The Writers Guild of America (WGA) and the talent agencies represented by the Association of Talent Agents (ATA) are on a collision course. The WGA wants to stop agencies from having an interest in affiliated production companies and taking packaging fees. Packaging is the practice of an agent putting together a script, star and director and presenting it as a bundled deal to a studio or network. The practice is largely dominated by the major talent agencies who can draw on their large pool of clients to assemble an attractive project. Packaging is mostly a television phenomenon and is extremely lucrative for the agencies. Instead of taking a ten percent commission on their client’s earnings, the agency instead receives a percentage of the production budget and often a share of the profits. While agents usually forego commissioning their clients when they take a packaging fee, the amount paid them reduces the funds that can be spent on production, including compensation paid to writers. And an agency receiving a package fee has less incentive to get their writer greater compensation because it does not affect the fee the agency receives.
What seems to be lost in the controversy is why packaging has become so dominant in the industry. It is not just that the big talent agencies are greedy. It is because the studios and networks have relinquished much of the creative control they used to exert.
When a studio finds a script it likes, it will not approve it for production without knowing who the director or showrunner will be, the identity of the principal cast and the of the budget. If the studio wants to package elements itself, it must option the script and expend the effort to assemble the other elements before the option expires. Unless the studio has commissioned the script and owns it, that means paying the writer an option fee to take the script off the market. That is often ten percent of the purchase price, which for a desirable script can be a significant sum. Then the studio must find a director or showrunner, and the most sought-after people are often in great demand. The studio will also want to secure a star or name actor or two before committing funds to its production. The truth is that studio executives often prefer to accept an agency package than to assemble one themselves. It is a lot of work to find a good script and recruit a director and stars that want to collaborate. Let’s say you find a script you like and can interest a director. Now you approach stars, but it takes weeks for them to read the script and respond as most are in high demand and many will ultimately decline. Or perhaps the star likes the script but wants changes made to it or who will direct it. Or their busy schedule means the shoot must be postponed until next spring, but that conflicts with commitments made by the director, the co-star or producer. And while you are paying option and holding fees, you are taking a financial risk which will be a complete write off if the project collapses and never gets produced. Herding cats may be easier than assembling elements into a package.
Consequently, studio executives have found that it is much easier to let a big agency package a project and present all the elements on a silver platter to them. All the buyer has to say is yes or no. They don’t have to rush about trying to secure elements before their option expires or juggle personalities and schedules. The studios and networks complain about packaging fees, but no one is forcing them to accept packages.
The fact is the studios have evolved and become financiers and distributors rather than producers. They don’t exercise creative control like the old days when a mogul would staff a project by simply picking among the writers, directors and stars they employed under long term contracts. The studios today are more like banks considering a mortgage. Bring them the right paperwork, check the boxes and its approved.
The WGA is correct that packaging poses a conflict of interest for agents. But agents are awash in conflicts of interests. The top agencies represent hundreds of stars, director and writers who compete for the same projects. And writers want to be represented by these agents because of their clout and relationships with studios as well as access to the stars and directors they represent. A writer given the choice of retaining an agent who would only represent her, or an agency that represents a lot of top talent, will usually choose the later.
The problem with this struggle between the WGA and ATA is that there is no middle ground. Unlike a labor negotiation which is a matter of haggling over work rules and minimums there is plenty of room to compromise. I don’t see the WGA backing down, and I think the agencies will strenuously resist losing a large portion of their income. Moreover, if the WGA is successful in banning the practice of packaging, that may only encourage more agents to become managers who are completely unregulated and often produce their client’s projects. So, stay tuned. It is going to be interesting.
More about the controversy.
What seems to be lost in the controversy is why packaging has become so dominant in the industry. It is not just that the big talent agencies are greedy. It is because the studios and networks have relinquished much of the creative control they used to exert.
When a studio finds a script it likes, it will not approve it for production without knowing who the director or showrunner will be, the identity of the principal cast and the of the budget. If the studio wants to package elements itself, it must option the script and expend the effort to assemble the other elements before the option expires. Unless the studio has commissioned the script and owns it, that means paying the writer an option fee to take the script off the market. That is often ten percent of the purchase price, which for a desirable script can be a significant sum. Then the studio must find a director or showrunner, and the most sought-after people are often in great demand. The studio will also want to secure a star or name actor or two before committing funds to its production. The truth is that studio executives often prefer to accept an agency package than to assemble one themselves. It is a lot of work to find a good script and recruit a director and stars that want to collaborate. Let’s say you find a script you like and can interest a director. Now you approach stars, but it takes weeks for them to read the script and respond as most are in high demand and many will ultimately decline. Or perhaps the star likes the script but wants changes made to it or who will direct it. Or their busy schedule means the shoot must be postponed until next spring, but that conflicts with commitments made by the director, the co-star or producer. And while you are paying option and holding fees, you are taking a financial risk which will be a complete write off if the project collapses and never gets produced. Herding cats may be easier than assembling elements into a package.
Consequently, studio executives have found that it is much easier to let a big agency package a project and present all the elements on a silver platter to them. All the buyer has to say is yes or no. They don’t have to rush about trying to secure elements before their option expires or juggle personalities and schedules. The studios and networks complain about packaging fees, but no one is forcing them to accept packages.
The fact is the studios have evolved and become financiers and distributors rather than producers. They don’t exercise creative control like the old days when a mogul would staff a project by simply picking among the writers, directors and stars they employed under long term contracts. The studios today are more like banks considering a mortgage. Bring them the right paperwork, check the boxes and its approved.
The WGA is correct that packaging poses a conflict of interest for agents. But agents are awash in conflicts of interests. The top agencies represent hundreds of stars, director and writers who compete for the same projects. And writers want to be represented by these agents because of their clout and relationships with studios as well as access to the stars and directors they represent. A writer given the choice of retaining an agent who would only represent her, or an agency that represents a lot of top talent, will usually choose the later.
The problem with this struggle between the WGA and ATA is that there is no middle ground. Unlike a labor negotiation which is a matter of haggling over work rules and minimums there is plenty of room to compromise. I don’t see the WGA backing down, and I think the agencies will strenuously resist losing a large portion of their income. Moreover, if the WGA is successful in banning the practice of packaging, that may only encourage more agents to become managers who are completely unregulated and often produce their client’s projects. So, stay tuned. It is going to be interesting.
More about the controversy.
