Showbizreporting's Blog

July 25, 2009

Fixing the Residuals System

Fixing the Residuals System

Posted: 24 Jul 2009 04:19 PM PDT

The residuals system is broken. It’s expensive to administer and is an invitation to conflict as platforms such as new media evolve. Yet we need residuals, because talent survives on these payments between gigs. Can the system be fixed?

Yes, I believe so. For a proposal, see my piece in today’s Hollywood Reporter.

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Subscribe to my blog (jhandel.com) for more about entertainment law and digital media law. 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.

Rosenberg v. SAG Lawsuit Reply Brief Filed

Posted: 24 Jul 2009 11:20 AM PDT

The appeal grinds on. SAG president Alan Rosenberg and three other Membership First hardliners (1st VP Anne-Marie Johnson and board members Diane Ladd and Kent McCord) filed their reply brief earlier this week.

I’m told there will be oral argument (unscheduled as yet). That’ll drive up the price to SAG of this nonsense by probably about $5,000 more: I’d imagine several attorneys for a mock practice session for several hours, then two attorneys for oral argument for a half day or so. Members’ dues money at work, thanks to MembershipFirst.

———————Subscribe to my blog (jhandel.com) for more about entertainment law and digital media law. 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.

June 16, 2009

Digital Media Law: SAG Lawsuit Still Grinds On; Court Denies SAG’s Motion to Dismiss Appeal

SAG Lawsuit Still Grinds On; Court Denies SAG’s Motion to Dismiss Appeal

As I previously reported, SAG’s counsel in late May filed a motion to dismiss the appeal by SAG president Alan Rosenberg and three other Membership First hardliners (1st VP Anne-Marie Johnson and board members Diane Ladd and Kent McCord) of a Superior Court order that denied their application for a temporary restraining order. On June 5—just days before the new TV/theatrical contracts were ratified—Rosenberg et al. filed a brief opposing the motion to dismiss.

Unfortunately, the Court of Appeals on June 9 issued a one-sentence order denying the motion to dismiss, presumably meaning that the appeal is too complex to be decided without oral argument (or, at least, full briefing). So, the appeal grinds on. Rosenberg et al. previously filed their brief in the appeal. SAG’s responsive brief is due July 1. Thereafter, Rosenberg et al. get to file a reply brief, and then there will probably be oral argument at some point. Within 90 days after the oral argument, the court will issue its ruling.

In other words, the appeal will probably drag on until sometime in November unless Rosenberg et al. are persuaded to drop it. Meanwhile, the suit itself proceeds in the trial court as well. Confused as to how a case can proceed in two courts at once? Well, it happens, and the legal fees aren’t cheap. All of this sounds like a campaign issue that Unite for Strength will probably raise—why reelect a president who persists in suing his own union? UPDATE: Indeed, as SAGWatch points out, by continuing to pursue their lawsuit, Rosenberg et al. are reneging on a promise Anne-Marie Johnson publicly made to withdraw the suit if the TV/theatrical contracts were approved.

June 3, 2009

DIGITAL MEDIA LAW: SAG TV/Theatrical Ballots Later Than Expected; SAG Litigation Continues; and More (APR. 29, 2009)

 

Digital Media Law

 

SAG TV/Theatrical Ballots Later Than Expected; SAG Litigation Continues; and More

Posted: 29 Apr 2009 02:19 AM PDT

The ballots for SAG’s recently approved TV/theatrical contract won’t be going out until mid to late May, a source tells me, several weeks later than the early May target that the Guild stated as recently as a week or so ago. That means that ratification, if achieved as expected, will not come until early to mid June, since balloting is expected to be a three week process.

The source, who spoke on condition of anonymity, explained that writing the pro and con statements has only just begun. That process takes a week, and then another week is allowed for rebuttal statements to be written.

(BTW, a copy of the proposed TV/theatrical agreement is available here. I’ve not yet done an analysis, but in the meantime you can read SAGWatch’s.)

Meanwhile, ballots for the commercials contract will be mailed to both SAG and AFTRA members Thursday, and due back May 21, reports Variety. It’s expected to pass easily. In contrast, the TV/theatrical contract will probably pass with a yes vote in the 60%-75% range, roughly in the neighborhood of the AFTRA deal, which achieved 62%. Only a simple majority (i.e., just over 50%) is required.

In other SAG news, Unite for Strength revealed in a Facebook email several days ago that the force majeure compromise is 33 cents on the dollar. “Force majeure” refers to arbitration claims on behalf of about 500 actors for a portion of wages lost due to the 2007-2008 Writer Guild strike. The claims amount to about $63 million, and, thus, the total settlement is about $21 million. I’m told SAG members will get checks several weeks after the agreement is ratified.

That settlement amount—33 cents on the dollar—is on the low side, but that was a tradeoff. SAG wants its contract to expire in mid-2011, to synch up with the WGA, AFTRA, and DGA. That’s an issue created by the ten-month delay that the hardline Membership First faction inflicted on the union; without the delay, the deals would have synched up as a matter of course. To get synchronicity at this late date, SAG had to give something up.

