Sunday, January 31, 2010

SAG Moves towards Joint Bargaining with AFTRA

The SAG National Board yesterday passed a resolution, by a surprising 82% to 18% vote, directing the guild’s president and National Executive Director to “seek engagement with AFTRA in a joint bargaining agreement for negotiation of the Television/Theatrical Contract,” as quoted in a SAG press release. This move is as I predicted in a blog post three weeks ago, based on conversations then with a confidential source.

Those negotiations, scheduled for October 1 – November 15 of this year, would take place “under the terms of Phase One, modeled on the agreement used successfully in the 2009 Commercials Contract negotiations,” per the resolution. Phase One is the 1981 agreement between the two unions under which they have jointly bargained with the studios for almost three decades, with the notable exception of 2007-2009.

The margin was unexpected, since the board is almost evenly divided between factions that support joint bargaining (Unite for Strength and an independent in Los Angeles, and most or all members of the New York and regional boards) and a group (Membership First) that has generally expressed bitter opposition to joint bargaining under Phase One, a framework that gives SAG and AFTRA equal weight on the negotiating committee. (Because of the lateness of the hour, it was not possible to explore this issue with sources, and a call to a SAG spokesperson was not immediately returned.)

The resolution also directs the President, Ken Howard, and National Executive Director, David White, to “bring a recommendation to the National Board at the earliest opportunity.” The urgency presumably stems in part from the fact that AFTRA’s next national board meeting is February 27 meeting, and more generally from the constraints created by the October 1 date and the various processes leading up to it, as I have previously discussed. The TV/theatrical contract doesn’t expire until June 30, 2011, but the agreement reached last year between the studios and SAG mandates early bargaining, specifically, from October 1 through November 15.

The SAG press release is below.


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SAG National Board of Directors Meets via
Videoconference in Los Angeles and New York

Los Angeles, (January 31, 2010) - Screen Actors Guild National Board of Directors voted today to seek engagement with AFTRA in a joint bargaining agreement for negotiation of the Television/Theatrical Contract. Approved 82 to 18 percent, the resolution states:

“It was moved and seconded that in light of SAG's historically productive negotiating partnership with AFTRA, the SAG National Board of Directors directs President Ken Howard and National Executive Director David White to seek engagement with AFTRA in a joint bargaining agreement for negotiation of the Television/Theatrical Contract, under the terms of Phase One, modeled on the agreement used successfully in the 2009 Commercials Contract negotiations. President Howard and NED White shall bring a recommendation to the National Board at the earliest opportunity.”

Screen Actors Guild President Ken Howard said, “I am very pleased with the vote and thank the Board for their leadership and foresight on this important issue. I so appreciate the Board’s cooperative spirit in this discussion and throughout the day, and feel confident that our Guild is moving in the right direction.”

In other actions, the National Board voted unanimously to create a National Performance Capture Committee to address the unique concerns and experiences of members who render performances that are recorded using “performance capture” technology across all media, and to advise the Guild on all matters pertaining to work in this rapidly growing area.

The board also approved 83 percent to 17 percent the unanimous recommendation of the finance committee to authorize the extension of existing initiation fee reductions in targeted markets across the country and to have the Guild’s Joint Strategic Planning and Finance Committee review the initiation fee structure nationwide.

The national board received reports from elected leadership and staff including:

• President Howard memorialized those members who have passed away over the last year reading each name aloud and calling for a moment of silent remembrance. Howard also recognized the recent loss of former Houston Branch President and board member Jim Huston, who passed away January 28, 2010.

Mary McDonald-Lewis, Regional Branch Division board member from Portland, Oregon, delivered a special tribute to Huston, saying, “He stood with his brothers and sisters through the best of times and the worst of times, and did so with resolve.“

• Secretary-Treasurer Amy Aquino delivered a report on the Guild’s second quarter financial results noting that SAG’s revenue and expenses are closely tracking the projections for fiscal year 2010. Aquino also provided an update on investment performance indicating recoupment of certain losses in the Guild’s investment portfolio when compared to the prior year.

• National Executive Director David White reported on the strategic planning efforts underway at the Guild and preparation for negotiations. White updated the board on new institutional and member service initiatives including a revitalized organizing strategy and program. White applauded SAG committee members and staff for their innovative and thoughtful work in key areas including the 2010 SAG Awards, government relations and legislative activities, new media outreach activities, and the LifeRaft Live Streaming partnership with SAG Foundation, among other efforts.

The Board also appointed Deputy National Executive Director of Contracts Ray Rodriguez to the Screen Actors Guild-Producers Industry Advancement & Cooperative Fund (IACF) board and addressed a number of governance matters, including a constitutional amendment regarding written assent procedures; an amendment to Branch rules of procedure; advisory recommendations from the annual national membership meeting; amendments to the election guidelines; and a recommendation to study the feasibility of electronic voting.

