Negotiators for the Screen Actors Guild this weekend reached a tentative agreement with the Assn. of Talent Agents that would allow agencies to make and receive investments in companies involved in production, sources said Sunday.
The proposed three-year contract would significantly change the ground rules of Hollywood that have been in operation since 1939--the same year "Gone With the Wind" and "The Wizard of Oz" hit the silver screen.
The rules were drafted to curb conflicts of interest and protect actors from being exploited by unscrupulous talent agents by forbidding agents from representing actors while also working on behalf of producers or movie studios.
Agents have pushed for more than two years to loosen the rules, saying the provisions were outdated and prevented agencies from attracting much-needed capital from companies that have only marginal interest in film production such as advertising agencies or investment bankers.
Under the new proposal, independent production companies and large advertisers would be allowed to invest as much as 20% in a talent agency, the sources said.
Movie studios and television networks still would be forbidden from owning or investing in a talent agency. The prohibition would extend to a studio's parent company, such as Viacom Inc., AOL Time Warner Inc., Walt Disney Co., Vivendi Universal, News Corp., Sony Corp. or Metro-Goldwyn-Mayer Inc., or any subsidiary of those companies.
"Under no circumstances will the agents become the employer of the actors they represent or become a producer,'' said a SAG source involved in the negotiations, who asked not to be identified.
The agreement, which would take effect July 1, still must be approved by SAG's board of directors and membership, and be ratified by talent agencies. The SAG board will meet on March 11 to consider the proposed new pact, which amends and modifies portions of the 1939 "master franchise agreement'' while leaving conflict of interest and many other provisions intact.
The entire agreement, including the provisions first drafted during the Depression and those agreed to this weekend, would then expire in July 2005, the sources said.
SAG and the Assn. of Talent Agents plan to announce the agreement today. The two sides imposed a news blackout during the contract talks, but sources said Sunday that both sides won important concessions during five weeks of arduous negotiations.
The previous agreement expired Jan. 20, but the two sides continued to work under the old rules while they continued negotiations.
The agreement would represent a sea change for Hollywood. The 1939 agreement had no termination date and the rules--called evergreens--extended into perpetuity. However, that structure made it impossible for talent agents to make changes since those representing SAG members must agree to abide by the "master franchise agreement'' before securing an actor client.
Changing the agreement to one that expires in three years paves the way for agents--and actors--to forge new rules.
"This is a vast difference and gives both sides an opportunity to make changes,'' said one executive close to talent agencies who asked not to be identified. "But this is more than just an agreement, it's a new partnership between the actors and the agents.''
The talent agents have tentatively pledged to become more involved in SAG's efforts to stem runaway production that has become a drain on the local economy as well as other regions around the country. New York, Chicago, North Carolina and other areas have watched their bustling business of movie or commercial production pack up and head north to Vancouver and Toronto and halfway around the world to Australia.
Although the details have not been worked out, the talent agents will assist SAG members in making sure that their jobs fall under the provisions of SAG labor agreements--no matter where the movie or TV production is shot. There has been some confusion whether SAG contracts could be enforced when a production is moved to a foreign location.
SAG's national board has established May 1 as the date for the guild to begin enforcing the provisions of SAG agreements for all productions that involve SAG members, no matter where a production is filmed.
The proposed new agreement with agents, according to sources, also will set up a "bond'' to protect actors should a talent agency go out of business. During the last two years, two or three smaller firms have shuttered, and actors have gone without their paychecks, which producers often send directly to the actor's talent agent or manager. Now, the Assn. of Talent Agents will contribute an undisclosed sum to start a SAG fund that actors can tap if an agency defaults on payments.
SAG also would be granted legal standing to represent actors if an agency files for bankruptcy. The proposed agreement also would set up an "Actor Benefit Fund," to accept contributions to SAG's health plan by talent agents.
One proposed provision would allow agents to receive commissions on an actor's residuals for works on home video--for as long as three years after the initial release of a theatrical motion picture. However, for an agent to qualify for a commission, the actor would have had to receive salaries that exceeded union scale. The provision would not apply retroactively, meaning video commissions would not be owed on work negotiated or shot before July 1.
Although the agreement would allow some production companies to invest in an agency, SAG sources say performers would be protected because of a proposed provision that would require full disclosure when an agent has made or received an investment in or from an industry-related company.
"This agreement will empower SAG members to make informed choices about who their franchised agent will be,'' said a SAG source who asked not to be identified.