Monday, September 22, 2008

SAG: The Calm before the Storm

The SAG elections are over, and the Unite for Strength challenger slate now has a razor-thin majority on the national SAG Board.  Indeed, one of MF’s three key leaders, David Jolliffe, was bounced off the Board (and the alternate pool) altogether.  This result, achieved by UFS (aka U4S) even in light of a somewhat lackluster campaign, suggests that SAG members are tired of MF’s inability or refusal to achieve a deal with the studios.  That view is reinforced by the low return rate (only 10%) for SAG’s push poll survey regarding the stalemate with the studios.

So now, with the members having spoken, the guild moves quickly forward into an era of progress, with a prompt conclusion of negotiations in sight?  No.  Sorry.  On the contrary, what SAG members need most immediately — a studio deal — is something that UFS never focused on (its platform was built primarily on the long-term goal of merging with AFTRA) and that MF has demonstrably failed to deliver. 

That doesn’t bode well.  Even if things went smoothly, a deal would be unlikely before January.  Unfortunately, things probably won’t go smoothly, because UFS doesn’t have clear control of the guild (and MF is not going to roll over).  There are several reasons for that:

First, MF still controls the guild presidency.  The president (Alan Rosenberg) was not up for election this year and will be in office until at least next September. 

Second, MF still controls the National Executive Director (NED), Doug Allen, and, some people contend, some other members of the guild staff (I don’t have any insight on that latter contention).  That won’t change unless UFS can change the NED’s approach to negotiations (probably wishful thinking) or fire him (see below).

Third, UFS’s margin depends on receiving near-unanimity of support from the New York and regional members.  The size of the Board (71 members) makes that hard to guarantee.  MF claims that a defection of just two regional members of the Board would erase UFS’s control, but it’s hard to verify that number because of the weighted nature of the voting system employed by the national Board. 

Fourth, the way national Board meetings are conducted makes it hard to assert control.  For one thing, the (MF-aligned) president chairs the Board meetings.  Also, the meetings run for hours, which means that New York Board members, attending by teleconference from the 3-hours-later East Coast time zone, reportedly have some tendency to go home before meetings are over, which could cost UFS its thin majority as the agenda drags on.  Further complicating matters is the use of Roberts Rules of Order to govern (or manipulate) procedure in the ridiculously oversized Board.  MF incumbents are experts in Roberts Rules; the new UFS members probably are not (at least yet).

Fifth, the balkanized nature of SAG governance has allowed MF to lock in some of its power against the new majority.  For instance, MF still controls the overwhelming majority of the Hollywood seats on the national Board (27 out of 33). (UFS controls the national Board only if it has the support of the New York and regional Board members as well.)  Also, some of the national Board’s powers are delegated to separate divisional Boards, and MF still strongly controls the Hollywood Division board.

Sixth, another aspect of balkanization is the delegation of many Board powers to various committees.  The one of most immediate interest is the Negotiating Committee, whose job is to negotiate a contract with the studios.  The members of this committee were appointed by Hollywood, New York and the regional branches, and all of the Hollywood appointees are members of the MF faction.  Ideally, UFS would replace some or all of them, but that will be difficult because, under SAG rules, replacing these members requires either a majority vote of the Hollywood Division board (which is controlled by MF) or a 2/3 vote of the national Board (but UFS doesn’t have this supermajority).  Ironically, the chair of the committee is the MF leader, David Jolliffe, who was ousted from his seat as a national Board alternate.

Seventh, it’s not clear that UFS and its allies are united on how to approach the contract negotiations, particularly considering the fact that this issue was not a focus of their campaign.  Unless it develops a clear focus, UFS and its allies will struggle unsuccessfully to control the agenda.

Eighth, UFS and its allies will have to work cohesively.  For instance, the head of the slate, Ned Vaughn, won election as an alternate to the national Board (and a full member of the Hollywood Division Board) but not as a full member of the national Board.  That raises the question of whether he will take the lead for UFS on the national Board (probably yes, since not all full members attend every meeting).  UFS will also need to fully integrate its allies, such as Hollywood independent Morgan Fairchild, who was endorsed by but not a part of the UFS slate, and the leadership of the New York Division.

Looking Ahead

That’s a lot to consider.  What happens next?  The next Hollywood Division Board meeting is in two weeks (October 6) and the next national Board meeting is almost two weeks after that, October 18, i.e., a month away.  There won’t be any progress on the studio contract between now and then.  Instead, expect a lot of jawboning.  MF has signaled that they are already lobbying the regional members of the national Board.  UFS is apparently doing the same (including via a conference call among UFS, New York and regional members this week), and should also be reaching out to the guild president (who has had differences with MF in the past), some potentially more moderate MF members, A-listers such as Tom Hanks and George Clooney, and various other constituencies.

