Showbizreporting's Blog

January 13, 2010

Digital Media Law

Filed under: Entertainment — showbizreporting @ 3:49 pm
Tags: , , , ,

Baby You Can Drive My Car: Hollywood Health Plans May Have to Pay “Cadillac Plan” Tax
By Jonathan Handel
Posted: 12 Jan 2010 11:59 PM PST

Hollywood unions have long bargained for great health benefits, often foregoing a portion of wage increases in order to fund those benefits (as well as valuable pension benefits). Those health benefits, which are available to middle-class members as well as wealthy stars, would be the envy of most of the country if people elsewhere knew of them: the DGA’s top-tier plan reportedly features 10% in-network co-pays and a deductible of $325 per person in a world where 30% copays and $1,000 deductibles are more common.

However, the Senate version of health care reform would tax a portion of the cost of such high-end plans, resulting in costs that would probably be passed on to members in the form of higher premiums and/or benefit cuts. The President met with union leaders Monday and indicated he may compromise on the issue. Like everything in health care reform, it’s all up in the air until something passes – or if something passes – in this health-insurance benighted nation. For more, see the piece on yesterday’s NY Times Media Decoder blog.

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October 20, 2009

Carol Lombardini to top AMPTP

Carol Lombardini to top AMPTP
Org names new president
By DAVE MCNARY

Lombardini_carol

The key players for the next round of guild contract talks are now in place. With another complex set of labor negotiations looming, the majors opted for stability by promoting Carol Lombardini to prexy of the Alliance of Motion Picture & Television Producers. Her appointment comes eight months after Nick Counter announced his retirement following nearly 30 years as the majors’ top labor negotiator.
Lombardini is likely to face a much different dynamic in the next round of talks than she and Counter experienced in the last round, when the WGA went on strike for 100 days and SAG took a year to close its feature-primetime deal.
Presidential elections at the WGA West and SAG last month ushered in regime changes and leaders who have vowed to tone down the confrontational rhetoric that characterized the 2007-08 contract talks.
Still, the guilds and AMPTP will have to grapple with issues regarding new-media compensation, as they evaluate the residual formulas that were introduced in the most recent contracts. They’ll also likely have to address shortcomings in the guild-sponsored health and pension plans, which have been battered by the economic downturn.
The AMPTP is contractually bound to begin negotiations with SAG this time next year for the successor to the contract that expires June 30, 2011, as does the DGA deal. The WGA’s pact expires two months earlier.
Lombardini has been involved in more than 300 negotiations during a 27-year career at the AMPTP. She’s been acting prexy since Counter’s departure in March.
In the end, Lombardini was the unanimous choice among the AMPTP member companies following interviews with half a dozen candidates. Sony Pictures topper Michael Lynton, Warner Bros. chairman-CEO Barry Meyer and NBC Universal chief Jeff Zucker made up the committee that oversaw the selection process.
Lombardini, viewed as more low-key than Counter, has specialized in the drafting and interpretation of contract language, while Counter focused on negotiations and strategy — a complex task given the different priorities for the congloms that dominate the AMPTP.
“I look forward to leading the AMPTP as the businesses of our member companies evolve,” Lombardini said. “I am also committed to building on my longstanding relations with our bargaining partners across the entertainment industry. The most important challenge we face is finding ways for the companies and guilds and unions to reach agreements that do everything possible to keep the business vital.”
Counter was able to maintain labor peace in Hollywood for much of his tenure at the AMPTP but became a much-vilified figure during the WGA’s walkout. Counter’s stance on new media and strategy of pursuing the controversial notion of shifting all residual formulas to a recoupment-based blueprint was widely viewed as helping solidify the resolve of WGA members to support the strike.
Studio honchos have been pleased with recent political developments within the unions. SAG has seen its leadership tilt toward a more moderate stance in the past two elections, as illustrated by Ken Howard’s appointment as prexy last month. John Wells took the reins of the WGA West, a move seen as a vote by scribes to tap into his biz relationships and experience in contract negotiations.
When Counter announced his retirement in February, the AMPTP employed a search firm that interviewed about a dozen candidates. It’s understood that Lomdardini emerged as the favorite due to her extensive background in hammering out the nuances of the labor agreements.
“She has a proven track record as a negotiator, deep knowledge of labor issues and excellent relationships throughout the industry with guilds, unions and the member companies alike,” Meyer said in a statement.
Lombardini, an attorney by training, has served as general counsel; VP of legal affairs; senior VP of legal and business affairs; and exec VP of legal and business affairs.

http://www.variety.com/article/VR1118009982.html?categoryId=13&cs=1

September 8, 2009

A Message from Ken Howard

Subject: A message from Ken Howard

Fellow Hollywood SAG Members,

The most important question in this election is this: What steps must we take to strengthen the Screen Actors Guild and make sure we can negotiate the best possible contracts? I’ve described very clearly what I think the answer is. We need to build close relationships with all our fellow entertainment unions and approach future contract negotiations as a united front. Most critically, the two unions representing performers in our industry must work together as one. The surest way to achieve that is by merging SAG and AFTRA into one powerful national union.

