Agency Campaign Update (Text Only)

June 19, 2019

Hi, I’m David Goodman, President of the Writers Guild of America West. I’m sorry for the delay in bringing you up to date on where we are with our agency campaign. The Negotiating Committee had important decisions to make and it took time.

As we discuss the current situation, it’s important to remind ourselves what this campaign is about. We are seeking fundamental changes in a system where agencies make most of their income by getting paid untold amounts of money by studios in packaging fees for representing us, or by becoming studios themselves and being our direct employers. The fundamental goal of this campaign is to maximize writer income—not primarily for the most successful among us, but for our middle class.

Fourteen months ago, we told the agencies exactly what we want: an end to their conflicts of interest, and true partnership with writers to maximize our incomes. Our proposals for a negotiated solution directly align the interests of our agents with ours. If we make more, they make more. Their proposals thus far do not in any way fix the problems we’ve pointed out.

We remain at impasse and involved in a difficult but necessary struggle, and in a moment, I will lay out for you why we are making changes in our approach. On the negotiation front, our key proposals are for agency transparency and sharing of essential writer information, and an end to packaging fees and agency production arms. Currently, here are the agency positions on these issues:

On transparency, they have completely rejected our demand to know how much they make for representing us and how much the studios pay them in packaging fees.

On their production companies, they took a step backward from their original proposal, which was that we did not have jurisdiction to negotiate on those entities. Now, in their June 7th offer, they told us that, because the agencies and their production arms are, quote, “legally separate entities, the agencies cannot make substantive offers in these areas,” unquote, and they suggested that the Guild meet with their production companies separately to discuss our concerns. In other words, because of the WME IPO, it is now the position of the agencies that they have no relationship with their production companies, but they are willing to help us make an appointment. I am not kidding, this was said in the meeting. I will probably be accused by some for a negative tone here, but this dishonest characterization was an insult to all the writers in that room, and all the writers in the Guild. It was simply outrageous.

On packaging fees, the agencies began in April to adopt the approach of offering writers some of “their” back-end earnings, which they negotiate—for themselves—directly with the studios, with no writer or Guild involvement. In April, they offered 1% of this money; on June 7th they offered 2%.

Our proposals on transparency and production by agencies are easily understood by our membership, so I won’t dwell on them today.

The offer of “revenue sharing” of packaging fees, however, has been the subject of speculation. Should the idea of revenue sharing be taken seriously? Should the Guild counter their offer? If we don’t, are we refusing to negotiate, refusing to be reasonable, or perhaps making a mistake?

Although the Guild has been crystal clear about the need to eliminate conflicts of interest and to align agent incentives, we did not immediately reject the concept of revenue sharing as contrary to these goals. I have always hoped they would come up with something in this area that made sense.

However, in the course of reviewing in detail the ATA’s latest proposals—and thinking once again through the concept of revenue sharing—the Negotiating Committee, after thorough deliberation, made a decision to take revenue sharing off the table. I want to take the time to be very clear as to why this approach doesn’t work, so that there is no further confusion.

We begin with the basic principle, which we have restated at every opportunity, that any offer from the agencies must realign agency interests with ours. We are compelled to do that because, today, in television and sometimes in film, each writer deal now triggers two separate negotiations: one that the agency undertakes on behalf of us, their clients, and one that the agency undertakes on behalf of itself. As a result, and across the industry, the portion of writer income negotiated by the agencies has gotten worse, while agency compensation has skyrocketed.

The simplest way to address this imbalance and align our agents’ interests with ours is to insist that we return to a commission-based system of compensation—one in which the agency does better only when the writer does better. One dollar to them for every ten we make, in fair and lock step.

Revenue sharing, by contrast, ignores this entirely. It focuses not on writer compensation, but on agency compensation instead. Even so, it’s easy to see why the concept is attractive. It seems to promise money in our pockets. The problem is that revenue sharing starts with the premise—clearly acceptable to our agents, but false and completely unacceptable to us—that the conflict of interest represented by our employers paying our own agents is no real problem. All writers need is for our agents to pursue their own out-sized profits and then slip us a little tip at the end of the year, like a bonus at holiday time, or a credit card that gives you back 3% on your dollar.

