December 16, 2020
CAA Franchise Agreement and Sideletter
The WGA and Creative Artists Agency (CAA) have reached a deal on a franchise agreement. Therefore, effective immediately, CAA may once again represent Guild members for covered writing services. WGA and CAA have also agreed to withdraw the legal claims each has brought against the other in federal court.
The CAA agreement contains the same terms as those set forth in the ICM/UTA deal, and protects writers in the three fundamental areas that the Guild has emphasized since the beginning of the campaign:
- Contract, deal memo, and invoice information will be provided to the Guild, allowing the WGA and the agency to partner in systematically addressing late pay and free work.
- Strict 20% limitation on agency ownership of production entities.
- A sunset period that ends the practice of packaging by June 30, 2022.
Over the past several months, the WGA, CAA, and its private equity owner TPG negotiated the steps the agency must take to come into compliance with the franchise agreement (i.e., the divestiture from wiip) and protections to address the unique conflicts of interest presented by CAA’s ownership by TPG. There are three layers of additional protection for writers that have been negotiated in the side letter. Here’s a brief summary of these additional terms:
- In compliance with the Franchise Agreement, CAA and TPG placed their ownership interests in wiip in an irrevocable blind trust with a clear mandate for the trustee to sell that interest down to the required 20% or less. CAA and TPG further agreed to relinquish operational oversight over wiip while their ownership interests are in the blind trust. The side letter provides a reasonable deadline for the sale of CAA and TPG’s interests in wiip, and for serious consequences if the sale is not completed by that date, including the right for the WGA to suspend CAA’s ability to represent writers, and the requirement that CAA place any wiip-related fees or commissions it receives during the suspension period into escrow until the sale is completed. The Guild has agreed to keep the date confidential so as not to impact the trustee’s negotiations with potential buyers.
- The side letter insures that CAA and any TPG entity will not jointly have a greater-than-20% ownership interest in any other affiliate production company. In addition, the TPG fund that owns CAA agreed that it will not have a greater than 20% ownership interest in any affiliate production company, regardless of whether CAA also has an interest in the entity.
- The side letter also has precautions for situations that involve TPG entities—i.e., investment funds –that have no ownership interest in CAA but have a greater than 20% interest in a production company. TPG has agreed, going forward, to disclose the identities of all such entities. As of today, there is only one such company, and it is not an MBA-signatory. If CAA negotiates a deal with any such entity, even if CAA does not, itself, have an ownership interest in it, the agency must disclose to its writer clients the existence of TPG’s ownership. CAA must also provide the Guild a copy of the offer and final deal points. This transparency will allow the Guild to make sure that CAA is negotiating appropriate deals for writers in these circumstances, and that TPG’s ownership interest is not suppressing the value of writers’ services. If there are irregularities in the writer deals—such as depressed pilot script fees, for example—the Guild will have the information it needs to investigate and take any necessary corrective action with CAA.
The Guild appreciates the hard work of both CAA and TPG in working through the complicated issues involved in this negotiation.
You can read a red-lined version of the CAA franchise agreement here. The CAA/TPG side letter is here. Click here for the list of all franchised agencies.
WGA Agency Negotiating Committee
Chris Keyser, Co-Chair
David Shore, Co-Chair
Meredith Stiehm, Co-Chair
Deric A. Hughes
Tracey Scott Wilson
Patric M. Verrone
David A. Goodman, President WGAW, ex-officio
Marjorie David, Vice President WGAW, ex-officio
Michele Mulroney, Secretary-Treasurer WGAW, ex-officio
Beau Willimon, President WGAE, ex-officio
Kathy McGee, Vice President WGAE, ex-officio
Bob Schneider, Secretary-Treasurer WGAE, ex-officio