Remember also that the claims are under arbitration. SAG could have gotten zero cents on the dollar if the arbitration had proceeded; or it could have prevailed altogether. With that much uncertainty, a settlement in the 50% range might have been expected. That would have yielded a total of about $31 million, rather than $21 million. So, it’s a reasonable conclusion that SAG gave up about $10 million in order to get the synchronized expiration date—and prompt payment to the affected members.

The Guild also had to agree to modify the TV-related force majeure language in a way that reduces the likelihood of future force majeure claims. To put this in context, though, I’m told there has never been an industry-wide force majeure claim before. The studios obviously want to avoid seeing one again, not only to reduce their costs, but also to decrease the strength by which SAG members would support a writers strike in the future. (In other words, if actors have to bear the entire cost of their own lost wages, they may be less likely to enthusiastically support a strike by a sister union.)

Speaking of lost wages, I also have a couple of factoids on the SAG layoffs: the total number of people laid off was 36 (not 35, as previously reported), with an additional 26 unfilled positions that will remain unfilled. That’s a total reduction in force of 62 positions, and the annual savings to the Guild is $2.5 million in salaries ($4 million if bonuses and other factors are included).

Moving from lost wages to lost causes, there are developments in the lawsuit filed against SAG by the union’s own president, Alan Rosenberg, and his fellow Membership First plaintiffs 1st VP Anne-Marie-Johnson and board members Diane Ladd and Kent McCord. That suit, as you may rather have forgotten, seeks to unseat the TV/theatrical negotiating task force, as well as interim National Executive Director David White and Chief Negotiator John McGuire. That group—plus the commercials negotiating committee—is the team that managed to close two deals in as many months, while MF closed nothing at all over several years.

The lawsuit, in my opinion, hasn’t got a Popsicle’s chance in hell. After all, what judge is going to unwind a twice-ratified union leadership change? Incredibly, the lawsuit proceeds on not one but two tracks, since there are now both a trial court action and a concurrent appeal. Rosenberg’s and his co-plaintiffs’ solicitude for the members apparently includes spending their money on pointless multi-pronged litigation—understandably, since abandoning the litigation before this summer’s SAG election would be no boon to MF’s election prospects. Indeed, if MF ever wins control of the Board again, you can expect a motion to have SAG reimburse Rosenberg et al. for their no doubt considerable litigation costs.

In any case, there are developments on two fronts. In the trial court, SAG filed its Answer to the plaintiffs’ first amended complaint. A variety of defenses are asserted, including that the complaint is moot (because the SAG Board re-fired the previous NED, Doug Allen, at a meeting, after having first done so by a written assent document), interferes with the union’s right of self-governance, and is barred by the wrongful acts of Rosenberg and his co-plaintiffs (this presumably refers to the 28-hour filibuster over which Rosenberg presided in an attempt to prevent Allen from being fired).

Meanwhile, in the Court of Appeal, Rosenberg & co. filed their Appellant’s Opening Brief several days ago, accompanied by multi-volume, multi-hundred page appendices of documents. The arguments are simply a rehash of the arguments Rosenberg and his co-plaintiffs made in the trial court–which were rejected not only by the trial court judge, but also in an earlier appeal. Yes, the current appeal is actually the second, and the case is only three months old.

What next? As the name implies, the Appellant’s Opening Brief is the first brief in the appeal. The next few weeks will see the filing of the respondent’s brief (SAG’s brief) and the reply brief (in which Rosenberg et al. get to reply to SAG’s brief). Then comes oral argument, unless the court decides to proceed based on the briefs alone (which I think the court has the right to do, but I’m not sure).

For those who find appellate work dry and lifeless (it’s all briefs and legal arguments, with no witnesses or jury), the trial court action will grind on as well, doubtless with demurrers, a motion to dismiss, motions for summary judgment, depositions, interrogatories, requests for production of documents, and all of the other costly accoutrement of modern-day litigation. Actually, that’s pretty dry and lifeless too. This could go on for months, providing amusement to everyone except SAG’s accountants. As in entertainment, so too in litigation: the show must go on.

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June 2, 2009

Digital Media Law: Actors Commercials Negotiations Detoriate (Mar. 18, 2009)

 

Digital Media Law

 

Actors Commercials Negotiations Deteriorate

Posted: 17 Mar 2009 10:15 PM PDT

Though it gets less play than the stalled SAG TV/theatrical talks, SAG and AFTRA have been jointly negotiating for several weeks with the advertising industry over the commercials contract. That contract is SAG’s second most important, economically, and represents hundreds of millions of dollars per year to SAG alone (I don’t have the AFTRA figures). Now, after industry statements that the negotiations had been going reasonably well, the talks seem to have hit a snag, and the unions may seek a strike authorization vote from their members, reports The Wrap.

