The labor dispute over talent agency packaging fees is boiling over, but it sits outside of Hollywood’s triple-witching contracts.

In April, the Writers Guild of America instructed its members to fire their agents — and most did though not all, according to news accounts — igniting a static trench warfare that is ongoing.

In a boost to the WGA, some small and medium-size talent agencies recently signed franchise agreements with the union, breaking ranks with the Association of Talent Agents, an industry trade group.

WGA efforts to abolish the packaging practice date to the 1970s, when talent agencies began taking their fees directly from producers for movies and TV projects that were often built around scripts penned by their writer clients.

When talent agencies package projects, they don’t collect the normal 10% fee on earnings from their clients in the packaged project, which agencies assert is a benefit for talent.

For TV shows, the agency packaging fee is typically 3% of a TV network’s license fee plus a slice of profits, which can run $30,000-$100,000 per episode for multi-season TV series. Over the decades, packaging fees became a pillar of agency economics.

The WGA counters that the practice moves talent agencies into roles akin to employers and eats into the economics of film and television to the detriment of talent. It wants to align interests by having agencies compensated only when clients get paid.

Also, the WGA wants the talent agencies to abandon a budding trend of creating boutique, in-house Hollywood production companies.

Return to the 2020 Talent Agencies Special Report.