As Writers and Agents Dig in Their Heels, Hollywood Wonders Who Will Blink First

WGA Agency Packaging Fight Placeholder Writer
Cheyne Gateley for Variety

Can Hollywood function without writers’ agents doing its behind-the-scenes bidding? The industry is about to find out.

The battle between the largest talent agencies and the Writers Guild of America went nuclear on the evening of April 12 as negotiations broke down and the guild issued a directive to members to fire their representatives.

As of April 15, WGA members demonstrated an impressive level of solidarity with the guild. Prominent screenwriters and showrunners shared copies of their termination letters via social media and voiced strong support for the guild’s campaign to reform the rules that govern how agents work with WGA members.

Talent agents, represented by the Assn. of Talent Agents trade organization, are digging in their heels in opposition to the WGA’s new rules. In blowing up the negotiations, both sides have seemingly decided to see who will feel the most pain from the separation — and who will be motivated to offer concessions in order to reunite the warring parties.

The WGA is expected to soon file a lawsuit against the ATA and its members, putting a legal framework on the guild’s opposition to talent agents earning packaging fees and the expansion of the largest agencies (through parent companies) into the finance and production arena.

But a legal process will likely take months to produce any decisions. The industry is highly attuned to whether dealmaking for new projects or the management of existing business will be affected by the absence of agents from the equation. There are also questions about how strictly the WGA will enforce its mandate that members sever business ties to agents who refuse to affirm the guild’s newly implemented Agency Code of Conduct.

“I’d think that there won’t be any impact for a while, but who knows,” predicts one senior TV production executive who has been closely following the WGA-ATA fight. The executive expressed “shock” that the situation unraveled so quickly last week.

One area of concern common to both camps is that in the short term, the WGA members whom the guild is most trying to help with its reform effort could wind up suffering the greatest harm by the split with agents.

The guild is attempting to ban the long-standing industry practice of talent agencies receiving packaging fees for helping to assemble TV series and some movies. WGA maintains that agents’ interests have become “misaligned” with writer clients because packaging fees are paid by the production entity. Instead of the standard 10% commission on a client’s salary, agencies that receive a TV series package waive the 10% commission fee for all clients of the agency that work on the show. The guild maintains that agents’ incentive is skewed in favor of the production company and against fighting for the highest salaries for writers on the show.

Agents counter that there is no such conflict, in part because they run the risk of losing promising clients who feel short-changed on deals. Agents and others in the creative community say that a squeeze on lower-rung writing jobs is coming from broader industry shifts and the changing formats of television programs and not from a lack of effort by agents.

The standoff raises other thorny issues, such as the question of whether WGA members who have agency representation as directors, actors, producers and
other roles need to sever agent ties in all areas. Also uncertain is the reaction to the WGA’s packaging push from fellow Hollywood guilds like SAG-AFTRA and the DGA, whose members have benefited in the past from having their commissions waived on packaged shows.

The fight is further complicated by a fundamental disagreement between the WGA and ATA on the scope of the guild’s authority to regulate agents as they represent WGA members. ATA executive director Karen Stuart accused the WGA of sowing “industry-wide chaos” in a message to ATA members on April 14.

“Their course of action has thrown the entire entertainment ecosystem into an abyss, affecting stakeholders across the spectrum. As we embark through unknown territory, we must not lose sight of the fact that the WGA’s Code is unacceptable to all agencies — from those that employ two agents to those employing 2,000,” Stuart wrote. “The Code would provide the Guild with an unprecedented level of control to dictate how your agency operates and how it regulates the conduct of agents in all respects, even those reaching beyond the Guild’s own jurisdiction.”

Numerous WGA members countered that suggestions of “chaos” ensuing were overly dramatic. “I don’t call my agent every morning to figure out how to write my show,” said a seasoned showrunner.

But one thing both camps can agree on is that the lack of agents advocating for writers will likely take a heavy toll on the employment prospects for writers in mid-level job categories, whether they are younger writers with less experience or established scribes who have not reached the A-list as screenwriters or as executive producers/showrunners in television.

The vast expansion of the TV series landscape has created an hourglass-shaped job market for writers. At the top is an enormous demand for experienced showrunners and writer-producers with EP-level experience. There are also plenty of openings for lower-paid junior positions. The pinch, even in the era of peak TV, is coming in the middle.

Whereas writers on staff at the producer, supervising producer or co-EP level could once reliably count on making annual mid six-figure salaries, now those jobs are harder to land. Agents say there is no comprehension by the guild or even clients about how much legwork and scouting it takes to find optimal opportunities for WGA members in the middle ranks of job classifications. Landing development opportunities for a hot-shot writer fresh out of college is easier than securing deals for middle-aged white male writers in the current environment, agents say.

“There are a lot of people who won’t work this year. That’s just a fact,” said a veteran literary agent.

The WGA has said its push to reform the agency franchise agreement — which stood untouched for 46 years until the WGA signaled its intent to renegotiate the terms last year — stemmed from complaints from showrunners and other writers frustrated at seeing high-five-figure packaging fees go to agencies as line items in series budgets. The WGA’s hope is that money long allocated for agency packaging fees will be redeployed toward higher writing budgets. Agents are extremely skeptical that packaging fee revenue will be returned to the writers’ room.

Last week, the ATA sought to break the logjam in talks by offering a proposal to share 1% of agency packaging fee revenue with the guild. The offer was designed to redistribute that money among staff writers on a show who did not have profit participation points. The ATA, according to multiple sources, knew that coming in at 1% was only a starting point for negotiations. What it did not expect, however, was that it would be rejected so swiftly as to shut down negotiations.

Because the WGA has fired up members on the goal of eliminating packaging as an illegal breach of fiduciary duty, it’s tricky for the guild to reach a deal that allows the practice to continue. A source close to the WGA said that the only way the ATA’s proposal would have averted the April 12 meltdown was if “that revenue share offer had started out at 50%.”

As the sides settle into their trenches, many in the industry say they are in wait-and-see mode. That there was nebulous immediate impact in the days after the WGA’s edict came down only makes it harder for insiders to see the path to a settlement.

“The Big Four [agencies] feel like they can outlast the writers,” predicted a talent manager. “They have deep pockets and will follow through on the threat of cutting clients and unprofitable agents.”