The Hollywood Fight That’s Tearing Apart Writers and Agents, Explained – Vulture
A-listers like Tina Fey, Shonda Rhimes, and Oliver Stone are among the WGA members who want a code of conduct for agents. Photo: Getty Images
There is a very big fight happening in Hollywood right now. It’s a standoff built around contract negotiations and entertainment-industry minutiae, but this fight affects every person who writes and creates the TV shows and movies we watch. For the past three months, the labor union representing those writers, the Writers Guild of America, and the people charged with finding them jobs and negotiating their compensation — the agents who comprise the Association of Talent Agents — have been in a standoff to determine the future of their working relationship. In recent days, that standoff has erupted: A decades-old contract between the groups has expired without a new deal on the horizon; the WGA has filed a lawsuit against Hollywood’s biggest agencies, instructing Guild members to fire their agents.
This is a fight about money, of course, though the particulars of who gets that money and why are pretty complicated. So what, exactly, is going on? Here’s everything you need to know.
First of all, who are these people?
The WGA is the labor union that represents writers across America, but they’re most well-known for representing Hollywood writers. Remember that 100-day strike in 2007 that resulted in Friday Night Lights having a really off second season? The WGA was the group that went on strike over a dispute with the Alliance of Motion Picture and Television Producers.
The ATA is a collective of more than 100 talent agencies, but the most important are known as the Big Four: Creative Artists Agency, William Morris Endeavor, United Talent Agency, and ICM Partners. Together, these companies dominate the industry. CAA, WME, and UTA alone “account for almost 70 percent of WGA members’ earnings,” according to the Guild.
What do agents do?
In the most basic sense, agents find jobs for writers and negotiate their pay. They get meetings for their clients with film studios or networks or showrunners, seek out openings on writing staffs, and find available projects in development. Writers then take the meetings and pitch themselves for jobs, and if they get them, the agent negotiates for the most lucrative contract possible and takes a commission of up to 10 percent. Remember when Mark Wahlberg got paid $1.5 million for 10 days of reshoots on All The Money in the World and Michelle Williams got paid an $80 per diem? Wahlberg’s payday was said to be the work of his agent, famed Endeavor CEO Ari Emanuel.
Agents and their employers also make a lot of money through a standard industry practice called “packaging,” in which agencies collect fees from the production studio behind a project. Packaging fees are a big part of WGA’s grievances with the ATA, and we will get to those later.
Why is this fight happening now?
The contract that dictates the terms of the ATA and WGA relationship is the Artists’ Manager Basic Agreement, which has not been renegotiated since 1976. (For comparison, the WGA renegotiates its collective bargaining agreement with the Alliance of Motion Picture and Television Producers every three years.) The entertainment industry has changed a ton over the past decade alone: Demand for content is higher than ever, with newcomers like Amazon, Netflix, Apple spraying fire hoses of money across the industry, but even though production and profits are at record highs, many writers say they feel squeezed. According to the WGA, the median weekly earnings of TV writer-producers dropped by 23 percent between 2014 and 2016.
The streaming boom has contributed to that stagnate compensation, thanks to shorter seasons for TV shows and changes to residuals. (Though WGA president David A. Goodman says wage growth is an issue that far predates season shortening.) Nevertheless, Guild members expect their agents to fight for every extra dollar possible over union-mandated minimums, and the WGA says agencies are no longer following through on that duty. Big portions of agencies have been sold to private equity firms over the past few years, which the Guild alleges has changed their profit motives and prompted them to de-prioritize relationships between agents and the writers they represent, focusing instead on owning entertainment properties — whether that means getting a cut of films or shows that clients write, or the agencies themselves buying products like the Ultimate Fighting Championship or the Miss Universe Organization, which are both now owned by Endeavor, which owns WME.
