Labor relations in Hollywood could be in for their wildest ride in decades next year, with an actors strike against the ad industry possibly coming as soon as March 31 and a potential writers walkout against their agents looming just a week later.
The ad industry is already gearing up for an action, urging producers who employ union actors to wrap up all their shoots before March 31, when SAG-AFTRA’s current commercial contract expires, lest they be caught in a strike in the middle of production. An actors strike, if it comes to that, would be a pretty straight-forward affair, and not all that unusual. Before their merger in 2012, SAG and AFTRA struck the ad industry four times, most recently for six months in 2000. In each case, production stopped, contract talks resumed, a settlement was eventually reached and everyone went back to work.
But the coming battle between the Writers Guild and the Association of Talent Agents for a new franchise agreement – in which the WGA wants to put an end to the inherent “conflicts of interest” involved in packaging deals and the big agencies’ forays into content production and financing – is much less predictable. Even so, there is an historical precedent. Back in 2002, the SAG fought the same battle with the ATA over similar issues, although that dispute ground to a stalemate; SAG never got a new franchise agreement with the ATA, and SAG-AFTRA doesn’t have one to this day. And yet, it’s never ordered its members to leave their agents, which doesn’t provide much of a road map for the WGA and the ATA as they enter this uncharted territory.
The coming showdown began last April 6, when the WGA East and WGA West gave the ATA a one-year notice of termination of their existing franchise agreement, known as the Artists’ Manager Basic Agreement of 1976 — which hasn’t been renegotiated in nearly 43 years. If a deal isn’t reached by April 6, the WGA could extend the current deal until the dispute is settled, or it could order its members to walk out on their agents until a deal is worked out.
Such a walkout would have an immediate impact on writers and their reps, because under the WGA’s rules, “No writer shall enter into a representation agreement whether oral or written, with any agent who has not entered into an agreement with the guild covering minimum terms and conditions between agents and their writer clients.”
Writers who have signed agreements with their agents might be allowed to keep their agents until their personal service agreements expire – and none lasts longer than two years. But the big agencies rarely enter into signed agreements with their writers. “They work on a handshake,” a source noted, and each side can part company anytime they like, although whatever employment deals they have would remain in effect. But since the vast majority of writers who are represented by the big agencies only have oral agreements, they could be asked to choose between their union and their agent.
If the WGA were to order its members to ditch their agents, writers wouldn’t be allowed to negotiate or sign any new employment agreements through their agents. And that would leave some of the guild’s most prominent members – TV showrunners, creators and executive producers – in a tricky position. They could negotiate new deals with the networks and studios on their own, but state laws in California and New York prohibit their attorneys and managers from procuring employment and negotiating on their behalf without working in concert with a licensed talent agent.
The WGA could then promulgate its own franchise agreement, and there are plenty of smaller talent agencies that might sign it. Writers might then enter short-term handshake deals with them, and in concert with their attorneys and managers, work out new employment deals until the WGA and ATA come to an agreement. But few, if any, of those smaller agencies have the clout to put together the kind of packaging deals that are so common in the TV industry today. According to the WGA, 87% of all scripted TV shows from the 2016-2017 season were packaged, and nearly 80% of those shows were packaged by two agencies: WME and CAA.
A walkout would effectively put an end to all new packaging deals until an agreement is reached between the ATA and the WGA. And that could have a seismic impact on the TV industry at large, leaving networks and studios scrambling to replace the financial and creative elements of TV shows previously provided in packaging deals by the agencies.
Writers with pending deals that haven’t been consummated would then be in a tough spot, having to choose between their agent and their guild. Those who defy the guild and re-sign with their agents could quit the guild by opting for financial core status, which strips them of their right to vote or hold union office but requires them to pay that portion of union dues that goes directly toward covering the costs of collective bargaining, contract enforcement and contract administration.
Only 28 writers opted for financial core status during the WGA’s last strike, which lasted for 100 days in 2007-2008, and guild leaders heaped scorn on them for doing so, publicly calling them “scabs” and the “puny few who consciously and selfishly decided to place their own narrow interests over the greater good” – strike-breakers who “must be held at arm’s length by the rest of us.” Years later, they were still being ostracized by the guild, which deemed them unworthy for awards consideration.
