Friday, January 18, 2008

The Directors Deal – Fair or Feasible?

The Directors Guild has reached agreement with the studios. Should the Writers Guild accept the same deal ... or try to negotiate better terms, and possibly continue the strike for months? Is the deal fair, or merely feasible, i.e., the best the DGA thought it could get? What's the tradeoff between fair and feasible, and what should the WGA do next?

Let's take a closer look.

Residuals for paid downloads (Electronic Sell-Through)

On paid downloads such as iTunes purchases, the studios gave the directors about twice what they offered the writers. That sounds extravagant, but it's not: the existing number - which was the same as the formula used for home video -- was unreasonably low, considering that there's no manufacturing cost for digital downloads (unlike DVDs and video tapes).

The writers wanted about 8 times as much as the studios offered, so, the studios didn't even meet the writers half-way. Also, the increase only kicks in above certain sales volumes (and the formulas differ slightly between movies and TV programs). Still, an increase is still better than a sharp poke in the eye.

Residuals for ad-supported streaming

This is where it gets ugly. If a network provides a show via streaming on the Internet or cell phones, with ads but with no charge to the user/viewer, the residual payment to the director would be a flat fee of about $1,200 for the entire first year of streaming. (That figure is for a one-hour program; other figures apply for half-hours or for movies; and also, there's a short initial "free period" where no residual is payable.) The network and/or the studio might make a lot of money on advertising, but the residual would still be a flat figure. A fairer approach would link the figure to either advertising revenue or viewership (number of hits).

There's another twist: what happens if or when television itself is delivered via Internet technology (so-called IP-TV)? The studios might then argue that the low flat-rate figure applies, rather than the current, more talent-friendly television residual formulas. The current definition of "Internet" in the Guild agreements is vague enough that this is a real concern. It should be tightened.

Residuals for electronic rentals

Several days ago, Apple announced that movies and, I believe, TV shows, would be available for rental on iTunes - a new wrinkle, since most content on iTunes is sold, not rented. The DGA press release on the new deal does not discuss rentals, but an email being circulated by a prominent writer claims that the DGA deal includes a provision reconfirming a 2001 Internet Sideletter that provides a 1.2% residual for such usages. If so, that's good news.

Jurisdiction over new media

When, or if, more programming is produced for new media in the first place, the guilds want it to be done using their members. The studios offered the writers jurisdiction over derivative works - i.e., Internet and cell phone programming based on existing TV shows (or movies, presumably). The DGA deal achieves that, but also attains jurisdiction over new works created for the Internet, as long as the production budget for the new work exceeds certain thresholds. The thresholds are a bit higher than one might like, but still, this is a clear win.

Sunset provision

The deal expires in three years, which is always the case with the entertainment guild agreements - they're always three years. But this time, there is apparently some kind of "sunset language" emphasizing the point that the parties can reconsider everything afresh in three years, as technology changes. Perhaps, goes the theory, the directors (or writers) could obtain increases in the next negotiating cycle.

I think that's an empty promise. Are people really going to sit in a room and reargue the issues from square one, as though this year's deal had never been made? Of course not. The deal that gets done today will be the precedent for tomorrow, just as the home video deal, crafted at the dawn of the videocassette age, has lived on more than two decades, into the realm of DVDs and its hi-def successors, such as Blu-ray.


The DGA press release says the new deal gives the guild better access to studio "deals and data," and also gives the guild improved provisions for challenging transactions between two divisions of the same company (these intra-company, self-dealing transactions are problematic because they can be artificially manipulated by the studios in order to reduce the amount of residuals due).

The press release isn't specific about the details, but these new or enhanced provisions can be critical to enforcing the guild agreement. Sounds like a clear win.

Also, the various residual percentages for new media are based on distributors gross rather than producers gross. This technical sounding point gives the directors a cut of a bigger pot of money, and one that is somewhat less subject to Hollywood-style accounting (i.e., manipulation). That's a significant concession from the studios - it's something the writers wanted, and it's one reason the studios walked out of talks last month.

Other terms

The new deal increases wages and residuals by amounts that are consistent with past practice (3% annual increase in minimums, for instance). There are also a variety of provisions with no direct analog in the writers agreement, just as the writers have some issues on the table that are specific to them.

What next?

The studios have said they're willing to resume discussions with the writers, initially on an informal basis. The writers should accept the invitation. What they need to do is quite simple: press for some improvement in the deal and hold the Oscars hostage. By negotiating down to the wire, they may achieve a few small improvements in the deal, which the studios would then offer the directors as well, of course.

