WGA Hopes to Leverage Packaging Fee Victory With Studios for 2023 Contract Gains

 Posted on January 29, 2024  |  5 minutes  |  876 words  |  Aldo Pusey

Upcoming contract negotiations between the Writers Guild of America and Hollywood’s biggest employers are expected to include an echo boom of another industrywide conflict from the recent past.

The WGA declined to comment, but industry sources say there is growing momentum for the guild to press for big economic gains, piggybacking on the guild’s successful campaign to eliminate packaging fees. In 2019, the WGA took aim at the long-standing practice of producers paying packaging fees to talent agencies that help assemble TV series and some independent films.

The WGA went to war with the largest talent agencies after the guild implemented new rules that barred talent agents who represent WGA members from receiving packaging fees. Those packaging fees were typically about 3% of a project’s license fee upfront, with the promise of more percentage points flowing in down the road in success.

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The WGA’s packaging-fee fight came to a head at a time when the practice was already under pressure due to the changes in the way TV shows are produced and monetized in the streaming era. The guild’s most recent overarching film and TV contract with the Alliance of Motion Picture and Television Producers is up May 1. Contracts for the Directors Guild of America and SAG-AFTRA expire June 30.

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There’s no question that the end of packaging-fee agreements — formally barred as of July 1, 2022 — will benefit every sizable producer’s bottom line. But there’s also no doubt that the management side is revving up to point to the billions of dollars that have been invested to build up new streaming platforms. All those losses and foregone revenue have been carefully tracked for Wall Street over the past few years, providing readymade stats and facts as the sides make their cases in the court of public opinion.

Another factor industry veterans are watching is who among the top executives on the management side might play an important diplomatic role if the talks get tense. With so much turnover at the top in recent years, none of the current roster of CEOs has a long history of dealing with WGA, DGA or SAG-AFTRA negotiations.

After hard years of pandemic conditions and business disruption, Hollywood’s bosses may be in no mood to bargain. But the harsh reality is inescapable. The WGA flexed incredible muscle with its members in 2019 and 2020 to win the packaging-fee brawl that ultimately benefited employers. It doesn’t take a genius script doctor to predict where the third act of this drama is headed.

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