On April 13, nearly 7,000 screenwriters fired their agents. Four days later, their union, the Writers Guild of America, sued Hollywoods four largest talent agencies: William Morris Endeavor Entertainment, Creative Artists Agency, United Talent Agents, and International Creative Management Partnersbetter known as the Big Four. The lawsuit, which came after months of failed contract negotiations, imploded the long-deteriorating relations between Hollywood writers and their representation. Todays outcome, wrote Karen Stuart, executive director of the Association of Talent Agents, in a statement after the final negotiations, was driven by the Guilds predetermined course for chaos.
For two months, the Guild and the agencies stood off. Staffing seasonthe six-week mad dash when all of network television hires writers for its roomscame and went. For the first time in decades, writers hawked scripts en masse without agentsusing managers, social media, acquaintances, and automated apps. In early June, the two sides met to attempt a peace treaty. It did not go well. (Their offer in no way addressed the concerns weve raised, WGA President David Goodman told The Daily Beast). Instead, the agencies countersued. On June 20, WME Entertainment filed a lawsuit, alleging wanton abuse of union authority. One week later, United Talent Agents filed another, calling the battle a power grab.
Now, Creative Artists Agency has filed a third complaint. The 57-page document, filed Monday in Los Angeles County Court, accused the Guild of violating antitrust law, and attempting to restrain competition on a staggering scale using illegal means. Representatives for CAA declined to comment on the record, but the case sent a clear message: the agency does not intend to cave. The conflict could, and likely will, stretch on for months more. We fully expected the agencies would file countersuits, WGA President Goodman said. They are taking a hard line in an attempt to keep their status quo.
The CAA suit marks the most recent salvo in an often inscrutable industry dispute, mired in acronyms, entertainment jargon, and the dreary technicalities of Hollywood contract law. But at its core, the writer-agent war revolves around an increasingly familiar problem, understood by anyone at work in the gig economy: the rights of freelancers in the face of corporations. Specifically: what happens when those companies take billions in private equity, and what they do to protect their bottom line.
In the simplest version of the Hollywood ecosystem, the role of the agent is something like a salesman. Writers write scripts. They send them to agents. Agents shop the scripts around, peddling them off to producers. If a producer shows interest, they might make an offer. The agent brokers that deal and takes a cut. But in the past few decades, that basic arithmetic has gotten increasingly complex. Years ago, agents finagled something called packaging. The idea was that the agent would rope other workers into a project before selling ita marquee actor to star, for example, or a big-name directorparlaying a single script into a package deal for a much larger sum. It meant that agents could have a stake in the final profit of a project, and thereby increase their cuttaking 3 percent of the script license, an additional 3 percent later, and 10 percent of whatever the show would make. They call it a 3-3-10 arrangement.
As a general rule, screenwriters have never been keen on the process. Its murky ethical territory. If an agent has a stake in a shows overall profit, it changes their relationship to the writer. Its something like if your union representative got paid by your boss, or if your divorce lawyer started working for your ex-wife. They are no longer our advocates, said a screenwriter and WGA member, who spoke to the Daily Beast on the condition of anonymity due to ongoing projects. They are our employers.
But in late 2017, the latent tensions over packaging evolved into overt rage. That fall, two major agenciesWME and CAAstarted their own production companies: Endeavor Content and Creative Labs. Soon after, UTA followed suit, taking a stake in Core Media Group, now known as Industrial Media, and later in Civic Center Media. The business move, known in industry jargon as double dipping, violated a Hollywood convention once thought sacrosanct. It had been explicitly banned by the Screen Actors Guild for nearly 60 years. When an agent does production, they become both salesman and buyer. They no longer merely work for the boss, they become the boss.
That really changed everything. It made all of us sit up and be like, Whoa, OK, we really have to do something now, one screenwriter said. Packaging fees are clearly bad, and they create a power imbalance. But production companies are audaciously terrible.