The meeting adjourned just after 5:00 p.m. PST.

Tuesday, January 26, 2010

SAG-AFTRA Joint Bargaining: AFTRA Hesitates, Slightly; and More

An AFTRA committee, expected to recommend joint bargaining with SAG, instead referred the matter to a subcommittee, the Hollywood Reporter and The Wrap reported. Curious about details, I contacted a source close to AFTRA. (SAG and AFTRA declined to comment.)

The committee that met yesterday is, in fact, AFTRA’s Strategy Cabinet, a key, 25-member committee that advises the AFTRA National Board on important matters. The Cabinet is chaired by AFTRA president Roberta Reardon and includes AFTRA officers and others.

As the Strategy Cabinet’s action indicates, there wasn’t 100% agreement in the room regarding joint bargaining. However, reports my source, there is nonetheless a sense of inevitability that there will, in fact, be joint bargaining. AFTRA wants to develop a framework that it would be comfortable with.

Fortunately, my source indicate that this framework would probably entail only the three well-understood concepts that I discussed in a recent post: (a) 50-50 representation on the negotiating committee (and equal voting strength for all members of the committee), (b) a non-disparagement agreement, and (c) working out the negotiating schedule to accommodate both the joint bargaining (SAG’s bargaining is scheduled for October 1 – November 15) and AFTRA’s always solo “front of the book” bargaining (that portion of their Network Code agreement expires November 15).

As a caveat, the subcommittee to which the Strategy Cabinet referred the matter has not been appointed yet (this is expected in the next few days, and Reardon is expected to be chair), so it may have other thoughts. In any case, these developments make it all the more important for SAG to make decisive moves at its National Board meeting this Sunday towards joint bargaining.

Two other interesting notes from the Strategy Cabinet meeting. One is that AFTRA is continuing with an organizing training program in all Locals whose purpose, I’m told, is to build strength at the bargaining table in AFTRA’s existing areas or jurisdiction, including by increasing AFTRA’s share of work in a variety of areas. Those existing areas include some where AFTRA’s jurisdiction overlaps with SAG’s – scripted basic cable; new media; and video games – as well as other areas that are AFTRA’s alone.

In addition, the Cabinet created a national Actors’ Equity Cooperation Committee to explore with Actors’ Equity areas of mutual interest and concern. This could be a very early step towards merger; who knows? In any case, cooperation, and perhaps a merger, make sense from three very different perspectives.

First, at the level of expensive stage productions, a number of these are mounted by studios (Disney) and/or based on movies. Cooperation or a merger would allow actors to present a united front during bargaining. Bluntly put, the more sources of media conglomerate revenue that actors can threaten, the more leverage they have.

Second, at the level of 99-seat productions (in Los Angeles, this is the 99 Seat Plan, commonly referred to as Equity waiver; in New York, the Showcase Code), cooperation or merger might result in allowing small producers to exhibit pay-per-view tapings on YouTube or other websites. This could provide producers – and actors – with a new source of revenue, but is currently forbidden by Equity. Instead, promotional tapings of portions of a show are allowed, but not taping or exhibition of an entire show, to preserve the uniqueness of a live experience. Discussion between AFTRA and Equity might ultimately persuade Equity to become more comfortable with new media, and new revenue sources sought by entrepreneurial producers. The other benefit to actors is, of course, more exposure for their work, which is in fact the purpose of the 99-seat arrangements.

Finally, of course, merger would eliminate duplicative dues payments and presumably make it easier to qualify for health insurance and pension for actors who work in both television and live stage. The Equity pension plan, like AFTRA’s, is a defined benefit plan; interestingly, Equity also has a 401(k) plan. (Equity declined to comment for this story.)

Looks like AFTRA may be slowly bringing actors towards the day when all three performers unions merge, though there are certainly many steps between now and then, if indeed it ever happens. Interesting times.


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Saturday, January 16, 2010

Mitigation ‘Round About Midnight?

That sweet walkaway payday for Conan O’Brien might not be as rich as it sounds. Media such as Variety are reporting that NBC is likely to pay Conan $30 to $40 million to settle out his contract, with a deal to be reached shortly. But what few of the media appear to be mentioning is the two magic words of employment contract settlements: mitigation and offset. Depending on how those terms are deployed, the hit to NBC could be much less than the numbers imply – particularly if Conan scores a deal with Fox for a new show to start in September, as many observers expect.

