WME and the WGA have finally agreed on a settlement that will allow WME to represent writers again after a nearly two-year distance from the guild. WME was the last agency in the WGA’s campaign to reform the rules on how talent agents represent trade unionists.
The WGA has told members that the agreement is in line with previous agreements with CAA, UTA and ICM, which are aimed at ending conflicts of interest in author representation. The transactions prevent the agencies from owning 20% or more of a production company. A caption agreement requires WME to drop its stake in Endeavor Content to the threshold by a certain date, and appoint a retired judge to oversee the process. The agreement also places a similar restriction on Silver Lake Partners, Endeavor’s majority owner.
It is speculated that Endeavor is trying to sell approximately 81% of Endeavor’s content in various slices to financial buyers, such as private equity investors, rather than to another studio or content production company.
If Endeavor becomes a stock exchange, the owner of more than 5% of the company’s share may own 20% or more of a manufacturing entity. In line with the transactions of the other agencies, WME has also agreed to phase out packaging fees – whereby the agency collects a producer fee for the packaging of its customers in a project – by 30 June 2022.
Endeavor has a stricter timeline for selling Endeavor content. The deadline is believed to be around 12 months, which is a nod to the complexity of the company, which among other things deals with WGA members in general, and more than 300 projects in various development phases. The timetable for the sales process was one of the last and most difficult obstacles to overcome. It is understood that Endeavor received significantly more time to carry out the sales process than CAA did for the production due to the size of Endeavor Content.
U.S. District Judge Andre Birotte Jr., who led the lawsuit through the WGA talent agency’s fight, pushed the guild in that direction during the most recent trial in the case. The lawyers of both parties filed a joint motion with the federal court on Friday afternoon to dismiss their antitrust claims against each other. Each party agreed to pay its own attorney fees and costs.
Rick Rosen, the TV head of WME, led the negotiation on behalf of the agency. He sent a memorandum to staff on Friday afternoon announcing the agreement, which he said “addresses the authors’ core concerns while acknowledging the unique aspects of WME’s affairs.”
“For many of us it was undoubtedly a painful process, but when we think about what led us here, I feel grateful that it forced us to take a good look at who we represent and how we can best serve it, to to ensure that our interests and goals are clearly aligned, ”Rosen wrote. “I believe we will therefore be better proponents of writers.”
The guild’s hard campaign promises to put an end to the decades – old practice of agents packing producers. It also establishes strict rules that can prevent agencies from entering the production industry by restricting their ownership of production or distribution companies. WME fought hard and entered into the most complicated negotiations with the guild because parent company Endeavor, through its Endeavor Content unit, invested heavily in production and distribution activities.
One of the biggest obstacles to separating Endeavor Content from the rest of Endeavor is the fact that the production distribution unit has more than 300 projects in different development phases. Endeavor Content also has existing contracts with dozens of WGA members, agreements allowed by the guild as Endeavor Content accelerated its development activity in 2017.
The side letter agreement with WME mostly reflects the agreement the WGA signed with CAA in December. The private equity firm TPG owns a majority stake in CAA. Under the CAA Agreement, the 20% ownership restriction is limited to TPG VI, the fund holding the CAA interest, and does not apply to other TPG funds. Similarly, the WME transaction is limited to Silver Lake Partners IV and does not apply to other Silver Lake funds. However, both side letters contain a notice requirement, which stipulates that an author and the WGA must be informed if they are about to enter into an agreement with a production company that is through one of the other funds of the private- equity firm owned.
The side letter also stipulates that WGA may revoke the franchise agreement of WME if the sale of Endeavor Content is not completed on the agreed date.
“The Guild appreciates the efforts of WME and Endeavor to work through the complex issues in this negotiation,” the WGA said in a statement to members. “Congratulations to the entire membership.”
Led by David Goodman, president of WGA West, and David Young, executive director of WGA West, the guild has set its sights on reforming agency franchise rules in 2018. Concerns about the inherent conflict of interest in the packaging have long plagued some guild members and leaders. The recent expansion of major talent agencies into production and distribution by Endeavor Content, CAA’s Wiip and investments by UTA have also raised alarming interests.