Please go to http://www.facebook.com/l/;uniteforstrength.com/?p=734 and you’ll see important video messages from Tom Hanks, William H. Macy, and Felicity Huffman explaining why they – along with Sally Field, Tony Shalhoub, Hector Elizondo and so many other SAG members – agree with me.

My opponent, Anne-Marie Johnson, sees it differently. She and her group, Membership First, chose to fight with AFTRA heading into last year’s TV/Theatrical negotiations, and it cost us terribly:

    – SAG members lost tens of millions of dollars in increases and countless job opportunities during a ten month contract stalemate.

    – SAG covered only 10% of the 2009 TV pilots.

    – Lower revenues led to a 2-year budget deficit of $10 million, requiring 8% of SAG’s staff to be fired.

    – Reduced earnings meant fewer members qualified for SAG health insurance and pension credits.

    – Lower earnings contributed to the need for major changes to SAG’s pension and health plans, which will take effect in January, including higher health insurance premiums and deductibles, and a lower pension accrual rate.

With results like these, it’s no surprise that Anne-Marie Johnson and Membership First are now trying to sound like they embrace the idea of working together with AFTRA. But what you hear them saying may be very different from what they mean.

    – They say they want “all performers in one union”… but they steadfastly oppose merger, the obvious way to accomplish that.

– They say SAG should “share services” with AFTRA… but they want to immediately end the legal agreement that prohibits SAG and AFTRA from publicly attacking each other.

– They say SAG and AFTRA must negotiate together in 2010… but Ms. Johnson pledges her first act if elected would be to ask performers who are members of both unions to choose between them. Is she suggesting that SAG should raid AFTRA’s membership? That would be ruinous.

We CANNOT afford to go back to the go-it-alone approach of Anne-Marie Johnson, Connie Stevens, and Membership First. Unite for Strength is dedicated to protecting the future for actors. If you agree that SAG is made stronger by working in partnership with our fellow entertainment unions, please vote for me, Amy Aquino, and all the Unite for Strength board candidates.

Respectfully,

Ken Howard

VOTE USAN – USF

http://www.facebook.com/l/;www.UnitedScreenActors.com

August 6, 2009

Whose Pay is Better?

Actors and filmmakers are getting less up front. Call it the acceptance phase.
By Patrick Goldstein – August 5, 2009 – LA Times

It wasn’t so long ago that, after putting in years building up his career, Denzel Washington finally cracked the $20-million star salary club. But now he’s taking a sizable pay cut to star in the upcoming 20th Century Fox film “Unstoppable” after the studio threatened to pull the plug on the picture in order to get its costs down.

David Fincher used to make $8 million to $10 million per picture, along with a nice piece of first-dollar gross, as an A-list director. But he’s taking considerably less money — and no first-dollar gross — to get his new Sony Pictures film, “The Social Network,” off the ground.

The same goes for “Dinner for Schmucks” star Steve Carell and director Jay Roach. They may be two of the top comic talents in the business, but the duo aren’t getting their usual salary quotes for the upcoming Paramount movie. When Julia Roberts told Disney she wouldn’t cut her salary to star in the recent comedy “The Proposal,” the studio bailed on Roberts, hiring Sandra Bullock for even less than what it had offered Roberts. The movie turned out to be one of the summer’s biggest comedy hits.

What’s going on here? In Hollywood, whenever a studio executive would sit down to negotiate with an agent for an actor, writer or filmmaker, one of the first questions volleyed across the table was: What’s your client’s quote? If you’d written, directed or starred in a big hit, or even enjoyed a couple of modest successes in a row, your quote went up. And unless you ran off to make some nutty labor-of-love indie film where everyone committed suicide in the third act, your salary level was assured. That quote stuck like glue. Even after a few stinkers, a big star could still get their $15- or $20-million fee.

Not anymore. For basically everyone except Will Smith, salary quotes have evaporated, simply vanishing into thin air, as have the much-coveted first-dollar gross deals that top actors and filmmakers used to get. As one successful producer put it: “Quotes and first-dollar gross have just flown out the window — the studios simply won’t make those deals anymore,” he explained. “It’s all about what the role is worth in that particular movie. The studio pays for the lead actor or actress, but after that, well, the talent is just getting grinded. Everyone else is lucky to be working.”

(You’ll notice that no one is quoted by name here because, in addition to the natural Hollywood aversion to talking about salaries, the studio chiefs don’t want to look like they’re gloating about reining in talent costs — although they often are, gloating that is — while the agents and managers don’t want their clients to think that they’ve been largely powerless to stop the new austerity measures, for fear that their talent will skedaddle to another agency.)

In Hollywood the new mantra is: “cash break zero.” Instead of paying out first-dollar gross, where top talent would start collecting huge wads of cash right off the top from the very first box-office receipts, the studios are now constructing deals where the talent participates in the profits from a film only after the studio has recouped both its production and marketing costs. The new arrangement can still lead to huge windfalls — in part because the studios are now giving top talent a far bigger piece of the home video take than they could get before. But the talent only reaps the rewards if they are willing to bet on themselves and can deliver a hit.

