The Writers Guild of America East and West has announced that a franchise agreement has been reached with William Morris Endeavor Entertainment, LLC (WME). Effective immediately, WME may once again represent Guild members for covered writing services.
WGA and WME have also agreed to withdraw the legal claims each has brought against the other in federal court.
According to a release from the guild, the new franchise agreement contains the same terms as those set forth in the UTA/ICM/CAA deals and protects writers in the three fundamental areas that the Guild has emphasized since the beginning of the campaign:
- Contract, deal memo, and invoice information will be provided to the Guild, allowing the WGA and the agency to partner in systematically addressing late pay and free work.
- Strict 20% limitation on agency ownership of production entities.
- A sunset period that ends the practice of packaging by June 30, 2022.
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The WGA also negotiated a side letter with WME, its parent company Endeavor, and Endeavor’s private equity owner Silver Lake that contains the protections previously negotiated with CAA, as well as additional terms.
The purpose of the WME side letter is to address two complicated conflict of interest issues, one that is currently in play and one that is prospective. Specifically, WME is currently majority-owned by Silver Lake, and WME hopes in the future to become a publicly-traded corporation.
WME/Endeavor agreed to a mutually-chosen third-party monitor, Louis M. Meisinger, a retired judge and mediator, to ensure that the agency sells down its interest in Endeavor Content to the required 20% or less in compliance with the Franchise Agreement.
The side letter provides a deadline for the sale of Endeavor and Silver Lake’s interests in Endeavor Content down to the permissible level.
During the divestment period, WME will escrow all after-tax gross profits, writer commissions and packaging fees related to WGA-covered projects produced by Endeavor Content.
The side letter also imposes serious consequences if the sale is not completed by the agreed deadline, including the right for the WGA to suspend WME’s ability to represent writers and an enhanced obligation to escrow profits, package fees and commissions WME/Endeavor receives related to WGA-covered projects produced by Endeavor Content until the sale is complete.
Consistent with the CAA agreement, the side letter ensures that WME/Endeavor and any Silver Lake entity will not jointly have a greater-than-20% ownership interest in any affiliate production company.
The Silver Lake fund that owns WME/Endeavor will not have a greater than 20% ownership interest in any affiliate production company, regardless of whether WME/Endeavor also has an interest in the entity.
As long as WME remains a privately-held agency, the exemption will apply only to a limited group of institutional shareholders whose small stake confers no say over agency operations.
The WGA and WME have been at odds since writers let go of their agents in April, 2019.
Led by WGA West president David Goodman and WGA West executive director David Young, the guild set its sights on reforming its agency franchise rules in 2018.
Concerns about inherent conflict-of-interest issues in packaging had long simmered among some guild members and leaders. The more recent expansion of large talent agencies into production and distribution through Endeavor Content, CAA’s Wiip and investments by UTA had also raised conflict-of-interest alarm bells.
At the outset, the guild seemed to be a facing an uphill battle in trying to bring about major changes to longstanding industry practices. The largest agencies — notably CAA, WME, UTA and ICM Partners — sought to negotiate a new agreement through the Association of Talent Agents bargaining organization.
But those negotiations were unproductive and by April 2019 the guild directed its members to fire agents who would not agree to the guild’s new rules.
WME TV chief Rick Rosen released a statement to his staff:
We are pleased to inform you that WME and the WGA have agreed to a new franchise deal. This agreement addresses writers’ core concerns while recognizing the unique aspects of WME’s business.
For many of us, this has undoubtedly been a painful process, but as we reflect on what led us here, I do feel grateful that it forced us to take a hard look at who we represent and how best to serve them, ensuring that our interests and goals are clearly aligned. I believe we will be better advocates for writers because of it.
We will be reaching out to our former writer clients in the coming days to discuss the opportunity to represent them again, and, most importantly, to hear what each of them is looking for in their representation moving forward. For all of you who represent writers — and anyone else for that matter — use this as an opportunity to recalibrate and reset your client relationships.
Today’s result should serve as a reminder of the opportunity and privilege it is to represent the best in the industry and provide them something that no one else can – the access, resources, and influence to realize all their creative pursuits. We must re-commit to harnessing that every day for writers with integrity, transparency and passion.
Writers have been a part of this agency since our inception, and they will continue to be a part of the lifeblood of WME. We look forward to once again serving as their advocates during this unprecedented time in our industry.
Let’s get back to work.
Full details of the agreement can be found here.