SAG warns actors against side deals

LOS ANGELES, Jan. 25 (UPI) -- As talks continue on a new basic agreement between actors and talent agents, the Screen Actors Guild has issued an alert to its members to be wary of agents asking them to sign side agreements.

The basic agreement between the Screen Actors Guild and the Los Angeles-based Association of Talent Agents and the New York-based National Association of Talent Representatives expired last Sunday, but talks have continued on a new set of rules governing the ways in which agents may represent the interests of their clients.

The outcome could fundamentally change the entertainment industry's business model.

The 63-year-old agreement includes provisions intended to prevent conflicts of interest, by precluding agents from becoming producers and forbidding studio ownership of talent agencies with whom they negotiate for the services of actors, directors and other talent.

Agents have been trying to eliminate those restrictions, arguing that they are outmoded and unfair. The agents also argue that by being permitted to grow financially stronger, they'll be in better position to help their clients prosper.

Negotiators for the guild and the agents' associations have agreed not to discuss specific details of the talks publicly, but SAG posted a statement on its Web site promising to keep its members up to date.

"We believe that SAG has demonstrated its willingness to reach a reasonable and fair compromise and hope that the agents' negotiators view this negotiation in that light," said the posting. "We will continue to update you. To that end, we have created a special section on the SAG Web site to which you can refer to keep abreast of developments."

Union leaders used the posting to caution actors against signing side agreements with agents.

"During this period," said the message, "you should continue to consider yourselves represented by your current agents assuming you have otherwise valid contracts with those agents.

"Should your agent suggest signing any agreement which is not a SAG-approved agreement, it is essential both to your own interests and those of your actor colleagues that you do not sign such an agreement."

SAG said last Monday that it has presented a "comprehensive set of proposals" to ATA/NATR on Jan. 16, and that representatives of the union and the agents' associations have had substantive discussions "every day since."

The union said all of its proposals are premised on three principals -- that an artist is entitled to uncompromised representation, that agents must not become actors' employers, and that "any change to existing restrictions must benefit artists as well as agents."

If the union and the agents' associations do not come up with a new agreement to replace the expired deal, there is a possibility that talent agencies would be able to expand their business horizons by partnering with corporations or financial entities in ways that are prohibited under the existing compact.

Analysts anticipate that financial institutions such as American Express and Fidelity, advertising agencies and major corporations -- including Coca-Cola, McDonald's, PepsiCo and Procter & Gamble -- would enter into a competition to acquire the major Hollywood talent agencies, in a rush for preeminence in the new world of the entertainment industry.

Other suitors for the hands of the big Hollywood agencies -- Creative Artists Agency, Endeavor, International Creative Management, United Talent and William Morris -- would likely include high-tech firms Apple, Gateway and Microsoft.

The big five represent the most recognizable -- and most bankable -- names on Hollywood's A-list of actors, directors, producers and writers.

According to a report in the New York Post, the agencies are closely held companies run by small groups of partners with private stock distributed among a wider group of agents. Their respective values are not publicly known, but insiders told the paper that CAA is worth about $300 million and ICM about $250 million.

"Every major advertiser and every major corporation in America today is in the media business, whether they know it or not," said the head of one major agency who did not wish to be identified. "But if you look around the world at the cost of entry for the Viacoms, the Time-Warners, the Sonys, it's in the $20 billion to $80 billion category. Agencies became a very cheap entry point."

The agencies are recognized as experts in the fields of branding, marketing and maintaining client relationships. Leading agencies have also developed expertise in financing and distribution of entertainment products.