Mega-agency WME has filed a lawsuit against the WGA, as this Hollywood Reporter article outlines. WME is claiming the WGA has broken federal anti-trust regulations by ordering its writers to fire their agents after negotiations between the WGA and the ATA (Association of Talent Agents) broke down over the practice of packaging—or more accurately, packaging fees.
It’s simple: as The Hollywood Reporter reported, WGA and ATA negotiations broke down, so WME is suing the WGA. THR has another article wherein a USC professor breaks down the WME IPO and worries that it could be DOA. Confused yet? If you are, it's understandable. Let's break down the acronyms:
- THR: The Hollywood Reporter. One of the three main industry news sources.
- WGA: Writers Guild of America. Labor union that reps screenwriters, among others.
- ATA: Association of Talent Agents. Negotiates on behalf of Hollywood’s major talent agencies.
- WME: William Morris Endeavor. Widely considered the second most powerful talent agency in Hollywood.
- USC: University of Southern California. Film school, George Lucas Building, you know.
- IPO: Initial Public Offering. When a private company tries to raise money by selling shares on the stock market for the first time. Usually makes a select few people very rich.
There’s a lot going on behind the scenes here, and probably the only guy who knows everything about everything is WME head honcho Ari Emanuel. But we can still make some educated guesses. Let’s dive in:
Panic on Wilshire Blvd.
It takes a lot of effort to put together an IPO. It’s costly and time-intensive, but the payoff is ostensibly worth it—usually in the billions of dollars. WME has been planning on going public since they received an injection of capital from private equity firm Silver Lake Partners. Private equity firms want big returns on their investments, and a WME IPO looked set to deliver…
Until the WGA threw a wrench in their plans. The mass firing of agents and subsequent fight over packaging fees is threatening to carve a huge chunk out of WME’s supposedly reliable entertainment revenue stream. WME was already holding $4.6 billion in debt, and they can’t afford to see revenue dip if they want that sweet stock offering cash infusion. In that context, this lawsuit seems like a desperation move.
Suited and Booted
Full disclosure: I am not a lawyer and definitely not a litigator. But there are a few things we can glean from WME’s lawsuit, and how likely it is to succeed.
WME is claiming that the WGA has acted outside of the bounds of its rights and responsibilities as a labor union, and has unfairly engaged in “anti-competitive practices.” This is kind of hilarious since the WGA’s point is that the big agencies, including WME, were themselves engaging in anti-competitive practices by killing deals that either didn’t include agency-repped elements, or a packaging fee, or both. And since they’re writers, you know they brought receipts.
The lawsuit also claims that the WGA leadership “coerced its members” into firing their agents and implemented a new Agency Code of Conduct. The thing about coercion, though, is that it implies unwillingness. Unfortunately for WME, that new Agency Code of Conduct was approved by a vote of 95.3% to 4.7%. In other words, it was overwhelmingly not coercion.
The WGA is also not trying to “restrain trade in commercial markets.” They have not said that the agencies can never package and charge fees for it. Their stance is that if an agency does want to continue the practice, the WGA will refuse to work with that agency.
Again, I’m not a lawyer, but it doesn’t seem like this lawsuit is going places.
The multiple lawsuits winding their way through the courts will take a while to play out. In the meantime, writers are getting by without their agents just fine. The WGA has determined that it will negotiate with agencies individually, instead of negotiating with the ATA directly. We’ll see how that goes.
Finally, it’s important to point out that there are a lot of great agents out there who genuinely love their clients and their work. This WGA/ATA fight isn’t about the agents themselves, it’s about the system struggle that writers are facing.
If you’re a lawyer and you have more insight into this process than I do (which you almost certainly do), leave a comment below.