Revenue sharing does nothing to incentivize your agency to get you a penny more in salary. It does nothing to address the real problem, which is that agencies are not effectively doing their only job, which is to maximize the income of each writer in their individual negotiation with the companies.

It does nothing to stop agencies from taking large upfront fees out of our episodic budgets, reducing money for production and writers’ budgets.

It does nothing to incentivize feature agents to fight for better conditions for feature writers, and pushback on cuts in quotes, or late pay, or free work.

Finally, it does nothing to combat the abusive practice in which agencies seek to control access to lucrative packaging fees by manipulating who works on any given project—which is the dirty open secret of this business.

In exchange for allowing all of these abuses to continue, revenue sharing pays us off with pennies on the agencies’ back-end dollar. And it does it in a way that you have to think about to realize how bizarre and perverse it is. Revenue sharing flips our relationship with our agents on its head. Now, somehow, when THEY make more, WE make more? What are writers supposed to do in that scenario? Root for agencies to get better back-end definitions and more points so we can get a slightly larger scrap kicked back to us? We always joked that our agents thought we worked for them. Now they want us to sign an agreement that makes that joke a reality.

We’re not going to do that—not at any number. Why? Because, even if we would consider trading a world of un-conflicted agents for a payoff, the numbers don’t work. They do not work.

Even though the agencies still refuse to give us details of their proposals, here’s what we can assume about their offer: It is 2%, but only on the back end, and only of shows created in the future. We have no idea what profits are going to be on future shows, as the world moves to short orders and streaming and vertical integrations. We have no idea how many years it will take for meaningful profits to accumulate on shows created after we sign a new agreement with the agencies.

We have no way of accurately assessing the profits of the agencies whose books are closed to us—not unless we audit every single show, every single year.

We do know, however, that even with optimistic profit projections—and even at a higher percentage than the agencies would ever agree to—the per-member payout is far too small to make up for the free fall in our overscale pay. Guild membership can’t be driven toward minimum and then expect to make that up with a piece of a piece of agency profits.

What is more, there is no conceivable way to equitably divide a profit pool amongst the members of the Guild. Would it be divided among every member of the Guild, or would you just receive it if you worked on the particular show, represented by the packaging agency, that showed a profit? If so, would someone who’d been fired from the show after ten episodes receive the same amount as a writer who was with it for the entire run? Who makes that determination? I don’t want to. Revenue sharing as a model would absolve the agencies and plunge the Guild into an administrative morass from which we would never escape.

In other words, an unknown and un-confirmable number, divided by a tiny percentage, at a distant and unspecified date, crazily divided amongst a membership that needs relief now, is not an answer to our demand that the agencies abandon packaging fees and re-align their interests with their clients. We will not discuss it further.

Now, if an agency believes, in good faith, that there is an alternative to the current packaging regime, other than the one we have proposed, we’re ready to listen. But we will not counter on revenue sharing. Because any percentage we respond with—even 98%—suggests that the answer is somewhere in the middle, and it is not. In truth, there can’t be a solution here until the agencies acknowledge that they are conflicted, and that conflict is fundamentally wrong, and that a fundamental wrong cannot be righted simply by a payoff. We are seeking to negotiate from a perspective that unites writers and agencies in dealing with the companies, and that’s what our proposals do.

So, these are the reasons we’re still at impasse, and the question on all of our minds is: How can we move this process forward? The truth is, the agencies in that ATA room are stuck. Agencies that have no financial interest in producing, and very little in packaging, are having their futures tied to entities like WME, which has gone into the IPO business and is currently committed to changing nothing. There is virtually no negotiation occurring, except for the concessions the Guild has made. Two months after our last meeting, they have now made us an offer that, as I indicated earlier, moved very little, and in some ways is worse.

