WGA Board Opposition Candidate Marc Guggenheim Proposes 50-50 Packaging Revenue Sharing With Agents & Ending Split Packages

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Marc Guggenheim, opposition candidate for the WGA West board of directors, has floated a proposed solution to the guild’s 20-week standoff with Hollywood’s talent agencies: Writers and agents would share packaging fees 50-50 after the agents are “made whole” from the 10% commissions they give up in packaged deals. He’d also do away with most split-fee packaging deals, in which agencies share the fees.

To date, the guild has nixed any kind of revenue sharing, and the Association of Talent Agents only has offered to share 2% of their backend fees with writers. The two sides haven’t met face-to-face at the bargaining table since June 7.

“I’ve floated enough of these ideas online to know that many of the elements of this proposal are met with strong and proper skepticism,” he said today in an email blast to the guild’s members. “Chief among those concerns is ‘practicality,’ which I’ve interpreted as ‘the agencies are never going to go for this.’ They certainly might not. David Goodman has said that it’s unlikely we’ll get everything we want because that’s not how life works and, once again, he and I are in agreement. All I know for sure is that unless we try, we’ll never truly know.

“Moreover, the whole point of my coming up with this proposal wasn’t to come up with the solution, but rather a solution. I’m convinced there are others. For example, someone who believes packaging does serve a benefit (e.g., the elements help the show get on the air) has suggested to me the concept of replacing package fees entirely with a ‘super commission’ comprised of the money the agency would receive from the studio the money they would make under a strict ten-percent model combined with a bonus for bringing the packageable elements to the project.

WGA West

“My point being, there are numerous ways to finally address this pernicious practice. 95.3% of us, including myself, voted to do just that. That righteous effort needs to include creative, outside-the-box thinking marshaled with hard-nosed negotiating.”

On March 31, WGA’s members voted 95.3% to 4.7% to authorize the guild to implement its own Code of Conduct banning packaging fees and agency affiliations with corporately related production entities. That Code went into effect on April 13, when the guild ordered all of its members to fire their agents who refuse to sign the Code. At last count, more than 7,000 writers had done so.

Guggenheim is a running mate of presidential candidate Phyllis Nagy, who seeks to unseat President David A. Goodman. Guggenheim didn’t address agency affiliations with production companies in his email, nor in his official candidate’s statement, in which he said: “The issues we face require nuanced solutions. Simply branding our representatives as racketeers isn’t nuanced. Our solidarity brought the agencies to the bargaining table. We need to return there post-haste and hammer out a deal that aligns our interests with that of our representatives. I don’t believe for a moment we aren’t smart enough to work out the negotiated solution the majority of the membership wanted.”

In today’s email blast, he said that “Before getting into the idea of revenue sharing, we need to proceed from certain first principles regarding packaging. At Candidates Night, David Goodman said something I completely agree with (go ahead, make your jokes): Package fees have grown far more pernicious in the past 10-15 years than they were in the previous 30-35 years. So any agreement that leaves package fees in place must first address the problems inherent in what packaging has become.

“To that end, we have to kill the process of ‘split packages.’ The rationale for package fees is that they provide ‘one-stop shopping’ for the studios. That doesn’t mean ‘two-or-three-stop shopping.’ Simply put, a split package is an oxymoron. The only way I would advocate even entertaining a split package is if both agencies actually placed elements on the project that helped it sell. In other words, they have to earn the package fees. A radical concept, I know.

“Next, while I would take the agencies up on their offer of “choice and transparency,” I would never just take their word for either. Some policing and enforcement mechanism must be put in place. I think the simplest way of accomplishing this is ensuring that the creator/showrunner is represented by an independent attorney of their choice. This attorney would not only represent the creator/showrunner in their negotiations with the agency over whether to take packaging fees in lieu of commission, they would also insist on transparency in terms of the packaging fee arrangement with the studio.

“However, that attorney’s fees need to be paid for by the packaging agency. It’s the agencies’ conduct that requires oversight. Therefore, they should be the ones to foot the bill.

