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End of an Era: The “Golden Age” of Streaming is at the Heart of Recent Hollywood Union Conflicts.

These disputes illustrate that streaming has changed Hollywood drastically and that entertainment lawyers must be more creative when drafting client contracts while staying conscious of union developments across the industry.



Though it may seem like streaming services have already fully entrenched themselves as the present and future of television, behind the scenes, the transition away from broadcast business models is still very much in progress and creating strife within a few of the major entertainment unions. Two major Hollywood union disputes in recent years have shown the complicated task facing entertainment lawyers moving forward.


The first dispute was a drawn-out battle between the Writers Guild of America (WGA) and the “Big Four” talent agencies (William Morris Endeavor (WME), Creative Artists Agency (CAA), United Talent Agency (UTA) and ICM Partners) over the practice of packaging fees[1]. A decades-old revenue mechanism for agencies, packaging fees were collected by bundling multiple clients (actors, writers and/or directors) into a single project. This practice was particularly lucrative for shows that went into syndication, where an agency could collect a percentage of all the individual royalties paid to each client that had been “packaged” into the project.


The problem, from the WGA’s perspective, is that those fees come out of the project’s budget, which reduces the money the studios can spend on paying writers.[2] And with the advent of streaming, syndication—once the ultimate goal for almost every show—is increasingly uncommon. Streaming platforms are specifically creating exclusive content, and the whole concept of “re-runs” no longer applies when the shows are on-demand to viewers instead of organized into pre-set TV schedules. As a result, writers are making less money in back-end royalties, and facing declining up front compensation for shows with high packaging fees.


The agency response to the reduction of syndication revenue has been to find ways to increase front-end revenue. Since industry rules prevent agents from operating as producers or studio executives, agencies have turned to partnering with “affiliate producers”—either through the agency’s parent company or acquired subsidiaries—to create shows that can then be packaged with talent. This gives the agency both a direct pipeline to ensure as many clients as possible are cast in a project, and allows the agency’s parent company to profit off of the production of the program directly.


According to the WGA, these practices were a clear breach of the fiduciary duty the agencies owed to their clients. The affiliate producer system creates situations in which agencies are often partnered with production companies that they are supposed to be negotiating against on behalf of their clients. Acting in their own best interest, the agencies are more interested packaging as many clients as possible into individual project than making sure that each client is getting the best deal.


Accordingly, in April 2019, the WGA launched a quasi-strike, telling all of its members to fire their agents until those agencies signed a “code of conduct” which prohibited the use of packaging fees and affiliate producers. This standoff lasted nearly two years[3], but culminated in the agencies agreeing to substantially reduce their relationships with affiliate producers, and to begin phasing out packaging fees.


Though seemingly unrelated, another major union conflict arose just a few months after the WGA’s dispute with the agencies[4]. In October 2021, the International Alliance of Theatrical Stage Employees (IATSE)-- a union representing a wide range of film crew professionals from lighting to makeup--authorized a 50,000-worker strike that would likely have shut Hollywood down entirely. While this initiated as a response to the working conditions crews endured during the COVID-19 pandemic, large portions of IATSE’s grievances focused on the fact that streaming services had been paying crew substantially less than traditional broadcasting networks or studios. This had initially been under the auspices of streaming being dubbed “new media” during its emergence over the past decade, but the reduced rates for crew have persisted despite these streaming projects now having budgets equal to (or sometimes greater than) the TV projects of the “old media” regime. The strike was ultimately averted after quick but heavy negotiations between IATSE and the studios.


These disputes illustrate that streaming has changed Hollywood drastically and that entertainment lawyers must be more creative when drafting client contracts while staying conscious of union developments across the industry. Representing a film industry client in the modern era will require not only acknowledging the changing landscape, but anticipating or pushing for entirely new types of deals for clients that better match the way streaming services operate in creating content. It’s likely that these recent union disputes are just the beginning of business-side shakeups that will need to happen in order for the new era of streaming to be sustainable and profitable for those involved.


 

Keegan Dyer


Keegan Dyer (He/ Him) worked for nearly ten years in Los Angeles as an associate producer on independent films. He now attends the Chicago-Kent College of Law, focusing his studies on intellectual property and entertainment law.




 

[1] The Wrap: Why Agencies Fight for Package Fees Even as Streaming Diminishes Their Value. [2] Vulture: The Hollywood Fight that’s Tearing Writers and Agents Apart, Explained. [3] The Wrap: WGA Thanks Members After Packing Fees Victory. [4] Reuters: Hollywood Film-Crew Union Reaches Tentative Deal, Averting Strike.

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