The report goes on to say that the unions have already written—and someone has leaked—a draft letter to be sent to the membership of both unions seeking a strike authorization. A separate report in Blog Stage adds that the letter would also include a separate set of pro-authorization talking points, also leaked. (See below for copies of the letter and talking points.) That report cautions that the leaks may be just a negotiating ploy. A statement from SAG and AFTRA described the leak as an “unauthorized distribution of . . . one of many contingency documents that we prepare in the course of any negotiations.”

Nonetheless, I’m guessing the leaks are a trial balloon intended to pressure the Joint Policy Committee, or JPC, representing the advertisers and ad agencies. If the JPC doesn’t move on the issues and if the union membership doesn’t rebel at the idea of an authorization, then we may indeed see an authorization put to a vote of the members. (It’s important to remember that an authorization does not automatically mean a strike, especially since the more strike-averse AFTRA is part of the mix, unlike with the SAG TV/theatrical negotiations, where the more strike-happy hardliners were unconstrained last year.)

So, will the JPC move on the issues in the absence of a strike authorization? Apparently, they often play hardball until a strike authorization vote is held, note the Hollywood Reporter. That seems especially likely today, since the JPC recognizes that SAG is now a fatigued and overextended union, thanks largely to the hardliners’ stalling tactics last year and into January.
 

Those tactics have left SAG actors with virtually no studio theatrical work since June 30 of last year, no increase in minimum compensation levels for TV work (and the theatrical work that does exist), a dramatically diminished share of pilots, and a panoply of expired contracts in other areas. All of this, combined with the state of the economy, leaves SAG members more vulnerable and less likely to support a strike. (AFTRA actors are likewise vulnerable, if for no other reason than the fact that most of them are SAG members as well.) The result is less leverage at the bargaining table for the unions, and more for the JPC.

Speaking of issues, let’s look at the major ones. The fundamental roadblocks are (1) new media and (2) the economy. New media, of course, had been the major stumbling block in the negotiations between SAG and the studios before being at least partially eclipsed by the issue of contract expiration date. Among other things, the current commercials contract apparently has no minimums in new media. The unions want to change that.

As for the economy, it’s reared its ugly hydra-head in several ways. For one thing, the JPC has apparently yet to make an offer regarding wage increases. When they do, don’t count on it to make the unions happy.

On another economic front, the recession has decreased the value of pension plan and individual retirement assets everywhere. In addition, economists worry now about deflation of prices generally, but one area that still features high prices is health care. In this environment of benefits-related anxiety, the JPC is apparently seeking rollbacks and caps on the companies’ contributions to the unions’ pension and health funds. The unions, not surprisingly, want an increase in those contributions.

(Side note: P&H rollbacks also feature in the campaign by some members of IATSE, the union that represents most crew members, to derail that union’s proposed contract with the studios. Ballots are due back tomorrow, March 18—or perhaps have to be postmarked by then, I’m unclear—but either way, we’ll soon know the fate of that agreement. It’s expected to pass.)

Yet another significant issue is a proposal by the JPC to dramatically alter the way residuals are paid for national commercials—so-called Class A residuals. This comes in response to declining viewership of national ads due both to commercial-skipping by DVR users and to audience fragmentation, i.e., viewer migration away from network TV and towards cable TV, video games and the Internet.
 

The JPC says that its proposal is revenue neutral but simply changes allocations—in other words, that some union members would gain (those doing cable and Internet commercials), others would lose (those doing national broadcast network commercials), but as a whole they would receive the same amount of residuals in aggregate. (The same amount as what? As today? As under the union proposal? I don’t have the details, because there’s a news blackout.) The unions appear skeptical.

There’s a multi-way struggle here, by the way, because actors (and other production expenses) are only one aspect of the advertising cost structure. The other, of course, is the cost to air the ads—i.e., the prices that the networks and other outlets charge. That means that the more the networks push to maintain ad prices in the face of declining viewership and a softening ad market (which results from the slackening demand for consumer products), the less money the advertisers can afford to spend on production. Thus, they put the squeeze on actors. In a struggle between networks and actors for piece of the advertisers’ purse, guess who’s likely to win.

So, theatrical production is stalled and likely to stay depressed even after (if?) the stalemate ends, scripted television is eroding, advertising is soft, and the Internet pays everyone (producers and talent alike) mere pennies on the dollar. What’s a thesp to do? “Keep your day job” is too flip a response, but it sure isn’t an easy time to be an actor.

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In other Hollywood labor news, Variety reports that SAG interim National Executive Director David White sent SAG members a message today stating that, although no new formal talks with the studios are set, union negotiators are working behind the scenes to achieve a deal. No word on what exactly that means,

Meanwhile, SAG president Alan Rosenberg’s lawsuit against his own union slowly winds its way through the legal system. Rosenberg ’s lawyers filed some documents last week. I doubt they’re significant, but don’t know, because I haven’t seen them. The lawsuit seems, at least for now, to be a mere sideshow, but even defeats at both the lower court and appellate level haven’t deterred Rosenberg and his fellow plaintiffs (1st VP Anne-Marie Johnson and board members Diane Ladd and Kent McCord) from pursuing their now-moot claims.

