EXCLUSIVE, UPDATED with WGA email: Leaders of the WGA East and WGA West have rejected the Association of Talent Agents’ offer to sit down for informal discussions in advance of formal bargaining next year on a new agreement governing the relationship between agents and writers.

And in another sign that the guilds intend to play hardball in their efforts to reshape the agency business, sources say the WGA West has budgeted a whopping $600,000 to cover the cost of those upcoming negotiations.

ATA executive director Karen Stuart reached out to the guilds on August 2, proposing an informal sit-down in advance of the negotiations. “It is our desire to work together to find the right solutions so that we can most effectively face the collective threat posed by a changing industry,” she told the guilds’ leaders. “We were surprised, given our partnership, that this process did not begin with direct dialogue. Nevertheless, we have reviewed your proposed changes to our Artists’ Manager Basic Agreement (AMBA) and are reaching out to suggest an informal meeting with you to better understand both your concerns and your proposals. Given our history, we believe such an initial discussion is appropriate before we sit on opposite sides of the bargaining table. As always, we proudly support the WGA and its members, and we look forward to a productive and successful dialogue.”

The guilds’ leaders, however, declined her offer nearly two months later, saying they’d wait to discuss the terms of a new deal when formal negotiations begin next year. WGA West executive director David Young today sent Stuart an email saying that as negotiations for a new deal with the ATA loom, “We do not assume that partnership rather than conflict will prevail, but we remain hopeful.” (Read Young’s email below.)

WGA officials have long believed that the AMBA, which hasn’t been renegotiated in 42 years, is outdated and has allowed packaging of TV shows to get out of control. Last March, as the guilds geared for the coming battle, WGA leaders told their members that 87% of the more than 300 TV series produced during the 2016-2017 season were packaged by the agencies, and that “packaging is dominated by WME and CAA,” which they said accounted for 79% of all the packaged series.

The packaging of TV shows, in which agencies receive upfront and back-end fees in return for bringing various creative and financial elements together, is rife with “conflicts of interest,” according to WGA officials, who claim that packaging gives agents an incentive to low-ball their clients on shows in which they have a financial interest. Agents, however, scoff at such a notion, pointing out their clients would bolt for the doors if they thought they were being shortchanged.

WGA officials, however, argue that the agencies’ basic 3-3-10% packaging fee is standard in the industry, and that writers who leave one agency have to accept the same deal wherever they go.

In their proposals for a new agreement, which were delivered to the ATA in April, the guilds proposed that “No agency shall accept any money or thing of value from the employer of a client” – which would effectively end all packaging deals. They also proposed eliminating commissions on scale and putting the brakes on the agencies’ nascent ventures into film and television production by not allowing agencies to 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.”

Altogether, the WGA’s proposals 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.

WGA West president David A. Goodman, however, has said the guilds’ proposals are “entirely reasonable” and “demonstrate a commitment to the fiduciary principles of law, always putting the client first and being an honorable representative.”

The Screen Actors Guild, which has also long believed that packaging creates a conflict of interest for agencies, tried to take a similarly hard stand with the ATA in 2002, and when they couldn’t come to terms, pulled its franchise agreements from all the top agencies. That move, although dramatic, saw no change in the way the agencies conducted business, and few if any actors left the big agencies to be represented by smaller ones that had agreed to SAG’s terms. That stand-off continues to this day.

Here’s Young’s email:

As I made clear in my prior communication last month the Guild is prepared to meet with you in ample time to reach a new agreement. I also appreciate your emphasis on partnership, and we believe the WGA and the agencies should be partners. But aspects of our partnership have gone awry, and we are trying to address those things in an appropriate fashion. Our agreement with you requires us to give notice of our intent to renegotiate and to send proposals for a new agreement. That’s exactly what we did in April of this year.

Among the issues that concern writers are agency conflicts of interest such as packaging and producing. I would remind you that, regardless of our partnership, the agencies in 1976 forced packaging into our current agreement over vehement opposition from writers. In fact the biggest packaging agency sued the WGA for anti-trust in order to pressure us to accept.

Further, in 2002 the ATA agencies busted the SAG franchise agreement over your demand to be allowed to become producers. Given that similar concerns are part of our 2018 proposals, we do not assume that partnership rather than conflict will prevail, but we remain hopeful. In that spirit we look forward in due time to our formal discussions with you.