“Finally, to address one of my biggest pet peeves about package fees: The writer(s)’s points vest when the packaging agency’s points vest or vice versa. Period. Full stop.

He also said that the traditional 3-3-10% packaging fee model has got to go.

“By this point, we can all recite from memory that package fees are paid out according to the — say it with me – ‘3-3-10 model.’ We’re equally familiar with the fact that the first ‘3’ represents 3% of the base license fee per episode. And we all know that the packaging agencies receive that money upfront.

“No more. This money needs to be held in escrow until the conclusion of the television season. Otherwise, we won’t know how to fairly divide it for reasons that will become clear in a moment.

“First, we need to make the agents whole. I know, I know — but no one is suggesting that agents work for free. So, the agents should be able to recoup the money they would have made on commissions off of writers, directors and actors working on the show out of the package fee. Similarly, they should be able to recoup the fees they paid out to the aforementioned ‘oversight attorney.’

“What’s left over after the agents have been made whole is a surplus that would be split 50-50 between the packaging agency and the writing staff.

“To be completely transparent, I have struggled with whether the creator/showrunner should participate in this payout. On the one hand, it’s likely that the creator/showrunner is at least one of the packageable elements on the project and it feels slightly unfair that they are not allowed to participate in the largess created by the package they contributed to.

“On the other hand, this campaign has disproportionately impacted mid and lower level writers. This could present an opportunity to put more money straight into their pockets. Moreover, people have expressed concerns that we might be unwittingly shifting the conflict of interest from the agency to the showrunner if the split of the package fees is determined based on, for example, the composition of the writing staff as described below.

“For the record, because creators/showrunners are profit participants in their shows, the kind of conflict of interest people are concerned with is already baked into the system regardless of packaging. Moreover, I’ve never seen an instance where a showrunner has made hiring decisions based on an expectation of backend profits they’re unlikely to ever see in the first place.

“Like I said, the package fee is held in escrow until the end of the television season (with the process repeated for any subsequent seasons), so that we know exactly how many episodes the show ran for and how many episodes each writer was staffed for. The money is then distributed to the show pro rata based on number of episodes worked regardless of title or position.

As for the 3-10% portion of the traditional packaging fee, he said: “I’m treating the ‘3-10’ of the 3-3-10 under the same rubric because they’re both based on deferred compensation. Traditionally, the ‘second 3’ is calculated based on an additional 3% of the base license fee paid out of 50% of ‘net profits.’ (Seriously, how did these people ever come up with this stuff?) The ‘10’ stands for 10% of Modified Gross Receipts. In English, these are the backend points that are gradually going the way of VHS.

“My proposal for these forms of deferred compensation is that we split those monies with the packaging agent 50-50. But with a twist.

“Under this proposal, the agency can improve its percentage if it hits certain incentive benchmarks. Here are just a few potential examples:

• The writers budget makes a predetermined measurable increase — i.e., the writers are making more money.
• The composition of the writing staff hits a certain diversity threshold.
• Span protection is improved over what is currently provided for in the MBA.

“I should note that if people like the idea of these incentive benchmarks, they are easily applied to the 50-50 split of the ‘first 3’ surplus noted above.

“Now, because the money we’re talking about is deferred compensation, distribution to the writing staff is a bit more complicated than was the case with the ‘first 3’ monies divided and distributed at the end of each television season. However, there are models here to guide us. For example, it’s my understanding that the Grey’s Anatomy cast has points in that show that are kept in a pool which is divided up on a pro rata basis based on number of episodes participated in. We could establish a similar pool for the writers on a show over the course of its lifetime. Even the shows that make a profit (that the studio will admit to, at least) don’t do so until after it end production.”

Guggenehim ended his email by urging members to vote — and to vote for Nagy’s entire slate of running mates. Election ballots will be counted on Sept. 16.

This article was printed from https://deadline.com/2019/09/wga-board-opposition-candidate-marc-guggenheim-proposes-sharing-packaging-revenue-50-50-with-agents-ending-split-fee-practice-1202711161/