The Directors Guild has sided with the Writers Guild in the WGA’s ongoing legal battle with WME over the agency’s ownership interest in its affiliated production entity – Endeavor Content. In a letter obtained by Deadline (read it below), DGA national executive director Russell Hollander told WME president Ari Greenburg that the DGA has “been closely following the negotiations and litigation and believe now is the right time to communicate our strong support for the WGA’s efforts to remedy the affiliated production company issue.”
In his letter dated December 31, Hollander also told Greenburg: “This continued conflict of interest is not acceptable to the DGA. Absent prompt resolution, we intend to take all necessary and appropriate steps to protect our members.”
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The DGA declined comment.
Here’s the full text of Hollander’s letter:
The issue of talent agencies owning production entities is, and always has been, an issue of great concern to the DGA. While we have not commented publicly on these concerns, we have raised them on numerous occasions with representatives from WME and Endeavor Content. As discussions between WME and the Writers Guild of America have reached a critical point, it is time for us to make our position clear.
The issue of avoiding conflicts of interest is exceedingly important to the DGA and our members. Affiliated ownership carries with it inherent and obvious conflicts of interest. Agents should be free and unencumbered to carry out their duties to their Director clients with only the Directors’ interests in mind and should procure work for Directors without the incentive to make cost-effective deals with production companies owned by the same parent company as their agency.
We are aware that the issue of conflicts of interest arising from affiliated production ownership remains the last outstanding issue preventing a resolution between the WGA and WME. We have been closely following the negotiations and litigation and believe now is the right time to communicate our strong support for the WGA’s efforts to remedy the affiliated production company issue. We share their concerns and urge WME to resolve this issue with the WGA in a manner that will enable talent agents to satisfy their fiduciary duty to their clients free of conflicts of interest.
This continued conflict of interest is not acceptable to the DGA. Absent prompt resolution, we intend to take all necessary and appropriate steps to protect our members.
National Executive Director
WME is the only major talent agency that has yet to sign the WGA’s franchise agreement, and reducing WME’s ownership stake in Endeavor Content to just 20% is one of the last remaining issues holding up an agreement. The WGA also wants WME and its private-equity owners, Silver Lake Partners, to agree to the same terms as CAA and its private-equity owner did last month when they signed the guild’s franchise agreement.
The day before Hollander sent the letter, a federal judge denied WME’s request for a preliminary injunction that would have ended the WGA’s boycott of the agency until the antitrust case can go to trial. It was a major legal victory for the WGA and adds pressure on WME to settle the 21-month dispute and sign the WGA’s franchise agreement, as have all the other major talent agencies.
WME has said that it wants to reach a deal with the WGA and offered a proposal last month that it hoped the WGA would accept, saying, “We want to find a way forward with the Guild and return to representing our writer-clients.” The WGA, however, rejected that offer, saying that “WME has yet to grapple, in a serious way, with its own conflicts of interest.”
The WGA’s battle to reshape the talent agency business began in April 2018, when it notified the Association of Talent Agents of its intent to renegotiate its Artists’ Manager Basic Agreement, and a year later, writers voted overwhelmingly to terminate the AMBA and all unfranchised agencies. Since then, the WGA has negotiated 10 successive versions of its franchise agreement to accommodate reasonable agency proposals – beginning in May 2019, when it signed Verve; again last summer, when it signed UTA and ICM, and last month when it signed CAA.
The DGA last weighed into the dispute between the WGA and the talent agencies in April 2019 – just days after the WGA told its members to fire their agents who refused to sign its new Agency Code of Conduct, modified versions of which will now phase out packaging fees by 2022 and sharply limit their corporate affiliations with related production companies.
At that time, the DGA told its hyphenate members that they didn’t have to fire their agents for DGA-covered work even if they were also writers who were being told by the WGA that they must fire their agents who refuse to sign its Code of Conduct. “There are important issues that we are examining in the context of the DGA agency agreement,” the DGA said back then. “As our franchise agreement is currently in effect, we are not instructing hyphenate members to terminate their agents with respect to DGA-covered services at the present time.”