Just ask Michael Bay, who has boasted that he made $80 million from his share of the box office (and merchandising) from the first “Transformers” film. Director Todd Phillips is also enjoying a lucrative payday from Warners after making “The Hangover,” where he gave up a chunk of his up-front salary in return for a bigger piece of the back end. But not every movie is a monster hit. In the new “cash break zero” universe, if a film flops, or simply underperforms, the star isn’t walking away with the first batch of money that comes rolling in. If the studio doesn’t get to its break-even point, the talent (except for their reduced up-front salary) is walking away empty-handed.

Why did the movie studios finally get tough with talent? And is this really good for the movie business? Bad for talent? Or just a rare sign of fiscal sanity?

In Hollywood, everything revolves around leverage. When the business was flush (and at some point, it will be again), talent had the edge. If one studio wouldn’t do a deal, usually someone else surely would. But in lean times, it’s the studios who have all the muscle. While some talent reps smell collusion, it’s more likely that the talent is being hurt because of the way film budgets are put together. At its most basic, a movie has below-the-line costs and above-the-line costs. Below-the-line costs are basically the actual production expenditures on a film, including special effects, soundstage rentals and crew salaries.

Shift in power

Those are essentially fixed costs — call them unmovable parts — whether it’s union salaries for the crew or the cost of filming each day, either on location or at a studio soundstage or special effects house. Since no one wants to rob a movie of its production value, which is ultimately what wows an audience, a studio can’t simply say “Shoot the picture in 60 days instead of 80.” So when a studio tells a producer to cut 10% out of a film’s budget, guess what gets cut? The negotiable part: the cost of talent.

So today, the actors who used to make $15 million are making $10 million. The filmmakers who used to make $10 million are making $6 million. The writers who used to get a three-step deal, guaranteeing payments on a series of rewrites, now get one. As one prominent agent put it: “In terms of prices and quotes, everyone is in free fall. It’s just brutal out there. The balance of power has totally shifted from our side to their side.”

Studio chiefs say that in the old days — meaning five years ago — everyone was enjoying boom times. Year after year, DVD revenues kept soaring. In an up market, it was easy to be generous with back-end profits, since it looked like there was plenty of profit to go around. The studios didn’t mind if the talent got rich, just as long as it wasn’t at the studios’ expense. But times have changed.

“Two years after you’d made a movie, you’d look at the P&L [profit and loss] statement and the numbers always turned out better than they were when you’d greenlit the movie,” says one top studio executive. “Even a movie that you’d thought was a break-even proposition turned out to be nice moneymaker. But now it’s the complete opposite. The DVD revenues keep going down. You look at a movie two years later and the numbers aren’t anywhere near where you’d originally projected them. When the Walt Disney Co. reports earning losses in back-to-back quarters, it’s very compelling evidence that the entire business is in trouble.”

The steep downturn in the DVD market, where revenues are down close to 25%, might have been enough in itself to prompt studios to get tough with talent. But with marketing costs still skyrocketing, with the collapse of the capital markets leading to far less money pouring in to help studios assemble film slates, something had to give. According to another popular theory, the writers strike turned out to be incredibly bad for talent — notably writers — since the months of enforced production stoppages gave studios a rare opportunity to sit back and analyze their business, a process that had especially disturbing consequences for talent.

“It’s never a good thing when studios have time to think, especially if they’re going to be thinking — exactly why are we paying all these people all this money?” one top talent rep said. “They started looking at their overall TV and movie deals and before you knew it, a ton of talent had lost their deals, because the studios had the time to study who’d actually made them money and who hadn’t delivered the goods.”

New austerity

The end result is a huge recalibration of the money being paid out to talent, especially in an era where a surprisingly large percentage of the biggest hit films, such as “Up,” “The Hangover,” “Star Trek” and “Transformers,” are star-free movies, potential franchises that involve interchangeable parts. There are some who see this new austerity as a potential boost for creativity. If studios can make movies for less money, in theory the studios who still retain any artistic ambitions — all two of them — could greenlight some riskier, more filmmaker-friendly efforts, knowing that the price tag would be far less than it was a few years ago.

But right now everyone is still trying to get their bearings. In the old days — like 2005 — when a studio chief told a talent agent that his meal ticket would be taking a pay cut, the agent would act offended, loudly complaining that the studio’s offer was an insult. The star would never stand for that kind of abusive treatment.

But today? “Everyone has been going through all the stages, from denial to anger to rationalization to acceptance,” says one high-level studio executive. “But the world has really changed. I think most of the talent is in the acceptance stage now.”

July 13, 2009

Unions

Filed under: Entertainment — showbizreporting @ 12:37 am
Tags: , , , , ,

The problems with our industry here on the local level cut far deeper than the concerns of the unions.  