In another development, the WGA is cutting 10% of its staff, Variety reports. The causes: (1) a recession-caused decline in value of the WGA’s investment portfolio; (2) a reduction in dues-generating work for WGA members, due to last year’s writers strike and no doubt exacerbated by the slow decline in scripted television; and (3) expenses incurred in the so-far unsuccessful attempts to organize reality TV and animation. The WGA had no comment, says Variety.

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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.

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Here’s the draft letter. The underlined text at the beginning was in the letter as provided; it was not written by me.

 

POTENTIAL DRAFT LETTER FROM UNIONS RE: STRIKE AUTHORIZATION… IF PROGRESS IS NOT MADE, THEY WILL SEEK A STRIKE AUTHORIZATION VOTE FROM MEMBERS.

 

2009 COMMERCIALS CONTRACTS

Strike Authorization Ballot

 

To All Members of Screen Actors Guild and AFTRA:

 

Your AFTRA and SAG Presidents, Joint Board of Directors and Joint Negotiating Committee urge you to read this vital report, VOTE YES and mail your ballot today authorizing your Joint Board of Directors to call a strike in the field of television and radio commercials ONLY IF IT BECOMES ABSOLUTELY NECESSARY to achieve fair and equitable successor agreements.

 

PLEASE NOTE that these negotiations cover all AFTRA and SAG principal and extra performers employed in English and Spanish television and radio commercials. Employment in the following contract areas IS NOT affected by these negotiations: theatrical films, television and radio programs, news, industrial/educational and non-broadcast productions, sound recordings, music videos, interactive programs/video games and entertainment programs made for the Internet or New Media.

 

In today’s economy, SAG and AFTRA members need strong contracts more than ever. The industry is proposing major rollbacks that include:

 

• Significant changes to the compensation model

• A “pilot study” that tests ONLY the industry’s preferred compensation model without an equal study of the unions’ preferred compensation model

• Debilitating reductions in contributions to our P&H and H&R plans

 

Since February 23, your joint AFTRA/SAG negotiating team has been bargaining in New York City with the Joint Policy Committee (JPC) of the American Association of Advertising Agencies (AAAA) and the Association of National Advertisers (ANA) for new, three-year contracts covering the terms of your employment in television and radio commercials. From the first day of the negotiations, it has been our intention to reach an agreement acceptable to both sides. The issues at stake in these negotiations are critically important and require that we bring our full bargaining power to the table by passing this referendum to authorize a strike in the field of television and radio commercials.

 

In 2006, the Industry invoked language in the Commercials Contracts that required the Unions to explore alternate methods of compensation for principal performers in commercials. This led to a seven month, $1.3 million study by the consulting firm of Booz Allen Hamilton (now called Booz & Co.) commissioned jointly by the Industry and the Unions. Booz & Co. recommended a number of alternative methods of compensation including an “Adjusting Tiers” proposal that the Unions favor and a Gross Ratings Points (GRP) proposal favored by the Industry. Booz & Co. also made recommendations regarding the Internet and New Media, including the elimination of free bargaining, which is favored by the unions.

 

Your joint negotiating team has sought to continue the cooperative approach to this process that the Unions have exhibited from the very beginning. The JPC, however, has insisted that the only compensation model open to further exploration is the GRP model – the industry’s favored option. The Industry has also proposed an accelerated timetable for a “pilot study” to test their GRP proposal. At the conclusion of this study, our ability to agree to implementation of the new system would be taken away from us and placed in the hands of a third party consultant.

 

While your joint negotiating team believes it is important to be open minded about the possibilities for adapting our contracts to changing times, we strongly feel that any changes to our basic compensation structure must be pursued with care and deliberation. Further, any changes should only considered after full and unfettered analysis by the unions of the results of a pilot study that evaluates BOTH the Industry’s favored option and ours. We also believe it is important to act on Booz & Co.’s recommendation to eliminate free bargaining and establish minimums for commercials made for the Internet and New Media—a subject the Industry has not addressed.

 

At the same time, the Industry has demanded debilitating rollbacks in contributions to our P&H and H&R plans. By once again proposing a “cap” on contributions, the Industry threatens to eliminate tens of millions of dollars in contributions from our Plans, just as the Plans are suffering through the fallout of the current recession. The Industry also seeks to change the way contributions are made on multiservice contracts, which could even further reduce contributions to the Plans.

 

The AFTRA and SAG commercials contracts provide an important and often critical source of income to thousands of our members across the country. The national commercials contracts set rates and benefits for national commercials and ad campaigns in the major markets and across the country. The SAG and AFTRA commercials contracts support more of our members and their families than almost any other contract.

 

Your joint negotiating team is fully aware of the economic realities we are facing today and the challenges of negotiating in such an environment. However, rollbacks of this magnitude have such negative consequences that they must be met with determination and conviction from our members.