The other option is to continue the strike, and hope that SAG will walk out too. But that's five long months from now. No one has the stomach for that, and the collateral damage is too great. Besides, flawed though it is, the DGA deal doesn't warrant five more months on the picket lines.

The DGA would never have achieved the gains in the new deal were it not for the pressure of the writers strike. The writers have an opportunity to tune up that deal just a little bit, but that's about all. Let's hope that next month, there'll be a new Academy Award category, and that the Oscar for best guild agreement will be awarded jointly to the WGA and DGA.

This article first appeared on the Huffington Post on January 18, 2008.


  1. While the theory that the Writers could negotiate a bit longer to get a slight bump in residuals sounds nice, I'm extremely pessimistic that such a tactic would succeed.

    The AMPTP currently has the most leverage its had since the Strike began. There's a fair deal on the table, and now you want the Writers to balk?

    The very dangerous downside to such a tactic is the scenario that unfolds when the Studios don't budge.

    Would the Writers, having just said that the DGA deal wasn't good enough, suddenly return to the table with tails between their legs and sign it, albeit at the cost of 4 extra weeks of Strike?


    So the gamble would be hoping for a small bump while not painting themselves into a corner and prolonging the Strike for, as you say, six more months.

    The Writers should jump on this deal and halt the bleeding now.

  2. A Victim of the Writer's StrikeJanuary 18, 2008 at 6:29 PM

    I hope the Writers do the right thing by accepting the DGA deal and ending the strike. After all, there are tens of thousands of non-writers who are affected by this strike. Would the Writers please think about of all of us?

  3. Dear "victim"

    Bless your heart!

    My dear, writers are arrogant and selfish, they don't give a toss about you or anybody else.

    3,000 a week plus 50,000 an episode it's not enough for them. And this is just the lower or the ring.

    Oh no. They think they are entitled to more.

    And they are willing to strangle TV for that.

    When the strike will be over there will be WAY less job waiting for us all.

    Thank you writers.

  4. btl guy,
    It's interesting you're so quick to approve this deal when it isn't even down on paper yet.

    No one knows what the critical terms mean yet without legal clarification. I don't think the DGA has even signed it yet. There could be a lot more positioning, especially in light of the overwhelming concern by WGA members that there are numerous deal breakers here. Deal breakers that could leave writers flat with zero payments for services under certain conditions. Do you really think they should settle for zero, just so you ass can have a career?

    If it wasn't for writers there would be no industry and no one from the PAs to the caterers to the fat studio execs getting their $27M pay raises - none of them would be working, not in this industry.

    So stop telling writers how to live their lives and how much you think they should be willing to sacrifice for you.

  5. I don't believe these comments are by real crew members or people being held "hostage" by the writers.

    These comments have the stink of AMPTP paid bloggers all over them.

    Anybody who has a even a tiny portion of any brain lobe firing can see that the AMPTP has been pitting unions against one another and should be upset with the AMPTP and not the writers.

    And frankly, the only reason Gil Cates went for this deal is so he can have his one big night all year and that's directing an awards show. This is a guy who couldn't make it as a real director - keep that in mind.

    The AMPTP has offered an insulting residual fee. There is a ways to go on this deal. The one good thing about the DGA deal is that they now have no excuse not to come back to the table.

    Everybody knows the AMPTP walked out so they'd have the DGA contract to hold against us. A contract that has different needs than the WGA or SAG. We are not the DGA - we are a different union, and we have every right to fight for ourselves.

    And one more thing, btl guy, you in particular are NOT a real btl guy. You are are first to blog at every site and I will say every btl person I know has been empathetic to us. YOU ARE A PAID SHILL. COME OUT OF THE CLOSET.



    Do you really believe that? That every time someone posts an opposing view, they must be being paid for it?

    You may want to open your eyes to the very real possibility that your own arrogance is quickly eroding the support of those who, through no fault of their own, are impacted by the strike.

    Your comment is just as bad as someone else above who made the claim that "if it wasn't for writers there would be no industry". Every production that happens is a team effort, and as soon as one of the team members decides they are more important than the rest, things go south quickly.

    I would expect arrogance from an actor who makes 10s of millions for a single movie. But surprisingly, in my career I've seen many more high-dollar actors show class and decorum than many minimum-making writers. I think the difference is that the stars understand that while they often carry the show, they explicitly depend on those below them to provide a solid platform from which to shine. I'm not convinced that much of the newer WGA understands this yet :(

  7. Jon,

    I was responding to a specific plan of action which suggests that the deal is good, but may be improved upon.

    I pointed out the very real potential downside of such an action.

    You are correct in that I am responding to the reported facets of the deal, not the deal in its entirety. I can only respond to what is available.

