Agents Seek Change in Investor Rules

Some of Hollywood’s most powerful talent agents told state lawmakers Friday that their financial future is at risk unless they are unshackled from Depression-era rules restricting their ability to attract capital from film and TV producers and other potential investors.

Led by such agents as International Creative Management Chairman Jeff Berg and Creative Artists Agency Managing Director Bryan Lourd, the agents argued that an agreement between agents and the Screen Actors Guild is so restrictive that even an investment bank or consumer products company can’t invest in them because they make television commercials. Agents would like the freedom to sell a minority interest of up to 49% to investors, and also want to invest in potentially lucrative companies themselves.

But a group of SAG members, led by actors Richard Dreyfuss, Richard Crenna and guild President William Daniels, warned that any loosening of rules would result in conflicts between what’s best for their clients and their own financial interests.

“If an individual or company wishes to conduct production business, they have every right. They just shouldn’t be allowed to be agents,” Dreyfuss said.

The hearing of the Senate Select Committee on Regulation of Talent Agents, chaired by Sen. John Burton (D-San Francisco), comes amid an 18-month impasse between the Assn. of Talent Agents trade group and SAG over whether agents should be allowed to expand their businesses.

The hearing didn’t produce a conclusion about what legislators can or will do about what amounts to an internal industry issue. Burton called the hearings to find out more about the dispute and whether any of it runs afoul of California regulations governing agents. The regulations are in place largely to prevent actors from being exploited by unscrupulous representatives.

Under a 1939 agreement, SAG franchises agents who agree to the guild’s rules. Agents argue that those rules need to be changed because they are squeezed by rising costs and growing competition from unregulated managers, many of whom are acting as de facto agents.

As a result, agents have put SAG on notice that if the two sides don’t agree to a compromise giving agents more flexibility, the agreement will expire in January, freeing agents to do as they please.

But the hearing, which also attracted such well-known actors as Tyne Daly and Elliott Gould, evolved into a full-scale airing of complaints about how talent agents and managers operate, including the ease with which managers receive credits as producers on films and TV shows.

The actors argued that any new agreement with agents would require the approval of the state labor commissioner, adding that no agreement with potential conflicts of interest in it should be approved.

Actors also suggested that state laws governing agents be broadened so people other than an aggrieved actor would be allowed to report violations, that criminal sanctions be imposed on violators and that a loophole allowing unregulated managers to procure work for actors be closed. Under state law, only agents are licensed to procure work for actors.

Agents said it is critical for agencies to be strong financially to bring more clout to the table. Unlike in 1939, when stars and agents dealt exclusively with movie studios, they argued, today they sit across the table from a handful of global media giants created by multibillion-dollar mergers.

Berg added that agents don’t want to produce and don’t want film or TV credits even if production companies invest in them.

Committee members, including Burton and Sen. Kevin Murray (D-Culver City), suggested that many of the issues discussed aren’t likely to be touched by the Legislature and are better left to the industry. Burton also dismissed one suggestion by actors that people who violate state laws governing agents face criminal and civil penalties, saying no district attorney would prosecute such a violation when there are more important crimes to chase.

“I am really loath to get into criminal penalties for things that aren’t like real crimes,” Burton said.