: David Simon, creator of the shows The Wire and Homicide: Life on the Street, wrote a post last month discussing how he was cheated by CAA early in his career by his agent at CAA, and how packaging has hurt other writers.
In the book publishing industry, there is a strong sentiment that agents' interests are more aligned with publishers than with authors. Robin Sullivan, Kris Rusch, and others have argued that agents won't push for the best deal for an author because the agent values the long-term relationship with the publisher more.
A lot of the time it is hard to tell whether that is actually true. When it comes to the major talent agencies, it's pretty damn clear that they are not serving the interests of their writer clients.