UPDATED with statement from ATA official: As the Writers Guild prepares to sit down to negotiate a new deal with the Association of Talent Agents, WGA East executive director Lowell Peterson is blaming the agencies’ “conflicts of interest” in the packaging of scripted TV shows for the decline in writers’ quotes” – the wages they earned on their last assignments. In a recent letter to his members and to the WGA East’s council, Peterson says that writers’ quotes increasingly are moving downward toward the guild’s minimums – and that it’s the fault of their agents.
“The guilds negotiate minimum compensation rates, residuals, and other basic terms of employment,” he wrote in a section of his letter titled “Talent Agents and Conflicts of Interest.” It’s the agent’s job, he wrote, “to negotiate the above-minimum compensation that many members rely on. Despite the enormous profitability of the industry, members’ quotes have been decreasing toward minimums. The agents haven’t been very effective. Perhaps that’s because they have no economic incentive to push aggressively for the writer-clients’ interests.”
In a statement, ATA executive director Karen Stuart told Deadline: “Agents represented by the Association of Talent Agents have enjoyed a long and successful partnership with film and television writers. As the entertainment industry undergoes substantial changes and consolidation, agents remain the strongest allies of their clients and will continue to work diligently to ensure that the clients are properly protected. We look forward to engaging in a meaningful dialogue with the Writers Guild of America and to coming to a resolution that benefits all of us.”
The WGA has believed that packaging, in which the agencies bring together many of the creative and financial elements of a show, creates a conflict of interest for the agencies, giving them an incentive to low-ball clients on projects in which their agencies have a financial interest.
Agents scoff at such a notion, arguing that their clients would jump ship if they thought they were being shortchanged. But WGA officials note that the agencies’ basic 3-3-10% packaging fee is standard throughout the industry and that writers who leave their agency have to accept the same terms wherever they go. According to the WGA West, nearly 90% of all TV shows are packaged by talent agencies, and nearly 80% of those are packaged by two agencies – WME and CAA.
The deal between the WGA and the ATA, known as the Artists’ Manager Basic Agreement, has prevented agencies from packaging or holding ownership stakes in productions that employ their clients. Rather, it doesn’t allow agents to take their 10% commissions on projects for which they are receiving a packaging fee.
Union leaders argue that the big agencies are getting so fat off their packaging fees that representing writers is no longer their primary concern, and they want changes in the agreement that would completely reshape the talent agency business, putting an end to packaging and stopping the agencies’ nascent ventures into film and TV production.
In April, the WGA East’s council and the WGA West’s board voted unanimously to send a one-year notice to the ATA to terminate the AMBA. “Thus, in April 2019, the current AMBA will come to an end,” Peterson noted. “Our notices of termination included a set of proposals to modify the agreement, proposals we believe would be in the best interest of our members.”
Those proposals to stamp out these alleged conflicts of interest, first revealed by Deadline, provide that, “No agency shall accept any money or thing of value from the employer of a client.” That effectively would end all packaging deals, in which agencies receive upfront and back-end fees from the companies on shows in which they bring together various creative and financial elements.
The guilds also have proposed that “No agency shall derive any revenue or other benefit from a client’s involvement in or employment on a motion picture project, other than a percentage commission based on the client’s compensation.” And by “motion pictures,” the WGA is referring not only to films, but also to TV and streaming shows. This would effectively return the agencies to mere collectors of 10% commissions on the writers they represent – a business model that hasn’t existed at the big agencies in decades.
The WGA has also proposed that “no agency shall have an ownership or other financial interest in, or shall be owned by or affiliated with, any entity or individual engaged in the production or distribution of motion pictures.” Another proposal stipulates that, “No agency shall have an ownership or other financial interest in, or shall be owned by or affiliated with, any business venture that would create an actual or apparent conflict of interest with agency’s representation of a client.”
Few people, Peterson wrote, have read the agreement that will be up for renegotiation for the first time in 42 years. The AMBA, he wrote, “is a lengthy, detailed agreement that virtually no one has actually read, in part because it was last negotiated in 1976, despite massive changes in the television and movie business – the digital media business didn’t even exist back then – and in the structure and size and role of the talent agencies.”
The WGA and the ATA have yet to set a date for their first meeting to hammer out a new agreement.