Last April, because of those concerns, the WGA gave the ATA the requisite 12 months’ notice that it planned to terminate the Artists’ Manager Basic Agreement. Negotiations for a new contract didn’t really start between the groups until February, and they didn’t go well. Both sides characterized the other as acting in bad faith: The WGA said the ATA didn’t respond to their termination notice for months; the ATA said that’s a lie. Hours before the AMBA was set to expire in early April, the two sides agreed to a weeklong extension — offering a glimmer of hope that they’d reached a new agreement — but the bonus time didn’t change much. On April 13, the 43-year-old deal between the WGA and the ATA was officially kaput.
What does the WGA want?
The fight comes down to two issues: the fees associated with packaging and the rising trend of agencies working with “affiliated producers” owned by their parent companies. The Guild’s desired changes to those practices would dramatically affect how Hollywood agencies do business.
In a February address to Guild members, Goodman laid out his case. “Make no mistake: Fairness is an issue here, but the fundamental reason that the leadership is recommending these changes is money,” he said. “If writer pay were steadily rising as agencies continue to package, we wouldn’t be sitting here. If writer pay were rising as agencies move into production and become our employers as well as our representatives, we wouldn’t be here. But as writers we share a common knowledge that writers overall are not doing better, we’re doing worse.”
In short, that means the WGA is calling for an end to packaging fees, and for agencies to stay away from producing.
Let’s break these terms down. What’s packaging and why does it have fees?
Historically, packaging refers to the process through which agencies bundle talent to bring a project together. Say, for example, that a writer comes up with an idea for a TV show. That writer’s agent will then bring in a director or an actor to join the show — often one represented by the same agency as the writer — and call it a package. In practice, however, agents who represent well-established showrunners (or actors and directors) are able to claim packaging rights simply because they represent said talent. The process of assembling packages has become so commonplace in Hollywood that 87 percent of all shows that aired during the 2016–17 season were packaged, according to the WGA, with WME and CAA responsible for 79 percent of that. (Movies can be packaged, too, and often are.)
The Guild wants to eliminate the fees that studios pay agencies for delivering those packaged bundles. In the case of TV, the fee typically amounts to $30,000 to $100,000 per episode, according to the Guild. That money is taken from a production’s budget for the project and then given directly to the agency; it is not part of a writer’s pay. Producer, director, and former agent Gavin Palone has spoken out against packaging for years (including in New York Magazine), and this is how he broke down what’s known as the “3-3-10” packaging fee structure in 2015:
“The production company pays the agency a fixed percentage (usually 3 percent) of the network base license fee after each episode is produced, an equal amount deferred out of profits (if any) and a percentage of the profits (usually 10 percent).”
If a series becomes profitable, that 10 percent figure applies to the show’s gross profits for the life of the program, even if all of an agency’s clients leave the show before it’s over. In the case of very successful shows, that could amount to millions of dollars: ICM has reportedly made hundreds of millions from Friends over the years.
What does the ATA say about packaging fees?
ATA executive director Karen Stuart says the conditions for the full “3-3-10” fee are rarely met, because so few shows hit a profit level that would lead to additional payouts. Deals with streamers like Netflix also don’t include back-end profits. (Ever the disruptor, Netflix has even changed the packaging model for agencies, further prompting the companies to look for alternate revenue sources and increased chunks of ownership in entertainment properties.) The ATA asserts that the packaging fees model is better because it allows writers to forgo paying the 10 percent commission they would otherwise owe to their agents. A report from the ATA says packaging saved writers from paying $49 million in commission fees last year, and UTA released its own study saying writers actually made more from shows the agency packaged than they would have on non-packaged programs.
Goodman counters that the UTA’s study was based on a “false premise.” “There is no way to compare what writers would make in a world with agency packaging and without agency packaging. Agency packaging is so dominant that it controls the whole market for writers in television,” he says.
Guild writers contend that if agents can get packaging money for themselves, they should be able to negotiate equivalent compensation on behalf of their clients, too. It’s a sentiment that The Wire creator David Simon expressed in a charactersitically heated way: “If you can only leverage profit for yourself, but not for me, what the fuck do I need you for? Why are you on this ride at all? At the point that he can only achieve benefit for himself and not for his client, what the fuck good is an agent?”
