The WME and WGA have finally reached an agreement that will allow the WME to resume representation from writers after an almost two-year standoff with the guild. The WME was the agency’s last resistance in the WGA campaign to reform the rules that govern how talent agents represent union drafters.
The WGA told members that the deal is in line with previous agreements with CAA, UTA and ICM, which aim to end conflicts of interest in the writer’s representation. The agreements prevent agencies from owning 20% or more of one producer. A parallel letter agreement requires WME to discontinue its participation in Endeavor Content up to that limit by a certain date and appoint a retired judge to oversee the process. The deal also imposes a similar restriction on Silver Lake Partners, the parent company of Endeavor.
It is speculated that Endeavor may seek to sell around 81% of Endeavor’s content in multiple slices to financial buyers, such as private equity investors, rather than to another studio or content production company.
If Endeavor becomes a publicly traded company, the deal would prevent any owner of more than 5% of the company’s shares from owning 20% or more of a production entity. Consistent with other agencies’ agreements, WME also agreed to phase out packaging fees – whereby the agency charges a producer a fee to package its customers on a project – by June 30, 2022.
Endeavor has a tighter schedule for the disposal of Endeavor Content. The deadline is estimated at about 12 months, which is a sign of the complexity of the company that has numerous global businesses with WGA members, among others, and more than 300 projects in various stages of development. The timeline of the divestment process was one of the last and most difficult obstacles to be overcome. It is understood that Endeavor received much more time to conduct the sales process than CAA for its production due to the size of Endeavor Content.
US District Judge Andre Birotte Jr., who presided over the dispute sparked by the battle for talent agency WGA, pushed the guild in that direction in December at the latest hearing on the case. Lawyers for both parties filed a joint motion in federal court on Friday afternoon rejecting their antitrust claims at a loss. Each side agreed to pay its own legal fees and costs.
Rick Rosen, WME’s TV chief, led the negotiation on behalf of the agency. He sent a memo to the team on Friday afternoon announcing the deal, which he said “addresses the main concerns of the writers, while recognizing the unique aspects of WME’s business”.
“For many of us, this has undoubtedly been a painful process, but as we reflect on what brought us here, I am grateful for having forced us to look seriously at who we represent and how to best serve them, ensuring that our interests and goals are clearly aligned, ”wrote Rosen. “I believe we will be better defenders of writers because of that.”
The guild’s tough campaign promises to end the practice of decades of agents who receive packaging fees from producers. It also establishes strict rules that prevent agencies from entering the production business, limiting their ownership to production or distribution entities. WME struggled hard and had the most complicated negotiation with the guild because the parent company Endeavor had invested heavily in production and distribution activities through its Endeavor content unit.
One of the biggest obstacles to separating Endeavor Content from the rest of Endeavor is the fact that the production and distribution unit has more than 300 projects in various stages of development. Endeavor Content also has existing contracts with dozens of WGA members, deals that were allowed by the guild as Endeavor Content accelerated its development activity in 2017.
The parallel letter agreement with the WME mainly reflects what the WGA signed with the CAA in December. The private equity firm TPG holds the majority of CAA. Under the CAA contract, the 20% ownership restriction is limited to TPG VI, the fund that holds CAA’s stake, and does not apply to other TPG funds. Likewise, the WME business is limited to Silver Lake Partners IV and does not apply to other Silver Lake funds. Both side letters include a notification requirement, however, requiring that a copywriter and the WGA must be informed if they are about to do business with a producer that belongs to one of the other private equity funds.
The parallel letter also provides that WGA may terminate the WME franchise agreement if the disposal of Endeavor Content is not completed by the agreed date.
“The Guild appreciates the efforts of WME and Endeavor in working with the complicated issues involved in this negotiation,” said the WGA in its statement to members. “Congratulations to all members.”
Led by WGA West President David Goodman and WGA West Executive Director David Young, the guild decided to overhaul the agency’s franchise rules in 2018. Concerns about the conflicts of interest inherent in packaging have long simmered among some members and guild leaders. The most recent expansion of major talent agencies for production and distribution through Endeavor Content, CAA’s Wiip and UTA investments have also raised conflict of interest alarms.
