Negotiation By Other Means: The WGA Brings the Agencies to Heel

MK Lees describes how the Writers Guild of America West used rank-and-file action to protect screenwriters and put an end to a practice that was eating into their compensation. Image is of the Creative Artists Agency building in Los Angeles, sometimes called “the Death Star” © Siadhal, via Flickr.

Last week, in about as unqualified a union victory as there can be, International Creative Management (ICM), one of the four major literary agencies for film and television, signed a deal with the Writers Guild of America West (WGAw), the union that represents screenwriters, eliminating what the union had identified as major conflicts of interests with the agencies. The achievement marks a tectonic shift in how the industry functions, a change that would not have been conceivable without a massive rank-and-file action. The story that led to this moment is fascinating not only for what makes it a unique and unorthodox workers’ struggle, but also for some universal lessons for more traditional workplace organizing efforts of any size.

The WGA is one among the sea of unions dividing up Hollywood workers by craft. Despite being structurally inhibited by the gatekeeping and divisiveness endemic to craft unionism, the writers union was built in a militant and rank-and-file controlled fashion by communists and labor militants in the 30s and 40s, many of the same writers who would face the House Unamerican Activities Committee and the career-destroying blacklist in the years to follow. The union has gone on strike five times over the course of its existence, each strike crippling the industry due to the position writers occupy within production, the virtual architects of the entire filmmaking process. In short, without the script, there is no movie. This militant history has often resulted in the WGA raising the ceiling for other crafts whose unions are less willing to take the risk of any kind of work stoppage.

Union and agent: an unusual mix of reps

A union like the WGA is an odd duck in many ways in the labor movement. One of the oddities is that, while the union is their exclusive bargaining agent, writers also often have agents who represent them in negotiations with their bosses, often much more actively and aggressively than the union. The way this works is that the union gives authorization to those agencies to operate within a certain set of accepted parameters, spelled out in a regulatory agreement. The union has come to play the role of bargaining an industry-wide set of minimum standards employers must abide by, including a top-tier health and pension plan, and overseeing the collection and payment of residuals — fees for reuse of materials generated by writers like reruns and DVD sales. The agencies, for their part, try to get the best deal for their individual writer clients above those union minimums. 

In this way, a handful of elite, sought-after writers with a lot of bargaining power can demand huge sums of money for their scripts, though the vast majority of writers, many of whom have long spells of unemployment or living paycheck to paycheck, still enjoy the protections of the union and the pay scale minimums. Meanwhile, the agents who can pick and choose their clients, while ostensibly working for the writers, often make a killing from their commissions and over time have come to serve as a kind of cartel in the middle of the business, between workers and studio capital. You’re a producer who wants a writer for your project? You gotta agree to the demands of their agent to get one. You’re a writer who wants to submit your work for a job writing a TV show? You can’t without an agent to submit on your behalf. In this way the agencies have made themselves indispensable and gained untold millions of dollars for themselves. Anyone who’s watched the show Entourage has a sense of the sometimes sleazy, bourgeois life agents are living, built on the backs of the creative work of their clients.

The rise of the packaging fee

In theory, despite the oppressive gate-keeping and nepotism that is rampant in the above set up, for a writer who’s lucky enough to sign with an agent, it isn’t such a bad deal. You’ve got someone advocating for the best deal possible for you, and all franchised agents are prohibited from taking any more than a 10% cut of their client’s earnings. If you’re a writer with representation, your agent’s economic interests are directly in line with yours, because the more money you make, the more they make. So an agent has a strong financial incentive to fight to get you the most favorable deal possible. If you get hired to write on a show, your agent gets ten percent of the wages they negotiated to maximize. If you sell a show to a studio, your agent bargains up the price of sale, and they take their ten percent of that sale and whatever profit participation the writer who created the show gets in success.

Cut to 2018 and “Peak TV.” 500 original shows and climbing. The television studios are raking in unprecedented, stratospheric profits while box office records are being shattered year after year. The studios’ demand for content from writers is insatiable. The union, as strong as it’s ever been, has managed to win gains in minimums every time they are up for negotiation, often striking or threatening to strike to protect and advance writer compensation. Yet TV writer pay is falling precipitously, with a 23% decline in just two years between 2014 and 2016. Something in the system is broken. Turns out the “10%” scenario above has completely broken down, and the reason is the rise of an agency practice called “packaging.”

The agencies that represent writers also represent actors, directors, and producers. To make a particular project more desirable to buyers, they put together a package: a script from the show’s creator along with actors and/or a director also from their agency pre-attached to the project. The agents would then demand a fee from the studio buying the project, in exchange for the service of putting together this package. Because they would be getting this alternative source of revenue for these packaged projects, agents waive the traditional 10% commission fee from their client. This looks great at first blush: paying my agent 0% of my money instead of 10% sounds like a great deal. But the deal is way better for the agent, and it’s all in the details of the side deal they make with the boss. 