The Guild’s concern, ultimately, is that agents are not incentivized to aggressively negotiate for their clients when their financial success is divorced from commission. Or, as Goodman puts it, “Agency income should be directly tied to writer income.” That would mean reverting to a commission-only model that has not been in practice for a long time.
What are “affiliate producers” and how are they related to this fight?
While packaging has been around for decades, agencies opening up affiliated production companies is a much newer phenomenon. As Variety reported in March, “WME, CAA, and UTA in recent years have taken steps into content production and distribution, raising conflict of interest red flags in the view of many industry insiders.” WME’s parent company, Endeavor, owns a production shingle called Endeavor Content, while CAA has a hand in WIIP, and UTA has partial ownership of Civic Center Media. According to a source familiar with the agency side who did not want to be named, these companies are beneficial to writers because they increase the number of competitive buyers for projects, and because they’re willing to pay creatives more on the back end than other studios. This source also insists that agency clients are never pressured to go with an affiliate producer, only encouraged to pursue the best deal.
Screenwriter and WGA member John Gary says companies like Endeavor Content and Civic Center Media are not bad actors overall, citing projects of his own currently in development with WIIP. But these affiliate producers are a problem, he says, because the talent agencies have ownership stakes in them. “We know that company structure can eventually take advantage of employees in really bad ways,” Gary tells Vulture. “And so we need to eliminate that incentive for them to take advantage of us. They’re great companies with great people working there. They just can’t be owned by the same people who own the agencies. You cannot be both a judge and a prosecutor at the same time.”
Stuart, the ATA executive director, describes affiliates as “legally separate businesses with separate management and separate operations, housed in separate offices and with separate employees,” but their profits do still go to the same parent companies. The WGA charges that affiliate producers effectively turn the agencies into their bosses, creating an ethically dubious situation where agents are tasked with getting the best contracts for writing clients and the most cost-effective deals for studios owned by the same parent company as their agencies.
Can the WGA stop agencies from collecting packaging fees and working with affiliate producers?
It’s certainly trying! In late March, Guild members overwhelmingly approved a new code of conduct between agents and writers that would effectively prohibit both practices. Ahead of the vote, the code of conduct drew high-profile support from A-listers like Shonda Rhimes, Jenji Kohan, Mike Schur, Oliver Stone, and Tina Fey, and of the 8,274 Guild members who cast votes, more than 95 percent supported it.
The new code formalizes the WGA’s chief concerns: It stipulates that agencies must revert to the commission-only model, which means no more packaging fees, and that compliant agencies must sever ties with affiliate producers. Companies like WIIP and Endeavor Content could still exist, but the parent companies of agencies would have to forfeit their ownership stakes to avoid conflicts of interest. Here’s the crucial part: In order to continue representing a Guild writer, an agency has to sign the code. But virtually all of them have refused to do so.
So the agencies won’t sign this code of conduct. What happens next?
Well, we’re seeing what happens right now. With agencies refusing to sign the code — and the decades-old agreement between the WGA and the ATA in the dust bin — Guild writers have started informing their agents they can no longer represent them. The WGA frames this as a decision made by the agencies: If one doesn’t sign the code, it’s choosing to cut off client relationships due to a failure of compliance with Guild rules. The ATA, however, describes this scenario as writers firing their agents because of a new collective rule, framing union action as the Guild demanding its members dismiss their agents. (For instance, UTA CEO Jeremy Zimmer says, “The WGA is trying to make a decision for everyone by eliminating everyone’s choice.”) The point is, neither side can even agree on who is doing the walking, which shows you just how far apart the WGA and ATA still are.
Goodman, the WGA president, has been clear about the Guild’s unwillingness to bend on the issues of packaging and producing, saying, “There are negotiations where there is no middle ground, where there are basic principles that are not subject to compromise … But it is crucial for us to understand there is no meaningful compromise where conflict of interest is concerned. It’s a binary choice. Either agencies put our interest first, and make their money from our success, or, like now, they will continue in the business of maximizing their own success while writers suffer.”