As the Hollywood machine abandons L.A., its supporting workers struggle

Small, blue-collar businesses that sustain California’s entertainment industry — prop houses, studio equipment shops — fight for business as film production migrates to incentive-rich states.

By Richard Verrier – Los Angeles Times – July 12, 2009

In an industrial yard behind Burbank’s Bob Hope Airport, dozens of orange forklifts and 135-foot-high booms stand idle, gleaming in the afternoon sunlight. As recently as two years ago, the yard was largely empty because the equipment was busy being used to hoist cameras, rig lights and build sets for “Iron Man,” “Get Smart,” “The Curious Case of Benjamin Button” and other movies shooting throughout Southern California.

“I’ve been doing this for 25 years and I’ve never seen such a sustained downtime,” said Lance Sorenson, president of 24/7 Studio Equipment, who recently had to lay off two of his drivers and has imposed three- and four-day workweeks for the rest of his 44 employees.

Across town in Culver City, at the landmark studio where “Gone with the Wind,” “Citizen Kane,” “The Adventures of Ozzie & Harriet” and “The Andy Griffith Show” were filmed, there’s a similar story. Now an independent production facility known as the Culver Studios, the soundstage complex just lost one of its largest tenants, the syndicated game show “Deal or No Deal.” That program will tape future episodes in Waterford, Conn., a suburban town known for its nuclear power plant, large state park and assortment of shops and family-owned restaurants. The chief draw: Connecticut’s 30% production-tax credit.

“It’s a huge blow to us,” said James Cella, president of the Culver Studios.

Others also have been hard hit by the outflow of production to other areas, known as runaway production.

At Modern Props, also in the Culver City area, nearly half the employees have been laid off, and those remaining are on 20- to 40-hour workweeks. John Zabrucky, the company’s founder, thought he’d gotten ahead by opening a satellite office in Vancouver, Canada. But now so many states are offering tax incentives to film and television producers that he can’t keep up.

Hundreds of small blue-collar businesses like these sustain Southern California’s entertainment industry.

Many are struggling amid a sharp drop in local film and TV production triggered by the recession, a rise in runaway production, and the fallout from a writer’s strike and a yearlong contract dispute between studios and the Screen Actors Guild. According to the state Employment Development Department, jobs in movie and television production were down 13,800 in May compared with a year earlier.

On-location feature film production in the area has fallen to its lowest levels on record. Student films generated as much activity on the streets of Los Angeles in the first quarter of 2009, when only a few movies, including “Fame” and “Alvin and the Chipmunks: The Squeakquel,” were shot there.

California’s share of U.S. feature film production dropped to 31% in 2008 from 66% in 2003, according to the California Film Commission. That largely reflects a falloff in the Los Angeles area, where feature filming activity in 2008 was nearly half what it was at its peak in 1996. Television production, which recently has been a more reliable source of jobs in the region, is also declining. A recent survey from FilmL.A. Inc. found that 44 of 103 TV pilots this year were shot in such disparate locations as Canada, Illinois, Georgia, New York, Louisiana and New Mexico.

More than 30 states have sought to outbid one another with tax credits and rebates aimed at luring productions away from California. Sacramento has responded with its first-ever film-tax credit program, but most analysts think the credits are too small and restrictive to have much effect.

“L.A. is at risk of losing a good part of one of its signature industries, just like it did with the aerospace industry in the early 1990s,” said Jack Kyser, chief economist for Los Angeles County Economic Development Corp.

Few know that better than Cella, of Culver Studios. He previously ran Steiner Studios in Brooklyn, N.Y., and was tapped to run Culver in 2006 after a group of investors including Lehman Bros. acquired the 14 soundstages from Sony Pictures Entertainment for $125 million.

But the studio’s business took a big hit recently when NBC Universal and Endemol USA opted to move “Deal or No Deal” to Connecticut.

The show brought in more than $1 million in rental income to Culver Studios, Cella said, adding that there was little he could do to keep the producers from leaving.

“I could give them this space for free and it still wouldn’t compete with Connecticut,” he said.

The studio, which still hosts “The Bonnie Hunt Show” and others, has seen its occupancy rate slide to 46% from 85% in the last year.

Most of “Deal or No Deal’s” 250 crew members lost their jobs in the move.

“It’s a crying shame,” said Lindsay Hovel, an associate producer on the prime-time version of the game show hosted by comedian Howie Mandel. “There are so many talented people, and they’re just not able to work in the [entertainment] capital.”

The relocation was doubly bruising for Cella because it was announced just after California approved its film-tax credit program, which Cella lobbied heavily for and helped craft. The credits, however, don’t cover game shows.

Still, Cella predicts that the tax deal will attract some TV shows back to California.

“If we don’t do something now, there’s going to be nothing left,” he said.

Sorenson, of 24/7 Studio Equipment, also is pinning his hopes on the state tax credits to spur business. A major studio film can generate $75,000 in rental income for a company like Sorenson’s. But this year, 24/7 has worked mostly on a few low-budget films such as Screen Gems’ “The Roommate.” His company’s feature film business has plummeted 50% since 2007.

