UNIDENTIFIED PERSON, BYLINE: NPR.
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STACEY VANEK SMITH, HOST:
This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith.
ALEXI HOROWITZ-GHAZI, HOST:
And I'm Alexi Horowitz-Ghazi Now, if this terrible pandemic year has been a good year for anything, it's been pretty good for binging television.
VANEK SMITH: I think I have watched more television in the last year than I have in the entire rest of my life combined.
HOROWITZ-GHAZI: Samesies (ph). And today on the show, we have a story about how that insatiable appetite for new content, paired with a production-stopping global pandemic, may have helped tip the scale on a Hollywood power struggle that's been going on for nearly two years.
VANEK SMITH: Yes. And to be clear, we are not talking about "Godzilla Vs. King Kong," although that is a compelling battle. This is actually a labor fight between the big Hollywood talent agencies and the Writers Guild of America, which is the union that represents film and television screenwriters around the country.
HOROWITZ-GHAZI: To help tell the story of this titanic clash, we called up John August. He's the co-host of the "Scriptnotes" podcast, a veteran screenwriter of films like "Big Fish" and "Charlie's Angels."
VANEK SMITH: And, most importantly, for our purposes, he is a member of the Writers Guild of America's negotiating team.
HOROWITZ-GHAZI: If we were to do this screenplay style, like, what's the world before this conflict look like?
JOHN AUGUST: So normally, we'd open on how the world is before the hero shows up. And it's a world in which, you know, there are studios that are hiring writers and there are agents who are helping writers get those jobs.
VANEK SMITH: So for most of Hollywood history, John explains, agents acted as the middleman of the entertainment industry, connecting all the creative types like the directors and the actors and the screenwriters to the movie studio, TV network executives.
HOROWITZ-GHAZI: And the way that agents have traditionally gotten paid is by charging a 10% commission of whatever salary they're able to negotiate for their clients, which means that the agents' financial fates have been aligned with those of their clients.
VANEK SMITH: But, John explains, that model has also represented a kind of frustrating business limitation for the agency's ability to grow.
AUGUST: Ten percent's a very stable business model, but it's not explosive growth in an industry where we have Netflix going to hundreds of millions of subscribers.
HOROWITZ-GHAZI: And since the 1980s, agencies have relied more and more on a different and often more lucrative kind of financial arrangement, something called packaging. Instead of pitching one of their brighter clients to a studio in hopes of getting a 10% commission, agencies would now offer that writer as part of a package of people they represented, along with, say, a director and an actor, basically offering all the ingredients for a show. In exchange, the agency would get a fee directly from the network and a cut of any profits. But as more and more writers began to point out in recent years, this packaging fee model also meant the agencies were no longer incentivized to fight for the highest possible pay for their individual clients. Instead, the agency's main interest was in selling a whole package of talent, irrespective of what the individual people inside it got paid.
VANEK SMITH: This was a big change. But John says there has been an even bigger shift over the last decade as Wall Street private equity firms decided that it was time for them to get into the entertainment business. And they invested hundreds of millions of dollars to supercharge some of these talent agencies. And that shift came with new debt and all this pressure that pushed the agencies to find ways to make even bigger money.
AUGUST: They started to think, well, what if we could actually just make shows ourselves? And so they started forming these production entities where they were actually making shows for broadcast or especially for streamers. So you had companies who started becoming employers of their own clients. And so, you know, suddenly your agent is not just the person representing your side of the deal. They're also really representing the other side of the deal. And that's about as a clear conflict of interest as you could imagine.
HOROWITZ-GHAZI: If this were a screenplay, this is the moment where the oppressed writers decide to revolt against the agencies. And about three years ago, they demand a renegotiation of this whole system.
VANEK SMITH: The agencies, unsurprisingly, resist this. But finally, in April of 2019, the Writers Guild of America decides it's going to use the nuclear option, and some 7,000 writers across the country all fire their agents at once.
AUGUST: We're trying to basically remap the relationship between writers and agents in Hollywood. And it was scary for me and probably for all writers just because we're headed into such uncharted territory.
HOROWITZ-GHAZI: What that uncharted territory looked like after the break.
