Gary He/AP Photo
Members of the Writers Guild of America picket NBC headquarters in New York in November 2007. This time around, there was no strike and a big win for union members.
Organizing is an often interminable process where victory can be well over the horizon. That’s especially true when the adversary is powerful, deep-pocketed, and well connected. So it’s important to recognize wins when they happen, and explain their importance. The triumph of the Writers Guild of America in a two-year fight with a set of private equity–fueled talent agencies fits this description.
Back in April of 2019, thousands of writers intentionally fired their agents. They were protesting a reversal in the business model of the talent agencies, particularly the “Big Three,” which had recently come under the sway of private equity money. Thus swayed, those agencies had switched from serving their clients to serving themselves.
Despite this prolonged lack of representation, the writers survived and many even thrived, building new networks to reach and get work from showrunners and producers. Slowly, they brought the agencies around to meet their demands. Last Friday, the final holdout agency, William Morris Endeavor, announced a deal with the Writers Guild of America (WGA) that gives writers nearly everything they were asking for, realigning agents and writers in successful partnerships.
Private equity firms don’t often lose labor fights. But they don’t often come up against a labor force unified in opposition to them. “You really saw an example of what collective power can achieve,” said David A. Goodman, president of the Writers Guild of America West, in an interview. “The companies would love nothing more than for the Guild to go away. We proved through this fight that the agencies needed us more than we needed them.”
Leading up to the WGA’s dramatic action, the three talent agencies responsible for 70 percent of writer earnings—Creative Artists Agency (CAA), William Morris Endeavor (WME), and United Talent Agency (UTA)—had gorged on financial investments, with private equity firms, sovereign wealth funds, and other investor vehicles taking huge stakes in them. Suddenly, companies previously structured as partnerships among agents were now huge conglomerates seeking A-level returns.
Thus repurposed, the agencies used two main strategies to take more of the pie. First, they transformed the compensation model. Instead of the client paying a 10 percent commission to the agent, the agent gets a “packaging fee,” where studios pay talent agencies a commission for employing their clients. But that fee comes out of the show budget, putting agents into competition with their own clients over the same pot of money.
That did not work out for writers. Packaging fees ran into the millions of dollars, as studios that needed to keep agencies (which control premium talent) happy could bid up the rates. A 2019 WGA report showed that median weekly earnings of TV writers fell 23 percent from 2014 to 2016, despite “Peak TV” production with vastly more programs than ever before.
The second strategy involved agencies actually becoming owners of the content produced. By 2019, for example, WME owned the UFC mixed martial arts league, the Miss Universe pageant, the Professional Bull Riders association, sports and entertainment producer IMG, and its own production company, Endeavor Content, that sold and packaged films and TV shows to major studios. This created an even more direct conflict, as the agencies became the employers of their own clients while also purporting to serve their clients’ best interest. WME, CAA, and others controlled the bottom line on their programming, even though agents exist to maximize income for writers and directors and other talent. In essence, the agencies were now management, even as they purported to represent labor.
WGA leadership disputed both the rise in packaging fees and agency ownership of programming, and in early 2019 ratified a code of conduct for agencies, with 95.3 percent support of the rank and file, that codified these disputes. When the Big Three rejected the code of conduct, WGA writers fired their agents en masse.
Though it wasn’t as damaging to writer bottom lines as a strike action, it was still uncharted territory, especially for younger writers breaking into the business, who had to navigate the business without their agents. But the WGA worked to help their membership cope. “The jobs were there, the studios and networks still needed writers,” Goodman said. Managers rather than agents performed some of the contract-based functions. Writers took it upon themselves to help their colleagues with job searches. And the WGA established an employment platform, where showrunners could post their jobs, and writers could get information about what was happening in the industry. (Goodman told me that the WGA plans to keep that platform going.)
Something pretty incredible happened. According to Guild employment statistics, more writers worked in 2019, despite spending much of the year without agents. The subsequent pandemic year created its own problems, as production spun down. But overall, the agency middlemen proved not as essential to the industry and its workers as had been assumed. And one by one, the agencies were compelled to recognize that, too.
Private equity firms don’t often lose labor fights. But they don’t often come up against a labor force unified in opposition to them.
UTA reached agreement with the Writers Guild in July 2020, and CAA followed suit last December. WME, primarily owned by private equity firm Silver Lake Partners, was the final holdout. News broke about their agreement last Friday. All three of the deals look basically the same. Packaging fees will end as of June 2022, giving agencies and studios 16 months to wind down the practice. And all agencies must cap their ownership of production entities at 20 percent, so they don’t have a majority say in the businesses with which they contract their clients. A retired judge will oversee WME’s divestment.
One could quibble with the phaseout period or the size of the allowable agency stake in production. But by and large, it was a resounding victory for the WGA, which picked off the agencies one by one. “It became pretty clear that once CAA signed, that WME would have to make a deal with us if they wanted to represent writers,” Goodman said. The deal with WME came together in about a month.
Private equity made a fatal mistake in this fight. Normally, they pick on industries with dispersed workforces without much institutional power, whether in retail or customer service. In this case, the WGA has a organized workforce whose membership pumps out extremely lucrative TV and film franchises year after year. Hollywood was not Toys “R” Us, and the private equity model of squeezing the workforce and sucking out the value wasn’t going to play. “I think it really all goes back to how valuable your workforce is and how much unity they have,” Goodman said. Like professional athletes, who have some of the most successful unions on the planet, the writers weren’t easy to replace. And like the most successful union of yore, the United Auto Workers in the days when the auto industry was concentrated in just three mega-companies, the WGA followed the strategy of reaching an initial deal with one, thereby threatening the viability of the other two.
The idea of solidarity defeating concentrated corporate power looks good in the movies, but it rarely shows its face in real life. But the studios didn’t like being held up for packaging fees from the agencies either, yet they couldn’t get rid of them. Only the people who make the ideas that make Hollywood run were able to succeed. And that’s only because they stuck together, as many high-profile writers pointed out after the announcement.
Goodman, whose term as president comes up in September, told me a story about a young writer who fired her agent in 2019. “Her agent had just signed her to her first job,” he said. “I told her, ‘At some point, we might have to fold.’ And she got angry. ‘No, don’t fold!’ That was mostly the message I got. Writers understood there was something here worth fighting for.”
This was certainly a unique fight. The lack of a strike action meant writers could still earn money while they waged it. But there’s still a lesson for other workforces ravaged by private equity. Just as financier executives couldn’t write Star Wars, they aren’t interested in selling toys on the showroom floor or managing the grill at a fast-food joint or healing the sick in an ER. Workers can realize their own power and do their part to counter the financialization of our economy.