    If you are so sincere in this belief that I shouldn't be "so quick to approve this deal," I would suggest that you say the same thing to those who are so quick to call it a terrible deal. Or does your point only apply if someone disagrees with you?


    To the cries of "shill" (paid or otherwise), I have defended myself in this regard several times and several reputable sources rightfully believe I am who I say I am.

    I have repeatedly berated the AMPTP for their handling of these so-called negotiations, because their actions are unconscionable, especially in the light of the current economic situation, and the timing of the Strike in regard to the holidays.

    I categorically deny any accusation that I work for the AMPTP, any of their members or hired hands (other than as a paid crew member on production). I am not in contact with them at all and am not "fed" any information or talking points of any kind.

    In short, I do not support the AMPTP's side of these negotiations. I firmly believe that the Writers are in the right in terms of what they are asking for.

    At the same time, however, I vehemently disagree with the WGA decision to Strike when they did, and their completely incapable approach to the negotiations.

    This strike is, in my opinion, the result of hubris.

    These are my opinions, and I do not claim to speak for all of the below the line crew. I am, however, a below the line crew member who was forced out of work when the network television show I was working on locked the stages when we ran out of scripts to shoot.

    Are any of you so naive as to really believe that those of us who had no vote in this strike, but are economically hit hardest by it are not angry at the situation?

    Are we really insane to want the strike to end as soon as possible?


    Interesting view of the world.

    Finally, even if everything you sling at me were true (which it is not), how would that matter in terms of the points I am making?

    When you attack the man, but not the message, you are implicitly admitting that the point is valid.

  8. One more thing...

    Jon writes: "Do you really think they should settle for zero, just so you ass can have a career? "

    1) I never, ever, said that the WGA "should just settle for zero." Disagree with me all you want, but don't put words in my mouth. You don't get to write the script of my life.

    2) Maybe reserve the name calling for a playground somewhere...

  9. BTL Guy--given that the terms in the DGA contract are clearly *far* more favorable than the writers would have received without striking, are you prepared to revise your opinion that the strike was unnecessary, and, indeed, may have been a necessary evil? Do you *really8 think the AMPTP would be offering these provisions without the strike?

    It's worth re-quoting another BTL guy, who actually uses his real name, John Jabaley, Location Manager and member of Teamsters Local 399

    "I understand that this strike could have been over a long time ago if the AMPTP wasn’t dead-set on keeping the internet for themselves.

    Much has been made of the suffering of us “below the line workers” and while it is true that I haven’t worked since Thanksgiving as a direct result of the strike, it is also true that I’ve been unemployed before, and I will be unemployed again. It’s show business. Work comes and goes, just like it did when I started off and like it will when I finish. There are assistance funds. There are ways for people to get help.

    What doesn't exist are ways for us to individually stand up and say: excuse me, General Electric, AOL/Time Warner, Sony, NewsCorp, CBS, Viacom, I’d like a share of the internet revenue when you make money off something I made for you. Something I wrote, something I directed or was in. I’d like you to make a contribution toward my retirement because I worked 16 hours a day hauling cable, dealing with the neighbors, loading the camera, running background, building 20X frames or feeding the people who did.

    I can’t do that. My neighbor the propmaster can’t. My neighbor the actor can’t. Even my neighbor the Production Designer can’t. None of us can do it alone. To do that, it takes all of us to stand up.

    I understand that people at every level of this business pour their lives onto pages and into moving pictures. And I believe that's worth rewarding.

  10. Greg,

    I will freely admit that much of this deal is better than I thought it would be and I will go so far as to say that the WGA Strike helped make it so. (The part that's not as good is the streaming residual -- I thought that'd come in around $2000 for one year; and maybe it would have if the Studios weren't forced to recoup the losses imposed by the Strike).

    However, in this linear world of ours, where there is no way of knowing for sure what deal might have been gained had the WGA not struck, or more importantly, not struck when they did; I am still not willing to say that THIS strike, at THIS time, with THESE GUYS running the negotiations was the best solution.

    I still firmly believe that a "perfect storm" strike of WGA and SAG (and DGA if it had come to that) would have been shorter and more effective.

    A common misconception that all these "shill" shouters have is that I am somehow anti-WGA or anti-Strike. These claims are simply false.

    I disagree with the methods, not with the goals.

    And going forward, I would hope that the Writers can do some simple cost-benefit analysis of accepting or denying a deal.

    What more could the WGA reasonably expect to get by continuing to strike for 2 weeks? For two months? For six months?

