WGA Rejects WME’s Proposed Deal; Says Agency “Yet To Grapple” With Its “Conflicts Of Interest”

WGA and WME Logo
WGA; WME

The WGA has rejected WME’s latest proposal that would end their long-running legal battle, saying that “WME has yet to grapple, in a serious way, with its own conflicts of interest.” WME sent the guild a new proposal on Dec. 22 that would, had it been accepted by the guild, have ended the WGA’s 20-month boycott against the agency. WME said last week that it had “updated the terms of our proposal and submitted it to the WGA in a good-faith effort to jumpstart our discussions. We want to find a way forward with the Guild and return to representing our writer-clients. We are willing and available to meet with the Guild as soon as possible, including over the holidays, in order to reach a resolution.”

The guild’s agency negotiating committee, however, says that the agency’s proposal is unacceptable because it has more favorable terms than the agreement reached with CAA on Dec. 16, leaving WME as the last major agency not to have signed the WGA’s franchise agreement, which phases out packaging fees and limits ownership in an affiliated production company to 20%.

Here’s the full text of the negotiating committee’s message to Writers Guild members:

“We’re writing to update you on the most recent development with WME.

“As a reminder, on September 1st we announced that the UTA/ICM franchise agreement would not be changed for CAA and WME, but that provisions would need to be negotiated in order to mitigate those agencies’ additional conflicts of interest. On December 16th, CAA signed the UTA/ICM franchise agreement, as well as a side letter that laid out essential additional terms and protections concerning CAA’s production company, wiip, and the agency’s private equity owners. Within an hour of the CAA deal announcement, WME publicly pronounced that the deal “… suggests a path forward for WME to reach an agreement as well.”

“On December 23rd, WME sent franchise agreement and side letter proposals to the WGA that it billed to writers and the town as providing that path. In fact, what WME proposed substantially alters both the CAA side letter and the franchise agreement, repeatedly undercutting the basic protections these agreements provide to writers.

So you can judge for yourselves, here are some examples:
• CAA and TPG (CAA’s private equity owner) relinquished all operational control of wiip and placed it in a blind trust administered by a third-party trustee, with an agreement to sell down to 20% or less by a deadline agreed to with the WGA. These protections mean that as writers are returning to their agents, the Guild can be certain that CAA and TPG will be in compliance with their side of the bargain. WME and its private equity owners, Silver Lake Partners, have not offered to place their ownership interests in Endeavor Content in a blind trust. WME has proposed that they be allowed to sign the franchise agreement immediately and return to representing writers, even as they and Silver Lake retain control over Endeavor Content.

• CAA agreed to penalties for failure to achieve compliance with the 20% ownership limit by the agreed upon date, such as placing all wiip commissions and package fees in escrow and the potential suspension of CAA’s franchise agreement.
WME’s proposal rejects all penalties for failure to comply with their obligation to divest from Endeavor Content.

• CAA and TPG agreed that they will not, each individually or both together, own more than 20% of wiip.
WME insists that they and an entity owned by Silver Lake may, together, own more than 20% of Endeavor Content.

• The UTA/ICM/CAA franchise agreement binds all agency shareholders to the terms of the agreement, regardless of the ownership stake they hold in the agency.

WME wants to exempt shareholders that own less than 20% of the agency from conflict-of-interest regulations, which means that a shareholder owning 19% of WME could also own 100% of a studio. This would significantly weaken the protections of the existing franchise agreement.

• The UTA/ICM/CAA franchise agreement does not permit any exemption of pre-existing projects from the 20% ownership limitation.

WME insists on retaining unrestricted ownership of Endeavor Content projects currently in production, or already produced, including subsequent seasons, sequels and spinoffs. They have cited packaging as an analogy. But the Guild has been very clear from the start that pre-existing packages were allowed to remain only because it would be impossible to claw back past commissions from writers. Affiliated production offers no such parallel.

This is not an exhaustive list of the ways in which WME’s proposal differs from the franchise agreement signed by every other agency in the business and the side letter signed by CAA. It is, however, sufficient to illustrate the point that WME has yet to grapple, in a serious way, with its own conflicts of interest.

WME was correct in this, however: the CAA deal does represent a path forward – the path forward. WME waited until every other agency in town found a way to partner with the Guild and return to the representation of writers. Having sat mostly on the sidelines for the past 20 months, there will be no “going last” bonus for WME – no accommodation for the fact that they are the most conflicted of all agencies – no alterations to our existing deals that soften the protections that writers have fought for nearly two years to achieve.

If WME wishes to represent writers again, they and Silver Lake can agree to the terms found in the franchise agreement and side letter linked here.

In Solidarity,
WGA Agency Negotiating Committee

This article was printed from https://deadline.com/2020/12/wga-rejects-wme-deal-agency-grapple-conflicts-of-interest-1234662648/