Packaging deals in the entertainment industry: a bargaining approach

ABSTRACT Creation of a television or movie project requires the bundling of inputs – writers, actors, directors – into a coherent package that can be produced and distributed. Traditionally this bundling was done by studios, which then negotiated compensation deals with input suppliers via their agents. However, large talent agencies have increasingly engaged in the practice of “packaging,” which involves creating vehicles for their clients and selling the bundled projects to studios. The union for screenwriters has challenged this activity as constituting an unfair business practice, arguing that it creates a conflict of interest on the part of agencies. This paper evaluates this claim in a bargaining framework with transaction-specific investments and a possible holdup problem.