Now that UTA has signed the WGA’s franchise agreement after lengthy negotiations, speculation is mounting over which of the other Big Four agencies – WME, CAA or ICM Partners – will be the next to sign.
Sources tell Deadline that WGA West president David A. Goodman told members at a captains meeting Tuesday night that the guild is close to a deal with another major agency, and if that comes to pass, the era of packaging fees – money the studios pay agencies to bring together the creative elements of their films and TV shows – could soon be on its last legs.
Goodman’s remarks triggered a guessing game as to which agency he might be referring. According to sources, none of the other members of the Big Four appear on the verge of signing a deal with the guild. WME is believed to have had sporadic conversations with the WGA, but they have not advanced to a meaningful negotiation.
Industry insiders expect that the UTA pact, which is far more flexible than any of the WGA’s previous deals with mid-tier agencies, could spur negotiation activity.
“A seal has been broken here, and that is good,” an agency source said about the terms in the UTA agreement.
The guild was especially flexible with UTA in the area of its financial interest in a company – in this case, Civic Center Media – that’s engaged in the production or distribution of films or TV shows.
When the WGA signed up APA in January, the agreement limited the agency to only a 5% interest in such a production/distribution company. Then, in March, when the guild signed up Paradigm, it allowed for a 10% ownership, and through favored-nations clauses offered that same deal to all the other agencies that had previously signed including Gersh, Verve, Buchwald, Kaplan Stahler and numerous others.
But the UTA deal allows it “to have up to a 20% non-controlling ownership of a production company” – twice as much as it had offered in March, and four times as much as it had offered in January.
“Today’s deal shows that the WGA is willing to negotiate, at least,” said a source at an agency that has not signed the guild’s franchise agreement. “Before this, they were such hardliners on affiliates and ownership percentages.”
That is a sentiment echoed by multiple agency sources. Several insiders noted that the agencies had made proposals in the past, but affiliate production had been one of the issues that had been deemed non-negotiable by the WGA. That is no longer the case — terms are getting more favorable for the agencies with every deal, and some are speculating that the allowed ownership stake could rise above 20% with more Big Four agencies signing. That would impact agency-affiliated production companies such as WME affiliate Endeavor Content and CAA affiliate wiip.
The Big Four agencies have also rankled at the guild’s demand they turn over their clients’ financial records, such as contracts, deal memos and invoices. But UTA co-president Jay Sures wrote in a memo to his writer-clients today that “This agreement continues to protect your confidential contract and financial information, which was critical to us. This is information the Guild had insisted we hand over to them whether you consented or not, and it was a core sticking point. We expressed willingness to provide contract information but only if you do not object. Our agreement is that if you tell us not to provide your contract information to the Guild, we will not do so. Without this, UTA would not have made this agreement.”
Sharing all contracts with the guilds had been a non-starter for the major agencies, which have been advocating for the policy to be contingent on client approval. So that concession by the WGA too could be a deal-maker for one or more of the Big Four.
And then there’s the issue of the ongoing anti-trust litigation between the WGA and UTA, WME and CAA. As part of their pact, the guild and UTA have agreed to drop their lawsuits, which could prove yet another incentive for WME or CAA to make a deal.