Sorenson made up for the shortfall by renting out equipment to TV shows, but even that is no longer a sure bet.

One of his customers, the HBO series “Hung,” filmed three months in L.A. and two months in Michigan, which offers a 42% tax credit. Another customer, the TNT series “Leverage,” has opted to film its second season in Portland, Ore., which offers a 20% cash rebate on qualified expenses.

“It would be a lot different if we were smoking busy,” he said. “But . . . every rental right now is like a precious jewel.”

Local prop houses also are struggling from the downturn. Some have recently closed and others have cut their payrolls.

Modern Props laid off 17 workers last month. The company owns a 120,000-square-foot warehouse that contains 80,000 props.

“I was in shock,” said Luis Peniche, 21, a former sales assistant who lost his $25,000-a-year job after two years at Modern Props. “I really loved working there. It was like family.”

Unable to pay his rent, Peniche moved into his sister’s apartment in Van Nuys. He also stopped taking classes at Santa Monica College because he couldn’t afford the books and tuition. “I’d love to work in the entertainment industry, but it’s just so bad out there.”

Zabrucky launched the company 32 years ago, specializing in leasing furniture, lights and electric control panels to sci-fi TV shows such as “Buck Rogers in the 25th Century” and eventually to some of the biggest movies in Hollywood, including “Die Hard,” “Ghostbusters” and “Men in Black.”

Modern Props became one of the largest prop houses in Hollywood, employing 50 people in its heyday in the late 1990s. But the business has eroded through much of the last decade, squeezed by the growing use of digital effects; the growth of reality television, which spends little on props; and especially the departure of shows to other locales.

“We know how to do what we do very well,” Zabrucky said, “but we can’t fight the fact that everything is just being sold right from underneath us.”

Last summer, Modern Props lost one of its clients, the ABC series “Ugly Betty,” to New York. “Their set decorator was in every week placing orders. That’s $14,000 a month we lost,” lamented Ken Sharp, vice president of sales and operations for Modern Props.

To highlight the plight facing his business and others, Zabrucky recently designed skateboard decks that show a pictograph of the country, with California highlighted, and distributed them to hundreds of Hollywood executives as well as city and state politicians. The deck shows arrows pointing away from the state and the words “don’t run away.”

 

June 10, 2009

Digital Media Law: SAGTV/Theatrical Contract Ratified Overwhelmingly, 78%-22%

Digital Media Law

SAG TV/Theatrical Contract Ratified Overwhelmingly, 78%-22%

In a stunning defeat for the hardline Membership First faction, SAG’s TV/theatrical contract passed overwhelmingly, by a 78%-22% margin (almost 4 to 1), those numbers according to the guild. Variety first reported the story, prior to the guild’s announcement, with a 1% difference in the numbers.

Significantly, even in the faction’s stronghold, the Hollywood division, the vote was an enormous 71% to 29% in favor, or almost 3 to 1. In NY, it was 86% to 14%, and in the regions it was 89% to 11%. There was a large turnout—35% of eligible members voted, far above the typical 20%-25%. The ballots went out to 110,000 paid-up members.

It’s an amazing end to an almost 12 month stalemate, and calls into question the faction’s ability to make any headway in the upcoming SAG board elections. On the contrary, the results suggest that the moderate Unite for Strength faction should make significant gains. That’s because only Membership First will be defending seats in Hollywood , whereas no moderates or independents are up for reelection. Thus, the moderates can only gain, at least in Hollywood . In NY and the regions, Membership First has little support, so, there again, the moderates should prevail.

Another question is the SAG presidency, which is up this year as well. According to Variety, incumbent president Alan Rosenberg announced today that he’ll seek a third term. Given the membership’s overwhelming rejection of his vote No position, that may be an uphill climb, especially if the moderates/independents put forward a high-profile candidate, such as James Cromwell, who has been rumored to be considering a run.

Below are press releases from AFTRA and the AMPTP.

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AFTRA Press Release

AFTRA President Roberta Reardon Applauds SAG Contract Ratification

Los Angeles, CA (June 9, 2009)–In a statement released today, Roberta Reardon, National President of the American Federation of television and Radio Artists (AFTRA), praised the announcement by Screen Actors Guild regarding ratification by SAG members of a new two-year successor agreement to the SAG Basic Agreement and SAG Television Agreement saying:

“On behalf of the more than 70,000 members of AFTRA, I congratulate the members of Screen Actors Guild on their successful ratification of a new television and theatrical agreement. We’re pleased that SAG members will now enjoy improved wages and working conditions, and we applaud their efforts to negotiate a solid new agreement.”

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AMPTP Press Release

Statement by the AMPTP

The ratification vote by SAG members is good news for the entertainment industry. This concludes a two-year negotiating process that has resulted in agreements with all major Hollywood Guilds and Unions. We look forward to working with SAG members – and with everyone else in our industry – to emerge from today’s significant economic challenges with a strong and growing business.

