May 26, 2018
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WGA Seeks To Reshape Talent Agency Business With Proposal For New Deal

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EXCLUSIVE: The Writers Guild wants to completely reshape the talent agency business, putting an end to packaging and stopping the agencies’ nascent ventures into film and television production.

In their proposals for a new agreement with the Association of Talent Agents, the WGA East and WGA West have proposed that “No agency shall accept any money or thing of value from the employer of a client.” That would effectively end all packaging deals, in which agencies receive upfront and back-end fees from the companies on shows in which they bring together various creative and financial elements.

“They don’t want packaging and they don’t want us to have any financial interests in productions,” a source at a major talent agency told Deadline.

The ATA recently received the new proposal and sent it to members last week. A copy was obtained by Deadline.

As previously reported, the WGA has served notice that it wants to renegotiate a 42-year-old agreement with the ATA, and have set a one-year deadline for the termination of their existing deal. The guilds’ actual proposals, however, have not been made public until now, and if adopted, would upend the way the agencies do business – something the agencies are not likely to accept without a protracted fight.

The Screen Actors Guild tried to take a similarly hard stand with the ATA in 2002, and when they couldn’t come to terms, the guild pulled its franchise agreements from all the top agencies. That move, although dramatic, saw no change in the way the agencies conducted business, and few if any actors left the big agencies to be represented by smaller ones that had agreed to SAG’s terms. It’s a standoff that continues to this day.

Like SAG – now SAG-AFTRA – the WGA has long believed that packaging creates a conflict of interest for agencies, giving them an incentive to low-ball clients on projects in which the agencies have a financial interest — as is the case on all packaged shows. Agents, however, scoff at such a notion, pointing out that their clients would bolt for the doors if they thought they were being shortchanged.

WGA officials argue that the agencies’ basic 3-3-10% packaging fee is standard in the industry, and that writers who leave one agency have to accept the same deal wherever they go. The WGA’s efforts to stamp out conflicts of interest also include a proposed that “No agency shall derive any revenue or other benefit from a client’s involvement in or employment on a motion picture project, other than a percentage commission based on the client’s compensation.” And by “motion pictures,” the WGA is referring not only to films, but also to TV and streaming shows.

This would effectively return the agencies to mere collectors of 10% commissions on the writers they represent – a business model that hasn’t existed at the big agencies in decades.

The WGA has also proposed that “no agency shall have an ownership or other financial interest in, or shall be owned by or affiliated with, any entity or individual engaged in the production or distribution of motion pictures.” Another proposal stipulates that “No agency shall have an ownership or other financial interest in, or shall be owned by or affiliated with, any business venture that would create an actual or apparent conflict of interest with Agency’s representation of a client.

“The guild’s proposals are entirely reasonable,” WGA West president David A. Goodman said. “If you read them closely, they read like a voluntary code of conduct that an agency would put up on their own website to attract writers and other talent. The proposals demonstrate a commitment to the fiduciary principles of law, always putting the client first and being an honorable representative.”

Here are the rest of the guild’s proposals for a new agreement, known as the Artists’ Manager Basic Agreement (AMBA), which hasn’t been renegotiated since 1976.

Agency-Client Relationship

a. Agency shall at all times act as a fiduciary of client, and shall comply with all fiduciary duties imposed by statute or common law.

b. Agency’s representation of a client shall not be influenced by its representation of any other client.

c. Agency shall promptly disclose to client all inquiries, offers and expressions of interest regarding employment or sale or option of literary material, and shall keep client apprised of the status of all negotiations.

d. Agency shall maintain confidentiality with respect to client’s employment and financial affairs.

e. Agency shall not submit client for employment where the employer or producer has not yet secured underlying rights necessary for the assignment.

f. Agency shall be responsive and professional in communicating with client.

Agency Compensation

a. Agency’s commission shall be limited to 10% of client’s gross compensation, including client’s profit participation.

b. Agency’s commission shall not reduce client’s compensation below MBA scale compensation.

c. Agency shall not circumvent limits on commissions by charging fees for other services.

d. Agency shall provide quarterly to client and to the guild an itemized statement showing in standardized electronic format (i) all compensation received by or on behalf of client; and (ii) all commissions and other revenue received by agency related to its representation of client. Client and guild shall have the right to audit such statements.

Notification to Guild

a. Agency shall provide the guild with a copy of the agreement or essential deal terms of any engagement or other transaction involving a client no later than 10 days after the earlier of (i) the existence of a binding contractual commitment; or (ii) the commencement of client’s writing services.

b. Agency shall provide the guild with immediate notice of client’s commencement of services or delivery of literary material, or other material fact triggering compensation, and a copy of any invoice or other documentation relating to the payment obligation.

c. Agency shall provide the guild with copies of all representation agreements with client.

Enforcement of MBA and Client’s Individual Writing Agreements

a. Agency shall not encourage client to violate any provision of the MBA.

b. Agency shall zealously advocate for clients best interests in all aspects of the employment relationship, including but not limited to the following:

1. Advocating against client’s performance of uncompensated or speculative writing services;

2. Advocating in favor of multiple steps in theatrical deals; and

3. Protecting client from abusive hiring practices such as sweepstakes pitching.

c. Agency shall be aware of and monitor the contractual deadline for the payment of all compensation to the client, and shall immediately notify the guild in the event a payment is late.

d. Agency shall cooperate fully with the guild in any investigation or contract enforcement action undertaken on behalf of a client.

e. Agency shall not encourage client to violate any guild rule.

Non-Discrimination and Diversity

a. Agency shall comply with all state and federal anti-discrimination laws in its selection and representation of clients.

b. Agency shall not, without prior disclosure to client, procure any employment where there is a reasonable basis to believe that the client will be subjected to a hostile work environment or other forms of workplace harassment.

c. Agency shall take steps to ensure the referral of qualified diverse writers for any open writing assignment.

d. Agency shall consult with their clients regarding diversity as a factor in their procurement of employment.

e. Agency shall provide the guild with an annual report summarizing agency’s diversity efforts and reflecting, through anonymized data, the employment history of writers represented by the agency, broken down by membership in statutorily­ protected classes.

Enforcement of AMBA

Streamline arbitration process in the AMBA to provide for enforcement of its provisions through expedited arbitration through a sole neutral arbitrator. Enhance penalties for breach of AMBA, including loss of franchise for serious violations. Revise list of approved arbitrators.

Term of AMBA

Term of the new AMBA shall be three years, provided that it shall thereafter renew for one-year periods unless either party gives written notice of termination at least 60 days before the expiration date then in effect.

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