CAA, WME and UTA lead coalition in favor of law requiring streamers to devote 50% of their budgets to independent productions

In a rare team-up of major Hollywood talent agencies, CAA, UTA and WME have joined forces as founding members of the American Entertainment Alliance – which, among other things, wants US law to require streaming providers like Netflix, Prime Video, HBO Max and Disney+ to devote at least 50% of their budgets to independent productions.

Alongside the big three agencies, other founding members of the coalition include Anonymous Content, Jason Blum’s Blumhouse, Ron Howard and Brian Grazer’s Imagine Entertainment, Jeff Sagansky, Legendary Entertainment, MRC, North Road, Producers United, Propagate Content and Ziffren Brittenham. The AEA was announced Thursday in a New York Times article.

“As film and television consolidate, we need a regulatory framework that puts creators first, protects industry workers and preserves competition,” Jay Sures, UTA vice president and board member, said in a statement.

The coalition’s launch comes a week after David Ellison’s Paramount completed its purchase of Warner Bros. Discovery, as part of a $111 billion megamerger consolidating the film and television businesses of two of the industry’s biggest players.

On its recently launched website, the American Entertainment Alliance states: “Ending entertainment market consolidation benefits all Americans – from crew members at the bottom to writers and actors to viewers at home. » The coalition says entertainment jobs in the United States “are at risk of collapse due to a power imbalance in the American film and television industry.”

AEA “is a coalition of independent production companies, talent agencies and entertainment leaders focused on strengthening competition, expanding opportunities for independent producers and creators, and supporting film and television production in the United States,” the group said in a statement. “The alliance responds to a fundamental restructuring of the entertainment industry. Studio consolidation and streaming have significantly reduced the market for independent content, disrupting the economics of film and television.”

In addition to a law requiring streaming providers to allocate half of their content budgets to content from U.S. studios or independent producers, the American Entertainment Alliance wants licensing and syndication rights for TV shows and movies to revert to the production company (or outside studio behind the project) after a few years.

The AEA also wants federal policies to “bring production back” to the United States. “Foreign governments have spent two decades buying American productions with tax credits and subsidies,” the group says on its site. “Between generous overseas incentives and consolidation at home, filming in the United States no longer makes financial sense. We want a federal policy that makes it economically rational to write, film and produce here.” Additionally, the coalition wants to “demand transparency in the algorithms that determine what audiences discover, to prohibit platform self-preferencing.”

In a statement responding to the AEA announcement, the Streaming Innovation Alliance – whose members include Netflix, Disney, NBCU’s Peacock, Warner Bros. Discovery and Paramount (now merged as Skydance) and TelevisaUnivision – criticized the call for “brutal government mandates” governing the green light process.

“American audiences in the streaming era have more access to a wider variety of movies and shows than at any time in history. Viewers decide when, where and how to watch at different price points (including free, ad-based options) that make sense for their families,” the Streaming Innovation Alliance said. “That’s why more than 70% of Americans view streaming favorably (with even higher support among younger consumers and in communities of color) and nearly 75% think streaming services should be regulated the same, or less, than they are today.”

The Streaming Innovation Alliance added: “Adding heavy-handed government mandates to the green light process will only dampen production and discourage creative risk-taking – turning back the clock on decades of streaming-fueled progress.” »

The launch of the American Entertainment Alliance initiative also comes as Hollywood studios and unions have reached broad consensus in favor of a federal production incentive. Lawmakers introduced a measure in Congress last month to provide a 20% credit for U.S. labor costs. The measure includes a 5 percent bonus for independent films and has the support of the Independent Film and Television Alliance, as well as the Motion Picture Association and a wide range of other entertainment interest groups.

The American Entertainment Alliance attributes the industry’s current state of consolidation to the end of the FCC’s financial interest and syndication rules more than 30 years ago.

In 1970, the FCC implemented the Financial Interest and Syndication Rules (aka Fin-Syn), which prohibited the big three broadcasters at the time (ABC, CBS, and NBC) from owning the programs they aired or controlling their syndication. Under these rules, independent producers were guaranteed access to radio distribution and could retain their syndication rights. The FCC ended the Fin-Syn rules in 1993.

“When these rules were repealed, consolidation followed,” explains the AEA.