Critically, UFS and its allies have to develop a coherent approach to the negotiations.  That’s tough, because it will require discussion of a key issue of negotiating strategy:  whether to abandon attempts to break the studios’ new media template and gain improvements.  I offered a suggested crash program on how to gain such improvements (building on a detailed memo prepared by Steve Diamond), but that was before the push poll results and dramatic economic deterioration drove the final nails in that coffin.  In light of SAG’s lack of leverage, the hard truth is that there won’t be a deal until SAG concedes on the key aspects of the new media template (jurisdiction (more here) and residuals).  The other (unfortunate) non-starter, an increase in the DVD residual, is clearly already dead.  If these are taken off the table, some other areas (such as force majeure, product integration and clips) are probably negotiable.

UFS and its allies really only have two options, neither of them good:  They can agree among themselves to give up on improving new media, but will have to recognize that it will be difficult to get the current National Executive Director (NED) and Negotiating Committee to implement that strategy, and also that the studios will know of this decision as soon as it is made, because of the large number of people involved and the attendant dissension.  Or UFS and its allies can continue to allow the NED and Negotiating Committee to seek improvements in new media, an MF approach whose failure is already clear and that will lead to nothing except continued stalemate with the studios and an electoral failure for UFS in next September’s SAG elections. 

Hovering over all of this is the need for UFS to defend against the likelihood that MF will blame UFS next year for MF’s failed strategy.  That’s a strategy that MF began to implement almost as soon candidate nominations were announced (well before the election was over), when SAG’s president, Alan Rosenberg, argued that it was inappropriate for anyone to run against the incumbents while negotiations were still pending.  The risk to SAG institutionally, and to its members, is that the contract becomes a hot potato that neither faction wants to touch.  At this rate, it’s even possible that the commercials contract (whose expiration has been pushed to March 31) would get negotiated before the stalemated TV/theatrical contract.

UFS and its allies also have to decide how to deal with the NED.  They could fire him, but it’s not clear they have the will to do so:  In an interview with me several weeks ago, Vaughn indicated great reluctance to take this approach, and both he and new Board member Adam Arkin seemed undecided on the matter in an LA Times interview within the last few days. 

The hesitancy arises at least in part from a view that the NED could be persuaded to change his spots (which seems unlikely, though perhaps not impossible), and also the idea that firing him would signal that the job is politicized, as though anyone could imagine it isn’t already.  Another concern is cost, since the NED’s contract (which reportedly expires in January 2010) would probably have to be bought out, apparently to the tune of at least $600,000 (1-1/3 years multiplied by approximately $450,000).  Not chump change, but a relative bargain considering the money SAG members are losing by not having a new contract with increases in minimums — the studios, for what it’s worth, claim that these losses are over $19 million already — and the hundreds of thousands of dollars wasted on the failed anti-AFTRA campaign (more here) and the push poll.

Other UFS or UFS-aligned members of the national Board do feel that the NED should go.  However, this approach also has difficulties.  One is the buyout cost, but even more troubling is the question of what happens next.  Who will appoint and control the hiring committee and how long the process would take are key questions the guild would have to ask, but an even harder one is who would take the job, or even want to undergo the hiring process.  That process would be particularly dangerous for a candidate because of UFS’s narrow margin of control.  Any NED candidate would have to contend with the possibility of his or her candidacy becoming publicly known, then being lost by one or two dissenters among UFS and its allies.  The interview process would thus be a high-stakes gamble that few qualified candidates would be willing to undergo.

In any case, we can expect a struggle among the UFS and UFS-aligned members of the national Board on this issue — and as long as they remain divided internally, the NED will stay, because he has the support of MF, and because inertia can always carry the day.

The other big issue is what to do about the Negotiating Committee, dominated as it is with locked-in members of the now-spurned MF faction.  As indicated above, this isn’t an easy problem.  However, as a last resort, the national Board might have to dissolve the committee, and attempt to negotiate directly, unless another approach to this problem can be found.

One thing we won’t see is a strike.  The guild membership has rejected MF and 91% of the membership wouldn’t even vote in the survey for a “better” and “fair” contract with the studios.  The economy has deteriorated to its lowest point in at least two decades (thank you President Bush), and Los Angeles, in particular, has been bashed particularly severely by the Writers Guild strike, housing price deflation, foreclosures (which now represent one-third of all LA County home sales), the failure of Pasadena-based IndyMac bank, and continued high gasoline prices, not to mention economic pressure from Silicon Valley.  A flight to the moon is more likely than a SAG strike.  Beyond that, unfortunately, the only certainty is bitter infighting and continued stalemate with the studios.