Hollywood to change rules governing agents

One of the great taboos of Hollywood business ethics was close to being broken yesterday after a tentative agreement authorising talent agents to make investments in and take money from production companies that might want to hire their clients.

The deal between the Association of Talent Agents and the Screen Actors Guild (SAG) is intended to make the system more flexible at a time when business managers without ethical restrictions are increasingly taking over the agents' traditional role.

The new deal – planned to come into force on 1 July and still subject to a vote by the SAG – allows talent agencies to do limited business only with advertising agencies and independent production companies, not the big studios or their subsidiaries. They must also help to fight against the use of non-union labour.

Under a rule dating back to 1939, the SAG argued that allowing agents to enter production deals would make acting jobs subject to unfair competition. The firewall was temporarily – and controversially – taken down in the 1950s when Ronald Reagan, then SAG president, authorised his own agency, MCA, to purchase a stake in Universal Pictures. As a reward, Mr Reagan was helped to launch his political career.