There are a lot of wars brewing in Hollywood right now.
When the town is filled with that much egocentrism, there’s bound to be a lot of power struggles.
And this latest “chaos” in Hollywood could drastically change the industry forever.
There’s an old saying in Hollywood that it’s first and foremost that “show business is a business.”
What it means is like any business it can be ruthless, relentless and just because you’re a gifted artist doesn’t mean you’ll get the money for your project. If you’re an actor who is too perfect for a certain role then it might go to the bigger name who is less perfect for it.
The fact has always remained that there has always been a huge disconnect between the artists and the money in the town. Only few artists get money whenever they need it because of a long proven track record.
That creates a lot of hostility. It’s a hostility that has festered in Hollywood for a long time and now it’s bursting at the seams.
The Writers Guild of America challenged the status quo about how talent agencies unfairly conduct business.
The WGA brought the war to the Association of Talent Agents doorsteps several weeks ago where they challenged the packaging fee services under the Artists’ Managers Basic Agreement that outlines agents that represent writers can charge upwards of 10 percent of the writers’ earnings and/or charge a “packaging fee,” which is to staff all of their clients onto a project.
Indie Wire noted, “When agencies once relied almost entirely on their 10 percent commission as its source of revenue, packaging served as way for top agencies to leverage their A-list talent to maximize that 10 percent, both in terms of getting top dollar, but also by how many its clients (actors, writers, directors) were attached to the project.”
This basically concerns the “Big 4” agency, which are Creative Artists Agency, William Morris Endeavor, Untied Talents Agency and International Creative Management Partners. You can scroll through A-list and B-list actors and you’d likely find all of them at one of these agencies.
In 2017, the guild reached out to writers ranging from top showrunners to staffing jobs and an overwhelming number expressed how the “Big 4” negatively affected their careers rather than helping.
The packaging has evolved to grossly negligible over the last ten years or so and writers are angry about it.
Indie Wire also noted, “According to the WGA, the standard packaging fee for TV consists of three parts: an upfront fee of approximately $30,000 to $75,000 per episode that is paid out of the production budget; an additional $30,000 to $75,000 per episode that is deferred until the series achieves “net” profits, and a percentage (usually 10 percent) of the “modified gross” a show can make down the road. All told, a successful TV show can result in tens of millions in pure profit for a big agency.”
If it’s not obvious, this creates a conflict of interest because agents are selfishly motivated to negotiate on their behalf rather than their clients.
This resulted in writers’ salaries stagnating – staff positions often receiving the guild minimum – while the value of the big agencies grows significantly, in part as the direct result of packaging their clients’ shows. And this is compounded by the advent of streaming services like Netflix, Hulu and Amazon exploding with badly needed original content.
Writers banned together on Twitter over the last several weeks and shared stories about how their agents took advantage of them over the past. So the WGA implemented a code of conduct.
The WGA’s statement read, “On April 13, 2019, the Writers Guild of America implemented a new Code of Conduct for agencies that represent writers for work covered by a WGA collective bargaining agreement. WGA members may only be represented for WGA-covered work by agencies signed to the Code of Conduct. The Code of Conduct is a landmark agreement that realigns agency incentives with their writer-clients and eliminates the conflicts of interest inherent in agencies’ receipt of packaging fees and financial interest in production entities. Agencies signed to the Code may only represent writers for a 10% commission and may not receive packaging fees or be affiliated with a company producing or distributing motion pictures.”
95 percent of WGA writers signed the “Code of Conduct,” even though many announced it was a difficult decision because they were good friends with their agents – in some cases, they were the Godfather to their children or attended their weddings.
Nevertheless, they took a hard-lined stance. The ATA was not happy about it but negotiations opened up for both sides and they extended the deadline to April 12th at midnight. The negotiations broke down. They lost marquee showrunners and creators like Shonda Rhimes, Mike Schur, Greg Berlanti, Jenji Kohan, Joss Whedon, David Simon, Kenya Barris, Amy Sherman-Palladino, Matthew Weiner, and Noah Hawley.
“The Wire” creator David Simon blasted his agency in a detailed post, “Why bother to fight for 10 percent of a few dollars more for this story editor or that co-executive producer when to NOT do so means less freight on the operating budgets of the projects that you yourself hope to profit from? Why serve your clients as representatives with a fiduciary responsibility and get the last possible dollar for them, when you stand to profit by splitting the proceeds of a production not with labor, but with management — the studios who are cutting you in on the back end? Why put your client’s interest in direct opposition to your own?”
Simon also admitted that he was “filing a civil suit against the ATA” for an “overt and organized breach of fiduciary duty in which they have effectively pretended to represent clients while taking bribes from studios to keep those clients’ salaries and benefits lowered across the board.”
The ATA took a while to respond to the “chaos” the WGA has caused lately.
ATA director Karen Stuart wrote after the negotiations broke down, “Agencies will not be a willing participant to any further chaos. That’s the Guild’s plan. Their course of action has thrown the entire entertainment ecosystem into an abyss, affecting stakeholders across the spectrum.”
This is true but they caused this “chaos” Stuart is referring to. It’s reminiscent of the 2007 writers’ strike where the industry was left without the WGA for about eight months when shows were forced to either shut down completely. After eight months, the WGA got what they wanted but it ironically just made up the financial loss for those writers while they were out of work. It was almost unnecessary.
It’s important to note that writers disputing with television executives and studio bosses and not the agents –sometimes friends – who represent them caused the strike in 2007. That’s an important distinction.
But as the deadline passed,other big named writers fired their agents.
Maybe the biggest name was author Stephen King who wrote on Twitter, “This is never what I wanted. My rep has been honest and diligent for over 40 years. Not his fault, but we’re a union family. Come on, ATA. Come on, WGA. Solve this so we can go back to doing what we do.”
Comedian Patton Oswalt simply said, “I have an amazing agency that represents me. But I have an even better guild which stands for me.”
Nearly everyone in the WGA sent a letter to their agency that discontinued their partnership. In the meantime, many showrunners have pledged to help out other WGA members like La Toya Morgan (“Into the Badlands”) who wrote, “If you’re a writer looking to staff this season, I want to help you out. Reply with a few sentences about what kind of writer you are & why showrunners should give you a shot, and I’ll give you a #WGAStaffingBoost.”
“Parks and Recreation” creator wrote, “What happens now? We stick together.”
That should give you a good indicator of just how serious this issue has become. It looks like there is no end in sight.
So what does this mean for Hollywood content?
The WGA put out a list of agencies that agreed to sign The Code of Conduct but they are all lower-level boutique agencies.
CAA, WME, UTA and ICM package nearly 90% of projects nowadays. One of two things could happen then. The “Big 4” will be forced to negotiate with the WGA after they realize how much revenue they’re missing out on or every writer will officially jump ship to one of these other agencies and effectively making them huge – forcing producers to package their projects wherever the writing talent is.
You have to remember just how powerful agencies are and how egocentric the agents are. They might find new non-WGA writers or they could just wait it out like they did in 2007. But Netflix, Amazon, and Hulu can’t wait around – so it might force agencies’ hands.