"Hollywood is gearing up for a legal battle with private equity"

From Pitchbook, April 24:

More than 7,000 members of the Writers Guild of America fired their agents on Monday, marking the most dramatic moment to date in the labor organization's ongoing legal feud with Hollywood's four dominant talent agencies.

But the writers aren't necessarily mad at the agents themselves. Instead, they're directing their ire at the agencies' private equity owners, which have instituted the use of "packaging fees." The WGA, a labor union representing television, radio and film writers, argues that the practice is cutting into writer pay and represents a conflict of interest, and the battle over the fees is heating up.

Last week, the WGA sued Silver Lake-backed William Morris Endeavor (WME), TPG Capital-backed Creative Artists Agency (CAA) and United Talent Agency, which received a roughly $200 million investment from Investcorp and Canadian pension manager PSP Investments last August. In the lawsuit, the WGA argues that the use of packaging fees violates state and federal law. The union implemented a new code of conduct earlier this month that essentially banned the fees, but so far, the agencies have refused to sign, leading to the suit and the mass firings. And the WGA is blaming PE.

"The top three agencies now operate under the pressure of private-equity-level profit expectations," the WGA said in a report released in March. "This has caused a seismic shift away from an agency's core mission of serving clients over all else, fulfilling its fiduciary obligation to always act solely in the best interests of clients and to avoid conflicts of interest."...MUCH MORE