LIZ: TO HOLLYWOOD.
WE WARNED YOU LAST FRIDAY THIS
COULD HAPPEN, AND IT DID.
ONE MINUTE AFTER MIDNIGHT ON
SATURDAY, HOLLYWOOD WRITERS
BEGAN FIRING THEIR AGENTS BY THE
HUNDREDS.
THIS AFTER A NEW CODE OF CONDUCT
DEAL COULD NOT BE REACHED
BETWEEN THE WRITERS GUILD OF
AMERICA AND THE ASSOCIATION OF
TALENT AGENTS WHICH REPRESENTS
SOME 1,000 AGENCIES, INCLUDING
THE BIG FOUR, CAA, ICM, WME.
AT ISSUE, PACKAGING FEES.
WRITERS SAY THEIR AGENTS ARE
FAVORING MORE LUCRATIVE
PACKAGING DEALS WITH STUDIOS AND
IN TURN, COLLECTING HUGE SUMS OF
MONEY FROM STUDIOS FOR THEIR
CLIENTS' PROJECTS INSTEAD OF
SHARING THE PROCEEDS WITH THE
CLIENTS.
TWITTER WAS SET ABLAZE OVER THE
WEEKEND WITH A FLURRY OF WRITERS
WHO WERE FIRING THEIR AGENTS.
PATTON OSWALT TWEETING I HAVE AN
AMAZE
AMAING AGENCIES WHICH REPS ME
BEE AN EVEN BETTER GUILD THAT
STANDS FOR ME.
ANDY RICHTER QUOTING I'M ONE OF
THOSE WEIRDOS THAT REALLY LIKES
HIS AGENT BUT I WENT AHEAD AND
DID THIS ANYWAY BECAUSE FAIR IS
FAIR.
THIS WHOLE BATTLE WAS
TELEGRAPHED FOUR YEARS AGO IN
ONE ARTICLE THAT'S GONE VIRAL IN
HOLLYWOOD, WRITTEN BY AGENT
TURNED PRODUCER GAVIN POLONE
ENTITLED GAVIN POLONE ON TV'S
DIRTY SECRET, YOUR AGENT GETS
MONEY FOR NOTHING.
THE EXECUTIVE PRODUCER OF "CURB
YOUR ENTHUSIASM" AND "GILMORE
GIRLS" ONCE A PARTNER AT WTA
WHICH REPPED ALL THE SEINFELD
WRITERS, QUOTE, IN MANY CASES
THE TOTAL PAYMENTS TO THE
AGENCY, GAVIN WRITES, ARE MORE
THAN WHAT THE AGENCY'S CLIENTS,
WHOSE BACK IT WAS LEVERAGED
UPON, MAKES ON THE SHOW.
LET HIM SAY THAT AGAIN.
THE AGENCY MAKES MORE THAN ITS
CLIENT.
THE HOLLYWOOD WHISTLEBLOWER,
GAVIN PALONE, JOINING US NOW IN
A FOX BUSINESS EXCLUSIVE.
GOOD TO SEE YOU.
FIRST TO THE IMMEDIATE
SITUATION.
THE AGENTS LAST FRIDAY WARNED OF
TOTAL CHAOS IF WRITERS WENT
THROUGH WITH IT.
ARE WE SEEING CHAOS, DOGS AND
CATS LIVING TOGETHER?
WHAT'S GOING ON THERE?
>> THERE'S NO CHAOS.
THERE'S NOT GOING TO BE ANY
CHAOS.
THIS IS ALL JUST A MARKETING
PLOY ON BEHALF OF THE AGENCIES
BY THEIR ASSOCIATION TO FRIGHTEN
THE WRITERS INTO ACQUIESCING TO
THEIR DEMANDS OR AT LEAST
BACKING OFF THE DEMANDS OF THE
WGA.
LIZ: HOW SERIOUS ARE THE WRITERS
HERE?
WHAT WE'RE LOOKING AT IS THIS
VIRAL TERMINATION OF
PRESENTATION LETTER THAT WRITERS
GOT AND THEY COULD SIMPLY PUT
THEIR AGENCY IN THE DEAR COLUMN,
THEN SAY EFFECTIVE APRIL 13th,
YOU'RE DONE.
