The WGA sent WME and CAA a proposal today that outlines the steps they must take in order to become franchised by the guild and end their 18-month standoff over packaging fees and agency affiliations with corporately related production entities.
WME and CAA are the last holdouts in the guild’s battle to restructure in agency business, with more than 100 agencies – including all the other majors – having agreed to the guild’s terms, which ends packaging fees in on writing services by June 30, 2022.
The chief sticking point to a deal has been CAA’s ownership interest in affiliate wiip and WME’s ownership stake in affiliate Endeavor Content. The guild has already agreed that agencies that sign its franchise agreement can hold a 20% ownership stake in production entities, but getting CAA’s and WME’s stakes down to 20% has been the hang-up.
CAA put out a statement last month saying it had accepted the guild’s terms – except for a couple of points having to do with wiip – but the guild said that there was no deal because “CAA has proposed changes to the agreement that the WGA has not – and cannot – agree to.”
The guild’s battle to reshape agenting began in April 2018 when it notified the Association of Talent Agents of its intent to renegotiate its Artists’ Manager Basic Agreement, and a year later, writers voted overwhelmingly to terminate the AMBA and all unfranchised agencies. “Since then,” the WGA says, “we have negotiated nine successive versions of the franchise agreement to accommodate reasonable agency proposals between May 2019, when we signed Verve, and this past summer, when we signed UTA and ICM. Of their own choice, WME and CAA are the last agencies to come to the table. While we are currently engaged with both of them, it is imperative that we preserve our new franchise agreement’s guarantee of properly un-conflicted representation for all writers.”
Here is the letter that the WGA agency negotiating committee sent to members today:
Today, the WGA sent both WME and CAA a proposal that outlines the steps each of them must take in order to be in compliance with the 20% ownership cap on production affiliates in the franchise agreement. At the same time, we sent them a renewal of our initial information request, which they have, up to this point, only partially satisfied.
As a reminder, both CAA and WME have agreed, in theory, to the 20% cap provided for in the UTA/ICM agreement. What they have not done is spell out how they will actually comply. WME says it wants until 2022; CAA has given no specific timeline, saying that it will sell when “commercially practicable.”
“As we communicated to you in our previous correspondence (Sept 1, Sept 14, Sept 30), CAA and WME enter these negotiations more deeply conflicted than any of the other agencies. But that does not give them the right to come out on the other side of this process still conflicted. We have been clear with them from the start that we will not make a deal with them that undercuts the gains this campaign has achieved. Everything we ask from them today is necessary to ensure that writers are protected: which means that the agencies divest to the 20% limit in a timely fashion – that they remain divested – and that we can verify their compliance.
All of this begins with transparency over their corporate structures and private equity ownership. Earlier this month, at the request of both CAA and WME, the WGA agreed to confidentiality regarding certain corporate information that might be disclosed to us during the course of negotiations. While both agencies have now provided some corporate structure information, much of it was already publicly ascertainable, and most of our requests have gone unanswered. Any agreement must start with openness and full disclosure. We cannot protect writers from conflicts that are deliberately hidden from us.
You can read the complete correspondences from the WGA to WME and CAA, which includes the following terms these agencies need to meet to protect your interests:
• The limitations in the franchise agreement on 20% ownership of an affiliate production entity must apply to all the agency’s parent entities, investors, shareholders, and affiliates. Those are the terms of the UTA/ICM deal and there can be no exception for CAA and WME. To allow otherwise would permit the agencies to execute an “end run” by shifting ownership to another related entity while remaining conflicted.
• Neither agency will be permitted to sign the franchise agreement until it can demonstrate that it has properly divested according to the terms of that agreement. The Guild will not be in the position of sending writers back to their agencies on faith and waiting for compliance from agencies who have been relieved of their greatest pressure to do so. Nor will we be faced with telling writers to terminate their agency a second time, should that agency fail to comply.
• Preexisting projects cannot be exempted from the limitations on financial interest beyond 20%. We allowed preexisting packages to survive because requiring all writers to pay back commission in order to undo already packaged projects would not have been a tenable solution. There is no such parallel with affiliated ownership. What’s more, this requirement of full divestment to 20% ensures that there is no residual conflict inherent in agency-owned studio projects.
• The agency’s restructuring – and its continued compliance – must be subject to third-party oversight and verification. This is necessary because the agencies are privately held companies whose structures are entirely obscured from public view. Unlike packages, which can at least be ascertained in show budgets and profit statements, the Guild would have to take compliance on faith alone. That we will not do. We need to be assured that the divestment is complete and enduring. We’ll also need appropriate sanctions spelled out in the event of noncompliance. We are not insisting on auditing the agencies; however, there must be third-party monitoring to protect writers’ interests.
We will update you with any significant developments.
WGA Agency Negotiating Committee
Chris Keyser, Co-Chair
David Shore, Co-Chair
Meredith Stiehm, Co-Chair
Deric A. Hughes
Tracey Scott Wilson
Patric M. Verrone
David A. Goodman, President WGAW, ex-officio
Marjorie David, Vice President WGAW, ex-officio
Michele Mulroney, Secretary-Treasurer WGAW, ex-officio
Beau Willimon, President WGAE, ex-officio
Kathy McGee, Vice President WGAE, ex-officio
Bob Schneider, Secretary-Treasurer WGAE, ex-officio