Why The Writers Guild Is Fighting Hollywood Agents For Their First New Deal In 43 Years

By Darby Maloney & Andrea Gutierrez with John Horn

It was 1976 -- bell-bottoms were in fashion, Wings and Elton John were topping the charts, and the Writers Guild of America entered into a contract with Hollywood talent agencies. That contract governing their business relationship is still in effect -- but now the WGA is trying to negotiate a new deal.

Thanks to characters like Ari Gold from Entourage, Hollywood has created the image of the talent agent as a ruthless pursuer of money, and a fierce defender of his clients' interests -- but if you're a screenwriter in 2019, you may also add "cartel member" to that description.

The Writers Guild of America, which represents screenwriters, released a report this week: "No Conflict, No Interest: How The Major Hollywood Talent Agencies Put Their Interests Ahead of Their Clients' Interests."

The report is tied to the increasingly contentious contract negotiation between the WGA and talent agents. With their contract about to expire, the WGA and the Association of Talent Agents (ATA), which represents Hollywood's dealmakers in collective bargaining, appear to be far from reaching a new agreement.

There are two major issues at the heart of a relationship that's rarely seen by the public:

• How talent agencies get paid
• The fact that talent agencies are getting into the producing business

The fundamentals of the relationship are now being discussed.

Q: Why do writers need agents?

A writer in the WGA is automatically guaranteed to be paid the WGA's minimum rates, thanks to a collective bargaining agreement between the WGA and producers. But if they want to negotiate a higher fee above that minimum -- and, basically, to launch a career -- they need an agent.

A lawyer can also negotiate fees and bonuses, but a lawyer's job isn't to help a writer cultivate a career. That's what an agent can help with. An agent can be one of the people who shepherds a writer through the increasingly complicated entertainment industry, looking out for their best interests.

Chris Keyser, former WGA president and current co-chair of the WGA negotiating committee, spoke highly of his personal agents on The Frame. He added: "Agents can be our best friend in the business. They need to be unconflicted friends, and we do not work for them. We just have to remember that."

Karen Stuart, executive director at the ATA, said that agents are even more important in an industry dominated by mega-media corporations on the one hand and powerful digital outlets on the other. She told The Frame, "The writer is in the driver's seat, this I want to make clear -- but they need a strong agent in the passenger seat."

Q: How do agents get paid?

Traditionally, agents made their money by receiving a 10 percent cut of their clients' pay. The WGA says this gave agents the incentive to maximize their clients' earnings. The more money a client makes, the higher commission an agent receives.

But now, if agents have packaging deals with a studio or network -- based on bringing a key talent or multiple clients to a project -- they often take a percentage of the budget and profits of the production itself.

In TV and digital, agents take a packaging fee in lieu of their client's 10 percent, though in film, it's in addition to the client fee. In other words, agents repping writers for film can make way more than the standard 10 percent.

The WGA argues that those packaging fees eat into the budgets of their writers' TV shows, and it makes their talent agencies more aligned with the networks and studios -- rather than with their clients.

The WGA adds that writers don't always know about these packaging fees. Now they're asking that they be prohibited.

The ATA said that, going forward, its packaging fees will be more transparent. "The information will be made available to the writer client what the agency is doing."

Q: Why were packaging fees not transparent in the past?

The ATA's Stuart said, "I believe that the agents have not heard what they're hearing from their clients today."

Q: What are the other issues writers have with packaging fees?

The WGA's Keyser said they're not against packaging, but that the packaging fees inhibit the writers' abilities to work with directors or actors from other talent agencies. "The agencies put up barriers between us because they want to protect their packaging fees." He said that if he was producing a show and signed on to work with a director from another agency, his agency would have to split their packaging fee. Keyser said the WGA wants "open borders."

Stuart said that writers are always free to choose to work with whoever they want.

Q: Why is it bad if talent agencies are also producing content?

In the past, agents weren't allowed to be producers -- but now some agencies, such as WME with production company Endeavor Content, have set up affiliated companies that finance and produce.

The WGA's Keyser said that it creates a conflict of interest if the agent repping you to your employer is also affiliated with your employer.

The ATA's Stuart said that writer clients are free not to work with those companies -- but that those companies could give favorable deals. The agencies also say that they're creating new shows and movies for creative talent -- the more jobs, the better, regardless of who's behind them.

Q: Why did this happen now?

The WGA set a deadline last year for its deal with the ATA to be renegotiated. That deadline is April 6, and now they're negotiating after more than 40 years since the last time.

A WGA study shows that while the business has doubled in profits -- about $53 billion a year -- its members have seen their median salaries decline by about 16 percent.

The ATA's Stuart cites other changes in the business that affect writers' salaries -- including consolidation, the fact that TV shows now have far fewer episodes, and that writers sometimes can't work on multiple shows because of exclusivity agreements. "You're tied up, you can't do other work," Stuart said. "Of course that's going to result in mid-level writers getting less money."

Q: Isn't this a balance of power issue?

The WGA's Keyser said, "In the end, negotiations are always a question of power, and what we're engaged in right now in the Writers Guild is an attempt to ... take on the illusion that the agents are the more powerful of the two of us."

Read the full report from the Writers Guild here:

Listen to this interview on KPCC's The Frame podcast.