28 V I D E O A G E January 2022 (Continued from Page 26) The Age of the Agents The Seven Sisters • Creative Artists Agency (soon CAA-ICM) • William Morris Endeavor (WME) • United Talent Agency (UTA) • The Gersh Agency • Paradigm Talent Agency • Agency of The Performing Arts • Verve Talent and Literary Agency Understanding The 3-3-10 Packaging Fee When the key elements of a TV series (a showrunner, a script, a star or director) are “packaged” by an agency and offered to a TV studio or a TV network, the agency acts like a producer, and they want to be compensated with packaging fees, or by owning content through a sister company (i.e., an affiliate production), instead of getting a 10 percent commission from their clients. Packaging fees for scripted projects consist of three parts, and are referred as a 3-3-10 package, which is paid to the agency by the buyer (a studio or a TV network). The first three percent is from the budget of the project. The second three percent comes out of 50 percent of net profits. The 10 percent is the maximum percentage of money received after some costs are deducted from the revenue. This element is called Modified Adjusted Gross Receipts. The Writers Guild of America (WGA, or writers’ union) objects to the packaging fees because, if agents aren’t commissioned, then they have no incentive to negotiate for higher writer salaries. Agents are involved in putting together (or packaging) independent films, as well. These films are financed and sold by the agency’s affiliate, but are considered a conflict of interest by the WGA since, in effect, the agency becomes the writer’s boss. In addition, since the first three percent is based on the budget, the buyer may want that to be absorbed in the budget, which leaves less money to create production value on the screen. Gary Marenzi, a former head of Entertainment Sales & Partnerships at Endeavor Content, the affiliate production unit of talent agency William Morris Endeavor (WME), explained that there weren’t “any limitations to the content we could represent at Endeavor — we were not limited to the WME-driven packages or deals. As long as the project made economic sense and satisfied our quality standards, we were free to pursue any deal. There was a slight advantage of knowing about some of the WME projects at an early stage, but we still had to compete with other distributors to get involved with them. We were involved in many programs that were not packaged by WME or had any other WME involvement, as well as many WME-generated projects that we successfully competed for.” However, it has been observed that talent agencies’ affiliate sales companies tend to operate differently from traditional content distribution companies, maintaining the same low-key approach of the agencies, with reduced visibility, and little marketing efforts (e.g., press releases, trade advertising). Recently WME sold 80 percent of Endeavour Contents to South Korea’s CJ ENM for U.S.$775 million. The Best Way to Make Sales...
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