 

Your joint negotiating team will continue to fight for a fair contract and we hope to achieve such a contract without a work stoppage. Management must know, however, that you the members of AFTRA and SAG stand firm and united in your resolve to obtain equitable commercials contracts that do not decimate or negatively affect either of our Health or Pension Plans.

 

Your YES vote on the enclosed strike authorization ballot is necessary to send a strong message of clarity, strength and solidarity to management.

 

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Here are the unions’ talking points.

 

EMPLOYER RESPONSE TO UNIONS’ PROPOSALS:

 

• BASIC WAGES—Employers have made no wage offer.

 

• PENSION, HEALTH AND RETIREMENT—Despite the potentially devastating impact of the declining global markets on our Plans, the Employers have offered no increases in contributions and continue to press for “caps,” which will cost our Plans more than $60 million.

 

• CABLE—Employers have not responded to the Unions’ proposal to remove the “cap” on cable units despite a finding by Booz & Co. that cable is greatly undervalued [OR: “is an area of tremendous growth and earnings for advertisers.”]. Nor have they responded to the Unions’ proposal to extend exclusivity and holding fees to cover commercials made for national cable networks.

 

• INTERNET & NEW MEDIA—Employers have not addressed the Unions’ proposals for fair payment structures to replace the current experimental “free bargaining” approach to the Internet & New Media, which fails to provide any minimums at all.

 

• MONITORING—Employers have not responded to the Unions’ comprehensive proposal on monitoring.

 

• LIQUIDATED DAMAGES FOR LATE PAYMENT—Employers have not responded to the Unions’ proposal to increase damages for late payment of wages for the first time since 1978.

 

• SPANISH LANGUAGE—Employers have responded to the Unions’ proposal to rectify the decades-old refusal to pay “Class A” use fees for commercials on Spanish Language networks by proposing to roll back existing protections for Spanish Language performers.

 

• PREFERENCE & EXTRA COVERAGE ZONES—Employers have not responded to the Unions’ proposal to apply the contract to extra performers and to require preference of employment for professional performers in Charlotte , North Carolina and Austin , Texas .

 

• STUNT DRIVERS—Unions have proposed that Employers pay stunt drivers residuals when they sell the Employer’s product. Employers have responded by proposing to narrow the circumstances when stunt performers are entitled to residuals and to make it more difficult for them to file upgrade claims.

 

• SINGERS, DANCERS & CHOREOGRAPHERS—Employers have not addressed the Unions’ proposals to improve working conditions for dancers, to protect singers against automatic renewal at old rates, and to provide a limited ability for choreographers who have done covered work in at least 5 prior years to earn eligibility for benefits.

 

EMPLOYER ROLLBACKS:

 

• ELIMINATE “CLASS A”—Employers have proposed a radical, untested new system for compensating performers in national commercials that eliminates the current “Class A” payment structure, as well as the current structure for national cable commercials.

 

• DECREASE CONTRIBUTIONS TO PENSION, HEALTH, AND RETIREMENT BY OVER $20 MILLION—Employers have proposed implementing a “cap” over which they would not make contributions to P&H or H&R. This will cost the Plans at least $20 million at a time when they are already suffering due to the bad economy. Employers have also proposed changes in how contributions are made on multiservice contracts that will likely further reduce contributions.

 

• OVERTIME—Employers have proposed that overtime apply only after 10 hours worked in a day instead of 8 and that double-time not apply until after 60 hours worked in a week, with no double-time for hours worked beyond 10 in a day.

 

• DOWNGRADES—Employers have proposed changes that will allow downgrades even when the performer’s face remains in the commercial, eliminate the requirement to pay a session fee to a downgraded performer and increase the notice period for downgrades from 60 days to 13 weeks.

 

• HOLDING FEE—Employers have proposed to pay holding fees within 10 days of the end of a fixed cycle instead of by the first day of each fixed cycle, as presently required, postponing not only the payment to the performer, but the point at which the performer can accept a competitive commercial.

 

• STUNT PERFORMERS—Employers have proposed narrowing the definition of “stunt” to require an actual hazard to the performer regardless of the level of skill involved. They have also proposed making it even more difficult for stunt performers to file upgrade claims, including a new requirement to file within 48 hours.

 

• SPANISH LANGUAGE—Employers have proposed eliminating the premium Spanish-language performers must be paid to hold their exclusivity in English-language commercials making it even harder for Spanish-language performers to make a living.

 

• UNION LIABILITY—Employers have proposed that the unions pay them a TRIPLE session fee whenever a performer cancels an engagement on less than 24 hours notice and that the unions play an aggressive role in disciplining our own members for breaching exclusivity.

 

Actors Commercials Negotiations Deteriorate

Posted: 17 Mar 2009 10:15 PM PDT

Though it gets less play than the stalled SAG TV/theatrical talks, SAG and AFTRA have been jointly negotiating for several weeks with the advertising industry over the commercials contract. That contract is SAG’s second most important, economically, and represents hundreds of millions of dollars per year to SAG alone (I don’t have the AFTRA figures). Now, after industry statements that the negotiations had been going reasonably well, the talks seem to have hit a snag, and the unions may seek a strike authorization vote from their members, reports The Wrap.