Meanwhile, the ATA has released a set of “agency standards” for its member organizations to adopt in place of the WGA’s code. Yet again, there’s a big gap between the writers and agents here: The ATA’s new standards mainly focus on greater transparency in packaging and affiliate productions, rather than outright changes to the practices themselves.
Were any concessions made in the negotiations?
Some minor ones, yes — the WGA agreed that agents could receive compensation beyond commission for financing low-budget indie films — but there was little movement on the critical points of packaging fees and affiliate producing.
In the final days before the April 13 deadline, the ATA did present a profit-sharing offer and transparency guarantees to address those issues, but it wasn’t enough to gain traction with the Guild. The agencies proposed to share 80 percent of “a percentage” of their packaging profits with writers who didn’t have back-end deals, with an additional 20 percent of that chunk going to “industry initiatives and programs to foster and expand inclusion of historically underrepresented writers.”
But according to a source close to the Guild, the ATA’s unspecified percentage amounted to a tenth of those back-end profits, meaning that the profit-sharing piece amounted to only eight percent. As an extremely simplified example: If an agency made $1,000 from a packaged show, it would disperse $100 under the ATA proposal and keep $900, with $80 specifically going to writers who don’t have back-end deals (mostly mid-level writers and below) and the remaining $20 funneled to unspecified diversity programs.
“We came to the negotiating table in good faith and put forth comprehensive proposals providing choice, disclosure, transparency, shared revenue and a significant investment in inclusion programs,” ATA president Stuart said of the failed proposal. “Unfortunately, not to our surprise, the WGA did not accept our offer, did not provide counterproposals, and refused to negotiate further.”
The response from WGA West president Goodman: “You are still receiving money from our employers for access to us, and keeping 99 percent of the profits of your backend. It does not change your incentives at all. It is not a serious proposal and we reject it.”
How will writers get jobs without agents?
In his February address to Guild members, Goodman said 75 percent of respondents in a recent WGA survey said they got themselves their most recent jobs, not their agents. Multiple television executives told Vulture that the staffing pipeline might not run as smoothly, but they weren’t worried about writers rooms getting filled. “Will it hold up production realistically? Probably not,” said one TV exec, who added that lesser-known writers would have the hardest time getting connected with showrunners and in-development projects without agents to facilitate on their behalf.
In response to this concern, the WGA’s Gary told Vulture, “There are a couple of systems that the Guild is building out right now and we’ll be rolling out shortly” to serve as a stopgap measure until the WGA and ATA come to terms. “The system right now is going to be heavily reliant on showrunners, and I think it will be at least sort of incumbent upon the showrunners to work together, communicate well, and help each other seek out writers that they need for their rooms,” he says.
What do those systems look like, exactly? The Guild has set up a staffing portal where showrunners can post about available jobs and connect with writers looking for work. There’s also a crowd-sourcing initiative under the hashtag #WGAStaffingBoost, and in-person meet-ups for Guild members are also being encouraged by the union.
But with staffing season approaching and a lot of writers rooms needing to be filled, these grassroots initiatives will soon be put to the test. Will the new measures be efficient enough? Will they provide adequate opportunities for lower-level writers who lack industry connections? Will showrunners fall back on hiring people they know for the purpose of expediency, or will Guild members — particularly the high-profile ones with the power to change careers and move the industry needle — commit to a culture of cooperation that makes these new methods effective? If ATA and WGA don’t return to the negotiation table, will they become indefinite practices in the face of a continued stalemate? Right now, it’s all up in the air.
There’s also been talk about managers and lawyers filling in for some of the duties typically handled by agents, but that is legally murky territory. Agents must be licensed to perform certain duties for their clients, so it’s not like other Hollywood types can just show up and start negotiating on a writer’s behalf. The ATA has also warned the WGA that writers cannot “deputize” their managers or lawyers to replace their agents. In other words, things could get litigious.
Speaking of the law, has anyone sued anyone yet?
