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Writers Guild Accuses Big Four Talent Agencies of Illegal Conflicts of Interest

The Writers Guild of America has issued a blistering report accusing the top four Hollywood talent agencies of extensive and illegal conflicts of interest.

“While the major agencies have pursued growth through conflicts of interest, these practices contravene how agents are required to act under state and federal law,” the report said. “By maximizing their own profits and now the profits of outside investors, these agencies have strayed from their core purpose of representing the interests of their clients.”

The report, titled “No Conflict, No Interest,” targets CAA, WME, UTA, and ICM Partners and asserts that the four agencies handle 75% of the transactions involving the 12,000 members of the WGA. It was issued at an audio news conference Tuesday and comes amid an acrimonious battle between the guild and the Association of Talent Agents.

“The fundamental duty of a talent agency is to represent the interests of its clients. This report reveals how far the dominant agencies have strayed from this mission,” the report said. “The talent agencies will soon have to choose between their conflicted practices and representing talent for the proper ten percent commission.”

WME is part of same holding company that owns producer Endeavor Content, while CAA supports production entity Wiip. UTA partnered with MRC last year to launch producer Civic Center Media.

The report contains a cloaked threat of the WGA filing a lawsuit against the agencies by invoking the 1962 antitrust suit by the U.S. Justice Department, which forced MCA to get out of the agency business after a decade of acting as both a producer and an agency.

Ellen Stutzman, the WGA West’s assistant executive director, said Tuesday, “CAA, WME and UTA are positioning themselves to become the next MCA.”

Stutzman refused to elaborate when asked if she meant a lawsuit is in the offing or if the WGA is seeking intervention from the federal or state government. Agents in California and New York are regulated by those state governments.

The WGA has been seeking to revamp the rules of engagement for agents with WGA members with changes that would effectively end all film and TV packaging deals, in which agencies receive both upfront and backend fees, and bar agencies from any financial interest in any entity or individual “engaged in the production or distribution of motion pictures.”

The ATA has said packaging provides “tremendous” benefits to artists in all lines of work and that the expansion of agencies into production is essential to provide clients with opportunities in the fast-changing world of entertainment content.

The WGA and the ATA face an April 6 contract expiration deadline to hammer out a new franchise agreement governing the rules for agents representing WGA members. The WGA has scheduled a March 25 vote for members to implement its own code of conduct spelling out new rules, which will require members to fire their agents if they haven’t signed on to the code.

WGA spokesman Neal Sacharow refused Tuesday to say what specific margin would be required for the code to go into effect other than asserting it would have to be “overwhelming.”

“Cold Case” showrunner Meredith Stiehm, who’s a member of the WGA West board, and former WGA West president Chris Keyser spoke at the news conference. They are the co-chairs of the negotiating committee, which is scheduled to meet Tuesday with the ATA for only the third time. The two sides held rancorous negotiating sessions on Feb. 5 and 19.

Stiehm detailed how CAA had taken a packaging fee without informing her when “Cold Case” began its seven-season run. She said she was required to cut $500,000 from the budget of the show in order to get a final season on the air and discovered at that point that CAA was receiving a $75,000 per-episode packaging fee along with a profit participation that nearly matched her own.

“Ninety-four cents for every dollar I earned is indefensible,” she added.

The WGA has posted extensive comments on its sites from anonymous members about the alleged misconduct by agencies. Keyser defended not identifying the writers.

“This is a scary fight,” he said.

Keyser, who was the “Party of Five” showrunner, admitted that the WGA should have acted sooner. The current franchise agreement — the Artists’ Manager Basic Agreement — has not been altered since 1976.

“Packaging fees and agents’ production arms make a mockery of the fiduciary duty we are owed by our representatives,” he said. “Yes, we have taken too long to demand these practices end. But the persistence of a corrupt system does not make it right. While the changes are not small, they are what is required for the right to represent us.”

See the WGA’s full report below.

No Conflict No Interest by on Scribd

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