Here’s how it works. First, as background, the NBC payments are likely to be made over the period of time remaining in his contract – at least, that’s what customary. Conan’s attorneys, agents and manager would probably press for some acceleration though, unless the tax consequences of doing so would be adverse.

In any case, mitigation is the concept that the terminated employee, i.e., Conan, has an obligation to seek other employment. If he fails to do so, the payments from NBC could stop. To protect against this, Conan’s representatives will seek, and may get, a “no mitigation” clause. In that case, the payments would keep coming even if Conan decides to sit on the beach for the next 2-1/2 years (reportedly the remaining term of his contract), though he’s unlikely to want to damage his personal brand name by simply disappearing.

At the very least, though, Conan’s team will argue for no mitigation from now until a new Conan show could feasibly be launched, which is generally assumed to be September, i.e., the beginning of the fall TV season. They’d also probably seek a guarantee that there would be no mitigation if Conan is offered and refuses a show of lesser stature, or one at a lower salary than he was receiving at NBC, or one that reaches too small a percentage of households in the country. In other words, under such contract terms, Conan would be able to refuse a “demotion” without violating a duty to mitigate.

Now on to offset. This is the concept that whatever the employee earns at his or her new job, if any, would be offset against the settlement payments owed by the old employer. This would apply only for the remainder of the old contract. For instance, suppose the agreed NBC termination payment (“liquidated damages,” in legal terminology) is $40 million, and suppose Fox pays Conan $30 million over the next 2-1/2 years. In that case, the $30 million could be offset against the $40 million, and NBC would only have to pay $10 million.

Naturally, Conan’s representatives will seek a “no offset” clause. This would be a hard-fought point, however. NBC would argue that Conan would be getting a windfall and, even worse, that he’ll be cashing those checks while competing against NBC itself. That’s like biting the hand that feeds you, but knowing you’ll get fed regardless.

Here again, there’s a compromise available: Conan and NBC might agree that his salary from the new show would be only partially applicable (i.e., partially offsetable) against the NBC liquidated damages payments. For instance, if 50% of his Fox salary (if he does a Fox deal) were applicable, then $15 million (in the above example) would be applied against the $40 million, reducing NBC’s obligation to $25 million.

On a different note, it wouldn’t surprise me if NBC seeks a non-disparagement clause from Conan. Paying him liquidated damages while he’s getting paid by Fox to bash NBC in his monologue might be too much for the NBC suits to accept.

Of course, this is all speculation. No one’s seen the existing contract, let alone the settlement agreement, since there is no settlement yet (and it’s not clear to me whether NBC would be required to file a redacted copy with the SEC). But it’s easy to see how mitigation and offset amount to a win-win. Those provisions could allow Conan’s people to leak big impressive figures, yet reduce the bite for NBC.

Whether that would be enough to keep heads from rolling at NBC is another subject. If the Comcast deal goes through, under which the cable operator would acquire a majority stake in NBC Universal from corporate parent GE, then I’d expect some hasty departures. Someone might get the ax even if the deal isn’t consummated. (The antitrust division of the Justice Department recently announced they will be reviewing the deal.) Ironically, terminating the responsible executives would probably require NBC to make more contract settlement payments.

Moving Jay Leno to 10:00 p.m. was an understandable experiment. It seemingly kept both Leno and O’Brien in the family, and lower ratings were acceptable to the network, since production costs for five nights a week of a talk show are a lot less than for five nights of scripted dramas.

Unfortunately, it looks like the downside wasn’t evaluated as thoroughly: Leno’s lower ratings at 10:00 meant diminished ratings for 11:00 p.m. local station newscasts, an unacceptable price for network affiliates, for whom the newscasts are a cash cow. Moving Leno back to late night gave NBC one host too many: Leno, O’Brien, Jimmy Fallon and Carson Daly. That’s four hosts for three chairs, and when the music stopped, O’Brien was out. Now, for NBC, it appears time to pay the piper.


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Tuesday, January 12, 2010

Baby You Can Drive My Car: Hollywood Health Plans May Have to Pay “Cadillac Plan” Tax

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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Saturday, January 9, 2010

Hollywood Labor: SAG Source Says a Strike Unlikely, Joint SAG-AFTRA Bargaining Likely; and the Year Ahead

A SAG strike in the upcoming negotiating cycle is “difficult to envision,” a source from SAG’s moderate faction, Unite for Strength, told me, though he/she cautioned that avoiding one will require that management negotiate reasonably and he/she wouldn’t take the strike option off the table (as, indeed, no union could).

The source also said SAG’s upcoming January 31 national board meeting will probably feature a move towards resurrecting joint bargaining with AFTRA, adding that he/she was confident that bargaining later this year would indeed be jointly conducted. If the board does act on January 31, look for AFTRA’s board to respond at its February 27 meeting.

