LOS ANGELES — An unusual labor fight is shaking up Hollywood. The unions representing television and film writers have taken on the talent agencies, rather than the studios that employ them, as they did in previous disputes. Before the two sides can make peace, the entertainment industry may have to undergo structural changes.
What just happened?
On Friday afternoon, negotiations collapsed between union leaders for television and movie writers and representatives of the talent agencies.
The issues underlying the dispute are many-stranded, but the short version is this: The Writers Guild of America believes that talent agents are putting their own interests ahead of those of their clients. In the writers’ view, the agents are not fulfilling their legally bound fiduciary duties.
The agents firmly disagree. While they offered a counterproposal during talks last week, they shunned the writers’ call for deep changes to the way business has been done for decades.
During talks, the writers asked the agents to sign a new code of conduct that would replace a formal deal that had been in place since 1976. While some agents from minor agencies agreed to the code, the great majority, including the agents at the most powerful agencies, refused to sign on.
After the failed talks, union leaders informed their members to break ties with any agency that had not signed the code.
Who are the main players?
The Writers Guild of America comprises two affiliated unions, the W.G.A. West, based in Los Angeles, and the W.G.A. East, based in New York. They represent roughly 13,000 writers.
The Association of Talent Agents is representing the interests of the agents. The association’s main constituents are the big four agencies: William Morris Endeavor, Creative Artists Agency, United Talent Agency and ICM Partners.
Will the writers really go through with firing their agents?
It looks that way. If they don’t, they will not be abiding by W.G.A. Working Rule 23, which bars members from working with agents who have not agreed to the new code of conduct. A number of writers have already broken with their representatives.
Mike Schur, the co-creator of “Parks and Recreation” and “Brooklyn Nine-Nine,” tweeted at the end of talks: “WGA Members: What happens now? We stick together.” (Mr. Schur was one of the participants in the negotiations.)
What does an agent do, anyway?
The main job for writers’ representatives is to help the writers find employment and negotiate the highest possible compensation on their behalf. By law, agents must act in the best financial interest of their clients. They must also inform them of any possible conflicts of interest in a given deal.
There are all kinds of agents. The ideal version is a fierce advocate who may also act as an occupational therapist. At the other end of the spectrum is the one who doesn’t call you back. These days, the writers say, even the most assiduous agents can work against their clients’ interests, because the system itself is broken.
Can’t a lawyer or manager do the same things an agent does?
On this, the writers and agents strongly disagree.
The W.G.A. unions say that they are the writers’ exclusive bargaining representatives. As such, they can delegate who gets to negotiate on behalf of their members, and they have not hesitated to signal to managers and lawyers that they may effectively take on the duties of agents on the writers’ behalf.
But Latham & Watkins, the law firm working for the agents, sent a letter to the W.G.A. on Friday saying that, if managers or lawyers function as agents, they would be breaking the law. The firm pointed to the California Talent Agency Act and New York’s General Business law. No one may assume agenting duties without having an agent’s license, Latham & Watkins said in the letter, which went on to threaten that the agents would “take appropriate action as needed, against any person engaged in unfair competition.”
The writers countered that, with the legal letter, the agents were “attempting to intimidate attorneys and managers to stop them from performing work they routinely do.”
What was the old deal between the writers and agents, and how did the writers want to change it?
In 1976, writers and agents signed the Artists’ Managers Basic Agreement, which regulated how talent agents represented writers. The 43-year-old arrangement had fallen woefully out of date, in the W.G.A.’s view.
With the proposed new code of conduct, the writers demanded that agencies rid themselves of packaging fees and get out of the production business.
What is packaging and what are packaging fees?
Packaging is a decades-old practice under which agencies may team writers with other clients from their stables for a given project. With packaging fees, an agent forgoes the usual 10 percent commission fee paid to them by individual clients; in its place, they are paid directly by the studio.
What is the difference between how the writers and agents view packaging and packaging fees?
The two sides are miles apart on this question.
Agents say the writers do not fundamentally understand packaging and the fees that go with it. The writers say they understand it just fine — they just find it to be corrupt.
The writers argue that agencies violate their fiduciary obligations to their clients when they make money from studios instead of from the people they are representing. The practice of accepting packaging fees, the writers say, allows the agencies to enrich themselves at the writers’ expense when they should be using their leverage to get more money for writer-clients.
The agencies say they don’t buy that argument. To bolster the agents’ position, United Talent Agency conducted an analysis meant to show that writers earned more from packaged shows than non-packaged shows. With packaging, the agencies argue, the interests of agents and writers are directly aligned. Because agencies don’t make money on failed shows, the agents argue, they have the same motivation as writers in creating hits.
Did the agencies consider getting rid of packaging fees during talks?
No. The Association of Talent Agents offered a counterproposal under which the agents would have handed over 1 percent of packaging-fee profits to writers from successful series. The W.G.A. said this was “not a serious proposal.”
How does the agencies’ entry into the production business play into the dispute?
There are agency-affiliated companies that have moved into the production business — and this does not sit well with the writers unions.
W.M.E., for instance, has an affiliate company called Endeavor Content. It was formed in 2017 and is a distributor of the show “Killing Eve,” as well as a producer of an epic drama coming from Apple TV Plus called “See.” C.A.A. also has an affiliate: Wiip. It is a producer of “Dickinson,” a comedy series that is also part of the Apple rollout scheduled for the fall. United Talent Agency is also getting in on production, with an affiliate called Civic Center Media. It has teamed up with M.R.C., the producer of “House of Cards,” to make new shows.
The agencies have argued that these affiliates are artist-friendly studios that will help writers, because they add to the number of potential buyers — which means more competition for writers’ services and bigger paychecks. The writers have said that agencies have a conflict of interest when they act as studios. How, they ask, can an agent represent you and also be your boss?
Have the agencies considered getting out of the production business?
Nope. They offered to meet with the writers unions four times a year in an effort to demonstrate that the affiliated studios were benefiting their members. The W.G.A. called this arrangement “unacceptable.”
What does all this have to do with Peak TV?
With the rise of streaming, there are more shows than ever before, a phenomenon often called Peak TV. Writers say their pay has not reflected the boom. Weekly earnings for television writers declined 23 percent between 2014 and 2016, according to W.G.A. figures. And pay on a per-episode basis, when adjusted for inflation, has also declined since the 1990s, the W.G.A. said.
The agencies have questioned the W.G.A.’s calculations. An analysis by William Morris Endeavor determined that compensation for its writers went up by an average of 9 percent each year between 2016 and 2018.
The agents have conceded that Peak TV may have its downsides — but only because studios and streaming services are getting more powerful. In this atmosphere, the agents argue that their services are needed more than ever.
What happens next?
Nobody knows. The agencies may wait to see if the writers fracture in the days to come. Likewise, the writers may wait to see if more agencies cave and sign the new code of conduct.
Other than the minor agencies that have signed the code and the small number of W.G.A. members who voted against the idea of firing their agents, each side has presented a united front.
Many bystanders — producers, studio executives — expect the W.G.A. to file a lawsuit and let the courts decide who is right and who is wrong.
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