The report goes on to say that the unions have already written—and someone has leaked—a draft letter to be sent to the membership of both unions seeking a strike authorization. A separate report in Blog Stage adds that the letter would also include a separate set of pro-authorization talking points, also leaked. (See below for copies of the letter and talking points.) That report cautions that the leaks may be just a negotiating ploy. A statement from SAG and AFTRA described the leak as an “unauthorized distribution of . . . one of many contingency documents that we prepare in the course of any negotiations.”

Nonetheless, I’m guessing the leaks are a trial balloon intended to pressure the Joint Policy Committee, or JPC, representing the advertisers and ad agencies. If the JPC doesn’t move on the issues and if the union membership doesn’t rebel at the idea of an authorization, then we may indeed see an authorization put to a vote of the members. (It’s important to remember that an authorization does not automatically mean a strike, especially since the more strike-averse AFTRA is part of the mix, unlike with the SAG TV/theatrical negotiations, where the more strike-happy hardliners were unconstrained last year.)

So, will the JPC move on the issues in the absence of a strike authorization? Apparently, they often play hardball until a strike authorization vote is held, note the Hollywood Reporter. That seems especially likely today, since the JPC recognizes that SAG is now a fatigued and overextended union, thanks largely to the hardliners’ stalling tactics last year and into January.
 

Those tactics have left SAG actors with virtually no studio theatrical work since June 30 of last year, no increase in minimum compensation levels for TV work (and the theatrical work that does exist), a dramatically diminished share of pilots, and a panoply of expired contracts in other areas. All of this, combined with the state of the economy, leaves SAG members more vulnerable and less likely to support a strike. (AFTRA actors are likewise vulnerable, if for no other reason than the fact that most of them are SAG members as well.) The result is less leverage at the bargaining table for the unions, and more for the JPC.

Speaking of issues, let’s look at the major ones. The fundamental roadblocks are (1) new media and (2) the economy. New media, of course, had been the major stumbling block in the negotiations between SAG and the studios before being at least partially eclipsed by the issue of contract expiration date. Among other things, the current commercials contract apparently has no minimums in new media. The unions want to change that.

As for the economy, it’s reared its ugly hydra-head in several ways. For one thing, the JPC has apparently yet to make an offer regarding wage increases. When they do, don’t count on it to make the unions happy.

On another economic front, the recession has decreased the value of pension plan and individual retirement assets everywhere. In addition, economists worry now about deflation of prices generally, but one area that still features high prices is health care. In this environment of benefits-related anxiety, the JPC is apparently seeking rollbacks and caps on the companies’ contributions to the unions’ pension and health funds. The unions, not surprisingly, want an increase in those contributions.

(Side note: P&H rollbacks also feature in the campaign by some members of IATSE, the union that represents most crew members, to derail that union’s proposed contract with the studios. Ballots are due back tomorrow, March 18—or perhaps have to be postmarked by then, I’m unclear—but either way, we’ll soon know the fate of that agreement. It’s expected to pass.)

Yet another significant issue is a proposal by the JPC to dramatically alter the way residuals are paid for national commercials—so-called Class A residuals. This comes in response to declining viewership of national ads due both to commercial-skipping by DVR users and to audience fragmentation, i.e., viewer migration away from network TV and towards cable TV, video games and the Internet.
 

The JPC says that its proposal is revenue neutral but simply changes allocations—in other words, that some union members would gain (those doing cable and Internet commercials), others would lose (those doing national broadcast network commercials), but as a whole they would receive the same amount of residuals in aggregate. (The same amount as what? As today? As under the union proposal? I don’t have the details, because there’s a news blackout.) The unions appear skeptical.

There’s a multi-way struggle here, by the way, because actors (and other production expenses) are only one aspect of the advertising cost structure. The other, of course, is the cost to air the ads—i.e., the prices that the networks and other outlets charge. That means that the more the networks push to maintain ad prices in the face of declining viewership and a softening ad market (which results from the slackening demand for consumer products), the less money the advertisers can afford to spend on production. Thus, they put the squeeze on actors. In a struggle between networks and actors for piece of the advertisers’ purse, guess who’s likely to win.

So, theatrical production is stalled and likely to stay depressed even after (if?) the stalemate ends, scripted television is eroding, advertising is soft, and the Internet pays everyone (producers and talent alike) mere pennies on the dollar. What’s a thesp to do? “Keep your day job” is too flip a response, but it sure isn’t an easy time to be an actor.