The source, who spoke on condition of anonymity, suggested the SAG-AFTRA unity move might come in the form of a resolution committing SAG to engage in joint bargaining and empowering someone – David White (SAG’s National Executive Director), Ken Howard (SAG’s elected president) or an appointed committee – to engage in talks with AFTRA towards that goal. (Indeed, Howard has already had informal contacts with AFTRA president Roberta Reardon, as Back Stage has reported.) Successful joint negotiations are, the source indicated, a steppingstone to merger with AFTRA, a goal that UFS has consistently espoused.

The bargaining in question is with the AMPTP (studio alliance) regarding the TV/theatrical contract. Those negotiations were conducted jointly for 27 years under the “Phase I” agreement, but AFTRA suspended that agreement during the last round of negotiations after provocative attempts by SAG (under previous leadership) to modify the agreement to AFTRA’s disadvantage.

Those negotiations will commence October 1, 2010 and run for 6 weeks. The current contract doesn’t expire until June 30, 2011, but the early bargaining is taking place pursuant to a clause included in the current agreement (ratified in June 2009) at the AMPTP’s insistence.

And a heads up: the rest of this article is pretty much insider baseball, so proceed if you want the nitty-gritty details on what the year ahead may hold for Hollywood labor, and SAG in particular.

Negotiating Priorities

The source listed various possible priorities for the negotiations, while cautioning that such a list is obviously subject to change over the next nine months, or at least the next five or six, since I’m told by a source with knowledge of AFTRA scheduling that that union would probably want to arrive at a package of proposals by June or so. (The SAG source’s timing suggests a somewhat later date.)

A more fundamental reason the following list is preliminary is that SAG (and AFTRA) have not yet begun the “wages and working conditions” (W&W) process of canvassing members and soliciting their input on issues of concern. Nor has SAG appointed a Negotiating Committee for the upcoming talks. With those caveats in mind, the priorities the source listed were as follows:

(1) New Media. SAG is not particularly happy with the compromises made in new media. One possible move, depending on what SAG learns from data supplied by the producers (pursuant to an information sharing provision of the new media sideletter to the TV/theatrical agreement), is that SAG might seek a shortening of the time period during which the studios pay low fixed dollar amount residuals for ad-supported streaming of television programs. After the fixed residual period, the contract specifies a percentage of gross receipts. Thus, shortening the fixed residual cycle would move up the point at which potentially more lucrative percentage residuals are paid.

Regarding information sharing, by the way, SAG may have an opportunity to review information from other guilds in addition to what the producers supply, as the source told me that SAG president Ken Howard has had conversations with the presidents of other guilds/unions and hopes that all will share information.

(2) Basic Cable. The SAG basic cable contract is separate from the TV/theatrical agreement, but expires at the same time. (AFTRA doesn’t have a basic cable contract per se; it negotiates one-off deals with the producers, though the deals each have similarities.) In light of the growing number of scripted programs on basic cable – and even the possibility that NBC might one day cease broadcasting and become a basic cable channel – improvements in the basic cable agreement are important to actors.

Here, the UFS source indicated, a priority may be strengthening terms related to working conditions. The TV/theatrical agreement has many provisions regarding meal breaks, overtime, turnaround (the time between end of work one night and call time (start of work) the next day) and the like, whereas the basic cable agreement is less protective of actors in these areas. The actors’ goal here would be to obtain more protections.

Basic cable residuals are much less lucrative to actors than broadcast residuals, but the source did not focus on seeking improvements in this area. Significant improvements may not be achievable, given the lower budgets and smaller audiences of most basic cable programs.

(3) Spanish Language Organizing. This is a growing area of programming, and one that the source cited as a negotiating priority. However, it was not clear to me how this would affect the TV/theatrical agreement itself. Interestingly, the source stated that SAG does not have a negotiating department at present, an issue I did not have a chance to contact SAG’s spokesperson about.

(4) Pension and Health (P&H). Concern in these areas is driven by two factors: (a) The various union pension plans are suffering from diminished assets due to the stock market crash and diminished contributions (which are based on earnings) due to the weakness of the industry, the soft economy, and wages lost due to the 2007-2009 work stoppages. (b) Also under stress are the health plans, which are challenged by the ever-increasing cost of health care, and which may be subject to taxation as “Cadillac plans” under the new health care reform legislation working its way through Congress. For these reasons, P&H may be bigger factors in the upcoming negotiations than they have been in the recent past.