SAG Voting Results

Here’s how the YES votes tallied up at a glance:

National Membership: 78%
Hollywood Membership: 70% (so much for Hollywood is voting NO)
NY and the Branches 85%
Total voter turnout:  35+%


June 9, 2009

Digital Media Law: Uneasy Lies the Head that Wears the Crown – Why Content’s Kingdom is slipping Away

Uneasy Lies the Head that Wears the Crown: Why Content’s Kingdom is Slipping Away

Posted: 09 Jun 2009 12:37 AM PDT

Content and technology are locked in a struggle whose outcome may determine the future of the entertainment industry. The problem is this: Content is becoming a commodity. In contrast, although distribution used to be the exclusive province of Hollywood —movie theaters, television networks, home video, among others—this is no longer true. Instead, new distribution technologies have arisen, and the ascendancy of those technologies has come at the expense of content.

To learn more, check out my law review article on this subject, called Uneasy Lies the Head that Wears the Crown: Why Content’s Kingdom is Slipping Away.

June 3, 2009

SAG – AFRTRA RATIFY AGREEMENT

 

SAG-AFTRA Ratify Advertising Agreement; SAG Townhall Features Fireworks (May 22, 2009)

 

SAG and AFTRA announced yesterday that their combined paid-up membership, about 132,000 members, overwhelmingly ratified the contracts between the unions and the advertising industry. The result was expected, as there was no organized opposition. About 28% returned their ballots, about typical. Of those voting, about 94% voted yes. The deals expire March 31, 2012.

The news from the TV/theatrical side is nowhere near as placid. The ballots went out a few days ago—they’re due back June 9—and SAG’s conducting a series of town hall meetings across the country. The first was last night in Hollywood, and the fur flew. About 600 people attended according to a staff count; although the crowd was reportedly 70% composed of hardline Membership First partisans, they didn’t manage to fill the room. That’s a bit surprising. I’d expected an overflow crowd, given their (apparent?) strength in Hollywood.

What they slightly lacked in numbers, they made up in volume and conviction, according to sources inside the room. Fellow MF-ers like SAG President Alan Rosenberg were applauded for their statements against ratification, while pro-contract voices such as SAG interim National Executive Director David White were booed. The approximately three-hour confab kicked off with statements from the dais, and was mostly taken up by member questions and comments, which were described as overwhelmingly anti-ratification.

That dais, by the way, included SAG Secretary/Treasurer Connie Stevens, chief negotiator John McGuire, White, SAG 1st VP Anne-Marie Johnson (who chaired the meeting), Unite for Strength leader Ned Vaughn, UFS-er Stacey Travis, Deputy NED Ray Rodriguez, and Rosenberg. General Counsel Duncan Crabtree-Ireland responded to questions from time to time.

According to Vaughn, Rosenberg was asked at the meeting what he proposed the union do if it voted down the deal. Rosenberg apparently replied that the union should get a strike authorization and then, if necessary, strike. How he expects to conjure up the necessary 75% vote for a strike authorization is unclear. In contrast to that high hurdle, it only takes 50% + 1 (a simple majority) to ratify the deal.

More colorful speakers at the meeting were Ed Asner and Seymour Cassel. Asner compared the contract’s effect on actors to “taking the Jews out and shooting them,” leading one audience member to comment that he hadn’t expected Holocaust metaphors at a SAG meeting. Well, why not? SAG politics seem to know no bounds.

Cassel, for his part, spotted former SAG president Melissa Gilbert, a moderate, and, standing at the mic, referred to her dismissively. Cassel later responded to one of David White’s comments by saying “bullshit.” This was understandably too much for Johnson, as chair of the meeting, and she ordered Cassel to leave. Out in the hallway, Cassel told me that “I tend to speak my mind, perhaps too candidly.” That certainly seems true.

Another notable out in the hall was Nichelle Nichols, who played Uhura on the original Star Trek. We chatted briefly about the Star Trek movie, not SAG politics, let alone Trekian essays about SAG politics. There was also a Jack Nicholson lookalike, wearing a snappy suit, white shoes, and tinted eyeglasses. Maybe it was Jack Nicholson, but somehow I wouldn’t expect to see him aimlessly wandering the halls at a SAG meeting and using the hotel ATM.

David White chatted for a bit after the meeting, and explained the contrast between his reaction to the studios’ February offer (it “sucks,” he said at the time) and the current one (“a good deal with solid gains,” he told me yesterday, and, in the context of the economy and the dragged out negotiating process, even a “fantastic” one). The key difference is the contract expiration date, which in the current deal is synchronized with the WGA, AFTRA and DGA (mid-2011). In the February deal, it wasn’t, and the significance is that synchronicity allows at least some of the unions to make common cause and present a united front when the contract is up.

White previously predicted the deal would pass, so this time I asked whether he thought it would pass in Hollywood. (That’s not necessary for passage, but it would give some signal of a reduction in divisiveness within the union.) He predicted it would, citing the strong messages of support he was receiving from Hollywood members (though not at the meeting), but noting judiciously that “members will vote their conscience.”