“I said several times that no one wanted the agency’s campaign more than I did, and I am delighted that we have achieved our goal: the agencies that represent us now have their financial interests aligned with their writing clients, and the agencies. , like packaging fees and agency-owned production entities, have come to an end, ”Goodman said in a statement. “As difficult as this battle was, the simple and fair clarity of the objective, which a writer’s agent must do more only when his client does, is what helped us to succeed.”
At first, the WGA seemed to be facing an uphill battle in an attempt to bring major changes to the industry’s longstanding practices. The largest agencies – notably CAA, WME, UTA and ICM Partners – sought to negotiate a new agreement through the negotiation organization Association of Talent Agents. But those conversations were intermittent and unproductive, and in April 2019, the guild directed its members to fire agents who did not agree with the new guild rules.
This massive separation of scribes from representatives created tension and confusion across the industry, as suddenly the agents were not fulfilling their traditional function of combining deals to facilitate film and TV deals for clients. It also sparked a wave of litigation, with three main agencies – CAA, UTA and WME – suing the WGA on the theory that its boycott was illegal under antitrust law.
The WGA countered its own antitrust claims and also accused the agencies of accepting illegal “kickbacks” from production companies. A trial was scheduled for February 2022.
But the agencies found that they couldn’t wait that long, as the pandemic wiped out revenue from the live events business. One by one, the agencies reached an agreement with the guild so that they could re-represent the writers. First UTA and then CAA dropped the case, leaving WME as the only resistance.
In December, Birotte, in Los Angeles, told lawyers on both sides to work harder to reach an agreement.
“Find a way to try to resolve this,” said Birotte at the time. “Real people are paying a price during this dispute.”
The WME asked the court for an injunction ordering an end to the boycott. The agency continued to argue that the boycott was illegal and said its agents and customers were fleeing to rival administrators or agencies. Birotte denied the request.
Here is the complete memo from WME TV chief Rick Rosen to the agency staff:
Team,
We are pleased to report that WME and WGA have agreed to a new franchise agreement. This agreement addresses the main concerns of the writers, while recognizing the unique aspects of WME’s business.
For many of us, this has undoubtedly been a painful process, but as we reflect on what brought us here, I am grateful for having forced us to look carefully at who we represent and how to best serve them, ensuring that our interests and objectives are clearly aligned. I believe that we will be better defenders of writers because of that.
We will be contacting our former client writers in the coming days to discuss the opportunity to represent them again and, most importantly, to hear what each of them is looking for in their representation in the future. For all of you who represent writers – and anyone else – use this as an opportunity to recalibrate and redefine your customer relationships.
Today’s result should serve as a reminder of the opportunity and privilege to represent the best in the industry and provide them with something that no one else can – access, resources and influence to carry out all their creative activities. We must commit to taking advantage of this every day for writers with integrity, transparency and passion.
Writers have been part of this agency since our inception and will continue to be part of the WME’s lifeblood. We look forward to serving again as your advocates during this unprecedented period in our industry.
Let’s go back to work.
Rick
Here is the full statement from WGA West President David Goodman:
I have said several times that no one wanted the agency’s campaign more than I did, and I am very pleased that we have achieved our goal: the agencies that represent us now have their financial interests aligned with their writing clients, and the agencies are problematic. deals like packaging fees and agency-owned production entities have come to an end. As difficult as this battle was, the simple and fair clarity of the objective, that a writer’s agent should only earn more when his client does, was what helped us to succeed.
I couldn’t be more grateful to the negotiating committee, the elected leaders and the team whose commitment and tireless work over the past three years have won the victory. But, as with all successes in WGA history, such as our pension and health benefits, our perpetual waste and our Internet jurisdiction, this achievement is due to the members, who understood what we were fighting for and were willing to make personal sacrifices for a greater good. I am proud and lucky to be one of them.