(5) Resynchronizing SAG Minimums. AFTRA reached agreement on its current deal by June 30, 2008, and received a 3.5% bump in minimum wage rates. In contrast, SAG’s deal wasn’t ratified until almost a year later. As a result, SAG received its first increase almost a year after AFTRA, and is therefore at a lower wage rate for the duration of the current contract. A priority for SAG is raising those rates, not just for the obvious reason, but also because synchronizing the two union’s wage rates is a necessary precondition to merger.

It’s clear that the AMPTP would want any increase for SAG wage rates to be paid for by SAG foregoing another economic priority. (The AMPTP, SAG and AFTRA had no comment for this article on any matters.) That raises the question of how to reduce the bite of resynchronization. I suggested one possibility: rather than SAG seeking an immediate double-size increase at the beginning of the 2011-2014 agreement, the guild could instead seek acceleration of its annual increases, resulting in a gradual rise to parity. (Warning – some math ahead. Skip to the next section if you’re phobic . . . .)

Here’s how this approach would work. If the agreement follows the customary pattern, AFTRA will receive annual increases on July 1, 2011, July 1, 2012, and July 1, 2013. Those increases will probably be between 2.5% to 3.5% per year. (They’re 3.5% per year under the current agreements.) SAG will receive an annual increase on July 1, 2011 as well, but that still leaves it one increment (i.e., 3.5%) behind AFTRA.

To bring SAG up to parity, the agreement could give SAG its next increase 9 months later (say April 1, 2012), rather than the 12 months that AFTRA will wait. That brings SAG up to parity with AFTRA, but only for the 3 month period until AFTRA’s July 1, 2012 increase kicks in. But then the agreement could give SAG its next increase 9 months after its April 1, 2012 increase – i.e., on January 1, 2013. Now SAG will match AFTRA for a period of 6 months, until AFTRA’s July 1, 2013 increase kicks in. Then, the agreement could give SAG an increase 9 months after its January 1, 2013 increase, i.e., on October 1, 2013. Now SAG will match AFTRA for the remaining 9 months of the contract (i.e., through June 30, 2014). At that point, the unions will stay synchronized, because the 2014-2017 will commence by giving both unions an increase on July 1, 2014.

Now look at the boldface portions of the preceding paragraph: 3 months plus 6 months plus 9 months equals 18 months that SAG will be synchronized with AFTRA. In other words, SAG will be at AFTRA wage levels for half the contract term. That’s a compromise halfway between the current situation, which is no parity, and an approach that gives full parity immediately upon commencement of the 2011 contract. By splitting the difference, SAG’s other priorities would take less of a hit – at a cost, of course, of delaying full parity.

The point of all this is that parity need not be an all or nothing proposition. This approach is a way to incrementally restore parity. And, by varying the 9 months in my example, the tradeoff between time to parity and cost of parity can be tuned to whatever negotiators deem appropriate.

A different approach would be to give SAG its increases at one year intervals, just like AFTRA, but to give SAG larger increases than AFTRA receives, such that by the end of the contract term, SAG is at the same level as AFTRA. Here again, the approach can be tuned, but perhaps not as precisely, since SAG would have to reach parity in exactly 3 years, 2 years or 1 year.

Framework for Joint Bargaining

Moving on from math, let’s talk about joint bargaining. The UFS source pointed out that the jointly-bargained commercials contract was not actually bargained under Phase I, but rather under a freestanding joint bargaining agreement. That agreement includes a non-disparagement agreement that clamped down on anti-AFTRA rhetoric coming from SAG’s hardline Membership First faction.

My source also said that the non-disparagement agreement was essential to the success of those negotiations (and I’m sure AFTRA would agree). Yet, according to the source, it would be difficult to include the non-disparagement clauses in Phase I, since the Phase I agreement is part of SAG’s constitution, meaning that revising Phase I would require jumping through various hoops, such as a 2/3 vote which might not be achievable, given MF’s representation on the board).

The solution? Extending the freestanding joint bargaining agreement to cover the TV/theatrical negotiations, or creating a new such agreement. So, than Phase I, we may see this reboot, or remake, or sequel instead. It’s just like going to the cinema, if your idea of a good movie includes Roberts Rules of Order.

Negotiating Committee

The UFS source told me that the joint negotiating committee would have 50-50 representation from SAG and AFTRA, with equal weight for each member. That’s a given, in that AFTRA would agree to nothing less.

The SAG portion of the committee will have 11 members from Hollywood, 4 from New York and 4 from the Regional Branch Division (i.e., everywhere else). Since the Hollywood Division, which is controlled by MF, appoints the Hollywood members of the Negotiating Committee, does that mean that the partisan split in the Committee will be 11 MF and 8 moderates? Not necessarily. SAG president Ken Howard is a Hollywood member, and it would be very bizarre for MF to refuse to seat him (and, in fact, to refuse to make him chair of the committee).

