Writers told to fire their agents as WGA and agencies fail to reach an agreement

An effort by writers and their agents to resolve a dispute over industry practices collapsed Friday night as the Writers Guild of America said it had not reached a settlement to end the standoff that has kept Hollywood on edge.

The WGA said that the agencies haven’t provided them with a fair offer and that its members would move forward with plans to fire their agents — an unprecedented step that the union has been threatening in the weeks leading up to Friday’s deadline.

“We know that, together, we are about to enter uncharted waters,” WGA leaders said in an email to members. “Life that deviates from the current system might be various degrees of disorienting. But it has become clear that a big change is necessary.”

David Goodman, who has been leading the negotiations for the guild, said in a separate memo late Friday that, despite the deadline extension agreed to last week, “it is clear to us that we are not appreciably closer.”

The talent agencies said in a separate statement that the writers rejected their latest offer, which was presented Wednesday and included a concession about profit sharing.

“Unfortunately, not to our surprise, the WGA did not accept our offer, did not provide counterproposals and refused to negotiate further. We’re prepared to continue to fight for the best interests of writers and all artists,” said Karen Stuart, the executive director of the Assn. of Talent Agents, the organization that represents the agencies.

The negotiations have kept the entertainment industry in a state of suspense during the last month as the two sides fought it out over packaging fees and the agencies’ encroachment into TV and film production.

The mass firing of agents could disrupt the flow of projects during a record period of TV production. Since agents function like market makers by bringing together clients and potential buyers of their scripts, a protracted dispute could affect the pipeline of new TV shows.

Writers and agents had until midnight Friday night to strike a deal on a new code of conduct for agencies. It replaces a 43-year-old agreement and ends longstanding industry practices that the union believes benefit agents at the expense of writers.

The union instructed its members to notify their agents via a written form letter that they could not represent them until they sign the union’s code of conduct. “The Guild will forward all letters en masse to the appropriate agencies in a few days,” the WGA said.

The action, however, could lead to a court fight.

On Friday, lawyers for the ATA threatened to sue the WGA over a plan that talent managers and attorneys assume some of the responsibilities of agents. The association said that such a proposal would violate both California and New York law, and would constitute unfair competition to its member agencies.

“ATA will take appropriate action as needed, against any person engaged in unfair competition, to protect the lawful interests of its members,” said Marvin S. Putnam of Latham & Watkins, the firm representing the agencies.

In a statement, the WGA said: “The Guild stands by its action in lawfully delegating the authority it has as the exclusive representative of writers under federal law. The agencies are attempting to intimidate attorneys and managers to stop them from performing work they routinely do.”

The talent agencies submitted their most recent proposals to the Writers Guild of America on Wednesday, with concessions on the two key issues on the table — packaging, the longstanding practice of an agency collecting fees for bundling talent from its clients’ rosters; and affiliate production, which is the more recent phenomenon of agencies muscling their way into the movie and TV production businesses.

Agents said they would share a percentage of their back-end profits with writers on packaged shows. They are offering 80% to be shared among a show’s writers who are not participating in the profits of the series, regardless of which agency represents them.

The agents didn’t elaborate on how the money will be shared or offer any other specifics on the execution of the plan. The remaining 20% of the back-end profits would go toward diversity and inclusion initiatives.

“This is a meaningful investment in the writer community,” said Stuart.

Typically, only long-running, hit TV series realize money on the back end, while the majority of shows end their runs before the big money rolls in.

The agents also responded to the WGA’s request that they share client contracts and invoices, saying they are offering to provide the guild with copies of writers’ “executed contracts and financial information,” with the writers able to opt out of sharing this confidential information.

But the agents didn’t elaborate on the specifics of the proposal, or the types of financial information it would provide.

In addition, agents are offering to be more transparent on issues including affiliate production, diversity and film financing. They said they would advance $2 million per year for three years — $6 million in total — toward an industrywide fund to foster and encourage inclusion.

In his response to the ATA, Goodman said the proposals, including the offer to share backend profits, were inadequate.

“You are still receiving money from our employers for access to us, and keeping 99% of the profits of your backend,” he wrote. “It does not change your incentives at all. It is not a serious proposal and we reject it”.

Union leaders agreed late last week to extend talks with agencies to reach a settlement.

The guild’s members voted overwhelmingly last month in favor of a code of conduct that would restrict agencies from certain practices, including packaging and production.

But the proposed code remains a major point of contention between the two sides.

“The WGA’s code of conduct is a threat to agency business operations — whether two agents or 2,000,” Stuart said in her statement.

Writers and agents agree to one-week extension to avert showdown »

david.ng@latimes.com

@DavidNgLAT