Inside the Hollywood ‘Wrexit’ that could wreck the status quo
Scriptwriters have voted to ‘fire’ their over-powerful agents. It's the start of an overdue showbiz revolution
All is not well in Hollywood as Tinseltown braces itself for what wags are calling “Wrexit”.
Scriptwriters have voted to “sack” their agents in a dispute that has pitted some of the most influential figures in the entertainment industry against each other.
In one corner there are 13,000 members of the Writers Guild of America, split between two unions: the WGA West, based in Los Angeles, and the WGA East, based in New York. Facing them are members of the Association of Talent Agents.
It is a body whose membership ranges from small outfits with a handful of staff to the “big four”: William Morris Endeavor; ICM Partners; United Talent Agency; and Creative Artists Agency (CAA), co-founded by Michael Ovitz, one of the most powerful figures in Hollywood.
The dispute centres on the writers’ demand for a new code of conduct, replacing the Artists’ Manager Basic Agreement, a document dating back to 1976 when One Flew Over the Cuckoo’s Nest won the Oscar for best film.
Put simply, the writers’ union believes agents’ sole responsibility should be to represent their clients.
“Our agents work for us. Every dollar they make must be generated as a percentage of the money we make,” the union says.
Screenwriters want to enforce a code that would outlaw what is known as “packaging”, a system enabling talent agencies to put together a production team of writers, actors and directors.
The snag is that the code would prevent talent agencies from going into the film production business themselves – exploiting what has become an increasingly important income stream.
For the union, this represents a clear conflict of interest, and it is the writers who are suffering.
The new code would cramp the style of men like Ari Emanuel, chief executive of Endeavor, who wants to be both a talent agent and producer.
“The big agencies’ interest is not with writers, it is with studio profits,” David Goodman, president of the WGA West, told members a couple of months ago.
“Packaging means there is zero connection between what your agency negotiates for you and what the agency makes. The agency has no financial incentive to get TV writers more money. None.”
The unions’ response has been to instruct its members to “sack” their agents after negotiations on a new code broke down earlier this month.
Thousands of pro forma letters are being sent to agencies by the union on behalf of its members. It is also filling the void by using social media to post job opportunities with representation being provided by lawyers and managers.
The Association of Talent Agents is expected to challenge these tactics in the courts, arguing that they are in breach of California and New York law.
Karen Stuart, the association’s executive director, has accused the guild of a naked “power grab”.
She has also denied that packaging has depressed writers’ pay.
“The WGA is mandating a ‘code of conduct’ that will hurt all artists, delivering an especially painful blow to mid-level and emerging writers, while dictating how agencies of all sizes should function,” she told members.
“The business model is changing,” says Kevin Klowden, executive director of the California Centre at the Milken Institute, a nonpartisan economic think tank.
“Once upon a time, things were pretty straightforward: you knew who the studios were and who the agencies were.
“Now a number of agencies have become involved in production. And some are involved in investing along with private equity houses.
“Writers are frustrated by what they feel is a conflict of interest, especially when it comes to the money they earn when shows are repeated.
“What you are seeing now is writers, for whom residual TV rights are really important, feel threatened because they feel agents are representing producers rather than them,” explains Klowden.
“Historically this is significant because writers only have one or two big hits in their career.“The money they make from that allows them to take chances and come up with edgier shows.”Innovations such as streaming television have transformed the creative and economic landscape over the past four decades. So a change in the business model was arguably inevitable.It is hardly surprising that major agencies, who were among the biggest beasts in the Hollywood jungle, would want to exploit what they saw as new opportunities.“There has been a transition going on for a number of years,” says Gene Del Vecchio, professor of marketing at University of Southern California Marshall School of Business.“In the old days, it was the commission era, when agents were highly committed to getting top dollar for their writers. Then there was the packaging era. Agents put the parts of the production together, went to the studio and forewent the 10% commission. Agents effectively became neutral.
“Now there has been another transition. Agents are now hiring the writer and their motivation is to protect their profits. They want to get the lowest rates.”For writers, this is the straw that broke the camel’s back, says Del Vecchio. Writers want to go back to the days when the agents had a fiduciary responsibility to them.He says: “The whole industry is in flux. Agents are getting squeezed between the studios and writers.“Ultimately it will be the writers who win, because you need content. But it’s going to be a painful process.
“There is little doubt that there has been growing resentment among writers who believe that they have been the losers as the industry has evolved.”“For four decades, US agencies have made millions by packaging projects without compensating WGA writers. Now, they offer 1% of their profits,” says Brad Schreiber, a TV and film scriptwriter.“Further, writers have brought directors and actors to their projects, only to lose them when the agencies want a package of clients all from the same agency.”Ultimately the dispute, which many believe will end up in the courts, is over who calls the shots in Hollywood, and there are many in Tinseltown who would like to see the agencies taken down a peg or two.“Ultimately it’s about power,” says Tom Nunan, a lecturer at UCLA School of Theatre, Film and Television, and a producer of the Oscar-winning film Crash.“Agencies have been pursuing power aggressively since the Michael Ovitz era. Agents became the talent rather than behind-the-scenes players. They became celebrities, and with power came influence.”
When the agencies began creating studios as an extension of the talent agencies themselves, they appeared to be thumbing their noses at antimonopoly laws designed to prevent just such behaviour.“It is writers who have been the first to challenge them, but the Directors Guild and the Screen Actors Guild could be next. So far they have remained neutral.“The reason why the writers went first was because their contract is up,” says Nunan.“They will find work, they can get around the agencies. I think there is a desire in Hollywood to see agents get their comeuppance.”– © Telegraph Media Group Limited (2019)