Ned Vaughn also told me the deal would pass, both in Hollywood and nationally. He pointed to the importance of consolidating gains and negotiating in solidarity with other unions, especially AFTRA, in 2011. I asked if he thought SAG and AFTRA would be merged by 2011, and he replied that he “would love it if they were.”

A contrasting post-meeting voice was MF stalwart and SAG board member Clancy Brown, who explained his opposition to the deal in more measured terms than Asner and Cassel had used. He argued that “there’s a better deal out there to be had,” and cited “the paltry Internet move over residual” and the “larcenous” force majeure settlement as reasons.

The day before, I spoke with 2nd VP Sam Freed, who is president of the New York board, and separately with board member Mike Pniewski of Atlanta, both supporters of ratification. The latter predicted the deal will pass, and commented that the guild “got the best deal we can.” He cited a variety of positive aspects of the deal, and underlined the need for “stability in the marketplace” for labor.

Freed pointed to the estimated $105 million value of the deal, and said it addresses “the plight of the middle class actor.” He emphasized that the level of concern MF expresses over new media was not supported by current figures: of $1.3 billion in SAG earnings in 2008, Freed told me only 0.05% came from new media. (That’s one-twentieth of one percent, not 5%.) Alluding to the opposition, he quipped “There’s a guy who would be complaining if it was raining vegetable soup and he only had a fork in his hand.”

In other union news, Variety reports that 85 year-old actor Theodore Bikel “has been re-elected to an 11th two-year term as president of the Associated Actors and Artistes of America.” The 4-A’s, as it’s known, is in turn a unit of the AFL-CIO. Its affiliates are AFTRA, SAG, Actors’ Equity and several smaller performers unions: American Guild of Musical Artists (AGMA), American Guild of Variety Artists (AGVA), and the Guild of Italian American Actors. AFTRA has a direct charter with the AFL-CIO, awarded last year. The other unions are chartered with the 4-A’s, as far as I know, and derive their AFL-CIO affiliation that way (as did AFTRA prior to 2008).

Subscribe to my blog (jhandel.com) for more about SAG, or digital media law generally. Go to the blog itself to subscribe via RSS or email. Or, follow me on Twitter, friend me on Facebook, or subscribe to my Huffington Post articles. If you work in tech, check out my new book How to Write LOIs and Term Sheets.

SAG’s Strange Voyage

 

SAG’s Strange Voyage  (May 19, 2009)

 

Where did the Screen Actors Guild go? After months of news—a near daily barrage covered diligently by various journalists and citizen-journalists, including this author—the guild fell off the radar screen. It was as though 5757 Wilshire, SAG’s national headquarters, somehow disappeared into the black hole that features so prominently in (spoiler alert) the latest “Star Trek” movie.

The quiet was deceptive however. Last week, SAG’s Hollywood board, controlled by the hardline Membership First faction, passed a resolution establishing a task force “to explore the acquisition of actors of AFTRA.” That appears to violate an agreement between the two unions that prohibits disparagement and raiding. The AFL-CIO is currently investigating, and monetary fines are a possibility. The irony is that the guild, controlled (albeit narrowly) by a moderate majority (composed of the Hollywood-based Unite for Strength faction coupled with Hollywood independents and New York and regional members), could find itself punished because of the actions of the autonomous Hollywood Board, controlled by the hardliners. Unfortunately, SAG’s governance structure ensures that there will always be too many starship captains on the bridge at once.

Meanwhile, within SAG itself another battle is looming, and here again the phasers will not be set on stun. Tensions between the hardliners and the moderates rival those between the Federation and the Romulans, and are about to break out again into open war—this time, as the guild membership prepares to vote on the TV/theatrical contract, which was recently approved by the SAG negotiating task force and the guild’s national board. Ballots are being sent to the membership at large today, May 19.

The stakes are high. Ratification will end an almost eleven month stalemate and restart studio theatrical production, which has been at a virtual standstill since the previous contract expired on June 30 last year. Rejection will plunge the union and the AMPTP—the alliance that represents studios and producers—back into stalemate, once again adrift in uncharted nebulas. Nonetheless, the hardliners have pledged to defeat the deal. Although they seem unlikely to succeed—a recent picnic/rally drew at most 70 attendees—they will drive the percentage of ratification down.

For almost two years, the hardliners have acted as though they come from another galaxy, or at least from Planet Claire, where (as the B-52’s explained) “no one has a head.” They started by trying to unilaterally reduce AFTRA’s power on the committee that for decades has jointly bargained the TV/theatrical contract. AFTRA ultimately responded by abandoning the joint arrangement, called Phase 1, and negotiating its own deal with the studios. The hardliners, who at the time controlled the guild, should have foreseen this result, and its effect, which was to reduce not AFTRA’s power but SAG’s.

Compounding this misstep, SAG delayed negotiating with the AMPTP until the contract was almost at the point of expiration. The studios’ response was unsurprising: they accelerated production, stockpiled films, then presented SAG with a take it or leave it offer whose terms mirrored that of the AFTRA deal and, in a key area, mirrored the terms of the Directors Guild and Writers Guild deals as well.

