Sunday, August 3, 2008

SAG DVD Residuals Increase: RIP

It seems pretty clear that SAG has dropped its request for an increase in the DVD residual (as I predicted it would have to): an email from National Executive Director Doug Allen to the members an hour ago lists various priorities -- and omits DVD altogether.

The relevant portion of the letter says:

Your interest in and support of the key issues like jurisdiction and residuals for all new media have been invaluable to our negotiations ... We also know that you remain concerned about other key bargaining priorities such as, for example, product integration, force majeure, stunt performers and background actors’ issues.
Three years from now, when the SAG agreement (if one ever gets signed) and WGA agreement expire a month apart, the unions may decide to try once again to increase DVD residuals. They'd be well advised to do so, not just because the DVD/BD (Blu-ray Disc) market will still be worth many billions of dollars, but also because future technologies are likely to include physical media, and these will be paid using the "DVD formula." See Slipped Disc: Why DVD Residuals Still Matter — and Always Will.

Turning from the future back to the present, the letter also seems to say that meetings between SAG and the studios are taking place now, notwithstanding press reports to the contrary:
Your negotiators are working every day to successfully conclude negotiations .... Right now, that involves small group meetings and exchanges with the employers, their AMPTP representatives and a core group of leaders in both organizations. ... You will not doubt read spin suggesting that there is dead silence between our sides. ... Discussions through alternative channels are ongoing....
Sorry if I remain skeptical, but I doubt progress is being made now, or that any will be made until after the SAG elections conclude on September 18. In my view, the soonest we'll see a deal is early October, and there's no assurance of that. It all depends on the election results.


  1. What is the basis for saying that the WGA and SAG agreement will expire one month apart? Won't the new SAG contract have an anniversary date based on when its new rates take effect? In other words, if AMPTP wants a June 30 expiration date, won't they have to retroactively pay everything from July 1 regardless of when the contract is actually signed? And isn't it far more likely that if the SAG contract is signed in, say, November, it will renew in November? (I assume that WGA renews in February, but I don't know that.)

  2. The agreements can have any term (i.e., length) that the parties agree to. In general, Hollywood labor agreements have terms that are approximately three years, though they are sometimes extended for various reasons. For instance, the SAG-AFTRA commercials contract might get extended by 6 mos., since it expires soon and the SAG is busy dealing with the theatrical contract.

    No, the WGA contract expires May 1, 2011. Here's the language from the new contract: "The term of the 2008 WGA Basic Agreement shall commence on February 13, 2008
    and shall continue to and including May 1, 2011."

    The previous WGA agreement expired the end of October, but the studios changed the date for the new contract so that the WGA couldn't threaten the fall season (or the Oscars) as effectively next time.

    The WGA agreed to the change, apparently because they felt they'd be in a stronger place if their agreement was synchronized with SAG's. But, as you suggest, there's no guarantee that SAG's will continue to be set for the end of June. Indeed, the studios might insist that the SAG deal have a different expiration date than the WGA deal, and even than the AFTRA deal, to make it harder for SAG to coordinate with either.

    In terms of the relation between contract and retroactive pay - there is no fixed relationship. You can have a period with no contract in effect, as is the case with the WGA - the old deal expired October 31, 2007, but the new deal didn't pick up until Feb. 13, 2008. Or, you can have an explicit contract clause that sets different phase-in dates for different provisions. It's all a matter of negotiation.

  3. The following scenario seems extraordinarily unlikely to me: A new SAG TV/Film contract signed in October or November of 2008 that expires on June 30, 2011, unless it contains retroactive pay increases effective as of July 1. Otherwise, SAG members will be getting only a stub year of increases for one of the years.

    Also I believe the studios are going to insist on at least three years of fresh contract term, simply from a stability standpoint.

    Now, the very reason that the WGA anniversary date was moved to May could mean that the studios will resist having a SAG anniversary date in the fall -- but that suggests to me that the new SAG agreement might be pushed out to expiry at June 30, 2012 (thus, a 3-1/2-year term).

    I could envision a scenario where a number of interested parties would find it beneficial to synchronize the AFTRA Exhibit A expiration with SAG's eventual expiration. The biggest frustration in doing that might be that the New Media terms that are supposed to "sunset" in 2011 will be carried forward an extra year. But synchronizing SAG and AFTRA terms would facilitate future joint negotiation, which I believe most people would favor (although disagreeing on the manner of accomplishing it). Also, I take the point that I believe you made in an earlier post that the sunset clause is mostly a fig leaf and may have little real significance -- the next contract's terms will need to be bargained, sunset clause or not.

    From that perspective, perhaps my statement that the studios would not agree to a 2-1/2 year term for a new SAG agreement may be incorrect -- it could be that the studios would view it as advantageous to have the same expiration as AFTRA. Or, if the studios like the chaos that separate negotiation has caused, perhaps they will allow a situation to develop where AFTRA will have to go first next time (or agree to an extension to match SAG next time).

    SAG itself would have to recognize that if AFTRA renegotiates first in 2011, this year's problem of "pattern" will only be exacerbated. I wonder how they believe this problem can best be solved?