WE KNOW HUGE NAMES LIKE SHONDA
RIMES FIRED THEIR AGENTS THIS
WEEKEND BUT IN A NUTSHELL, WHY
ARE THEY THROWING DOWN THE
GAUNTLET?
>> WELL, THEY HAVE A REAL CLAIM
AGAINST THE AGENCIES.
ULTIMATELY, ANYBODY WHO IS
NEGOTIATING FOR ANYTHING WANTS
UNCONFLICTED REPRESENTATION.
YOU, LIZ, PROBABLY USE AN
OUTSIDE LAWYER WHEN YOU ARE
NEGOTIATING YOUR CONTRACT WITH
FOX, NOT SOMEBODY WHO WORKS FOR
YOUR BOSS.
THE AGENCIES ARE GETTING DIRECT
PAYMENTS FROM THE STUDIOS AND
THAT CREATES A CONFLICT, AND
FURTHER, AND MORE IMPORTANTLY,
THE AGENCIES ARE TRYING TO SET
UP THEIR OWN STUDIOS AND HAVE,
AND THEY ARE STARTING TO PRODUCE
ENTERTAINMENT AND HIRE THEIR OWN
WRITERS.
SO THEN THERE'S NOBODY IN
BETWEEN THEIR REPRESENTATIVES
AND THE STUDIO TO MAKE A FAIR
DEAL, AND THIS IS PROBABLY PART
OF THE REASON WHY WRITER
SALARIES HAVE REMAINED STAGNANT
FOR AT LEAST TEN YEARS WHILE THE
DEMAND FOR WRITERS IS PROBABLY
INCREASED BY FOUR TIMES.
LIZ: YEAH, BECAUSE YOU NOW HAVE
AMAZON AND NETFLIX AND THEY ARE
DOING CONTENT.
SO THE OBJECTIVE FOR THE WGA,
THEY DON'T WANT THIS CONFLICT OF
INTEREST ANYMORE, YET THE AGENTS
DON'T WANT TO GIVE UP THAT
TROUGH OF MONEY.
SO AGENTS --
>> THEY CAN'T, REALLY.
LIZ: GO AHEAD.
>> YOU GOT TO ALSO UNDERSTAND
THAT THE BIG AGENCIES, THEY
CONTROL ALMOST ALL OF THE
PACKAGES, HAVE STARTED SELLING
THEMSELVES TO PRIVATE EQUITY AND
HAVE A GOAL OF EVENTUALLY
PROBABLY GOING PUBLIC, AND
THAT'S ALL BASED ON THE IDEA
THAT THEY CONTROL REVENUE
STREAMS AND THAT THESE REVENUE
STREAMS ARE GOING TO INCREASE
AND THE WAY IT'S GOING TO
INCREASE IS THEY ARE GOING TO
USE THEIR CLIENT RELATIONSHIPS
TO OWN PRODUCT, TO PRODUCE,
FINANCE AND ACTUALLY OWN THE
PRODUCT AND THAT'S HOW THEY ARE
GOING TO GET A BIGGER MULTIPLE,
SO THEY CAN'T BACK DOWN ON THESE
ISSUES.
LIZ: THEY OFFER THE COUNTER
PROFESSIONALS, LET ME SAY THIS
TO BE FAIR AND BALANCED, THE WTA
OFFERED A COUNTER PROPOSAL
OFFERING THE WRITERS, DID I GET
THIS RIGHT, 80% OF ONE
PERCENTAGE POINT OF THEIR
PROFITS FROM PACKAGING FEES FOR
A TV SERIES AND SOMEBODY SAID
THAT WORKED OUT TO LESS THAN A
PENNY ON EVERY DOLLAR OF THE
WRITERS' BACK END THAT AGENTS
ARE GETTING?
IS THAT A NONSTARTER?
>> WELL, IT SHOULD BE A
NONSTARTER BECAUSE YOU HAVE TO
LOOK AT THE ISSUE IN TOTAL.
IT'S ABOUT A CONFLICT OF
INTEREST.
SO THEY ARE SAYING WE WILL GIVE
YOU A LITTLE BIT OF KICKBACK ON
THE PACKAGE FEES WHICH ARE
ALREADY DIMINISHED BECAUSE OF
THE NATURE OF THE BUSINESS WITH
STREAMING SERVICES NOT PAYING
PROFITS TO ANYBODY ANYMORE.
