By Mie Fleming Jr
Deadline April 18, 2019 9:08am

EXCLUSIVE: Flying in the face of WGA leadership’s expectations that agencies might lay off dealmakers who’ll form rival boutiques to rep writers exiting percenteries that refuse to sign the WGA’s Code Of Conduct, CAA president Richard Lovett addressed the entire agency this morning and made assurances.

He said no one’s compensation is going to be impacted by the ongoing WGA situation. That was taken essentially as a pledge that CAA will not lay off anyone for the duration of the WGA dispute, even if it stretches.

The message was meant to bolster uncertainty that agents and staff might have had, as the dispute with WGA over packaging and affiliated production companies took a nasty turn yesterday when the WGA filed a civil lawsuit in Los Angeles Superior Court against the four major packaging agencies CAA, WME, UTA and ICM Partners.

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https://deadline.com/2019/04/caa-assures-agents-no-layoffs-during-long-wga-standoff-1202598249/

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Whew…I bet that’s reassuring!

Arl

The Ol’ SAG Watchdog

*Headline photo selected by the Watchdog

By David Robb
April 17, 2019 10:13am

The WGA said Wednesday that they have filed a civil lawsuit in Los Angeles Superior Court against the four major packaging agencies, accusing them of violating state and federal laws with respect to the fiduciary duties to their writer-clients.

Related Story
WGA Negotiating Team’s John August Is Hopeful That Talks With Agencies Will Resume Soon

Tony Segall, the general counsel for the Writers Guild of America, West, said during a press conference at WGAW headquarters in Los Angeles that the suit against CAA, WME, ICM Partners and UTA makes two claims: that packaging fees violate state fiduciary duty laws, and that those fees violate federal unfair competition laws.

Specifically, the suit cites the anti-kickback provisions of the Taft-Hartley Act. Under that law, representatives of an employee can’t receive money from an employer, Segall said.

“Packaging fees have caused tremendous financial harm to the guilds and their members including the individual plaintiffs,” read the 25-page suit.

The plaintiffs listed are the WGA West and WGA East, and WGA members Patricia Carr, Ashley Gable, Barbara Hall, Deric A. Hughes, George Johannessen, Deirdre Mangan, David Simon and Meredith Stiehm.

Simon is creator of HBO’s The Wire and The Deuce. Stiehm is creator of the CBS series Cold Case.

“When the show was sold, CAA negotiated a packaging fee for itself, without my knowledge,” Stein said in remarks at the press conference. “It wasn’t until six years and 134 episodes later that I learned about it. It turned out that on the show I created, I worked on exclusively for years, CAA ended up making 94 cents for every dollar I earned. That is indefensible. An agency should make 10% of what a client makes — not 20, not 50, not like in my case, 94%. 10% is enough.”

Packaging has been allowed under the WGA’s franchise agreement with the agencies since 1976. But Segall said Wednesday that “the guild has been uncomfortable with packaging forever.” He added that in the mid-1970s the guild filed lawsuits against then-William Morris Agency, in which a settlement was reached that allowed the guild to attempt to regulate packaging. That, however, was “completely unsuccessful,” he said, and in recent years the TV packaging agencies “have abandoned the 10% commission model” and now rely almost entirely on packaging fees.

“It’s now time to ban it altogether,” Segall said.

The guild and the talent agencies repped by the Association of Talent Agents have not set any dates to resume discussions in their impasse over a new franchise agreement. Formal negotiations broke off Friday, after which the guild ordered its members to fire their agents who refuse to sign its Code of Conduct.

Segall added that “to date, thousands of writers have signed letters” terminating their agents who refused to sign the code, which was approved by an overwhelming vote of the union’s members. It bans packaging fees and prohibits agencies from being affiliated to production entities through corporate parents.

Before talks broke off Friday, the WGA and the ATA each made minor concessions but remain far apart on those two key issues, leading to today’s lawsuit.

“The agencies’ packaging fees violate the fiduciary duty that agents owe to their writer clients and deprive them of the conflict-free representation to which they are entitled,” the suit reads. “For these reasons, and because the payments made from the production companies to agencies as part of any package, constitute unlawful kickbacks from an employer to a ‘representative of any of his employees’ … packaging is an unlawful or unfair business practice for the purposes of the California Unfair Competition Law.”

The suit says packaging fees should be “declared unlawful” and “unjoined” and the plaintiffs should be awarded disgorgement of unlawful profits, and individual plaintiffs should be awarded restitution and damages. “Plaintiffs bring this lawsuit to end the agencies’ harmful and unlawful practice of packaging fees,” it said.