———————

In other Hollywood labor news, Variety reports that SAG interim National Executive Director David White sent SAG members a message today stating that, although no new formal talks with the studios are set, union negotiators are working behind the scenes to achieve a deal. No word on what exactly that means,

Meanwhile, SAG president Alan Rosenberg’s lawsuit against his own union slowly winds its way through the legal system. Rosenberg ’s lawyers filed some documents last week. I doubt they’re significant, but don’t know, because I haven’t seen them. The lawsuit seems, at least for now, to be a mere sideshow, but even defeats at both the lower court and appellate level haven’t deterred Rosenberg and his fellow plaintiffs (1st VP Anne-Marie Johnson and board members Diane Ladd and Kent McCord) from pursuing their now-moot claims.

In another development, the WGA is cutting 10% of its staff, Variety reports. The causes: (1) a recession-caused decline in value of the WGA’s investment portfolio; (2) a reduction in dues-generating work for WGA members, due to last year’s writers strike and no doubt exacerbated by the slow decline in scripted television; and (3) expenses incurred in the so-far unsuccessful attempts to organize reality TV and animation. The WGA had no comment, says Variety.

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Here’s the draft letter. The underlined text at the beginning was in the letter as provided; it was not written by me.

 

POTENTIAL DRAFT LETTER FROM UNIONS RE: STRIKE AUTHORIZATION… IF PROGRESS IS NOT MADE, THEY WILL SEEK A STRIKE AUTHORIZATION VOTE FROM MEMBERS.

 

2009 COMMERCIALS CONTRACTS

Strike Authorization Ballot

 

To All Members of Screen Actors Guild and AFTRA:

 

Your AFTRA and SAG Presidents, Joint Board of Directors and Joint Negotiating Committee urge you to read this vital report, VOTE YES and mail your ballot today authorizing your Joint Board of Directors to call a strike in the field of television and radio commercials ONLY IF IT BECOMES ABSOLUTELY NECESSARY to achieve fair and equitable successor agreements.

 

PLEASE NOTE that these negotiations cover all AFTRA and SAG principal and extra performers employed in English and Spanish television and radio commercials. Employment in the following contract areas IS NOT affected by these negotiations: theatrical films, television and radio programs, news, industrial/educational and non-broadcast productions, sound recordings, music videos, interactive programs/video games and entertainment programs made for the Internet or New Media.

 

In today’s economy, SAG and AFTRA members need strong contracts more than ever. The industry is proposing major rollbacks that include:

 

• Significant changes to the compensation model

• A “pilot study” that tests ONLY the industry’s preferred compensation model without an equal study of the unions’ preferred compensation model

• Debilitating reductions in contributions to our P&H and H&R plans

 

Since February 23, your joint AFTRA/SAG negotiating team has been bargaining in New York City with the Joint Policy Committee (JPC) of the American Association of Advertising Agencies (AAAA) and the Association of National Advertisers (ANA) for new, three-year contracts covering the terms of your employment in television and radio commercials. From the first day of the negotiations, it has been our intention to reach an agreement acceptable to both sides. The issues at stake in these negotiations are critically important and require that we bring our full bargaining power to the table by passing this referendum to authorize a strike in the field of television and radio commercials.

 

In 2006, the Industry invoked language in the Commercials Contracts that required the Unions to explore alternate methods of compensation for principal performers in commercials. This led to a seven month, $1.3 million study by the consulting firm of Booz Allen Hamilton (now called Booz & Co.) commissioned jointly by the Industry and the Unions. Booz & Co. recommended a number of alternative methods of compensation including an “Adjusting Tiers” proposal that the Unions favor and a Gross Ratings Points (GRP) proposal favored by the Industry. Booz & Co. also made recommendations regarding the Internet and New Media, including the elimination of free bargaining, which is favored by the unions.

 

Your joint negotiating team has sought to continue the cooperative approach to this process that the Unions have exhibited from the very beginning. The JPC, however, has insisted that the only compensation model open to further exploration is the GRP model – the industry’s favored option. The Industry has also proposed an accelerated timetable for a “pilot study” to test their GRP proposal. At the conclusion of this study, our ability to agree to implementation of the new system would be taken away from us and placed in the hands of a third party consultant.

 

While your joint negotiating team believes it is important to be open minded about the possibilities for adapting our contracts to changing times, we strongly feel that any changes to our basic compensation structure must be pursued with care and deliberation. Further, any changes should only considered after full and unfettered analysis by the unions of the results of a pilot study that evaluates BOTH the Industry’s favored option and ours. We also believe it is important to act on Booz & Co.’s recommendation to eliminate free bargaining and establish minimums for commercials made for the Internet and New Media—a subject the Industry has not addressed.

 

At the same time, the Industry has demanded debilitating rollbacks in contributions to our P&H and H&R plans. By once again proposing a “cap” on contributions, the Industry threatens to eliminate tens of millions of dollars in contributions from our Plans, just as the Plans are suffering through the fallout of the current recession. The Industry also seeks to change the way contributions are made on multiservice contracts, which could even further reduce contributions to the Plans.

 

The AFTRA and SAG commercials contracts provide an important and often critical source of income to thousands of our members across the country. The national commercials contracts set rates and benefits for national commercials and ad campaigns in the major markets and across the country. The SAG and AFTRA commercials contracts support more of our members and their families than almost any other contract.

