Hollywood writers and talent agents dig in their heels

Hollywood writers and their talent agents dug in their heels and showed no signs of backing down from entrenched positions after their failure Friday to arrive at a new agreement.

The two sides are engaged in an extraordinary dispute over practices that writers believe are unjustly enriching their agents. Negotiations yielded virtually no progress in recent weeks as writers took the unprecedented step of saying they would fire their agents if they didn’t accede to the writers’ demands.

On Friday, the Writers Guild of America officially made the threat a reality, telling its thousands of members that they can no longer be represented by agents who haven’t agreed to the guild’s code of conduct, which puts significant limits on agency practices, including the packaging of TV shows and movies. The code replaces a 43-year-old agreement.

Numerous writers have indicated they will can their agents in accordance with the guild’s position.

“Lost” writer Damon Lindelof used his Instagram account over the weekend to say he had sent his agents at CAA the guild’s termination letter. “My agents have become my friends,” he wrote. “As brutal as it is to send this letter, I unequivocally stand with my sisters and brothers and my union.”

Tony Kushner, the acclaimed playwright and Oscar-nominated screenwriter of “Lincoln” and “Munich,” said he had signed a letter terminating his association with CAA, which has represented him for more than 20 years.

“If our agents aren’t with us on this, how can we expect them to help us when we contend with profiteers to get what’s rightfully ours?” Kushner wrote in a statement posted on Twitter.

Comedian Patton Oswalt posted on his Twitter account his termination notice to his UTA agents. “I have an amazing agency that represents me,” he wrote. “But I have an even better guild which stands for me.”

Other prominent writers to send their agents termination letters included David Simon, Michael Schur and John August.

Experts say the prospects for a resolution appear dim, at least in the short term.

“There are some sticking points that don’t lend themselves to compromise,” said David Smith, associate professor of economics at the Pepperdine Graziadio Business School. “There are incentives for both sides to find ways to save face. But this dispute is unique.”

Agencies have indicated they are not retreating from their position despite mounting pressure from clients.

“We are going to do everything we can to mitigate the damage the guild has imposed by implementing their strategy,” said Karen Stuart, the executive director of the Assn. of Talent Agents, in a statement on Sunday.

She added: “Their course of action has thrown the entire entertainment ecosystem into an abyss, affecting stakeholders across the spectrum.”

If left unresolved, the feud will have a significant effect on Hollywood deal making, since agents are required by state law to negotiate contracts for talent.

“It does look like things will be extremely chaotic, especially for things in active negotiation mode,” said Elsa Ramo, an entertainment attorney who isn’t involved in the dispute.

The agency business in Hollywood is dominated by the big four agencies — Endeavor, CAA, UTA and ICM Partners. But the feud involves many more boutique agencies that tend to represent less established writers.

Last week, agents proposed a concession to writers in the hopes of easing tensions. But the WGA disputed the proposal over the weekend, saying the offer to share back-end profits was less generous than advertised.

Agents had proposed to share 80% of an undefined portion of back-end profits with writers. The guild is saying the undefined portion was just 1%, which would mean writers would receive only 0.8% of those profits. The ATA declined to comment.

One individual with knowledge of the talks said the expectation was that the proposal was a first offer that would potentially put the two sides on a path toward an agreement.

Writers ultimately balked at the ATA’s proposal Friday and declined to provide a counteroffer during a meeting that lasted just one hour, according to another person close to the talks.

At the heart of the dispute are packaging fees — the money agencies extract from TV shows and movies for pulling together the talent. Writers believe agencies have prioritized packaging fees over traditional client representation. Agents have countered that writers benefit from packaging, in part because they don’t have to pay the traditional 10% commission.

The fight also involves a more recent phenomenon — the aggressive move by agencies into TV and movie production, an area once the exclusive domain of the Hollywood studios but which has seen an invasion by tech giants Netflix, Apple and Amazon.

Endeavor, CAA and UTA have embarked on some form of production. The three firms have brought in private equity investors, which have transformed the agency industry in the past decade by putting the focus on beefing up bottom lines and finding new sources of revenue.

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