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https://deadline.com/2019/04/writers-guild-sues-agencies-packaging-fee-fight-1202597518/

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“Disgorgement”…Yikes,  this  is getting serious!   Stay tuned!

Arl

The Ol’ SAG Watchdog

*Headline photo selected by the Watchdog

7:36 PM PDT 4/16/2019 by Jonathan Handel

The playwrights’ organization says it hopes for a deal that “begins to heal the rift that is not only ending professional relationships but is damaging personal relationships, as well.”

The organization representing U.S. playwrights, the Dramatists Guild of America, weighed in Tuesday with a statement supporting the Writers Guild of America in its battle against the Association of Talent Agents. Although the DG is not a union, it is the professional organization for playwrights and others — librettists, composers and lyricists — writing for the stage in the U.S. (Those writers are not unionized.)

“The Dramatists Guild of America supports our WGA colleagues in their quest for the equitable representation of its members,” said the statement from Dramatists Guild president Doug Wright. “While the DG is not a union authorized to ‘franchise’ agents like the WGA does, many dramatists have literary agents that are members of the Association of Authors Representatives, and the AAR’s first rule in its canon of ethics is a pledge by its members that they will ‘provide loyal service to their clients’ business and artistic needs, and will allow no conflicts of interest that would interfere with such service.'”

Added Wright, “We are hopeful, then, that the WGA and the ATA will come to an agreement that recognizes this fundamental principle of agency and begins to heal the rift that is not only ending professional relationships but is damaging personal relationships, as well.”

The DG announcement comes one day after acclaimed playwright/television writer Jon Robin Baitz penned an essay on why he will not fire his agents and two days after Tony-, Oscar- and Pulitzer-winner Tony Kushner explained why he did. According to the WGA, thousands of writers have already terminated their representatives.

Disclosure: This reporter is an associate member of the Dramatists Guild of America.

For more on this subject, visit THR‘s labor page.

https://www.hollywoodreporter.com/news/writers-guild-offers-pay-manager-attorney-fees-agency-fight-1202581

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Feedom!  Okay!

Arl

The Ol’ SAG Watchdog

*Headline photo selected by the Watchdog

By Cynthia Littleton and Dave McNary  Variety

April 16, 2019 6:30AM PT

Can Hollywood function without writers’ agents doing its behind-the-scenes bidding? The industry is about to find out.

The battle between the largest talent agencies and the Writers Guild of America went nuclear on the evening of April 12 as negotiations broke down and the guild issued a directive to members to fire their representatives.

As of April 15, WGA members demonstrated an impressive level of solidarity with the guild. Prominent screenwriters and showrunners shared copies of their termination letters via social media and voiced strong support for the guild’s campaign to reform the rules that govern how agents work with WGA members.

Talent agents, represented by the Assn. of Talent Agents trade organization, are digging in their heels in opposition to the WGA’s new rules. In blowing up the negotiations, both sides have seemingly decided to see who will feel the most pain from the separation — and who will be motivated to offer concessions in order to reunite the warring parties.

The WGA is expected to soon file a lawsuit against the ATA and its members, putting a legal framework on the guild’s opposition to talent agents earning packaging fees and the expansion of the largest agencies (through parent companies) into the finance and production arena.

Related
Writer Jon Robin Baitz Defies WGA Order to Fire Agent, Slams Guild Leadership
The WGA and ATA Need a Voice of Reason (Column)

But a legal process will likely take months to produce any decisions. The industry is highly attuned to whether dealmaking for new projects or the management of existing business will be affected by the absence of agents from the equation. There are also questions about how strictly the WGA will enforce its mandate that members sever business ties to agents who refuse to affirm the guild’s newly implemented Agency Code of Conduct.

“I’d think that there won’t be any impact for a while, but who knows,” predicts one senior TV production executive who has been closely following the WGA-ATA fight. The executive expressed “shock” that the situation unraveled so quickly last week.

One area of concern common to both camps is that in the short term, the WGA members whom the guild is most trying to help with its reform effort could wind up suffering the greatest harm by the split with agents.

The guild is attempting to ban the long-standing industry practice of talent agencies receiving packaging fees for helping to assemble TV series and some movies. WGA maintains that agents’ interests have become “misaligned” with writer clients because packaging fees are paid by the production entity. Instead of the standard 10% commission on a client’s salary, agencies that receive a TV series package waive the 10% commission fee for all clients of the agency that work on the show. The guild maintains that agents’ incentive is skewed in favor of the production company and against fighting for the highest salaries for writers on the show.