SO THEREFORE, THEY ARE TRYING TO
SAY WE ARE GOING TO GIVE YOU
THIS AND LET'S MAKE THE WHOLE
ISSUE GO AWAY, AND NOT GIVING IN
ANYTHING ON THE IDEA THAT THESE
TALENT AGENCIES CAN BECOME
STUDIOS WHICH IS THE BIG
CONFLICT OF INTEREST AND WHERE
THE REAL MONEY IS GOING TO BE
GOING FORWARD.
LIZ: WELL, WE KNOW THIS.
WME IS VERY INTERESTED IN
LAUNCHING AN IPO VERY SOON.
THEY PROBABLY ALL ARE.
I KNOW ICM USED TO BE PUBLIC.
ARI EMANUEL, THE FAMED AGENT,
ARE THEY HURTING RIGHT NOW?
DO WRITERS REALLY HOLD THE KEYS
AND THE POWER RIGHT NOW?
COULD THIS AFFECT THEIR ABILITY
TO TAKE IT PUBLIC?
>> IN THE SHORT RUN, IT PROBABLY
WON'T.
THE THING IS, IT'S NOT -- THE
WGI DO BELIEVE IT'S GOING ABOUT
IT THE WRONG WAY.
I THINK THEY ARE RIGHT IN THEIR
CLAIMS, FOR SURE, 100%, BUT
THERE ARE SMARTER WAYS OF GOING
ABOUT IT BY NOT PUTTING IT ON
THE INDIVIDUAL CLIENTS TO HAVE
TO FIRE THEIR AGENTS AND
ULTIMATELY, EVEN THOUGH THEY ARE
SORT OF SEPARATING FROM THEIR
AGENTS, THEY ARE NOT GOING AND
TAKING NEW AGENTS WHICH WOULD
MAKE WME UPTIGHT BECAUSE THEN
THEY WOULD REALLY BE LOSING
BUSINESS.
AS THINGS GO ON, YOU KNOW, THAT
MIGHT BECOME WORSE, BUT MOST
PEOPLE MAKE DEALS FAR IN ADVANCE
SO THE AGENTS CONTINUE
COLLECTING ON THE DEALS THAT
HAVE BEEN MADE IN THE PAST SO IF
THIS DOESN'T LAST VERY LONG,
THEY WILL PROBABLY BE OKAY.
I THINK THAT THE SMARTER MOVE
FOR THE WGA WOULD HAVE BEEN TO
GO TO COURT ON BEHALF OF THEIR
MEMBERS.
GO TO COURT ON BEHALF OF THEIR
MEMBERS BECAUSE THERE IS A FAIR
BUSINESS STATUTE IN THE STATE OF
CALIFORNIA AND THERE'S THE
SHERMAN ANTITRUST ACT.
IT WOULD SEEM TO ME AND MANY
OTHER LAWYERS WHO HAVE COME
FORWARD AND SAID THIS THAT THEY
ARE IN VIOLATION OF THOSE
STATUTES, AND IN A LAWSUIT, IF
YOU STARTED TO OPEN UP IN
DISCOVERY THE E-MAILS OF THE
TALENT AGENCIES AND SEE HOW THEY
REFER TO THE PACKAGE FEES AND
WHAT THEIR STRATEGIES ARE, I
THINK IT WOULD BE VERY UGLY FOR
THEM AND THEY WOULD PROBABLY
HAVE TO SETTLE BEFOREHAND.
IT'S GOING TO TAKE A SMARTER
STRATEGY AND BIGGER POWER MOVE
THAN JUST SAYING OKAY, YOU'RE
NOT MY AGENT RIGHT NOW ALTHOUGH
I'M NOT GOING TO ANOTHER AGENCY,
AND ALLOW THE AGENCIES TO
CONTINUE TO COLLECT COMMISSIONS
FOR THE SHORT RUN.
I DON'T THINK THAT'S GOING TO
GET IT DONE.
LIZ: IT MIGHT COME TO THAT.
MIGHT COME TO THAT.
GAVIN POLONE, MY HIGH SCHOOL, AW
I WENT TO HIGH SCHOOL AND
COLLEGE WITH HIM.