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Writers Guild Blasts Talent Agencies CAA, WME for ‘Soaring’ Profits

The Writers Guild of America has singled out Hollywood’s largest talent agencies, William Morris Endeavor and Creative Artists Agency, for allegedly soaring profits.

The WGA, in an acrimonious negotiation over proposed new rules about how agencies represent writers, issued a report called “agencies for sale” on Monday morning — a few hours before a fifth round of talks are scheduled to resume between the guild and the Association of Talent Agents.

The report claimed that WME and CAA have received “billions” of dollars from private equity firms, sovereign wealth funds, and other institutional investors, leading to them being transformed from agencies with the primary purpose of representing talent to conglomerates singularly focused on expanding their bottom lines and returning value to investors. That’s led to the agencies being in the business of acquiring and owning content — creating a conflict of interest by making them employers of their own clients.

“The agency has always and will always put client interests first,” a CAA spokesman said in response to the report.

The WGA’s key proposals require that agencies exit both producing and packaging. The WGA and 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 to implement its own code of conduct spelling out new rules, which will require members to fire their agents if they haven’t signed the agreement.

The report alleges that WME and CAA’s private equity owners have already seen their investments double and triple in value. The WGA estimates that TPG’s $340 million investment into CAA had more than tripled in value between 2010 and mid-2017. Silver Lake Partners’ $750 million investment in WME had doubled in value to almost $1.5 billion by mid-2016.

“As this report makes clear, big investments by private equity firms have pushed the talent agencies into even more conflicted business practices,” said WGA West President David A. Goodman. “It’s no longer just the problems caused by packaging fees. They are also aggressively moving into producing content — making them both the representatives and the employers of their writer clients. The conflicts of interest will only continue to grow if we don’t do something now to realign agents’ economic interests with their clients’ interests. The solution will come from either a negotiated agreement with the Association of Talent Agents or through a code of conduct.”

The WGA report quotes credit rating agency Standard & Poor’s, which recently wrote of CAA, “The explosion of content from over-the-top (OTT) players such as Netflix, Amazon, and Hulu has favorably affected the company’s television revenue, particularly its TV packaging revenue. … The packaging of talent, along with the massive increase in TV content production, has driven most of the growth in the company’s TV segment.”

Hollywood agents offered counter-proposals last week to the WGA, which brushed them off. The ATA said its “statement of choice” emphasized that writer clients get to decide whether they want to work on a packaged show and that they have the choice to work with an “affiliated entity” — meaning a production company affiliated with the agency.

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