Battle lines are being drawn between writers and agents. Photo/Getty Images
Amy Berg is a television writer who has worked on series such as "Person of Interest" and "Counterpart," largely with the anonymity common to the profession.
But since late last week, she has become something of a celebrity among creators for a long Twitter thread criticising an unlikely target: the creators' own agents.
"Clients are often coming last in the pecking order of priorities. Yet, by law, we are supposed to be their only priority," she wrote of agents. "Starting to feel sticky yet? Because I haven't even gotten started," she said in the tweets, which have collectively drawn nearly 10,000 likes and zipped around Hollywood offices with a mix of urgency and fear.
Berg is part of a growing labour movement by Hollywood writers - the people primarily responsible for on-screen drama, jokes, stories and suspense - pushing back against a fundamental change in the entertainment business.
The writers are upset by the evolution of the major Hollywood agencies, particularly the "Big Four," the companies known as CAA, WME, UTA and ICM. These firms have over the years gone from a business model based heavily on collecting 10 per cent commissions on jobs booked for clients to collecting fees from studios for the larger role of putting together the creative elements of a TV show or movie, a process known as packaging. In some cases, the agencies have also recently launched separate production-like divisions themselves.
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.
— Amy Berg (@bergopolis) March 8, 2019
The writers say these practices create a conflict of interest that badly harms their bottom lines and often leads to the agents putting their own interests before their clients'.
The agencies counter that they are merely looking for the greatest number of revenue streams, the attainment of which will only enhance opportunities for the very clients objecting to them.
At issue are essential questions of how Hollywood should operate in a world of massive global entertainment conglomerates. Are the middlemen who unite the creative and business communities increasingly central to the birthing of ideas, and should they thus be allowed - even encouraged - to expand their role?
Or does such expansion amount to profiteering in contradiction of their purpose, and should their tasks be limited to the more specific goal of landing jobs for clients?
In a way, it might seem like a strange time for labour unrest. There are more television-content providers than at any time in the history of Hollywood. Several of them, such as Netflix and Apple, pay well above market averages. But the writers say agencies are sharing revenue in a highly inequitable way, leaving many creative people to fight for scraps.
It has added up to an unusual labour battle, one not between management and workers but between two parties ostensibly on the same side - a brewing civil war that could radically alter how Hollywood puts together shows and movies.
The writers are represented by the Writers Guild of America, the WGA West and WGA East. The agencies are represented by the Association of Talent Agents, or ATA. The parties must negotiate what's known as a new Artists' Manager Basic Agreement, or franchise agreement, which governs terms of their fee sharing. If the two sides cannot agree on a deal when that agreement expires on April 6, it could result in a mass firing of agents and unprecedented levels of chaos and confusion.
Unlike the most recent Hollywood labour showdown in 2007-2008, in which writers walked off the job for more than three months because they could not reach a deal with producers, there would be no strike, and thus - probably - no immediate interruption of new shows on the air.
But the lack of a deal would create a set of seismic and surreal consequences: a world of writers with no agents and agents with no one to represent.
"War, that's what it would mean," said one prominent film executive, speaking on the condition of anonymity so as not to appear to be taking sides, when asked what a mass firing of agents would mean.
Asked to elaborate, he said: "Nobody knows. But war, I think."
The situation is coming to a head. In the last week of March, the WGA's members - nearly 15,000 in its West Coast branch, based in Los Angeles, and some 5,000 in its East Coast wing in New York - are scheduled to vote on requiring a new "code of conduct" for agents that would dramatically curtail agents' ability to collect revenue off activities not strictly related to booking client jobs.
If the code is adopted, that means members could be asked to fire any agent who does not sign it when the deal expires April 6 or leave the guild. It is highly unlikely any of the big agencies would sign the code as it is currently conceived.
On Tuesday, the sides will meet for only the third time since the conflict emerged, when representatives from the WGA will sit across a table from ATA leaders and principals of the major agencies in a Los Angeles conference room. The first two meetings were considered non-substantive, with the WGA simply listing its positions. Whether significant negotiations will happen before the late-March vote is considered iffy at best.
The meeting between the two sides follows a telephone news conference the WGA held several hours earlier in which it made leaders and writers available for questions in a bid to rally support among the media, as well as release a new white paper that outlines what the group says are key conflicts of interest.
The WGA has two main objections. The most prominent is the creation in the past few years of quasi-production entities by the agencies - like Endeavor Content, part of the same holding company as the talent agency WME, or Wiip, supported by CAA. The creation of these units, the WGA says, means that writers are basically working for their agents, a situation rife with conflicts.
As a unit that matches creators with networks, studios and financing properties, Endeavor Content, the biggest of the bunch, doesn't function as a studio per se. But it does often take stakes in projects, a hallmark of a studio. Among its projects are "Killing Eve," the award-winning spy thriller starring Sandra Oh.
"As agencies get into production it creates a very large problem," said David Goodman, the president of the WGA West, "because it means a writer would be working for their agent. Now an agent has an interest in controlling the budget, for instance." That, he noted, runs directly against a writer's interest in increasing a show's budget to up their paycheck.
But the WGA also says it resists the much more established practice of agency "packaging fees," in which agencies take money, both upfront from a show's budget as well as from "back-end revenue," for bringing to a writer's project other agency clients such as actors, producers and directors before presenting the whole package to distributors and financiers.
Packaging fees have, according to the WGA, become a more central part of the agencies' business model. And, they say, that runs counter to clients' well-being as well.