If Ken Howard gets a seat, that yields a 10 to 9 balance in MF’s favor – but only if MF is determined not to appoint any other moderates (UFS or independents) to the Hollywood contingent on the committee. If MF is not united, or if they fail to bring all of their national board members (or alternates sitting for them) to the Hollywood board meeting, then they may not be able to insist on controlling all 10 seats. The result could be 10 to 9 or so in the moderates’ favor.

In any case, most or all of the AFTRA appointees will likely be moderate in temperament, giving moderate voices a majority on the joint committee. This is what angers MF, and is why they tried in 2007-2008 to modify Phase I to AFTRA’s disadvantage.

As for when the Negotiating Committee would be appointed, the source noted that that wouldn’t happen until AFTRA had responded at its February meeting to SAG’s January initiative (assuming that’s when things play out). SAG’s next national board meeting after AFTRA’s February meeting is in April. So, at that meeting, the SAG national board would create the new Negotiating Committee and ask the divisional boards to appoint their respective members.

For Hollywood, this appointment process would happen at the next monthly Hollywood board meeting, which would probably be the May monthly meeting (it could be the April meeting, depending on when in April the Hollywood and national board meetings fall, but I suspect that the divisional board meetings precede the national board meetings).

Another note re the Negotiating Committee: the old Negotiating Committee – the one that the SAG board disbanded in January 2009 when the moderates acted by written assent (also firing the previous SAG National Executive Director) – well, the old Negotiating Committee actually still exists, or was resurrected, and is now the Standing Negotiating Committee. That’s the committee that administers the contract, granting waivers and such. Also, the Negotiating Task Force (which replaced the Negotiating Committee) still exists, though it’s dormant. In any case, these factoids are apparently of academic interest; a new Negotiating Committee will be appointed for the upcoming negotiations, though obviously some of the members will be the same.

Upcoming Board Meetings

The schedule of national board meetings for SAG and AFTRA is: Jan. 31 (SAG), February 27 (AFTRA), April (SAG), June 10 (AFTRA), Sept. 25 (AFTRA), and Oct. (SAG). Thus, if SAG does not act decisively at its January 31 meeting, a special meeting of the SAG board may be necessary in order for the process to play out so that the Negotiating Committee can be appointed and the W&W begin in a timely fashion.

Will AFTRA Agree to Joint Bargaining? Will the AMPTP?

Ideally, the unions will decide that they should indeed bargain jointly. The last thing the industry, or the unions, need is more uncertainty and inter-union conflict. All that bought last time for SAG was a one year stalemate that got SAG a worse deal than it could have obtained a year earlier, and at a cost of tens of millions of dollars in lost wages due to suspended motion picture production.

Admittedly, the suspension of Phase I did help AFTRA become viewed by the industry as a more significant player than in the past. Also, AFTRA feels burned by SAG’s actions towards it in 2007-2008 (again, this was under a previous SAG administration). Thus, AFTRA is likely to require a significant degree of reassurance from SAG that despite SAG’s still messy politics, a SAG commitment to joint bargaining would be honored. Making things even more difficult, reviving joint bargaining will require that neither union feels it is apologizing for the 2008 breakdown. It’s an extremely delicate dance.

There’s also the question of whether the AMPTP will agree to negotiate jointly, since (as far as I can tell) they don’t have to. They’ll almost certainly agree though: doing otherwise would look like the organization was actively seeking labor discord. In addition, since the AMPTP has generally found AFTRA easier to deal with, why wouldn’t they want them in the room with SAG? After all, the AMPTP engaged in joint bargaining under Phase I for 27 years. Also, separate bargaining could (and probably would) result in different contract proposals, further complicating negotiations.

Will the Early Negotiations Result in an Early Deal?

Early negotiations are one thing, but an early deal is another. SAG doesn’t have a history of reaching early agreement. However, another factor is the DGA. Their contract doesn’t expire until mid-2011 (concurrent with SAG and AFTRA Ex. A, and just two months after the WGA), but they like to negotiate early. If SAG doesn’t reach an agreement during this fall’s early negotiations, which end November 15, then the holidays pretty much ensure that there will be no further negotiating opportunities until January.

At that point, the DGA may step in and do its deal – just as it did in January 2008, after the WGA failed to do a deal (and remained on strike) in fall 2007. In other words, SAG has a chance to set the template, but only if it reaches an early agreement. Let’s hope it does, since otherwise we may see stockpiling of motion pictures (i.e., accelerated production) in early 2011, followed by a disruptive slowdown (i.e., a de facto strike or de facto lockout).

What about the WGA?