Yes. On April 17, the WGA announced that its West and East branches, along with eight individual writers, are suing the Big Four agencies for “breach of fiduciary duty” and unfair competition. “Guild leaders have frequently noted that the agencies’ practice of charging packaging fees is not only bad for writers, it is unlawful,” said Anthony Segall, the Guild’s lawyer, at a press conference. “We are here today to announce the filing of a lawsuit that will establish that packaging fees are indeed illegal under both California and federal law.”
What are people in Hollywood saying?
Across Hollywood, the battle is a hot topic, and things have only gotten more contentious since negotiations broke down in early April. One of the most powerful agents in the land, WME President Ari Greenburg, said in a pre-deadline negotiation that the Guild was “there for theatrics, not progress.” Another agency source told Deadline that one modified proposal from the WGA amounted to putting “lipstick on a pig.” Meanwhile, a studio executive who spoke to Vulture called packaging “fucking evil.”
Film producer Keith Calder (Blindspotting, Anomalisa) drew an unfavorable analogy between representation in Hollywood and sports.
Writer and producer Amy Berg (Counterpart, Person of Interest) has posted several threads about the issue to Twitter, calling packaging a “conflict of interest” and affiliate producer operations “an anti-trust crime.”
David Simon was even more unsparing in his criticism. In an essay detailing his earliest Hollywood experiences, Simon wrote, “Packaging is a lie. It is theft. It is fraud. In the hands of the right U.S. Attorney, it might even be prima facie evidence of decades of racketeering. It’s that fucking ugly,” adding later on, “Only the end of packaging will restore a market in which writers are paid competitively for writing. And only an agent whose priority is having his client paid competitively is a means to achieving that result.”
On the WGA’s website you can read a list of horror stories from anonymous Guild members detailing ways they say they’ve been harmed by packaging. Some describe shows that were “held hostage” after writers turned down packages; others say their agents aren’t interested in finding them work as staff writers because their singular concern is packaging. Some say they’ve had shows sold as packages without even being informed. Gary serves as a Team Captain in the WGA, meaning he’s a point person who functions as a kind of peer organizer for other Guild members, and he says most of the concerns he fields are not about individual agents, but their employers: “What I hear from the people I’ve talked to most — again and again and again — is that everyone is scared that their agents, as much as they like them, aren’t working as best they can for them. And not because they don’t want to, but because the system doesn’t reward them for it.”
Since the deadline passed, Guild members have posted termination letters to their agents on social media — some gleefully, some ruefully.
After the contract between the WGA and the ATA expired, Stuart sent a letter to ATA members vowing to fight the union. “Agencies will not be a willing participant to any further chaos,” she wrote. “That’s the Guild’s plan. Their course of action has thrown the entire entertainment ecosystem into an abyss, affecting stakeholders across the spectrum. As we embark through unknown territory, we must not lose sight of the fact that the WGA’s Code is unacceptable to all agencies — from those that employ two agents to those employing 2,000.”
How many writers have split from their agents?
The WGA hasn’t released an exact number yet. But according to Guild lawyer Anthony Segall, who’s representing the union in its lawsuit, a “vast majority” of the roughly 8,500 agent-represented Guild writers have signed letters to sever ties with their agents.
Have any agencies sided with the WGA?
None of the Big Four agencies have signed. The fifth-largest agency, Paradigm, has indicated it will not sign the code, because “the agency business has become far more overhead intensive” and packaging revenue is necessary for operations. More than 40 smaller firms have pledged to sign it, but of that group, only Pantheon Talent Agency is an ATA member.
The WGA hasn’t hid its hopes that franchised agents will choose to leave their employers if they don’t sign the code, taking their client lists and operating independently in compliance with the Guild. In a statement that caused much hand-wringing in Hollywood, Goodman said, “I am saying that our collective power here is the power of divide and conquer. The agencies and agents all compete for talent, and when we make clear that we are leaving those who will not change, the change will come.”
*This article previously identified Ari Greenburg incorrectly as the CEO of WME, and stated that WME has an ownership stake in Endeavor Content. In fact, Greenburg is the president of WME, and both entities are owned by Endeavor. It has been corrected throughout.
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April 18, 2019 at 11:16PM