Their packaging fee includes a percentage of the show’s budget (money that could go towards hiring more writers, among other things). If the show ends up earning a profit, the agency gets 10% of that profit off the top. If the writer has a deal which let’s them participate in the profits, that money is taken as a percentage after the agency gets their cut. So instead of receiving the standard one tenth of their clients income, an agent can now out-earn their client on a show their client created. Even more appalling, because the agency earnings are coming out of a show’s profitability, the agent now stands to make more when their client makes less!

With the agencies interests untethered from the financial success of their clients, packaging fees became the overwhelming source of income for the “Big Four,” the agencies that represent 65% of writers and dominate the field: ICM, Creative Artists Agency (CAA), William Morris Endeavor (WME), and United Talent Agency (UTA). Writer pay began to drop, especially for mid-level writers, with entry level writers languishing at minimums for years. With TV being the packaging fee cash machine, writers of feature films saw their agents’ interest in their careers fade away, as they suffered new abuses and bargain basement writing deals at the hands of the studios. 

Meanwhile, packaging fees became such an assured part of all TV deals that studios started paying them out to agencies even when no actual packaging was going on at all. As an anonymous creator of an unpackaged show recalled, “One of the producers on the show is represented by an agency who assumed they would split the packaging fee. When this other agency found out they wouldn’t be getting a package fee, the agent called to scream at me. He said, ‘We don’t make our money off the 10%’” (emphasis mine). When the fee is supposedly in exchange for a single agency packaging the talent of a single show, the idea of multiple agencies “splitting the packaging fee” is a contradiction in terms. Yet that was the new normal. The cartels’ shake down was complete and everywhere.

It actually gets worse. Packaging allows agents to get a hefty kickback from the studios, but three of the Big Four have gone farther in padding their bottom lines by founding their own studios. This means when a writer sells or works for a production run by these affiliated production arms, their agency is literally negotiating against itself. Every dollar their client gets is a dollar the agency can’t keep.

The WGA says no

These twin evils of packaging fees and agency-affiliated studios were grievances raised by countless members of the union in regular internal grievance surveys of the membership but they were outside the familiar battlefield of union fights with the employers. This was something more complicated. But the union decided to make a move. On April 6th, 2018, the WGA sent 12 months notice to the Association of Talent Agents (ATA), the trade organization representing the agencies, that they would be terminating their agreement put in place in 1976 and sending a proposal that would eliminate the agencies’ conflicts of interest.

This was followed by eleven months of silence, as the ATA ignored the union, perhaps imagining that the ultimatum was a bluff. Their relationships with their clients were too strong, and writers needed them too much to secure their employment. It was not a bluff. Though the ATA did finally respond with less than a month until the expiration date, their counter offer was to let writers wet their beaks in the packaging money the agents were getting to the tune of 2% of their theoretical back-end compensation from their packaging fees, with status quo for agency-affiliated producing arms. The bargaining team walked away in response, and the members of the WGA voted by a margin of 95% to unilaterally implement an agency “Code of Conduct,” prohibiting the agencies from taking packaging fees or owning a film or television production company. A handful of tiny agencies agreed to this CoC but the Big Four and all mid-sized agencies refused, and on April 22, 2019, more than 7,000 writers submitted written letters to their agents saying their agent-client relationship was over.

No one knew for sure what would happen next. The other two top-level craft unions most affected by packaging schemes, the actors and directors, had already fled from the fight, deciding instead to cheer and pray from the sidelines. Would the agencies cave quickly, without any scripts to package? Would writers be starved out with no agents to procure work for them? Would some agencies decide that being in the producing business was more profitable anyway and cease being agencies? Would packaging simply continue without writers and all would be for nothing? Small fissures in solidarity began to form among the members as anxiety started to build. Organized writers had crossed the rubicon and it was uncharted territory from here on out.

By May the first mid-tier agency signed a franchise agreement with the union and got their writers back. The ATA sent a new proposal that still failed to get anywhere close to addressing the conflicts of interest. The WGA filed a lawsuit against 3 agencies alleging they were violating their fiduciary responsibilities and taking illegal kickbacks from employers. The agencies filed a frivolous countersuit against the union citing anti-trust laws. The industry press, beholden to the agencies for their news scoops, assumed their dutiful role as a craven propaganda mouthpiece for the ATA. The WGA announced it would no longer negotiate with the ATA, that all revenue sharing of these crooked packaging fees was off the table, and that they’d welcome counter proposals from individual agencies. This divide and conquer strategy worked. Three more mid-sized agencies broke ranks and signed on. In May, WME, one of the Big Four, filed for an IPO trying to spin their massive profits built on packaging fees and their bright future as a production studio into a home for investors. The WGA started feeding info about the campaign to investors and the IPO bid tanked, causing WME to first drop its share price from $32 dollars a share down to $15, and then scrapping the whole thing less than a day before the IPO was scheduled to open.  

