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SAG Grants Agents New Powers: Eastern board approves waiver, breaking tie in West.

The Screen Actors Guild has approved a waiver that will give talent agents broad new powers and privileges. The waiver will allow talent agents to engage in the distribution and financing of motion pictures and to have non-controlling interests in production companies.

The waiver will also allow companies affiliated with studios and networks to own controlling interests in talent agencies as long as the studio or network does not control the "interested" company. The waiver will also allow companies engaged in the production or distribution of motion pictures, other than studios or networks, to own an interest in an agency. The two-year waiver of SAG's agency regulation will not, however, allow agents to act as producers of films and TV shows.

The waiver got SAG's approval Monday night at a New York meeting of the Eastern section of SAG's national board of directors, which broke the tie vote-21 to 21-that had deadlocked the board's Western section last week. The motion that was carried by the SAG board was "to approve the recommendation of senior staff and the negotiations committee of the Agents Relations Committee to grant the ATA waiver as outlined in the amended documents presented to the board, and that the board authorize the national executive committee to negotiate the remaining items to the best possible resolution."

The Association of Talent Agents asked for the waiver in December so talent agents could compete on a level playing field with Hollywood's personal managers. Many agents, tired of the regulations imposed on them by SAG and the state, have quit the agency business to become personal managers, who are unlicensed and unregulated.

Many SAG members opposed to the waiver believe that it is fraught with conflicts of interest.

"It's a terrible conflict," former SAG third vp Ron Soble said. "It's just awful. It creates a blatant conflict of interest for the agent who, while having an interest in a production, is negotiating for his client's participation in that production."

The waiver, however, contains numerous safeguards designed to eliminate any such conflicts. The waiver states that traditional studios or networks "shall not directly own any interest in an agent." Companies barred from directly owning an interest in an agency include Warner Bros., Universal, Disney, Miramax, Sony Pictures, DreamWorks, 20th Century Fox, MGM, New Line, Paramount, ABC, NBC, CBS, the Fox network, the WB, and UPN.

The waiver also requires an agent who owns a noncontrolling interest in a production company to disclose that interest "to each client whom an interested company proposes to employ." The waiver also states that "the agent's fiduciary obligation to the actor shall not be impaired or diminished by reason of the agent's interest in the interested company," and "the actor may seek independent counsel or representation prior to entering into a contract with the interested company." Similar assurances are provided in the event a company affiliated with a studio or network buys a controlling interest in an agency, or when entities engaged in the production of motion pictures buy an interest in an agency. The ATA has also offered to set up a fund to protect actors' money in the event an agency goes bankrupt or otherwise defaults.

SAG has also made numerous "counterproposals" to the ATA that are designed to further protect the interests of actors. Some of those counterproposals have been accepted by the ATA, some were rejected, and others would require further negotiations. SAG's counterproposals called on the ATA to "partner with SAG on initiatives to increase employment diversity within the entertainment business," to "cooperate with SAG's efforts to organize those employers who have historically been non-signatory to SAG contracts," and to "assist SAG's efforts in combatting runaway production."

Some SAG members opposed to the waiver, however, feel that no amount of "safeguards" will protect actors from the conflicts of interest that they believe are inherent in the waiver. They note that SAG already got into trouble once for granting waivers to a talent agency. In 1952, when Ronald Reagan was the guild's president, SAG granted a "blanket waiver" to MCA that allowed the company, which was then only a talent agency, to engage in the production of TV shows. MCA used the waiver and the agency's vast talent pool to become the largest producer of TV shows in America-and to buy Universal Pictures. In 1962, however, the U.S. Justice Department filed a complaint, signed by Attorney General Robert Kennedy, charging that MCA had violated the Sherman Antitrust Act. The Justice Department also named SAG as co-conspirator for having granted MCA the blanket waiver. In the end, however, the case was resolved when MCA agreed to sell off the talent agency portion of its business.

The new SAG waiver, however, is far narrower than the blanket waiver granted MCA 48 years ago. Unlike the MCA deal, today's agents will not be allowed to be directly involved in the production of films and TV shows. And unlike the old MCA waiver, the ATA has agreed to numerous other restrictions designed to protect actors from potential conflicts of interest, and SAG can revoke the new waiver after two years if it proves unsatisfactory or problematic.

Even so, the waiver is expected to greatly enhance the fortunes of agents in their ongoing battle with personal managers, and not everyone is going to be happy as agents become more involved in the production and distribution of motion pictures.

David Robb writes for The Hollywood Reporter.

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