    Are the costs associated with prolonging the strike worth the gains above and beyond what is already on the table? Are the costs of a potential miscalculation (ie, we can afford to strike 2 weeks to get 'X'; oops, now it's four months and we still haven't got 'X') worth the potential gains?

    I say the costs are too high and the relative gains too low. Others may disagree.

    Disagreement is fine, or should be...

  11. I gave been following this strike pretty closey. I do not work in your business. I have come from a line of union workers. My grandfather was a in the United Mine Workers of America, and my father was a Teamster. I am a member of the CWA. I am only a consumer of your product so please understand if I don't understand your business.

    I have noticed a few things while reading the blogs concerning your strike.

    I agree that this strike seems necessary, from what I have read the AMPTP are businessmen with one goal in mind....MAKE THE LARGEST PROFIT POSSIBLE. The writers want to make the largest wage possble. Bottom line it's business.

    I keep reading that DGA submarined the WGA and the SAG when it came to VCR/DVD media in this the 80's. I understand the argument of prouction cost ect. in that negotiation because it was new, like the internet is today. What I don't understand is why the issue wasn't revisited before now. DVD's have been popular for almost a decade. In my mind that is 6 contract negotiations. That was 6 chances to get that rate increased. You had six chances to strike and didn't. I would like to know how that is the DGA's fault that these rates haven't changed. It sounds to me like it's been your own fault. You are your own union with your own contract.

    This current deal the DGA made I guess covers new nedia which is still "new", and the feeling I am getting is that this deal will set in stone forever your residuals for the internet. This type of thinking is crazy in my view. That's why contracts have an expiration date. So that things can be improved, or corrected.

    My question is did the WGA do any market research prior to your negotiations like the DGA did? While I'm not taking sides, but if they did the research maybe they know more than your own leadership or negotiation commitee does.

    Since this is new media and there is no historical data perhaps it's better to listen to the people who did the research and revisit the issue when your next contract is negotiated. The power of the unions are it's members. If you don't like something you have the power to change it.

  12. - why wasn't the VHS residual renegotiated (in good faith - as promised by the AMPTP)? Good question. The answer seems pretty simple - pretty much all contract gains for the WGA have been won through a striking. (the one notable exception seems to be the relatively fair internet rental fee of 1.2%) It is not until now, when we are fighting for jurisdiction over the Internet, the future, did we as a membership decide that it was necessary to strike. Obviously no one wants to be out of work, or for others to be out of work, or for their shows being off the air, or for their movies to not get made - and frankly the congloms have a lot more money to fall back on then we do so it better be a important and worth the sacrifice if we're going on strike. I hope that helps answer your question.

  13. btl guy says, "What more could the WGA reasonably expect to get by continuing to strike for 2 weeks? For two months? For six months?"

    They stand to gain everything and stand lose everything if they fold now, and they know it.

    There are provisions in the DGA outline that are deal breakers. Under certain circumstances writers could be left with nothing. But I suppose you have no problem with that. Nothing been set in stone but you are ready and willing to approve right now what ever is offered to the DGA. Nice of you to be so free with other people's money and lives.

    Now why do you work so hard to convince readers you're not a shill, and why do so many readers think you are one? Could it be that even if you're not you may as well be?

  14. Jon jon jon...

    You write that I am the one who is so cavalierly "free with other people's money and lives."

    That might be the most hypocritical comment I've seen since the start of the strike.

    The second most hypocritical comment was when you told me to "stop telling writers... how much [I] think they should be willing to sacrifice for [me]."

    The WGA Strike has left THOUSANDS of below the line workers without any income. We are losing our houses. Today. Families are in crisis. Today.

    Because of YOUR strike.

    It is the WGA leadership who is so free with other people's money and lives.

    It is the Below The Line who are sacrificing for Writers, pal. Not the other way around.

    Pull your self-centered head out of whatever orifice you've hidden it, wake up and smell the devastation you have caused.

    The only way you are going to "lose everything" is if you dig in your heels in the naive belief that you might someday "gain everything."

    Finally, I defend myself from Shill Shouters such as yourself because it's an f'ing insult -- you know it and that's why you sling it.

    I don't attack anyone, dude, unless I am attacked first. You come charging out of the gate with personal accusations because you don't like my ideas.

    You DON'T HAVE TO like my ideas. Argue with them on the merits, disagree all you want. Let's have a discussion. Then everything's cool.

    But throw me in with scum who prolong our misery because it suits them (this would be the AMPTP I'm talking about), and, yeah, I get pissed off and defend myself.

    If you can post comments with civility, I would be sincerely interested in the specifics of the deal breakers that you have mentioned. Or we can keep up the ugliness and name calling.