Meanwhile many writers were struggling without representation, as television’s “staffing season” rolled around with no one to submit their work to shows that were hiring. Anticipating the needs of their members, the union launched a massive mutual-aid project with a new piece of software that would allow showrunners and writers to connect directly with each other without agent intermediaries. In the meantime, a grassroots campaign began with scores of higher profile writers extending solidarity to lower level writers by boosting names on a shared, public spreadsheet and promoting writers in need of work on social media. Meanwhile, agencies were starting to feel the pain of revenue loss, and many were quietly getting in touch with the union. These private negotiations were ongoing, but out of view.

Internal divisions and doomsayers

As fall rolled around and the union’s siege against the unsigned agencies continued, hopes for a quick victory were disappearing. Some writers, particularly the top earners who had previously been able to command the attention of their agents in a way most writers couldn’t, wanted the fight to be over. Many were pushing an argument that packaging was going to happen anyway, now just without writers, and the membership had sacrificed for nothing. The leadership was mad, they claimed, chasing Moby Dick while the rest of the writers were drowning. The agencies were just too powerful. You can’t fight city hall. 

These dissidents mounted an opposition slate to the current union leadership, based on the idea that they could get writers a better deal by returning to negotiations with the ATA and being more reasonable and compromising, perhaps offering to work out creative ways where writers could share the benefits of the agencies’ extortion fees. There was some evidence provided that this opposition slate received tacit support from the agencies, but what was sure was that all forward momentum stopped dead as the agencies held their breath hoping for new union leadership who might be willing to capitulate.

But in an election that was seen as a referendum on the agency action, the “reasonable” candidates were demolished, as incumbents and other candidates who were pro-hard line against the agencies won their seats in a landslide. Turnout for the vote was higher than any election in the union’s history, and not by a small margin. The previous turnout record was 2,475. The 2019 election saw 5,809 ballots cast.

The agencies crumble and surrender

The agencies’ best hope of avoiding defeat had just been swept away by the rank and file, but it was still unclear if and how this campaign would end. In November, more mid-sized agencies bent the knee to the union and by March 2020, all but the Big Four had signed on and returned to representing writers. But the voices who had been asserting the futility and insanity of a reckless WGA leadership, in the press and within the union, moved the goalpost. None of these wins mattered until someone from the Big Four caved. 

Then it happened. Last month, on July 15th, it was announced that UTA and the WGA had reached a franchise agreement that would allow UTA to start representing writers again. The deal compels UTA to send all contracts and deal memos to the union for review and extra enforcement, limits agency ownership of production affiliates to 20% or less, and phases out the practice of packaging by June 2021. That is to say, the deal doesn’t just end packaging fees, it doesn’t just end packaging for writers, it abolishes the practice of packaging altogether for the entire agency and everyone it represents, directors and actors too.

Faster than the opposition could say “but this says none of this goes into effect until at least two of the Big Four sign on,” ICM was next, agreeing to a virtually identical deal. Packaging is done. If WME and CAA want to survive in the agency business (and there’s some debate about whether they do), they now must come to terms or risk getting crushed by their union-franchised competitors. This is total victory for the writers whose solidarity was unbreakable for over a year.

Lessons from an unorthodox fight

What can we learn from a battle that feels fairly alien to the fights with bosses to which we’re more accustomed? Some moments in this story present new angles on some universal lessons.

“That’s illegal!” and other myths about power. Recall that there were multiple lawsuits involved in this battle, most of which have now been dropped. The corrupt practice of packaging was likely a violation of many laws. But the WGA only filed the suits after taking direct action, and placed only a light emphasis on what could have been a “game-changing” class action. Some union members wondered aloud, if this is such obviously illegal racketeering, why can’t we just fight in the courts without all the personal sacrifice that comes with this action? Some were anxiously anticipating the “discovery” phase of the legal battle, when it was believed even more corruption would be uncovered on the studio side, which might impel the union’s opponents to settle before discovery could occur.

But smart organizers know any legal charge is a small bargaining chip, it’s not the game itself. Even in high profile fights like this one, the battles we win are usually the ones on our turf, and the WGA was smart to make the legal arena an ornamentation to direct action which once again was the road to actually getting the goods. A legal victory is never bettable — there are too many factors that rich opponents can manipulate. But even in a best-case scenario, a favorable legal outcome could not have occurred anywhere as quickly as the union shutting off the flow of labor, and it is unlikely any victory would have been as complete as the one they got. Notice that no one ever approached the National Labor Relations Board in this fight, even when some agencies were violating the Act by attempting to claim unauthorized representation of writers, another flagrantly illegal act. This is because the NLRB of today is worthless in a fight at best, and the more you know about today’s battlefield of labor relations, the more you stay away from them.

