One Year Later, Big 4 Talent Agencies and WGA Still Miles Apart in Packaging Battle

One year after a mass exodus of TV and film writers from Hollywood’s largest talent agencies, the Writers Guild of America and the industry’s Big Four talent agencies are still nowhere near settling the impasse over packaging fees and affiliated production entities.

The shock of the coronavirus-related shutdown of dozens of productions in recent weeks has heightened anxiety for many writers about the prospect of navigating a more difficult job market in the months ahead without the aid of powerful reps at the largest agencies: WME, CAA, UTA and ICM Partners. There’s a growing sense in the creative community that a good percentage of projects that were ready to roll just weeks ago now may not go forward amid the pandemic-related economic devastation that has still no clear end in sight.

WGA leaders maintain that the sentiment among the guild’s nearly 15,000 members remains overwhelmingly supportive of their decision to ban agents from receiving packaging fees on TV shows from production entities — an important source of agency revenue that the guild blasts as a blatant conflict of interest. The new Agency Code of Conduct that the WGA implemented on April 13, 2019, also bars agencies from having corporate ties to production companies on conflict-of-interest grounds.

WGA West president David Goodman said he communicates with 50 to 100 WGA members a week, much of it about the status of the agency campaign. By his estimation, the overwhelming majority of members back the guild’s decision to impose the code, reversing decades of industry practice. Industry sources say Goodman’s email inbox was flooded in recent weeks with missives from showrunners who are pushing for movement on the agency situation.

“Even those that didn’t support the campaign tactics still supported its goals,” Goodman told Variety.

The Big Four agencies have staunchly refused to agree to the WGA’s code. The guild has reached agreements on the Code of Conduct with most of the town’s boutique and mid-sized agencies, even some that were holdouts including Paradigm and APA. But WME, CAA, UTA and ICM Partners nevertheless accounted for the representation of the lion’s share of working Hollywood scribes prior to the split. There have been a few notable scribes who have signed on with Verve, Gersh, Rothman Brecher and other agencies that agreed to the WGA terms. But it hasn’t been a stampede. 

Numerous writers have confirmed to Variety that they have reached out to Goodman in recent weeks to express frustration with the lack of movement on the agency issue. Prominent members are still unwilling to criticize the guild publicly for fear of doing long-term damage to their employment prospects, or their ability to staff future writers rooms. The agency campaign has polarized factions of the WGA West and WGA East’s roughly 15,000 members. It spurred heated online exchanges and some finger-wagging and name-calling in the early months.

Now that the standoff has dragged on for a year, the situation may wind up being settled by a federal judge who is weighing the arguments in dueling lawsuits from WME, CAA and UTA against the WGA and WGA’s litigation against that trio, which initially included ICM although they are no longer a party. The agencies hope that U.S. District Court Judge Andre Birotte will soon issue a ruling that supports their contention that the guild overstepped its authority in trying to regulate the conduct of agencies. Birotte last heard arguments related to the case in January, a session at which the judge sounded skeptical of the WGA’s claim that packaging fees are a kind of illegal kickback.

When asked if there have been any recent settlement talks on the legal front, or efforts to reach compromise on terms of the code, Goodman would only say: “There’s always communication. Where that leads us I don’t know at this moment.”

That message is frustrating to those who question the WGA’s strategy of taking on the agencies at a time when it is also facing a tough contract renegotiation cycle with the major studios. The WGA is in the midst of working out a new timetable for negotiations with the major studios that were to have started March 23. In the space of a few weeks, the guild’s major point of leverage — the threat of a strike — has evaporated. Even some of the guild’s staunchest supporters say a strike in a recessionary environment would be a disaster.

“This is no time for this kind of fight,” said an exasperated TV writer of the agency breach. He had planned to juggle multiple projects in 2020 to stitch together a mid six-figure income. This time last year, he was among the estimated 7,000 WGA members who terminated their agents en masse through an electronic-signature document that the WGA distributed to top agencies. He’s now worried about his income stream potentially drying up later this year amid the coronavirus disruption.

Feature film writers have felt the loss of agency representation because their employment prospects are more dependent on knowing about available writing assignments at studios and production companies.

Industry sources said some showrunners have also become more vocal with guild leaders that TV series packaging has its advantages in that it allows writers and other creative talent on a show to waive their agency commissions. Some film writers are concerned that a ban on talent agencies packaging and arranging financing for smaller-budget films will put a big dent in the number of indie features that make it to production.

Goodman countered that the guild has worked hard with members to help faciliate job opportunities and in some cases negotiate deals on behalf of members.

“Our members for the most part are not experiencing any great suffering. In some cases the guild has had to step in to negotiated deals for members and in many of those cases getting them raises they weren’t getting when represented by franchised agencies,” Goodman said.

Agency sources counter that in many cases deal terms for mid-level writers have not been as rich with development options and salary bumps that agents would have extracted for rising-star scribes. They also note that the work environment may become more competitive in the near future if a post-pandemic recession punctures the Peak TV bubble.

Industry observers see the number of standalone studios shrinking in the near future, as Lionsgate, MGM and possibly others become takeover targets. That will also inevitably constrict the job market, although Amazon, Apple, Netflix and other well-heeled newcomers continue to step up their content expenditures.

Over the past few months, anecdotal reports have increased about agents resuming career counseling relationships with former clients on an informal basis. Industry executives and managers privately say there is no question that many agents and clients are in regular contact, albeit in private.

Goodman said he believes such incidents largely involve agents who are making unauthorized calls on behalf of former clients. He said the potential for the guild to impose sanctions on members who violate the agency-related rules.

“We continue to look into everything we hear,” Goodman said. “ For any member found to be breaking the rules, there will be consequences.”

Agency sources say a deal is do-able if the WGA will agree to allowing writers the choice to work with agencies that offering packaging and production entities, or not. Senior agency leaders acknowledge, more forthrightly than in the past, that the process had been abused in recent years. Agency leaders see more transparency in the process and greater awareness among members of the practice as the key to reforms.

“If you’re a writer and you want to be represented by a small agency that has signed the code, that’s great,” said a top agency leader. “If you want to be at an agency that provides packaging and affiliated production, you should be able to do that too. Writers should have the choice.”

There are rumblings that UTA and ICM Partners may be growing inclined to consider a deal with the WGA that puts stricter limits on affiliated production entities, given that they don’t have as much invested in that area as the parent entities of WME and CAA. But there is no sense of a weakening in the resolve to fight to retain packaging as an option. In the past year, packaging has continued at the top agencies around directors, authors, books and  iconic IP.

“It’s how we do business and how we’ve done it for 40 years,” said a Big Four agency topper. “For them to say that all of a sudden we can’t run our business this way is an overreach. We won’t give in.”

Goodman made it clear that the WGA has not changed its view that packaging, despite its long history in the industry, is an inherent conflict, which makes it the guild’s responsibility to govern. At the same time, he acknowledges the frustration born of uncertainty for members. 

“I do not want to dismiss the idea that people are missing their very good agents at agencies that haven’t signed a deal with us,” Goodman said. “I more than anyone would like to any member to be represented by whoever they want. But the guild had to step in because individual writers should not have to stand up for themselves on this issue. The guild wants to make sure there’s an agreement in place that protects all writers.”

Moreover, the WGA’s view on the agency situation hasn’t been affected by the coronavirus crisis, Goodman stressed.

“We wouldn’t use this crisis as a reason to give up all the work we’ve done to get agencies to address the conflict of interest issues we’ve raised,” he said.

Dave McNary contributed to this report.