Yet another obstacle has been put in the way of talent agencies in their quest to acquire and be acquired by other companies.
California’s legislative counsel has released an opinion that buttresses the Screen Actors Guild’s long-held opposition to loosening financial-interest restrictions on Hollywood agents. Bion M. Gregory, in an opinion made public Thursday, sided with SAG’s stance that the state’s labor commissioner cannot lawfully consent to last year’s proposals by the Assn. of Talent Agents allowing production companies to take stakes in agencies and visa versa.
“We feel justified about our position,” SAG prexy William Daniels said. “We are very grateful. Today’s opinion is totally consistent with our position that the California labor commissioner does not have the authority to grant a blanket waiver on financial interest.”
The ATA, in response, continued to insist that its proposal is lawful. It contended that Gregory’s opinion was not in conflict with its own stance and stressed its members will obey laws covering transfer of ownership.
“The opinion of the legislative counsel supports ATA’s position,” ATA said in a statement. “ATA’s proposals make it clear that every agent must comply with all state requirements.”
But State Senate president pro-tem John Burton, who conducted a special hearing last month on regulation of agents and managers, agreed that Gregory’s opinion backs up SAG’s position and that state law would have to be changed for the ATA proposals to go into effect.
The ruling may increase SAG’s leverage in upcoming negotiations with the ATA, which has sought clearance for investments of up to 49% by distribution and production companies. Although no date has been set for talks to start, and the guild’s master franchise agreement expires Jan. 20, both sides have expressed optimism recently that they will be able to hammer out a deal before that deadline.
And in an indication that both sides have cooled down their rhetoric on the issue, both expressed strong support for returning to negotiations as soon as possible. That could happen once SAG’s elections conclude next week.
Gregory’s opinion, written at Burton’s request, said the ATA proposals did not conform with the applicable portions of Chapter 4 of the state’s labor code.
“It is our opinion that to the extent that the ATA proposal allows for or contemplates the sale, transfer or giving away of interest in a talent agency, without the written consent of the labor commissioner, or allows a division of fees between a talent agency and an employer, an agent or the employee of an employer, it violates Chapter 4,” Gregory wrote.
Gregory also said the proposal could violate provisions of the code barring agents from dividing fees. “To the extent that the ATA proposal purports to permit an agreement between a talent agency and an employer, an agent or other employee of an employer that would constitute a division of fees, the agreement would violate Chapter 4,” he said.
Difference of opinion
The ATA contended Thursday that its proposal would not permit a “division of fees” and pointed out that Gregory had admitted that it was “premature” to determine whether any deal met that condition. But SAG’s national director of legislative affairs Lance Simmens said Gregory’s opinion is “unequivocal” in terms of spelling out limits on deals.
Gregory’s opinion was dated Sept. 27, a day before Burton convened a special hearing on state regulation of talent agents and managers. Burton, who expressed skepticism during the hearing that a conflict of interest would not emerge if the financial-interest rules were eased, said Thursday that he had not been made aware of the opinion prior to or during the hearing.
During that hearing, SAG attorney David Alter said the union would not seek legislative help on clarifying the role of the labor commissioner. Alter’s declaration followed the assertion by David Gurley, staff counsel for labor commissioner Art Lujan, that his office would welcome “guidance” from the California Legislature as to how to proceed on the ATA’s proposal.
SAG and the tenpercenters have not negotiated since last November, when talks collapsed. Agents — who began pushing for the revamp over two years ago — claim the SAG rules are outmoded and that loosening them will be a win-win situation for both sides by enabling shops to more easily tap financial resources, thus generating more work for thesps.
SAG has claimed that loosening the ban will create an unacceptable conflict of interest, even with ATA-proposed protections for actors. The ATA proposal specifically bars agents from being producers, waives the 10% commission on any client’s work with a “financially interested” entity and provides for expedited arbitration for actors.
“ATA does not agree that a ‘financial interest’ either invariably creates a real conflict or that any arising conflict — real or perceived — is incurable,” the ATA wrote last month. “To address the perception of conflict, its proposal on this subject goes to great lengths to insure that no actor can be affected adversely because the agent is ‘financially interested.’ “