Writers who stick with their agents in a walkout, if it comes to that, might expect the same treatment. Last year, of the WGA West’s nearly 24,000 members, only 40 were listed as financial core non-members. At the WGA East, only 11 of its 4,776 members were financial core.
The WGA has already rebuffed the ATA’s offer of informal talks ahead of the negotiations, which are expected to begin in February. One of the WGA’s key proposals would effectively end all packaging deals, in which agencies receive upfront and back-end fees for shows on which they bring together various creative and financial elements. Ending packaging deals, which are not prohibited in the current agreement, 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. So while that may be the WGA’s stated goal, it will certainly not be the final outcome.
But packaging isn’t the WGA’s only gripe. It also wants to the agencies to get out of the production business, which it sees as an even worse conflict of interest. “WME and CAA are becoming active in content production, financing and distribution” with “projects set up at Netflix, Apple, Hulu, Amazon and YouTube,” the guild told its members this year as it set the stage for the coming showdown. WME’s “related production entities” include Endeavor Content, IMG Productions, Media Res and Bloom, the guild noted, while CAA’s “related production entities” include Tornado Productions. And just last October, UTA joined the fray, teaming with Valencia Media and its subsidiary Media Rights Capital to form Civic Center Media to develop, produce and finance TV series. UTA, meanwhile, disputes the WGA’s packaging data, saying that it “has as many packages as CAA and almost as many as WME.”
Pointing to a possible legal challenge if it doesn’t get what it wants at the bargaining table, the WGA reminded its members (just before it gave the ATA its one-year notice of termination) that the Department of Justice brought an antitrust lawsuit in 1962 that “forced MCA-Universal, the largest agency/producer, to exit agency business.”
“ATA is looking forward to sitting down with the guild to listen and learn more about their proposals,” ATA executive director Karen Stuart told Deadline. “Agents have been working on behalf of writers for over 60 years to find them the best career opportunities and our goal is to have a series of thoughtful discussions and collaborate on the best agreement for writers and agents in today’s changing media environment.”
As the WGA plots its strategy, it’s preparing for a battle with the ATA that SAG lost back in 2002, when it tried but failed to rein in the agencies over some of the same “conflicts of interest” that the WGA is trying to curb this time around. SAG and the ATA fell out that year when they couldn’t come to terms on a new franchise agreement, which hadn’t been renegotiated since 1939. The main sticking point was that the big talent agencies wanted the right to invest or be invested in by ad agencies, advertisers and independent producers. SAG viewed such financial interests as an irreconcilable conflict of interest, putting the actor in the position of being repped by an agency that could also be his or her employer.
When SAG members rejected a proposed deal, SAG and the ATA went their separate ways, and have yet to reconcile. That same year, the same dispute over financial interest also drove a wedge between SAG and AFTRA, with AFTRA giving in to the ATA by allowing its franchised agents to have limited financial interests in production companies. And that kind of compromise – in which percentage limits are placed on ownership – may be what’s ahead for the ATA and the WGA if a deal is to be reached.
To this day, SAG-AFTRA has not worked out a new franchise agreement with the ATA, and still insists that “any union member who engages the services of a talent agent is required to secure a franchised agent. Choosing to be represented by any other agent may place you in violation of union rules and subject you to potential disciplinary action.” But when push came to shove with the ATA back in 2002, SAG chose not to insist that its members ditch their agents, and nothing happened to those who didn’t, despite the guild’s rules.
“The ruling faction of the guild’s leadership lost faith in its members,” recalled Kent McCord, who was SAG’s national treasurer at the time. “They said, ‘We can’t ask our members to choose between their union and their agents.’ They refused to enforce their own rule. This was the exact same question that was asked of members in 1939, when the franchise agreement was created, and they stood behind the union. I have always believed that if the union had enforced the rule, the membership would have stood by the union again.”
The WGA, which is much more united than SAG was back then, could soon be in the position of making those same hard decisions.