Speaking of the WGA, what role are they likely to play this time? It’s too early to predict with confidence. On the one hand, WGA members last year elected a new, more moderate president, are unlikely to want a second strike, and were never as dissatisfied with the new media deal as SAG was and probably still is. On the other hand, the WGA board is still under control of former president Patric Verrone and his allies (though who knows whether this might change in the fall) and the executive director is still David Young. With SAG negotiating in fall of this year, and the DGA negotiating most likely in January or so of 20111, I’m guessing the WGA will play a less central role this time around, but that could easily change.

The SAG Elections

Add this to the mix: Late summer and fall will bring the SAG elections, which make people even more irritable than the Santa Ana winds that arrive concurrently – though, thankfully, not as irritable as Raymond Chandler famously described in Red Wind: “On nights (when Santa Anas blow) every booze party ends in a fight. Meek little wives feel the edge of the carving knife and study their husbands’ necks. Anything can happen.” On the positive side, notes Chandler (and brushing past the quaint sexism of days gone noir), “you can even get a full glass of beer at a cocktail lounge.”

In any case, those elections will no doubt be a referendum on the upcoming negotiations. Indeed, in a case of awkward timing, the new board will likely be seated in late September, just days before the early negotiations are set to start. That could be a bit disruptive. However, as with last year, the only national board members in Hollywood whose terms are up are from Membership First, since the UFS members (and moderate Morgan Fairchild) were elected in 2008 to 3 year terms. Thus, on the national board, MF can only lose ground or, at most, hold their current numbers. On the Hollywood board, the possibilities are more wide open, but given UFS’s commanding results in the 2009 elections, it’s quite possible MF will lose ground there as well.

What Else Will AFTRA be Doing?

In another quirk of scheduling, the AFTRA daytime agreement expires November 15 of this year. That’s the portion of the AFTRA agreement that AFTRA always negotiates solo, without SAG. AFTRA will probably want to negotiate starting in September as it has in the past, or perhaps a bit earlier in order to avoid bumping up against the Oct. 1 start date for SAG negotiations. Either way, AFTRA will be in the negotiating room before SAG (indeed, while SAG is still preoccupied with its elections).

There’s yet another wrinkle to this: the daytime agreement has new media sideletters that are similar to the new media sideletters for the AFTRA primetime agreement (and SAG, WGA and DGA agreements). Thus, since AFTRA will presumably be negotiating before SAG, then AFTRA daytime negotiators may be discussing new media issues before SAG does, just as was the case in 2008, in fact.

This timing may give AFTRA a first cut at revisions to the new media deal – a fact that’s unlikely to sit well with the Membership First faction of SAG, just as it didn’t in 2008. Of course, it’s also possible that AFTRA will defer a discussion of new media until October 1, if the two unions are bargaining jointly.

(BTW, I’m using “daytime agreement” as a convenient shorthand. The gory details are as follows: AFTRA has one contract that’s relevant here, called the Network Code, or “Net Code” to its friends. Exhibit A of the Net Code deals with primetime programs, and was jointly negotiated with SAG’s TV/theatrical agreements for several decades until the last negotiating cycle. The “front of the book” portions of the Net Code (i.e., most everything other than Exhibit A) deal with daytime dramas (soap operas) and other areas in which there’s no overlap with SAG and is always negotiated by AFTRA alone. Most of the guild agreements now have two sideletters relating to new media, but the Net Code has four such sideletters, of which two relate to the front of the book and two to Ex. A, although the distinction is actually rather murky.)

What Else Will SAG Discuss at its January Board Meeting?

The UFS source gave me a preview of likely subjects at the January board meeting. In addition to SAG-AFTRA joint bargaining, they include:

(1) Revising the SAG-AFTRA non-disparagement agreement so that supporters of candidates for SAG or AFTRA board can speak freely about the other union without the possibility that the supporter’s union would be sanctioned for disparagement. Currently, the non-disparagement agreement includes such an exemption for the candidates themselves, but statements by their supporters during an election do not have this protection.

(2) Amending the procedure for written assent so that the assent would have to be circulated to all board members, not just those who agree with the assent (which was the approach the moderates took with the January 2009 written assent).

(3) Reducing the initiation fee for actors who join one of SAG’s regional branches rather than LA or New York.


That’s a full agenda, considering that it’s a one-day video meeting rather than a two-day in-person confab.

The Corporate SAG

Now for something unexpected: a situation that puts SAG behind the looking glass, this time sitting on the management side of the table. That will happen this year, because some portion of the SAG staff is itself unionized, and is represented by Teamsters Local 986. In that context, SAG is actually management. About 50 SAG staff are members, and the Teamsters representation dates back to February 2001. Interestingly, it took five or six months to achieve a contract, and a strike authorization vote was necessary.

