John Wells Says Industry “Will Have To Return To More Shared Rights Agreements” In Response To Jeff Sagansky’s Speech About Vanishing Backend – HRTS

Nellie Andreeva
·3 min read

It became the speech heard around Hollywood — Jeff Sagansky’s blistering comments last week about the adverse impact the proliferation of the streaming-driven “cost plus” business model has had on profit participation struck a chord in the industry. A week after Deadline wrote about the media investor and producer’s speech at a NATPE event, the discussion over the issue continues, with agencies and unions mulling ways to step in and help the creative talent they represent.

Sagansky’s scathing address was brought up today at an HRTS luncheon where producer John Wells, a force within the WGA and former longtime president of the guild, offered his comments.

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“I do believe the industry over time will have to return to more shared rights agreements,” he said. “Everything costs too much. It’s hard for companies to make money without enough revenue. Cost plus is complicated. They really remove the ability for a huge hit to generate profits for most creatives.”

Employed by Netflix, Amazon, Disney and Warner Bros., the cost plus model makes for “brutally unfair” and “ridiculous” deals writers, directors, producers and actors “are being forced to sign,” Sagansky said in his speech. Creative talent gets premiums (10%-20%) over their regular fees upfront but “would never again get paid” even if a show they make is a hit and keeps amassing billions of views over decades and keeps bringing in relicensing, advertising and other revenue to the streamer that owns it, he argued.

Wells, who has done numerous successful shows under the traditional broadcast model, including ER and Shameless, was on the panel representing hit limited series Maid on Netflix, the streamer that introduced the cost plus template. He was asked about Sagansky’s rallying cry for producers, writers, actors and agents to go to the Justice Department and Congress and try to get them to intervene and restore the business paradigm that allows creatives to own lucrative backend on their shows in the streaming age much like the government did in 1970 with the he FCC passed the Financial Interest and Syndication.

Asked if the Justice Department should intervene in this case, Wells quipped, “As long as we give it a couple of decades to get there,” adding, “The Justice Department is an alternative. It’s not going to change the business model anytime soon.”

That does not mean that the current grassroots movement within the industry is not going to bring about change and the current business framework, which makes for “a golden age of content production and the dark age of creative profit sharing,” according to Sagansky, will remain in place for the foreseeable future.

“My suspicion is that there will be major changes,” Wells said during the Q&A moderated by Variety’s Michael Schneider. “The model we all shared between companies is a more sustainable long-term model.”

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