Why the WGA’s Packaging-Fee Ban Capped Agency Stakes in Production at 20%

For decades, major talent agencies collected two separate payments from studios producing television shows and films. They earned standard 10% commissions on the writers they represented. But they also negotiated direct payments called packaging fees—thousands or millions of dollars per project—for bundling that agency’s writers alongside directors, actors and other crew into a complete package ready for production. The practice was so profitable that by the 2010s, packaging fees rivaled or exceeded the commissions agencies earned from their clients’ salaries.

The Writers Guild of America saw packaging fees as a fundamental conflict of interest. When an agent earned more money from packaging a project than from negotiating a writer’s contract, the agent’s incentive changed. The agency’s stake in production companies—equity positions in subsidiaries that actually produced the shows—deepened that conflict further. In April 2019, the WGA implemented a Code of Conduct banning both practices. The rule prohibiting packaging fees took full effect on June 30, 2022. But agencies did not exit the production business. Instead, WGA franchise agreements imposed a 20% ownership cap, forcing agencies to restructure from majority stakeholders into minority equity partners in production ventures.

How packaging fees worked and why they threatened writer representation

Packaging fees were structured differently for television and film. In television, an agency collected what the industry called “3-3-10”: 3 percent of the license fee when an episode was produced, another 3 percent of the license fee deferred until the show achieved net profits, and up to 10 percent of the back-end when the show was sold into syndication. For a successful show, those percentages could generate millions over its run. Front-end fees alone ranged from $15,000 to $75,000 per episode, or about $300,000 to $750,000 per season—still far more than the 10% commission the agency earned from each writer.

Film packaging worked differently: agents helped assemble financing packages for independent films—typically a script, director and star—a practice that touched more than 1,000 such films in the five years before 2019, according to the Association of Talent Agents. The amounts varied wildly depending on budget and box-office performance, but major agencies used packaging fees to diversify their revenue beyond commissions.

The WGA’s objection was structural. When an agent’s parent company or affiliate held equity in a production company, the agent had financial incentives to push certain writers’ projects over others, to accept lower writer compensation, or to favor produced projects that generated packaging revenue over projects that generated only commission. The guild found that major agencies had created production subsidiaries—CAA with wiip, WME with Endeavor Content, and UTA with Civic Center Media—that employed large numbers of writers whose agents worked down the hall. The guild argued that this arrangement turned agents into their writers’ competitors rather than their representatives.

The timeline and the numbers
The WGA imposed its Code of Conduct on April 13, 2019. The packaging sunset period ended June 30, 2022. Major agencies sold off majority stakes: CAA sold a majority stake in wiip to JTBC Studios, and WME sold 80% of Endeavor Content to CJ ENM for $775 million in November 2021. Franchised agencies were capped at owning no more than 20% of a production or distribution company. WGA franchise agreements were set to expire April 12, 2025, pending year-by-year extension.

The 2019 campaign and the agencies’ capitulation

On March 31, 2019, WGA members voted 95.3 percent in favor of a resolution authorizing the guild to implement a Code of Conduct that would prohibit franchised agencies from taking packaging fees or owning film and television production companies—8,274 members participated, with 7,882 voting yes and only 392 voting no. The WGA implemented the Code of Conduct on April 13, 2019, after the largest agencies refused to sign it. The guild prepared to enforce the ban by revoking the franchise agreements that allowed agencies to represent WGA writers.

When the major agencies refused to accept the new terms, the WGA authorized members to fire their agents. By April 2019, more than 7,000 WGA writers had sent termination letters to their agencies. The scale was historic: a labor action in which workers simply ceased doing business with their employers’ designated representatives. The guild did not strike the studios; it struck the agencies by withdrawing the labor and revenue that sustained them.

The campaign lasted nearly two years. CAA signed a franchise agreement in December 2020. WME, the last major agency to sign, agreed to terms in February 2021. The final agreements prohibited packaging fees outright and capped agency ownership of production companies at 20 percent. The rule applied not just to the agencies themselves, but to their parent companies and major shareholders. If an agency had a private equity owner, that owner’s stake in any affiliated production company could not exceed 20 percent either.

The 20% cap and the agency divestitures

When CAA, WME and UTA signed new franchise agreements, they faced a choice: divest the majority stakes in their production companies or break the agreement and lose the right to represent WGA writers. All three agencies chose compliance.

CAA, which had built wiip into a significant studio with shows like HBO’s Mare of Easttown and Apple’s Dickinson, signed its franchise agreement in December 2020, along with a side letter binding its private equity owner TPG and other shareholders to no more than a 20 percent ownership stake in wiip. In June 2021, CAA sold a majority stake in wiip to Korean studio JTBC Studios. CAA retained a minority position, consistent with the 20 percent ownership cap.

WME’s divestiture was larger in dollar terms. Endeavor Content, the production subsidiary of WME’s parent company Endeavor, was valued at $850 million. In November 2021, Endeavor announced a deal to sell 80 percent of Endeavor Content’s scripted division to Korean entertainment company CJ ENM for $775 million. Endeavor retained the 20 percent stake allowed under the WGA agreement. Like CAA’s transaction, the deal was driven by the requirement that Endeavor, as the owner of WME, could hold no more than 20 percent of any production company.

UTA, the third major agency, signed its WGA franchise agreement on July 15, 2020. Like CAA and WME, UTA holds a production affiliate, Civic Center Media, subject to the same 20 percent ownership cap.

An agency’s minority stake pays off only if the production company itself succeeds, not through guaranteed packaging fees on individual projects.

What the 20% cap means for production companies seeking agency investment

The economics of agency investment fundamentally shifted. Before the ban, when an agency took a stake in a production company, packaging fees guaranteed revenue regardless of whether a project succeeded or failed. An agency could greenlight a project, take its packaging fee, and move on. Failure did not reduce the agency’s return.

That model became illegal once the packaging sunset took full effect in 2022. If an agency takes a minority stake in a production company—staying within the 20 percent cap—it earns returns only if the production company actually succeeds in developing, selling and producing films or shows that generate revenue. The agency cannot rely on packaging fees to compensate for underperforming projects or poor judgment.

For production companies pitching to agencies, this changes the economics: an agency’s minority stake pays off only if the production company itself succeeds, not through guaranteed packaging fees on individual projects.

Franchise agreements were set to expire in April 2025, pending extension

The WGA franchise agreements that established the 20 percent ownership cap were set to expire on April 12, 2025. The union and agencies can extend the agreements year-by-year, or renegotiate from scratch. If the agreements lapse without renewal, the WGA could reinstate the prohibition on packaging and production company ownership—either through negotiation or through the same withholding-of-labor pressure that succeeded in 2019.

For production companies and founders, the expiration creates uncertainty. The 20 percent ownership cap could become more restrictive, could be relaxed if agencies push for it, or could remain in place. The 2019 campaign succeeded through a combination of union solidarity and labor withdrawal; the outcome of a renegotiation would depend on whether the WGA could mobilize its members again and whether agencies have gained market power since the last deal.

Related coverage: How CAA and TPG Are Building a $250 Million Holding Company for Creator Businesses; How overall and output deals fund production companies, and why terms fell since 2021.

Photo: James Larrison · CC BY 2.0 · via Wikimedia Commons