Lessons From the Writers Guild’s Deal With UTA: Why Now and What’s Next?

Three months after a judge’s ruling seemed to deal a crippling blow to the WGA’s nearly two-year campaign to eliminate packaging fees, the guild announced a potentially seismic deal with United Talent Agency on Wednesday that puts the guild closer than ever to its goal. Back in March 2019, the WGA began the push by enforcing new rules that barred agencies wanting to represent writers from collecting fees for packaging talent into film or TV projects, arguing that such fees are a conflict of interest that encourage agencies to make the best deals for themselves and prioritize the most lucrative talent at the expense of lesser-known writers. Over the last year, the WGA has steadily made case-by-case agreements with dozens of smaller and mid-size agencies, including Paradigm and Gersh. But the four agencies that take in more than 90% of all packaging fees in Hollywood — CAA, ICM Partners, WME and UTA — seemed immovable in their refusal to eliminate what has become such a lucrative revenue source. That is, until now. As part of a new franchise agreement with the WGA, UTA has agreed to end its use of packaging fees by June 30, 2022, on the condition that at least one of the other three major agencies agree to do so as well. It’s a major win for WGA, especially since a federal judge in April dismissed many major elements of the guild’s lawsuit against the agencies while the top agencies’ separate suit against the guild continues to move forward. But now UTA is pulling out of that lawsuit, leaving WME and CAA as the remaining plaintiffs. There are key takeaways for Hollywood writers — and their (former) agents: 1. The pandemic (and production shutdowns) played a role in timing Did the COVID-19 pandemic, which has damaged the financial outlook of every level of Hollywood,  play a factor in UTA’s willingness to play ball? In a memo released by the agency, UTA Co-President Jay Sures said that the agency’s “commitments were squarely aimed at delivering what’s needed most right now: returning writers and agents to their natural role as partners, so we can together face a business stirring with historic levels of uncertainty.” But the nature of the writers’ job has made their value to talent agencies even more lucrative. One agency insider noted to TheWrap that with almost all production still shut down because of the COVID-19 pandemic — at least in the U.S. — the ability of writers to continue working on screenplays at home and hold writer rooms and hold writer rooms remotely has increased their value to the agencies that have already signed WGA agreements as most major directors and actors have had their workloads taper off. Ivy Kagan Bierman, an entertainment partner at Loeb & Loeb who represented Verve in its WGA franchise agreement negotiations, agrees that writers’ status as a pandemic-resistant profession makes them more valuable than ever to major agencies that have gone without writer clients for over a year. “Despite that most productions are shut down due to the pandemic, many writers are still working as much as ever, and they have the potential to bring in commissions that the big agencies aren’t getting right now,” Bierman said. “It would benefit them now more than ever, especially with production shutdowns, to bring writers back on as clients.” 2. The guild made some key concessions But UTA is getting more than just its writer clients back. The Writers Guild made some key concessions in other areas of dispute like production affiliation and sharing confidential contract information. The WGA has protested CAA and WME’s attempts to develop affiliated production studios in which they held a majority stake, calling the ventures another conflict of interest that would encourage agencies to prioritize its ownclients and projects and to hold down overall salaries since they would be acting as producers. UTA has agreed to have no “creative or operational control” over any production affiliate, but has managed to increase the amount of financial interest it is allowed to have in a studio to a 20% stake. In January, when WGA signed a franchise agreement with APA, the maximum stake allowed was 5%, increasing to 10% through the guild’s deal with Paradigm in March. Thanks to the favored nations clause in all franchise agreements, all agencies that have signed with the guild will be able to have the same 20% stake being granted to UTA. WGA has also agreed to only request confidential information about a writer’s contract if the writer gives express permission, a change in the agreement that Sures described as “critical” to UTA’s willingness to sign. The WGA also relinquished a clause giving it the right to audit up to 25% of an agency’s deals for writer clients. “That’s a big give by the WGA since it generally maintains that it has the right to get copies of writers’ contracts from its members and the companies that employ them,” Bierman said. “With the most favored nations clause, there’s the chance that UTA could get an even better deal if any other agencies get more concessions from the guild.” 3. Will any of the other big agencies follow? The big question now is which agency, if any, will strike another deal with the WGA — one that could end packaging fees for good. According to guild insiders, the WGA has told captains that it is pushing forward on negotiations with another member of the Big Four — but which one is unclear. A key condition of these negotiations has been maintaining the strictest secrecy, making it uncertain how far along guild talks are or whether a new deal might be weeks or months away, if it comes at all. But one agency insider says that UTA’s deal should help break the months-long stalemate between the WGA and the agencies, and perhaps move the conflict from the courtroom to the negotiating table. “It’s a good sign. Shows there’s a deal to be made,” the insider said. “They have agreed to production ownership which originally they were vehemently opposed to. Now it’s a negotiation on percentage, which is a starting point we didn’t have before.”