That key area, as even those on the dark side of the moon probably know, is new media. The deal terms in this area, from a union perspective, have gaps in jurisdiction and residuals structure. In this, the SAG hardliners make a significant point. But those gaps flow largely from the revenue-draining effect that new media is having on Hollywood. Technology is driving the perceived value of content towards zero, a matter I discuss in a just-published article in the Vanderbilt Journal of Entertainment and Technology Law. That’s a pressure that both management and labor struggle to deal with.

Several additional factors helped make the search for better terms than three other unions a doomed mission to a dead planet. These were (1) the general uncertainty surrounding new media business models, (2) the economic fatigue suffered by actors and the rest of the industry in the wake of the 100 day writers strike, and (3) SAG’s lack of bargaining leverage, the latter a circumstance largely engineered by the hardliners themselves. (The recession, whose severity was at first unclear, only made things worse.) It’s as though the hardliners thought they could run at warp speed on cubic zirconia rather than dilithium crystals. Failure was not only an option, it was the predictable outcome.

What’s more, the stalemate itself led to further injury, of four varieties. First, it meant that SAG actors working in TV (a field in which production had continued) did so under the terms of the expired contract, meaning that they missed out on the 3.5% raise that AFTRA received on June 30 of last year by dint of its new deal. That’s amounted in aggregate to tens of millions of dollars foregone.

Second, it means that SAG will be behind AFTRA by 3.5% for at least the remainder of the new contract, because each union will continue to receive annual increases but SAG won’t get an extra bump to bring it to parity. Third, if SAG wants to catch up in the next round of negotiations, in 2011, it will need to trade off some other deal point that it might otherwise have gotten.

Fourth, the stalemate put into play the date that the new contract would expire, which is significant because it determines whether SAG’s deal will expire concurrently with those of the other guilds, allowing it to make common cause with them and increase the leverage of all four above-the-line unions (SAG, AFTRA, DGA and WGA) in the 2011 negotiations. SAG won that point, but at a cost of another two months of delay, from February (when the studios made an offer that would not expire concurrently) until April (when they made the offer that is now on the table). SAG was also forced to compromise pending claims for over $60 million dollars in force majeure payments—claims for actors’ wages lost due to the writers strike—but this may be less of a hit to the guild than it appears, since the contract language on the subject is at best ambiguous.

So where are we now? The ratification ballots are due back June 9, so we’ll know in less than a month whether the long stalemate is finally over. I anticipate ratification will be achieved, but with a percentage in the 60%-75% range, well below the over-90% that’s usually achieved when Hollywood union leadership recommends a contract. Meanwhile, the ballots for the SAG-AFTRA commercials contract with the advertising industry are out to the members, and are due back in two days, on May 21. That one will pass easily, as there’s no organized opposition.

Also of note: several months ago, SAG president Alan Rosenberg and three other hardliners (1st VP Anne-Marie Johnson and board members Diane Ladd and Kent McCord) sued their own union, seeking to enjoin negotiations and reverse personnel and procedural changes that they correctly anticipated would pave the way for a deal on terms the hardliners are pledged to oppose. Although their requests were denied by both the trial and appeals courts, the lawsuit nonetheless continues in both of those forums (Los Angeles Superior Court Case No. BC406900 and Second Appellate District 2d Civil No. B214056).

Why don’t the plaintiffs drop the debilitating two-track lawsuit, which flouts the concept of unity trumpeted by the hardliners when they were in power? Their motivation for proceeding in the face of near-certain defeat seems political at this point: dropping the suit would damage the hardliners’ campaign in this fall’s SAG elections, where the SAG presidency, and control of the board, are at stake. (Indeed, the political elbows are so sharp that several of the hardliners are also running in the now-in-progress AFTRA elections, seeking to undermine that union’s leverage from within.) Dismissing the suit would also doom the likely attempt the hardliners will make in the SAG boardroom to obtain reimbursement of their burgeoning legal fees. Meanwhile the guild is, of course, incurring significant fees of its own to defend itself and the forty-odd Board members also named as defendants.

Even assuming the TV/theatrical agreement is ratified, the guild has a long way to go before it’s back in our solar system. SAG’s been without a franchise agreement—the contract between the union and the talent agents—since 2002, and four other agreements are expired as well. The union is riven not only by factionalism but by economic and geographic divisions as well. New media issues will recur in 2011, which is just around the corner, and every three years thereafter, since technology continues to evolve faster than Hollywood can respond, let alone than union agreements can be renegotiated. The guild’s new leadership has made impressive progress in its few short months in office, but there are many light years yet to travel.

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Subscribe to my blog (jhandel.com) for more about SAG, or digital media law generally. Go to the blog itself to subscribe via RSS or email. Or, follow me on Twitter, friend me on Facebook, or subscribe to my Huffington Post articles. If you work in tech, check out my new book How to Write LOIs and Term Sheets.

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