 

Your joint negotiating team is fully aware of the economic realities we are facing today and the challenges of negotiating in such an environment. However, rollbacks of this magnitude have such negative consequences that they must be met with determination and conviction from our members.

 

Your joint negotiating team will continue to fight for a fair contract and we hope to achieve such a contract without a work stoppage. Management must know, however, that you the members of AFTRA and SAG stand firm and united in your resolve to obtain equitable commercials contracts that do not decimate or negatively affect either of our Health or Pension Plans.

 

Your YES vote on the enclosed strike authorization ballot is necessary to send a strong message of clarity, strength and solidarity to management.

 

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Here are the unions’ talking points.

 

EMPLOYER RESPONSE TO UNIONS’ PROPOSALS:

 

• BASIC WAGES—Employers have made no wage offer.

 

• PENSION, HEALTH AND RETIREMENT—Despite the potentially devastating impact of the declining global markets on our Plans, the Employers have offered no increases in contributions and continue to press for “caps,” which will cost our Plans more than $60 million.

 

• CABLE—Employers have not responded to the Unions’ proposal to remove the “cap” on cable units despite a finding by Booz & Co. that cable is greatly undervalued [OR: “is an area of tremendous growth and earnings for advertisers.”]. Nor have they responded to the Unions’ proposal to extend exclusivity and holding fees to cover commercials made for national cable networks.

 

• INTERNET & NEW MEDIA—Employers have not addressed the Unions’ proposals for fair payment structures to replace the current experimental “free bargaining” approach to the Internet & New Media, which fails to provide any minimums at all.

 

• MONITORING—Employers have not responded to the Unions’ comprehensive proposal on monitoring.

 

• LIQUIDATED DAMAGES FOR LATE PAYMENT—Employers have not responded to the Unions’ proposal to increase damages for late payment of wages for the first time since 1978.

 

• SPANISH LANGUAGE—Employers have responded to the Unions’ proposal to rectify the decades-old refusal to pay “Class A” use fees for commercials on Spanish Language networks by proposing to roll back existing protections for Spanish Language performers.

 

• PREFERENCE & EXTRA COVERAGE ZONES—Employers have not responded to the Unions’ proposal to apply the contract to extra performers and to require preference of employment for professional performers in Charlotte , North Carolina and Austin , Texas .

 

• STUNT DRIVERS—Unions have proposed that Employers pay stunt drivers residuals when they sell the Employer’s product. Employers have responded by proposing to narrow the circumstances when stunt performers are entitled to residuals and to make it more difficult for them to file upgrade claims.

 

• SINGERS, DANCERS & CHOREOGRAPHERS—Employers have not addressed the Unions’ proposals to improve working conditions for dancers, to protect singers against automatic renewal at old rates, and to provide a limited ability for choreographers who have done covered work in at least 5 prior years to earn eligibility for benefits.

 

EMPLOYER ROLLBACKS:

 

• ELIMINATE “CLASS A”—Employers have proposed a radical, untested new system for compensating performers in national commercials that eliminates the current “Class A” payment structure, as well as the current structure for national cable commercials.

 

• DECREASE CONTRIBUTIONS TO PENSION, HEALTH, AND RETIREMENT BY OVER $20 MILLION—Employers have proposed implementing a “cap” over which they would not make contributions to P&H or H&R. This will cost the Plans at least $20 million at a time when they are already suffering due to the bad economy. Employers have also proposed changes in how contributions are made on multiservice contracts that will likely further reduce contributions.

 

• OVERTIME—Employers have proposed that overtime apply only after 10 hours worked in a day instead of 8 and that double-time not apply until after 60 hours worked in a week, with no double-time for hours worked beyond 10 in a day.

 

• DOWNGRADES—Employers have proposed changes that will allow downgrades even when the performer’s face remains in the commercial, eliminate the requirement to pay a session fee to a downgraded performer and increase the notice period for downgrades from 60 days to 13 weeks.

 

• HOLDING FEE—Employers have proposed to pay holding fees within 10 days of the end of a fixed cycle instead of by the first day of each fixed cycle, as presently required, postponing not only the payment to the performer, but the point at which the performer can accept a competitive commercial.

 

• STUNT PERFORMERS—Employers have proposed narrowing the definition of “stunt” to require an actual hazard to the performer regardless of the level of skill involved. They have also proposed making it even more difficult for stunt performers to file upgrade claims, including a new requirement to file within 48 hours.

 

• SPANISH LANGUAGE—Employers have proposed eliminating the premium Spanish-language performers must be paid to hold their exclusivity in English-language commercials making it even harder for Spanish-language performers to make a living.

 

• UNION LIABILITY—Employers have proposed that the unions pay them a TRIPLE session fee whenever a performer cancels an engagement on less than 24 hours notice and that the unions play an aggressive role in disciplining our own members for breaching exclusivity. 

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