Nearly three years of struggle over what was once a major revenue stream for agencies ends in victory for the WGA
The Writers Guild of America’s nearly three-year campaign to end the practice of packaging fees in Hollywood ended in success as William Morris Endeavor became the final agency in Hollywood to reach a franchise agreement that will phase out the fees by summer 2022 and allow writers to be represented by Hollywood’s largest agency.
The terms of the deal are similar to the one signed by United Talent Agency last year and which Creative Artists Agency signed onto in December, the lone exception being specific provisions for how WME will divest a portion of their ownership stake in affiliate production studio Endeavor Content. The exact details in how WME and CAA would adhere to the guild’s requirement that no agency have more than 20% stake in an affiliate production outlet were a major obstacle in completing talks with the Guild and led the two agencies to accuse the WGA in a lawsuit of doing deliberate harm by withholding writer representation.
But despite over a year of pre-trial hearings and strongly worded lawsuits, the brewing battle between the WGA and agencies will not go to trial as the Guild’s nearly three-year campaign to change how agents represent writers ends in success. The battle began back in April 2018, when the WGA told the Association of Talent Agents that it would be terminating its contract in a year’s time and demanded a new contract that eliminated packaging fees, which are paid to an agency by a studio in exchange for packaging talent such as writers, directors and actors on a project.
The Writers Guild decried packaging fees as a conflict of interest that encouraged agents to negotiate better deals for their agencies rather than for their clients and demanded an industry-wide return to a 10% commission system for agents. The Association of Talent Agents defended packaging fees as a critical part of agencies’ finances and refused to relinquish them, leading to the Writers Guild in April 2019 to order thousands of writers to terminate their representation with any agency that did not discontinue packaging fees after over 7,800 members approved the walkout in a ratification vote.
In the ensuing months, the WGA signed franchise agreements with small and mid-tier agencies like APA and Gersh to phase out packaging fees over the next two years while suing WME, CAA and UTA, three agencies that signed the vast majority of deals with packaging fees. The Writers Guild accused the agencies of violating their fiduciary duty to writers by taking packaging fees while the agencies in their own lawsuit accused the WGA of enforcing an illegal boycott through its membership walkout.
The dispute seemed to be trending in the agencies’ favor after a federal judge dismissed several key charges in the WGA lawsuit, but the arrival of the COVID-19 pandemic and subsequent production shutdowns in Hollywood dramatically changed the agencies’ financial fortunes. With no film or TV projects shooting or live events taking place, revenue for the agencies quickly diminished, leading to thousands of layoffs. Compounding the problem was a mass exodus of agents, particularly those in literary departments, leaving for agencies that signed franchise agreements with the WGA or starting or joining management firms in order to continue representing clients.
As a result, the top four agencies and the WGA resumed talks, reaching agreements one by one starting with ICM Partners and UTA this past summer. With the new deals in place, writers now return to an agency landscape dramatically changed by the pandemic and the 21-month walkout as packaging fees are now set to be phased out by June 30, 2022.
The Hollywood Reporter first reported the news.
More to come…
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