So, we think it is time to start negotiating individually with the nine remaining agencies who represent a significant amount of writers, rather than with the ATA. The nine agencies are UTA, CAA, ICM, WME, Gersh, Paradigm, Rothman Brecher, Kaplan-Stahler, and APA. We are willing to meet with every agency that is willing to meet with us. We’ll reach out to each of them individually again in an attempt to hear their specific concerns with our proposals.

We’re not kidding ourselves, it might take some time for this approach to work. But it’s clear to us that there is no meaningful negotiation occurring right now through the ATA, and it’s worthwhile to try something new. It’s important to point out that we’re not “blowing up” the system here. The ATA is not the equivalent of the AMPTP. Its primary function, before we opened up this agreement, was to settle disputes between agencies over split packages. As a result, it is ill-equipped to deal with the variety of business models represented by the agencies. Its goal over the last 14 months—rather than dealing with our legitimate, obvious concerns—has been to engage in a PR campaign with the enthusiastic help of the trade press, aimed at dividing the Guild.

We are attempting something historic and not everything has gone as quickly as we’d hoped so far.

On the other hand, as difficult as the last two months have been, writers, the Guild, managers, and lawyers have for the most part done a tremendous job of dealing with staffing season, and we’re prepared to do the same with both theatrical and TV development. When we started this, there were predictions of “Wrexit” and “predetermined chaos” that have not come to pass. The lack of chaos is also to the credit of studios, producers, and PODS who have embraced using Guild resources and other methods to connect directly with writers. We have received a lot of positive feedback from key players in the industry. They have told us they are relishing the opportunity for writer and script access without the traditional gatekeepers. Meetings are happening, scripts are being read, jobs are being filled.

That’s not to say there hasn’t been disruption, that there haven’t been writers who, deprived of their agent’s representation, have felt at a disadvantage. And that is always the difficulty of any Guild struggle. For those of you in that position, please know that we are very concerned and ask you to reach out to the Guild for the help we can provide. I personally have been amazed at how so many writers have stepped up to support other writers, and I know you will continue to do so.

What do the coming weeks or months look like? The financial impact on agencies without writer clients will increase. The Guild will continue the legal and political strategies, which constitute additional pressure we will use to reach an agreement. And every week, writer deals, including big ones, are being made without agencies.

While we have heard from many of you during the past months, we want to make sure that we are hearing from every writer we can. In the coming days we will send out a membership survey about this campaign and how you are doing. I promise you that your answers will be confidential and that we want to hear whatever you have to say. We want to hear your concerns, and your support or disagreement.

And while we continue with this campaign, we will do the other ongoing work of the Guild, including stepping up the preparations for the 2020 MBA negotiations. There are some who have expressed concern that we are jeopardizing our negotiations by taking this fight on. The reverse is true: This fight has shown the Guild’s strength and sense of purpose. But that doesn’t mean we can take negotiations with the AMPTP for granted, and we won’t. We know what’s necessary, and if it’s any comfort, much of the elected leadership is the same leadership that led us to the historic gains we made in the 2017 negotiations.

I’ve been asked: What is the end game? I think that the real meaning of that question is, can you tell me when this will be over? And the truth is I can’t. I can say that no one wants this over more than me. But in the last couple of months we have, as a Guild, done something that no one else in this business has had the guts to do—not the studios or producers or lawyers or managers, or anyone else: We spoke out loud what everyone knows to be the truth, which is that the agencies have lost their way. We have taken on practices that are more than a half century old. And though we have not been unafraid—because it is scary to take on entrenched interests—we have been relentless. We have proven again that no one is as courageous as writers, or as generous with each other. And though no struggle comes without pain—or without some dissent—and though none of the tools we have deployed to take care of ourselves without agents come without growing pains, we are moving forward. This campaign now enters its next phase, where each individual agency, alone, will have to decide if it intends to represent writers or justify its existence without them. They will, in response, do everything in their power to make each of us feel as if we are alone, but we’re not. That is what it means to be a Guild. We are not alone. And the business will go on. And we will get hired—because nothing happens without writers. And, together, no one is as powerful, either.

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