Gavin Polone: Here's the Long-Shot Way Hollywood Writers Can Win the War on Agents

Talent reps are screwing their clients by charging unethical "package fees" and moving to own content, but the best strategy to end the nasty standoff may be a mass firing or a major lawsuit, writes the former agent turned manager-producer.

Over the past two weeks, the question I've been asked most is, "Why are you so obsessed with me?" What's surprising is that the second-most-asked question has been, "What do you think is going to happen with this whole WGA vs. the agents fight over TV packages?"

It's not only surprising that people care about this esoteric question of dealmaking but also — and more importantly — that the Writers Guild of America has chosen to dig in so hard over a less tangible, but still important, issue to their membership.

In the past, the guild has made its stand on such things as health care and residuals, which is to be expected, as those items are understood by all and immediately affect the economic and personal well-being of the recipients. Anyone to whom I try and explain what package fees are, and why they are controversial, usually offers me a blank look of incomprehension in return. Not the kind of thing that rouses the troops to throw themselves into battle; and yet it has. In this fight, the writers are taking a stance against the clear conflict present when agents, who are supposed to be representing the interests of their clients, are receiving separate and direct payments from studios on the projects for which they are negotiating on behalf of those same clients who are working on those same projects.

The code of conduct that the WGA is trying to force the Association of Talent Agents to sign would eliminate these conflicts, thereby affording the writers greater peace of mind that the negotiations for their work are being handled at arm's length and with assurance that they are receiving a true free-market rate for their services.

The agents see the issue differently … or, I should say, they have a counterargument: that they are important to the process of making entertainment and therefore deserving of these large fees; that they would always act in the best interests of their clients, irrespective of how they are compensated; and that their getting package fees is a big win for clients, who then don't have to pay the standard 10 percent commissions on those packaged projects. In my experience as an agent, manager and producer, none of that is factually nor arithmetically true. I would have greater respect for agents if they were to offer a more honest rejoinder along the lines of:

"Package fees should be allowed because they are a way for us to make more money in the short-run (because Teslas, ski houses and scamming your kid into the Ivy League are fucking expensive) and way more money in the long run, because the value of a business that is based on talent relationships and goodwill is far less than one that owns large revenue streams that continue to flow for decades. Further, if we leverage our relationships with our clients into not only owning parts of movies and TV but actually financing and producing movies and TV, we can then borrow against the assets we possess and buy other businesses and build media conglomerates and go public, or sell to private equity, and be super, super rich and get out of the business of representing talent altogether, which would be great because we don't want to be servants to clients anymore but would rather have those clients serve us. And if you think we're going to stop there, then you're as much of a rube as you were when you thought the package fee was something we got in exchange for not producing movies and TV and that we would be satisfied with those high fees alone and not try to get even more. Yes, we want the package and the right to produce and own movies and TV, but eventually we'll start buying Broadway theaters and booking our clients' plays into them, and our actors will star and our directors will direct. And we'll build our own streaming services, like Netflix and Hulu, to show the movies and TV we make. And we'll start book publishing houses and record companies and promote our own concert tours and construct our own theme parks and set up our own sports leagues and a bunch of other shit that we haven't had the headspace to think of yet because those fucking writers call us on the phone all the time asking us stupid shit like 'When will we get paid!!!!'"

Now, I don't mean to vilify the agents. The making of entertainment, in all its parts, is a business, and all of us who participate have the right to maximize our compensation to the best of our ability. The reason that agents have been able to secure a package on almost all the shows in production is because they have used the leverage that is yielded by the power of oligopoly, which is a result of the unfettered acquisitions of agencies and individual agents by the larger agencies, situating too much power in the two largest representeries and to a lesser extent in the second-largest two.

Neither the guilds, the government nor the artists ever said anything when Endeavor bought William Morris or CAA lured over agent after agent from smaller agencies. The studios, whose lunch money is being stolen in the form of package fees, have never objected to agency demands for packages, or to their crowding in on creating content. This is because studios are intimidated by the possibility of retribution (executives often owe their jobs to agent recommendations and will want their help again when the time comes, making it tough to take a position against packages and the like). Agents are trained and rewarded for figuring out how to maximize leverage for financial gain, so why would any writer fault or denigrate his or her agents for exercising the exact skills that originally drew the writer to hire them? Certainly, responsibility for the current power imbalance is shared by several parties.

So, to answer the question at hand, I think the agents will win this one, meaning they'll keep their packages and continue down the path to owning full-service studios. Maybe they'll have to abide by a modest cap on package fees, as a concession, but I doubt they will have to curtail their producing and owning content, which is the golden goose the agencies want most. The reason I think the 10-percenters have the upper hand is simply the difficulty the WGA will have in convincing its members to walk from WME, CAA, UTA or ICM and join some smaller, unfamiliar agencies, knowing that their former (and more powerful) agents will have it out for them. Agents are a vindictive lot and the career of a writer is precarious enough as it is. I'm sure most of the WGA members love their guild but they aren't going to, en masse, put their families' welfare in jeopardy for this cause.

Still, I can offer two suggestions for how the writers could possibly come out victorious:

1 Co-opt one of the larger agencies (probably UTA or ICM) to sign the "WGA Code of Conduct" by offering the prospect of a large wave of important client signings that would follow their coming over to the side of righteousness. To hammer this home, put together a list of 50 top writers who would commit to leaving their CAA or WME agents as soon as the newly WGA-certified agency signed the code. Faced with losing a lot of clients, the other agencies would have to consider acquiescing. Even more so if the WGA were able to convince their notably silent SAG-AFTRA and DGA brothers and sisters to join the fight.

2 Take them to court. From my questioning of lawyers who practice in this area, I gather that it would be quite possible to prove that the WGA has associational standing to sue the agencies on behalf of their members. The suit would claim that the WGA membership has been damaged by the near uniform price-fixing of package fees on TV shows, which could be deemed a violation of California's Cartwright Act and the federal Sherman Antitrust Act, as well as California's unfair business practices statute. Whether or not the WGA would prevail in such a suit, the intense scrutiny of in-depth discovery on all of the package deals they made would likely force some kind of advantaged settlement for the plaintiffs. Most importantly, it would take the burden off of the individual writers to act against their agents, ensuring that the members would stay in line.

For the same reason that I would not want to have a physician who was also an owner of my health insurance company and whose decisions on my care could be compromised by his vested interest in keeping insurance costs down and insurance profits up, I fully sympathize with the writers and am on the side of the WGA's pursuit of eliminating package fees and their halting agencies from becoming studios. Even if, as I suspect will play out, the writers have to retreat and fight another day, I commend the leadership of the guild for taking this crusade as far as they have and hope I'm wrong about the eventual outcome.

GAVIN POLONE is a film and TV producer and a talent manager as well as a former agent. He's a producer of A Dog's Journey (May 11).

This story first appeared in the March 27 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.