Social leaders are important. Social leaders aren’t necessary. During the phase of the fight when a faction within the union wanted to turn back and cut a deal, a number of extremely high profile Hollywood writers came out publicly condemning the direction the union had taken. Folks like Shonda Rhimes, Ryan Murphy, Damien Chazelle, Aaron Sorkin, Ava Duvernay, David Benioff and DB Weiss, and Craig Mazin signed an open letter and backed the opposition slate, temporarily kneecapping the leaders of the action. These super successful writers’ voices carry weight in the industry, and a lot of people look up to them and others who broke ranks. They are this struggle’s version of what we call “social leaders,” and fives on an assessment scale as they were actively opposing the bolder forms of collective action. While social leaders can be key in an organizing strategy to getting a wide array of members into or out of a fight, the bottom line is a real union is a formal, democratic organization, and as WGA board member Angelina Burnett said when asked about all these big names coming out against the action, “they each get one vote, same as I do.” These celebrity writers’ opinions might carry lots of weight among their many fans, and among the press who like to cozy up to big names in Hollywood. But in the union, the membership at large has the final say, and thankfully, leadership is not governance.

The philosophy of fear is futility. While fear is pervasive in all union campaigns, it usually assumes other forms. Few of us can admit to ourselves, let alone our peers, that we are nakedly scared, so we rationalize our fears into other stories. The protagonists of this fight are all professional storytellers, so the fictions that got told in order to justify positions of fear were creative and compelling. Many of these stories were different versions of: we’re not as powerful as we’re pretending to be, we’ve antagonized them too much, they’ll never give in, we’ve failed, we’re doomed, this is suicide. This is a tendency that emerges somewhere on the timeline of every union action. Without real power to retaliate against the writers or otherwise harm them (they did try to allege that no one but an agent was legally allowed to negotiate on behalf of screenwriters, but this failed), the agencies had one union-busting tool, and it was a familiar one: psychological manipulation via a propaganda war. The theme was futility, and press outlets that are heavily read by writers, like Deadline Hollywood, Variety, and The Hollywood Reporter hammered on this theme day after day, month after month, subtly weaving a story of a crazed leadership victimizing their members for a lost cause, conveniently downplaying the overwhelming democratic votes supporting the action. This had its intended effect of sowing little seeds of doubt among members that blossomed into full-blown hostility in some cases. But in the end, it wasn’t enough to weaken the union’s solidarity, because the leadership had heavily inoculated their members against this tactic in the lead-up to the action. The writers knew the agencies would try to influence them to turn on each other because they knew it was the only trick the agencies had. Every union-busting move is some form of creating doubt in people’s minds to break up our solidarity, because solidarity is the one thing that bosses know can’t really be beaten. In the middle of a campaign, imagining failure becomes psychologically tempting, but it’s also a self-fulfilling prophecy, and that’s why we have to resist that temptation and keep our eyes on the prize, even if it takes longer than expected.

Power is a renewable resource. No one predicted the union would have to hold out for over a year to win, and when it came time to mobilize for the contract fight with the studios in the middle of the agency campaign, many of the “anti” voices used this as another arrow in their quiver. “We can’t fight a two front war!” But a Sara Nelson quote came to stand for another way of seeing things in the WGA: ““People think power is a limited resource, but using power builds power.” The WGA went into their contract negotiations tired, but arguably stronger than ever, with a renewed sense of writers’ ability to lift each other up when their representatives had rebuked them. Had the COVID-19 shut down of TV production not robbed them of their central source of power, the ability to shut the town down, it shouldn’t be underestimated how much they could have won with a credible strike threat, or even a strike, which seemed as likely as anything in April. Even with virtually zero leverage, the WGA won gains in minimums, pension contributions, refused most proposed rollbacks, and even achieved an unprecedented paid family leave plan for new parents. This is only because writers as a united bloc are feared by the people who depend on their work to make profits. They know that union members know where their power comes from and aren’t afraid to exercise it as often as necessary.

In this case, exercising power meant a small, but well-organized group of workers was able to make history. They wiped one of the most massive sources of agency revenue off the map and rewrote the rules of an industry by simply withdrawing and folding their arms. Even such a small example in an ancillary niche of one industry is hard evidence of what workers are capable of when we organize and refuse to back down. We can stop the wheels of the whole economy if we wanted to. We just have to be bold enough to write our own story.

MK Lees is a screenwriter and Captain (steward) with the Writers Guild of America West and an organizer with the Industrial Workers of the World.