Hollywood writers consider firing their agents en masse

As an experienced TV writer, Evan Wright was passionate about his idea for a dramatic miniseries based on the founding of motorcycle maker Harley-Davidson. He pitched and sold the three-part “Harley and the Davidsons,” which premiered on the Discovery Channel in 2016.

But it was only much later that the L.A.-based writer learned that the show had been packaged — his agency had assembled talent for “Harley” from its own client roster, and received fees from the studio for the package in lieu of traditional commissions. “I was kept in the dark,” recalled Wright, who was also an executive producer. “I thought my agent was helping me. I didn’t know there was this secret business.”

Wright’s experience reflects the mounting frustrations writers have with the talent agencies that represent them. These concerns center on the long-standing practice of packaging fees and the newer trend of major talent agencies, including Endeavor, CAA and UTA, moving into TV and film production businesses.

Writers say both tactics present conflicts of interest that leave agents with divided loyalties, incentivized to strike deals that help cement a lucrative package or tip a project to an agency production shop, rather than looking out solely for their clients.

Writers’ concerns have grown so acute that the Writers Guild of America has taken the unprecedented step of asking its thousands of members to fire their agents if they don’t agree to a new code of conduct that would effectively end these practices.

The guild has issued a deadline of April 6 to negotiate a new franchise agreement, the pact that governs relations between its members and their agents. The current agreement was negotiated more than 40 years ago.

The latest in a series of closed-door meetings between representatives for the agencies and the WGA took place Tuesday afternoon in Los Angeles. No agreement was reached, though the WGA called the meeting a “small step forward for all the parties” in a statement, while noting that major points of dispute remain. The groups are expected to meet again Thursday.

The conflict leaves the industry uncertain over what comes next. In taking on a widespread agency practice, the WGA is battling a Goliath; a victory would transform the way business is done in Hollywood so profoundly that many observers deem it unlikely. But the WGA, which declined to renew the franchise agreement in December, could impose its own code regulating the conduct of agents. Although writers aren’t threatening to strike, the standoff could disrupt the pipeline of TV shows and movies currently in development.

“Talent agencies have represented Hollywood actors, writers, and directors for almost a century,” the union said in a statement before the meeting Tuesday. “But what began as a service to artists in their negotiations with film studios has become a cartel dominated by a few powerful agencies that use their control of talent primarily to enrich themselves.”

For their part, agencies have been stunned by the guild’s scorched-earth approach and have called the union’s demands unreasonable. They view their expanded roles as a vital way to offer clients more options and control in a consolidated media environment.

“The WGA’s code has been met with skepticism because it does not take into consideration the negative ripple effects it will have on the entire entertainment industry. It will limit opportunity and ultimately hurt artists,” said Karen Stuart, executive director of the Assn. of Talent Agents, the trade group that is negotiating with the writers. “Our priority has and always will be our clients’ best interests and we’re encouraging the guild to find common ground on a new agreement.”

The two largest Hollywood agencies, WME and CAA, represent several hundred writers each, while ICM and UTA also represent numerous writers. Smaller agencies such as Gersh are also affected by the talks.

Agencies argue that packaging benefits writers because packaged shows have a better chance of being greenlighted by studios with talent already lined up, and writers don’t have to pay the usual 10% commission to their agents. Agencies also argue that they are capable of managing conflicts of interest by shopping projects to multiple buyers and involving writers’ managers and attorneys more closely in deals.

But the WGA is not convinced.

“For me, this is really about getting rid of conflicts of interest and making agents act as proper fiduciaries,” said David Goodman, president of the Writers Guild of America, West. “Clients come first. Packaging and producing have to be eliminated.”

Some WGA members are privately uneasy about battling their agents.

“It feels like writers are being riled up without any long-range thinking behind it,” said one Oscar-winning screenwriter who asked not to be identified for fear of reprisals.

Others are more conflicted, saying they get along with their agents but want to see changes. “My agent is fantastic,” said another writer who works on a comedy series for a major streaming outlet. “I don’t hate the player, I hate the game.”