‘I have repeatedly said that no one wants the agency more than I do, and I am very happy that we have achieved our goal: the agencies we represent now have their financial interests in line with their writing clients and the agencies. problematic business practices such as packaging fees and agency-owned production entities are ending, ”Goodman said in a statement. “How difficult this struggle was, the simple and fair clarity of purpose, that an agent of the writer should only earn more than his client does, is what helped us to succeed.”
At first glance, it seems that the WGA is facing an uphill battle to try to bring about major changes to the long-standing practice in the industry. The largest agencies – in particular CAA, WME, UTA and ICM Partners – have tried to negotiate a new agreement through the Association of Talent Agents bargaining organization. But the talks were awkward and unproductive and by April 2019, the guild was targeting its members at fire agents who did not want to agree to the guild’s new rules.
The mass separation of scribes from representatives has led to tension and confusion throughout the industry, as agents suddenly do not fulfill their traditional matchmaking function to facilitate film and TV presentations for clients. It also sparked a spate of litigations, with three major agencies – CAA, UTA and WME – suing the WGA over the theory that its boycott was illegal under antitrust law.
The WGA worked against its own antitrust claims and also accused the agencies of accepting illegal “setbacks” from production companies. A trial is scheduled for February 2022.
But the agencies found that they could not wait that long because the pandemic wiped out the revenue from the live events. One by one, the agencies agreed with the guild so that they could work again in the case of author representatives. First UTA and then CAA withdrew the case, leaving WME as the lone stop.
In December, Birotte in Los Angeles told attorneys for both parties to work harder to reach a settlement.
“Find a way to solve it,” Birotte said at the time. “Real people pay a price during this dispute.”
WME has asked the court for an order to end the boycott. The agency went on to argue that the boycott was illegal, saying its agents and clients were fleeing to management companies or rival agencies. Birotte declined the request.
Here is the full memo from Rick Rosen, World Cup Head of the World Cup, to the agency staff:
Team,
We would like to inform you that WME and the WGA have agreed on a new franchise agreement. This agreement addresses the core concerns of authors, while acknowledging the unique aspects of WME’s business.
For many of us, it was undoubtedly a painful process, but as we reflect on what led us here, I feel grateful that it forced us to take a closer look at who we represent and how we can best serve it, to ensure that our interests and objectives are clearly aligned. I believe we will therefore be better proponents of writers.
In the coming days, we will contact our former client clients to discuss the opportunity to represent them again, and, most importantly, to hear what each of them is looking for in their representation going forward. For anyone who represents writers – and anyone else for that matter – use this as an opportunity to recalibrate and restore your client relationships.
Today’s result should serve as a reminder of the opportunity and privilege to represent the best in the industry and to offer them something that no one else can – the access, resources and influence to realize all their creative pursuits. We must commit ourselves to using it every day for writers with integrity, transparency and passion.
Authors have been part of this agency since our inception, and they will continue to be part of the lifeblood of WME. We look forward to serving as advocates again during their unprecedented time in our industry.
Let’s get back to work.
Rick
Here’s the full statement from David Goodman, president of WGA West:
I have repeatedly said that no one more than me wants the agency campaign, and I am very glad that we have achieved our goal: the agencies we represent now have their financial interests in line with their writing clients, and the agencies are problematic. end business practices such as packaging fees and agency-owned production entities. No matter how difficult this struggle was, the simple and fair clarity of purpose, that a writer’s agent should earn more than his client does, is what helped us succeed.
I could no longer be grateful to the negotiating committee, elected leaders and staff whose dedication and tireless work has won the day over the past three years. But, as with all the successes in the history of the WGA, such as our pension and health benefits, our remaining eternity and our jurisdiction over the internet, this achievement is due to the members who understood what we were fighting for, and who willing to make personal sacrifices for the greater good. I am proud and happy to be one of them.