In any case, the contract run for 3 years, and this iteration expires June 1. Negotiations have sometimes been difficult in the past – at one point, staffers worked without a contract while negotiations continued for three months past expiration.

Certainly this round of negotiations have the potential to be bumpy, in light of the economy generally and, more particularly, the layoffs imposed by the union in 2009. Also aggravating the situation from staffers’ point of view are the significant pay increases that some guild execs received in 2008 (at a time, it should be noted, when the guild was under different leadership).

One question this history raises is whether the represented employees will get the typical 3% annual increases. My guess is probably so (after all, SAG itself secured 3.5% increases for its members). A harder issue is whether the Teamsters will push for a No Layoffs clause. I’m guessing they will. It’s a tough stance for a union to take in this economy, but the Teamsters have leverage by virtue of the calendar: SAG (as employer) can ill-afford to let the 986 contract expire and then be in a labor dispute with its own staff into the early fall as negotiations between SAG (as a union) and the AMPTP bear down. The PR fallout would be too unpleasant.


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Wednesday, January 6, 2010

Video Business Shuts Down

Video Business magazine, a definitive chronicler of the home video business for 29 years and a sister publication of Variety (parent co. is Reed Business), is closing its doors after 29 years, effective this week. Both the online and print operations will go dark.

According to the mag's web site, Reed is divesting itself of most of its U.S. B2B pubs. Still, since both the magazine and home video businesses are in trouble, a magazine that covers home video suffers a double whammy.

Friday, January 1, 2010

Cat Fight in the Fox’s Den

Until moments ago (mid-day Jan. 1), when a deal was reached, Fox was threatening to black out its channels, most notably Fox broadcast, from Time Warner Cable (TWC) unless TWC anted up a subscriber fee of reportedly $1 per subscriber per month. Historically, cable networks such as HBO, Showtime, AMC, etc. got those fees, but broadcast networks didn’t. They need them now, with ad revenue shrinking, and customers departing networks in favor of cable channels — a multi-decade trend — and, more recently, video games, Internet TV sites such as Hulu, unauthorized (pirated) content, and user-generated content such as on YouTube.

Broadcast networks have started to get paid — CBS, for instance, reportedly gets up to $0.50. TWC apparently offered Fox only $0.30, but the terms of the deal they reached are undisclosed and most likely higher. Even though Fox ultimately didn’t pull the plug, it took the intervention of Senator John Kerry to keep football and “American Idol” from going dark on TWC. That’s not the sort of attention a media company wants. So why didn’t TWC just ante up the $1 and pass on the cost to consumers?

The answer is that MSO's (cable cos. like TWC) are afraid that if they keep raising cable prices, they'll drive more consumers to satellite or induce them to drop cable and just watch TV on the Internet. That is, instead of buying an Internet+cable bundle from Time Warner Cable, the customer might just drop the cable portion and buy Internet only.

Even worse for TWC: If customers opt for Internet only, some will be peeled away by telephone+Internet or cellular+Internet bundles from ATT or Verizon, causing TWC to lose the customer altogether. It’s called churn, and it’s especially likely because customer perception of cable company greed would dovetail with the belief that telcos offer better customer service anyway. Thus, raising cable prices could cost TWC dearly.

So, the battle between TWC and Fox is just another facet of an n-dimensional war between MSOs, satellite cos., landline telcos, cellular cos., cable networks, broadcast networks (ABC, CBS, CW, Fox, NBC), network affiliates (the local stations that actually broadcast the network signal), video game companies, Internet TV sites, unauthorized (pirated) content, user-generated content—and, of course, the consumer. And that's not even to mention the companies that manufacture the hardware, such as handsets, TV's, cable and satellite receivers, and other set top boxes. They’re always looking to play transmission companies off against each other and capture more of the consumer dollar.

To add to the confusion, there’s cross ownership between some of these companies but not all of them, meaning that ostensible competitors have very different profiles from each other, and also that they must often collaborate. For instance, when the Comcast – NBC Universal deal closes (assuming, of course, that it does), Comcast will control a cable system, a broadcast network, and multiple cable channels, whereas Time Warner Cable is a cable system only (that’s because Time Warner Inc. spun off TWC) and Fox’s parent, News Corp., lacks a cable system. Speaking of News Corp., throw in the fight between newspapers and Internet sites, and it’s clear that the Internet sparked a revolution that’s got everybody up in everyone else’s business. It’s the media equivalent of string theory, except that MBA’s usually have better hair than Einstein did.


Subscribe to my blog ( 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 book How to Write LOIs and Term Sheets.