"The budgets have gone up, in some cases way up. And yet the mid-level quotes on TV shows have been stagnant with 20 years ago. That's a really important data point," Goodman said. A veteran creator and current showrunner of Fox's sci-fi comedy "The Orville," he was head writer on "Family Guy" and has written on such shows as "The Golden Girls" and "Star Trek: Enterprise." He noted the budget for "Orville" is "more than twice it was on 'Star Trek: Enterprise.'"
Goodman said packaging fees were directly responsible, in part because agents collect 10 per cent from the studio that in turn reduces the pool writers draw from, and in part because those fees disincentivize agents from fighting for higher client fees because they're already collecting much more on the packaging.
"The system works against mid-level and lower-level writers," he said.
Goodman also noted a creatively limited consequence of high packaging fees: Agents are reluctant to find clients from another agency to work on a writer's project because it would mean sharing the packaging fees.
The news conference featured a number of showrunners describing their experiences, in which they said agents were profiting unfairly at their expense on hit TV shows."They've co-opted our work for their own financial gain," said Chris Keyser, the creator of "Party of Five" and a past WGA West president, adding, "In an era of unprecedented prosperity of media companies … writers' salaries should not be going down."
The franchise agreement has not been updated since 1976. But the WGA says this is the moment to re-evaluate it, with the expansion of agencies that, while still private, have become well-capitalized corporate entities with thousands of employees, ultramodern complexes, heavy outside investment and strong pressure for profits. (Endeavor, WME's parent company, was in the news last week for returning a $400 million investment from Saudi Arabia in the wake of the murder of journalist Jamal Khashoggi.)
But the agencies maintain that they are simply looking out for their clients' interests while also protecting their bottom line, and that both can be done simultaneously.
In a conversation with The Washington Post, Karen Stuart, executive director of the ATA, declined to comment about any of the WGA claims on the record. She sent a prepared statement after the conversation that read, "Our clients want their agents to work collaboratively with the guild on a reasonable and fair solution that puts writers in position to earn the best compensation in a world of vertical integration. While we are not on the same page as the WGA today, our goal is to find common ground through a constructive dialogue that leads to realistic solutions to the challenges of our new media environment."
Whether the WGA would actually ask clients to fire their agents or whether this is negotiating brinkmanship remains to be seen. But realizing they were falling behind in the public-relations war, the agencies have begun firing back.
Late Monday, a letter to writer clients was released from the chief executive of UTA that contained a mix of conciliation and combat.
"We aren't saints. We are tough businessmen and businesswomen who happen to love artists," said the UTA leader, Jeremy Zimmer. "There is true nobility in fighting for the people we represent and sometimes that gets lost."
But he also said that "the solution to the problems that our clients have with their agents is not to eliminate the choices they have around packaging or affiliate agencies. It is not to fire their agents and hope that the guild, or a yet unidentified agency, is the right partner to help them navigate the world of media consolidation, streaming, and globalization."
The letter follows a note last week from WME President Ari Greenburg to writer clients after the company held several town halls with them.
"We heard that there is fear, anxiety, and uncertainty about the future," he wrote. "Despite 1000 television shows, and the megadeals we read about in the trades, this is a challenging time for some writers having to adjust to new economics created by market forces including massive media consolidation and changing television models. We are aligned with you and your guild in finding solutions to this issue. However, we do not believe the answer is getting rid of packaging fees and affiliate production, which brings jobs and opportunities to writers. "
The WGA has been highly active on the PR front, aiming to rally both media and members to its side. Last week it began posting horror stories of agents more concerned with packaging fees than representing their own clients.
"I put an entire show together, but I didn't want my agency to get the package," said one. "In the end, they held the deal hostage and I had to cave to get the project through. Every network I showed the project to made a bid on my show. I wanted it to go to one network, but my agent thought they'd get a bigger package if they went with another network, so they sold the package to them
"My agency was not representing my best interest - they were representing theirs," the entry concluded.
The posts did not focus on the production entities. But Goodman said that this is only because it is not yet as important a part of agencies' business. "What happens in 10 years when it is?" he asked. "What can we do about it then?"
In her Twitter thread that went viral, Berg cited antitrust law as prohibiting talent agencies owning studios and then commented on it. "What is the ATA's argument when it's pointed out that what they're doing is illegal? Oh, those? They're just 'affiliate companies' housed in 'separate buildings' so don't worry about it. Cool, cool. Nothing to see here, guys."
The legality of the agencies' moves into quasi-production roles is an open question. The issue has not been tested in the courts in the modern era and, apart from general antitrust laws, there are not a lot of specific provisions governing these situations.
The WGA could rely on an archaic clause in California labour code that does not allow agencies to refer to people with whom the agent has a "direct or indirect financial interest." It has also leaned on agencies' status as fiduciaries, which require them to act loyally to a client. But a judge has yet to weigh in on whether a production arm violates that duty.
One historical precedent, at least, does favour the writers. In the early 1960s, the courts forced MCA, a growing music-and-representation company, to sell its agency business after buying a movie studio, Universal Pictures.
In a way, a mass firing on April 6 could test the fundamental theory of whether top-tier agents are adding or subtracting value. By removing them, even temporarily, from the equation, it would reveal whether deals got more or less lucrative for writers. The writers would still have managers and lawyers, who are governed by different rules, while some would potentially sign with any smaller agencies willing to sign the code of conduct.
"I really hope it doesn't get to that," said the film executive worried about a bloody battle. "Because who knows how any of us will do business."
- Washington Post
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