Wright, the TV writer from “Harley and the Davidsons,” said he also got along with his agent but eventually decided to part ways. “They’re part of the system where you like them personally, but your interests have been placed lower,” he said. Wright has worked on the Bravo series “Dirty John,” which was co-produced by the Los Angeles Times.

The union has solicited various anonymous complaints from guild members about agency practices. One writer complained that his agent scuttled his plan to adapt a book into a TV series. He said the agent wanted a producer who already had a deal with the agency’s production arm to develop the series — even though a studio was willing to pay more to option the book, according to an account posted on the union’s website.

Agencies have been attempting to defuse tensions. WME has held four town hall meetings with its writer clients in recent days. “We are aligned with you and your guild in finding solutions to this issue,” said Ari Greenburg, president of WME, in an email to clients. “However, we do not believe the answer is getting rid of packaging fees and affiliate production, which brings jobs and opportunities to writers.”

Other agencies including CAA, ICM and UTA have also been meeting with writer clients.

“If we have lost some clients’ trust then we need to know why,” said Jeremy Zimmer, chief executive of UTA, in a Monday email to writer clients. “We don’t want clients to be with us out of fear, we don’t want our clients to stay out of habit.” But he said firing agents isn’t a solution to the problem.

The level of acrimony has risen in recent weeks as the WGA has stepped up the rhetoric. Last week, the East and West Coast branches of the WGA posted a statement on their websites describing the agency industry as “a corrupt system” that needs cleaning up.

At a recent event for Hollywood managers, some WGA leaders compared agents to “criminals” who deserve “jail time,” according to an individual in attendance. “It was incredibly hyperbolic,” he said.

The WGA has been quietly meeting with talent managers and attorneys in recent weeks, some say in the hopes that these roles could pick up some of the duties of agents if no agreement is reached. But California law prohibits anyone from acting as a talent agent who isn’t properly licensed.

The conflict reflects broader economic currents. Despite a bounty of production in the era of peak TV, rank-and-file writers are facing an income crunch because of a confluence of trends that includes fewer episodes per season and the fade-out of residuals associated with syndication and DVDs. The guild estimated that the average pay of TV writer-producers fell 23% from 2014 to 2016.

Meanwhile, talent agencies have been expanding rapidly thanks to an influx of private equity investment, which has exerted pressure on the companies to find new sources of revenue and diversify their businesses beyond traditional talent representation. Endeavor, the parent company of agency WME, launched Endeavor Content in 2017 to develop and package TV shows and movies. CAA has also delved into TV production, as has UTA, through a partnership with Media Rights Capital, the production company behind “House of Cards.”

Packaging has become an important revenue source for the major agencies, which extract a percentage upfront and on the back end. The WGA West found that 87% of all TV shows were packaged during the 2016-17 season. Fees vary by project but usually involve a fixed percentage upfront and then a percentage of profits if a show is successful. For a hit show they could be in the tens of millions.

“Television packaging has been a fact of life in the entertainment industry for decades,” said Dan Stone, a partner at Greenberg Glusker, where his expertise includes collective bargaining in Hollywood. “Taking TV packaging away would certainly have a substantial impact on talent agencies.”

Union officials say these fees have become much more widespread in recent years, escalating costs and leaving less money available for shows.

“We’re against this oversize compensation that is essentially a kickback paid to agencies,” Goodman said.

Although the guild has a long history of negotiating with the studios, the union hasn’t faced off with the talent agencies since the 1970s.

“We’re in uncharted territory because these two groups haven’t sat down in decades,” said one former studio executive.

There have been some legal skirmishes along the way. In 2011, the creators of the ABC sitcom “Head of the Class” sued CAA over profits, claiming the agency made more money on the show than they did. But the case was ultimately dismissed in favor of CAA.

“The agencies are so entrenched and powerful and adamant that this not change,” said Neville Johnson, the attorney who represented the “Head of the Class” creators. He added that it’s “highly unlikely” there will be a negotiated settlement in the WGA dispute.

Some industry observers think the heated rhetoric coming from the writers could be a negotiating tactic.

“They’re trying to signal a strong position — they’re not going to budge,” said David Smith, a professor and labor economist at the Pepperdine Graziadio Business School. “But if you overplay your hand, your bluff can be called.”

david.ng@latimes.com

@DavidNgLAT