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Writers and agents agree to one-week extension in talks to avert showdown

LOS ANGELES, CA - MARCH 28, 2019 Building at 7000 West 3rd Street in the Fairfax area of Los Angel
The Writers Guild of America has been fighting with Hollywood talent agencies for months over packaging fees and movie and TV production.
(Al Seib / Los Angeles Times)

Hollywood’s version of a family feud has reached a tipping point as writers prepared to fire their agents en masse following an extraordinary standoff that could disrupt TV and film production.

The Writers Guild of America failed to reach an agreement with Hollywood talent agencies as of late Saturday, when the current franchise agreement negotiated in 1976 was set to expire.

But the union agreed to a one-week delay in implementing its proposed new agency code of conduct that would have ended long-standing industry practices, allowing time for the sides to negotiate a settlement.

“All of this might have happened last week. Instead, real negotiations begin now, as they always do, with a ticking clock,” the union said in a note to members. “It is your power – membership power – and your willingness to use it – that has brought us this far. Conflicted practices and misaligned financial incentives have plagued our relationships with our representatives for too long.”

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The fruitless negotiations have kept the entertainment industry in a state of suspense during the last month as the two sides fought it out over packaging fees and the agencies’ encroachment into TV and film production.

The labor dispute is unusual because writers typically are at odds with studios, not with the agents who are supposed to represent their interests.

Agencies, flush with capital from private equity firms, have dramatically transformed in recent years to become more heavily involved in the business of producing films and TV shows. But that has exacerbated tensions with writers, who increasingly feel agents are putting their own economic priorities ahead of their clients’.

In the era of peak TV, with a record number of shows being produced, the fight could transform how new series find their way to the screen.

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Writers aren’t threatening to strike, as they did in 2007 when they staged a 100-day walkout in a fight with studios over a new film and TV contract.

But industry insiders said that studios are nervous about the negotiations and how a failure to reach an agreement might disrupt the flow of deals and portend a new era of labor discontent. Since agents function in many ways like market makers by bringing together clients and potential buyers of their scripts, a protracted dispute could affect the pipeline of new TV shows.

Writers voted overwhelmingly last Sunday for a code of conduct that would hamstring agencies by ending packaging and the move into TV and movie production. Members voted 95.3% in favor of the measure, but no agency has so far agreed to the terms of the code.

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From left, Aaron Sorkin, Tina Fey and Norman Lear
(TNS, AFP/Getty, Rich Polk / Getty Images for Sony Pictures Television)

Aaron Sorkin, David Chase, Tina Fey and Norman Lear were among the approximately 800 writers who recently signed a statement in support of the union.

The vote was expected to give the guild more leverage in its negotiations with agencies. But the two sides have barely budged in the days since then. The WGA told members in an email on Wednesday that it hadn’t heard from the agencies since it sent a revised proposal a week ago.

On Friday, the agencies dismissed the guild’s latest offer, saying it contains no substantial changes.

“We received your latest proposal, which is identical in all material aspects to the last proposal that is unacceptable to us,” said Karen Stuart, executive director of the Assn. of Talent Agents, in an email to guild leadership. “The time is long past for simply pushing paper across the table. Let us know when you and your committee are prepared to have a negotiation that addresses all of the outstanding issues.”

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The ATA said in a separate message to its member agencies Friday that the guild’s code of conduct remains “unacceptable” and would give the guild “an unprecedented level of control to dictate how your agency operates.”

The guild said its members would fire their agents if no agreement was reached by Saturday’s deadline.

In an email message Saturday, the East Coast branch of the WGA called on volunteer “contract captains” to urge members to quickly sign and return agency termination forms that will be sent out Sunday. “The faster we collect these forms, the more pressure we’ll be able to put on the agencies,” the message stated.

The WGA said its new code of conduct will go into effect next Saturday if no deal is reached.

WGA officials didn’t respond to requests for comment.

Terminating agency agreements would have widespread repercussions throughout Hollywood, affecting the staffing of TV shows.

“This will probably affect less established writers the most,” said Dan Stone, a partner at Greenberg Glusker. “Established writers often rely on their own relationships to get their next job. It’s the newer and less established writers who tend to rely on their agents to get them in the door.”

The WGA has indicated that managers and attorneys could help fill the gap left by fired agents. The guild has outlined a plan for its members in the event that agents are fired. “Managers and lawyers will be able to work to negotiate any contracts for staffing, development, or sale of materials,” the guild said in the plan on its website.

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But such a workaround could run afoul of California law, which says only properly licensed agents can procure work on behalf of a client.

The guild has also unveiled an online script submission system that allows writers to upload their work for review by potential employers.

Many analysts have predicted the standoff will end up in a protracted court battle between the parties.

Writers are more in demand than ever thanks to the bounty of TV production that is being fueled in large part by digital streaming companies such as Netflix and Amazon. But writers are arguing that their pay is stagnating or declining because of a confluence of factors including shorter seasons.

“In some sense, the higher demand for scripts and productions is giving a leg up to the creatives to negotiate harder,” said Nelson Granados, executive director of the Institute for Entertainment, Media, Sports, and Culture at Pepperdine University.

The WGA, which has about 13,000 members, has placed much of the blame at the feet of agents. The union claims that agents are improperly making money off of writers’ backs through the decades-long practice known as packaging, which involves bundling talent on a TV show or movie from the agency’s client roster. Agencies extract lucrative fees for their services, usually by charging percentages on the front and back ends.

Packaging fees also have become a significant revenue stream for the major agencies. The WGA has argued that agencies are prioritizing packaging over traditional client representation. The agencies have countered that packaging saves clients money, since they don’t pay the traditional 10% commission.

Another chief sticking point is a demand by the union that agencies halt their march into TV and movie production, which is a more recent phenomenon. Three of the largest Hollywood agencies — Endeavor, CAA and UTA — have embarked on production initiatives as they seek new revenue streams at a time when their private equity investors are pressuring them to expand their bottom lines.

The WGA has argued that so-called affiliate production presents a conflict of interest, since an agency would be able to both employ and represent a client.

“Our goal for a new agency agreement remains to realign the agencies’ incentives so their welfare is directly tied to writers,” WGA West President David A. Goodman told members recently.

The agencies have disputed the claim that they have divided loyalties, saying they are capable of handling potential conflicts.

Despite overwhelming member support for its stance, the WGA still faces some internal dissent by writers who think the guild is taking drastic measures.

“This may be a bridge too far for the union,” said one film and TV writer who asked to remain anonymous to avoid a possible backlash from guild leaders. “It will hurt the people at the bottom of the ladder the most.”

david.ng@latimes.com

@DavidNgLAT


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