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Talent Agents Offer to Share Packaging Fee Revenue With WGA

Pessimism is growing about the likelihood of the sides reaching a deal

Hollywood’s major talent agencies have offered to share a portion of the revenue generated from TV and film packaging fees with the WGA to avoid the prospect of thousands of writers firing their agents as early as Saturday.

The financial offer was part of a lengthy proposal sent by the Association of Talent Agents to WGA negotiators late Wednesday. It’s believed that the offer called for the guild to create a special fund that would receive a percentage of each agency’s packaging fee revenue. The ATA has been cautious about putting a hard number on the table because of the expectation that other Hollywood guilds — notably the DGA and SAG-AFTRA — will expect a similar revenue-sharing agreement.

“Specifically, agencies will provide a percentage of their back-end profits to writers – 80% of which will be shared amongst a show’s writers not participating in the profits of the series, regardless of which agency
represents them. The remaining 20% will be invested in industry initiatives and programs to foster and expand inclusion of historically underrepresented writers. This is a meaningful investment in the writer community,” ATA executive director Karen Stuart wrote in a message to members sent late Thursday.

The ATA proposal was designed to address the concerns of WGA leadership that a subset of writers are being squeezed at a time when the income gap between Hollywood’s A-list and the rest of the creative community is growing. Complaints from lower-level and mid-level writers helped spark the WGA’s focus on renegotiating the terms of its agency franchise agreement to take aim at packaging fees, which the guild cites as a factor in the financial squeeze on some writers.

The ATA offer also included a payment of $6 million over three years to what is described as “an industry-wide fund to foster and encourage inclusion.”

The WGA had no immediate comment on Thursday night. The sides met earlier in the day or their fourth meeting in six days but were not able to finalize an agreement on the key issues of packaging fees and agency-affiliated ownership of production companies. Sources on both sides of the table expressed pessimism about the chances for the sides to reach a deal.

The ATA’s decision to release details of its proposal is an indication that negotiations may be heading back to an impasse. The agents want the broader industry to have an understanding of the moves they have made in an attempt to reach a compromise — and avoid the mass separation of writers and agents.

On Wednesday, ATA held a membership meeting at the InterContinental Hotel in Century City that amounted to a solidarity rally for more than 200 agents. Sources said that numerous attendees took turns at the mic and expressed the sentiment that if agents concede too much in the fight over packaging and production, an emboldened WGA could decide to take aim at other issues in the future such as cutting commission fees to less than the present 10% standard.

The guild and ATA are trying to avoid the disruption of having thousands of WGA members fire their agents en masse as of 12:01 am Saturday. The guild has vowed to implement its new Agency Code of Conduct if it can’t reach a deal with the ATA on a new agency franchise agreement — which, as proposed will eliminate packaging fees along with banning ownership of production companies by the parent companies of agencies.

The sides had been facing an April 6 contract expiration deadline, but an eleventh-hour gathering on that day led to the WGA agreeing to a six-day delay in the implementation of the code.

Hollywood’s largest agencies, represented by the Association of Talent Agents, have balked at the guild’s Code of Conduct reforms. The WGA asserts that taking fees from studios for packaging business and owning production affiliates are conflicts of interests to the agencies’ fiduciary duties to their writer clients.

The guild’s previous agency franchise agreement with the ATA, called the Artists’ Managers Basic Agreement, had not been renegotiated since 1976.

Here is the full ATA letter:

Dear ATA members,

As you know, we’ve been working diligently to reach a deal with the WGA. Thanks to all of you who attended our membership meeting this week – we deeply appreciate your input, guidance and overwhelming support as we work through these negotiations as a unified front. As we discussed, the WGA’s Code of Conduct is a threat to agency business operations – whether two agents or 2,000.

The past several days have been a rapid crescendo to this pivotal moment in our negotiations. We have now presented the WGA with comprehensive counterproposals that address their issues.

We’ve listened and heard meaningful feedback this week from WGA leadership, and in our own agency meetings and townhalls with writer clients during the past few months. Those meetings helped us further understand and reflect upon the fundamental issues of concern, including calls for greater transparency, deeper understanding of agency operations, increased support for lower- and mid-level writers, and ultimately better alignment in agent/writer compensation. Our goal throughout the discussions to date has been to avoid a destabilizing industry fallout.

Outlined below is a summary of our draft counterproposals:

  • Partnering With The Guild: Agents are, and always have been, on the side of the writer and are committed to protecting writers against free rewrites and late payments. The WGA has requested access to client contracts and invoices so they can intervene directly with studios/employers to rectify situations on behalf of writers. While WGA already has authority to collect that information from its Guild members and studios are also required to submit to the Guild, collection has been problematic. Agencies have agreed to provide the Guild with copies of writers’ executed contracts and financial information for writing services within the Guild’s jurisdiction – with the writer’s ability to opt out of sharing his/her confidential information.
  • Sharing Success: When a packaged show does well, writers will now share in the success and receive a share of the agencies’ packaging fees. Specifically, agencies will provide a percentage of their back-end profits to writers – 80% of which will be shared amongst a show’s writers not participating in the profits of the series, regardless of which agency represents them. The remaining 20% will be invested in industry initiatives and programs to foster and expand inclusion of historically underrepresented writers. This is a meaningful investment in the writer community.
  • Jumpstarting Inclusion: Agencies will also advance $2 million per year for three years ($6 million total) to jumpstart an industry-wide fund to foster and encourage inclusion, making a significant investment in today’s creative community.
  • Transparency in Film Financing. Agencies will be permitted to perform motion picture consulting, financing and sales services, and will fully disclose any fees and arrangements to the writer.
  • Transparency in Affiliates. Agencies have committed to providing safeguards and transparency to clients working with agency affiliates. Further, agencies will share anonymized data and summaries (e.g., aggregated financial terms, form contracts, initiatives) about deals made on behalf of agent-affiliated production entities that engages writers. The parties will meet on a quarterly basis to evaluate how the affiliate production companies are benefitting writers. If, at any point after the first two (2) years of the initial term of this agreement, WGA determines that the affiliate production companies are not benefitting Writers, WGA may give 90 days’ notice of intent to reopen this agreement on this limited issue.
  • Commission. Maintain all of agents’ current rights with respect to commissions.At this critical juncture, we are committed to getting a deal across the finish line. We are intensely focused on ensuring that it’s a long-term solution — one that meets a dual-purpose of protecting the best interests of all writers while creating alignment between the goals of our two organizations.I’ll continue to keep you updated and thank you for your support. Sincerely,Karen Stuart Executive Director

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