When the Guild sued in April, members took issue with these two practices: packaging and agency-owned production. But there was another undertone to the suit. In March, one month before the fight broke out into the public eye, the Writers Guild published an explosive report called Agencies For Sale. The furious 16-page document detailed another trend in the agency ecosystem: the growing influence of private equity.
In the early 2010s, the report claims, the two agency top dogs, WME and CAA, started taking investments from a small collection of private equity firms. In 2010, CAA sold a 35-percent stake in their company to an ultra-wealthy finance manager called TGP Capital, for a staggering fee of $165 million. Two years later, WME sold a stake in their agency to another billion-dollar firm, Silver Lake Partners, for $250 million. By 2014, TGP Capital owned 53 percent of CAA, and Silver Lake partners had paid WME another $500 million. Soon, UTA, kid sibling of the agency industry, scrambled to join the action. In 2018, they sold 40 percent of their company to Investcorp and PSP Investments for roughly $200 million. Together, the agencies have taken more than $3 billion dollars in outside money.
The agencies have clearly sold themselves to private equity, said Gavin Polone, the producer behind Zombieland, Gilmore Girls, and Bachelorette Party: Las Vegas. They have an ecosystem that is more self-generating than normal studios. They both control the talent and will be able to make content using the talent theyve acquired for themselves. Thats inherently conflicted and, in many ways, corrupt.
In their report, the Guild argue that the private money infusions have incentivized agencies to maximize profits more than ever before. Its a bid to appease their investors, the report alleges, often at the expense of the writer. The Guild claims that investment firms shifted agency focus away from writer representation to packaging and productionwhere profits are not only much higher, but more reliable. If you employ an agent who has a bunch of million-dollar clients, that agent can walk out the door, at any time, one screenwriter said. But if you own a TV show, that money will never walk out the door. That is in perpetuity.
On one thing, writers and agents agree: If the Big Four lost production and packaging, it would cut their earnings, which have soared in the age of prime TV. Its a prospect that terrifies agenciesespecially WME, also known as Endeavor, which filed a prospectus with the Securities and Exchange Commission on May 23, announcing their plans for an Initial Public Offering. Without their talent arm, WME risks massive loss. The Guild gets thaton Tuesday, they sent a bulletin warning hundreds of institutional investors, including hedge funds, mutual funds and pension plans, as well as investment advisors and industry analysts, WGA West research director Laura Blum-Smith told Variety. They titled the letter The Risks of Investing in Endeavor.
In this dispute, hundreds of millions of dollars are at stake. Its why neither side has budged, and why WME, UTA, and CAA fired back with lawsuits of their own. In the recent complaint, CAA attorneys dispute the unions concerns over packaging and production. They argue that packaging does not constitute a conflict of interest; that it does not hurt writers incomes; and that it actually improves them, by facilitating opportunities that otherwise might not exist. They claim that agency-owned production arms are not, as one writer put it, audaciously terrible, but offer an innovative, talent-friendly alternative to traditional television studios. And they accuse the union of violating antitrust law (an ironic twist, for an agency which, together with WME, brokered nearly 80 percent of scripted series last year). The Guilds boycott, the lawyers conclude, represented a stunning overreach.
A lawyer for the Guild contested CAAs claim that their boycott violated antitrust law. We are not conducting a boycott. Weve established certain rules governing the conduct of our members, and we believe we are fully in our right to do this, said Tony Segall, general counsel of Writers Guild West. There have been a number of cases that make it clear that a union in this situation has the right to establish rules about talent agencies representing their writers. All the professional sports unions have codes of conduct. It doesnt amount to antitrust violation, much less a boycott.
But its an overreach with no obvious end. Staffing season has ended. Every show picked up by network television has writers in its roomall without the aid of agents. I have a manager, I have a lawyer. It hasnt been perfect, one screenwriter said. But when in my career has anything in Hollywood been perfect?
Right now, what we want is we want the individual agencies to negotiate with us, WGA President Goodman said. To come in and talk with us and have a serious discussion about the conflict of interests that weve raised. Im hopeful that eventually happens. But I dont know how long that takes.