Agents counter that there is no such conflict, in part because they run the risk of losing promising clients who feel short-changed on deals. Agents and others in the creative community say that a squeeze on lower-rung writing jobs is coming from broader industry shifts and the changing formats of television programs and not from a lack of effort by agents.

The standoff raises other thorny issues, such as the question of whether WGA members who have agency representation as directors, actors, producers and
other roles need to sever agent ties in all areas. Also uncertain is the reaction to the WGA’s packaging push from fellow Hollywood guilds like SAG-AFTRA and the DGA, whose members have benefited in the past from having their commissions waived on packaged shows.

The fight is further complicated by a fundamental disagreement between the WGA and ATA on the scope of the guild’s authority to regulate agents as they represent WGA members. ATA executive director Karen Stuart accused the WGA of sowing “industry-wide chaos” in a message to ATA members on April 14.

“Their course of action has thrown the entire entertainment ecosystem into an abyss, affecting stakeholders across the spectrum. As we embark through unknown territory, we must not lose sight of the fact that the WGA’s Code is unacceptable to all agencies — from those that employ two agents to those employing 2,000,” Stuart wrote. “The Code would provide the Guild with an unprecedented level of control to dictate how your agency operates and how it regulates the conduct of agents in all respects, even those reaching beyond the Guild’s own jurisdiction.”

Numerous WGA members countered that suggestions of “chaos” ensuing were overly dramatic. “I don’t call my agent every morning to figure out how to write my show,” said a seasoned showrunner.

But one thing both camps can agree on is that the lack of agents advocating for writers will likely take a heavy toll on the employment prospects for writers in mid-level job categories, whether they are younger writers with less experience or established scribes who have not reached the A-list as screenwriters or as executive producers/showrunners in television.

The vast expansion of the TV series landscape has created an hourglass-shaped job market for writers. At the top is an enormous demand for experienced showrunners and writer-producers with EP-level experience. There are also plenty of openings for lower-paid junior positions. The pinch, even in the era of peak TV, is coming in the middle.

Whereas writers on staff at the producer, supervising producer or co-EP level could once reliably count on making annual mid six-figure salaries, now those jobs are harder to land. Agents say there is no comprehension by the guild or even clients about how much legwork and scouting it takes to find optimal opportunities for WGA members in the middle ranks of job classifications. Landing development opportunities for a hot-shot writer fresh out of college is easier than securing deals for middle-aged white male writers in the current environment, agents say.

“There are a lot of people who won’t work this year. That’s just a fact,” said a veteran literary agent.

The WGA has said its push to reform the agency franchise agreement — which stood untouched for 46 years until the WGA signaled its intent to renegotiate the terms last year — stemmed from complaints from showrunners and other writers frustrated at seeing high-five-figure packaging fees go to agencies as line items in series budgets. The WGA’s hope is that money long allocated for agency packaging fees will be redeployed toward higher writing budgets. Agents are extremely skeptical that packaging fee revenue will be returned to the writers’ room.

Last week, the ATA sought to break the logjam in talks by offering a proposal to share 1% of agency packaging fee revenue with the guild. The offer was designed to redistribute that money among staff writers on a show who did not have profit participation points. The ATA, according to multiple sources, knew that coming in at 1% was only a starting point for negotiations. What it did not expect, however, was that it would be rejected so swiftly as to shut down negotiations.

Because the WGA has fired up members on the goal of eliminating packaging as an illegal breach of fiduciary duty, it’s tricky for the guild to reach a deal that allows the practice to continue. A source close to the WGA said that the only way the ATA’s proposal would have averted the April 12 meltdown was if “that revenue share offer had started out at 50%.”

As the sides settle into their trenches, many in the industry say they are in wait-and-see mode. That there was nebulous immediate impact in the days after the WGA’s edict came down only makes it harder for insiders to see the path to a settlement.

“The Big Four [agencies] feel like they can outlast the writers,” predicted a talent manager. “They have deep pockets and will follow through on the threat of cutting clients and unprofitable agents.”

https://variety.com/2019/biz/news/writers-agents-negotiations-hollywood-future-1203190363/

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WGA members you can Blink. Just don’t Blunder!

Arl

Fhe Ol’ SAG Watchdog

*Headline photo Eye selected