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HOROWITZ-GHAZI: So let's reset the scene. The writers have fired their agents en masse. The agencies sue the union in retaliation. The Writers Guild sues back. And everyone digs in for a protracted fight. Meanwhile, John August says, the writers now have to navigate the Hollywood labor market without an agent, which was pretty daunting.
AUGUST: It was scary to think about trying to get new jobs without an agent because we just had always had them.
VANEK SMITH: But he says his fellow writers quickly developed this kind of informal network to help writers and employers find each other.
HOROWITZ-GHAZI: And as the first major television season rolled around, it seemed like the labor market was working well enough without the agents, that the informal networks and the new systems put in place by the Guild were keeping TV production humming.
AUGUST: Everyone started to realize like, oh, agents are important, but they're not actually crucial to the whole process.
VANEK SMITH: Soon enough, some of the smaller agencies started to break rank and make agreements with the Writers Guild because, unlike their titanic brethren, many of these smaller agencies did not own their own production companies or rely on those packaging fees for their business model.
HOROWITZ-GHAZI: And for a while, it seemed like this might just be the new way in Hollywood. Film and TV writers would rely on informal networks and smaller agencies to make the labor market work, while the big agencies continued to make their money without the writers packaging their other clients and producing their own content.
VANEK SMITH: But then, of course, something else happened last year.
AUGUST: The pandemic hit Hollywood hard because immediately all production stopped. It was impossible to shoot new things. But the one area that wasn't so greatly impacted was writers because writers could keep working on TV shows. Writers could keep writing movies. And so a bunch of stuff got written during that time, and writers were getting paid during that time.
HOROWITZ-GHAZI: There are four big agencies that dominate Hollywood with four big acronyms - CAA, UTA, ICM and WME. And these big fish had been expanding, in some cases using private equity funding to acquire properties like the Miss Universe pageant and the Ultimate Fighting Championship. And they actually ended up being more vulnerable to the pandemic's impact on the economy.
AUGUST: In many cases, these big agencies were representing touring musicians and live entertainment and wrestling. And they had all these things which were shut down because of the pandemic. Writing was the only thing that was still happening, so the agencies which had signed the deal were at a huge advantage because they still had money coming in the door.
VANEK SMITH: John says that combination of pressures eventually helped to crack what had seemed like an intractable stalemate just a year earlier and helped shift the power towards the writers in their negotiations.
AUGUST: We, as writers were holding together really well. The agencies weren't holding together as well because the agencies, they were usually at each other's throats. And so we end up having individual conversations with the agencies and figuring out what their priorities were. And ultimately, we were able to sign. UTA was the first of the big four agencies to sign, and that sort of set the dominoes in motion.
HOROWITZ-GHAZI: The first big fish, UTA, United Talent Agency, made a deal with the Writers Guild last July, agreeing to gradually phase away from the packaging fees model and to cap its ownership of production companies at 20% to mitigate conflicts of interest. Two of the other big fish were hooked in August and December.
VANEK SMITH: And finally, last Friday, the very last holdout of Hollywood agencies, WME, announced that it had reached an agreement with the Writers Guild of America.
HOROWITZ-GHAZI: So did the writers get what they wanted in the end in this fight?
AUGUST: Ultimately, the writers got everything they wanted. We got resolution on the two big conflicts of interest.
HOROWITZ-GHAZI: Now, this is the part of the screenplay where the hero of the story finally returns to a world where peace and order have been restored.
VANEK SMITH: Triumphantly returns.
HOROWITZ-GHAZI: But the hero has also, of course, been transformed by the trials and tribulations of the journey. And so I asked John August what had changed about the writers in the course of this fight.
AUGUST: We talk about characters having agency. When we say agency, it means that a character can make choices for themselves and really take actions on their own behalf. And paradoxically, I think writers themselves haven't felt a lot of agency. During this time, writers had to work with each other to figure out how to get stuff done.
HOROWITZ-GHAZI: So the writers kind of took back their agency along with their agents?
AUGUST: Absolutely. The writers discovered they had agency all along.
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VANEK SMITH: This episode of THE INDICATOR was produced by Alexi Horowitz-Ghazi and Jamila Huxtable. It was fact-checked by Sam Tsai (ph). THE INDICATOR is edited by Paddy Hirsch and is a production of NPR.
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