Monday, December 22, 2008

SAG Strike Authorization Ballots Delayed

The Screen Actors Guild has delayed sending out the strike authorization ballots until January 14 at the earliest, representing an approximately two-week delay from the originally scheduled mailing date of January 2.

This development was revealed less than two hours ago in an email from SAG National Executive Director Doug Allen to all SAG members, which also stated that an in-person SAG National Board meeting is now set for January 12-13 (all day the 12th and part of the day the 13th). Re the ballots, the letter said that they would go out “immediately following this special board meeting,” which would appear to mean January 14th at the earliest.

As reason for the move, the missive cited concerns by unnamed board members (presumably part of the hardline Membership First faction) over opposition that has resulted from over 100 high-profile actors (actually, over 130) and almost 1400 members. I’d guess that the opposition letters from the NY and Chicago boards had an effect as well, and that the Hollywood moderate Unite for Strength faction had an effect also (they met with Allen earlier in the day, per the LA Times).

The 12th and 13th are weekdays, and this fact may make it hard for some NY and regional members to attend, and even some of the working UFS members may not be available. Although they’d probably send alternates, this dilution may increase the ability of MF to control the agenda.

The letter also stated that the delay would give SAG extra time to conduct more member education and outreach aimed at increasing support for the strike authorization. One form this will take was disclosed to me by Doug Allen last week: SAG plans to conduct town hall meetings at regional branches around the country.

Allen’s email was preceded several hours by an email from SAG President Alan Rosenberg by a letter asking members to support the strike authorization, hoping for a “fair contract and labor peace,” and wishing members happy holidays.

The LA Times beat me on this one by about a half hour.

Here are the emails, Doug Allen’s and the Alan Rosenberg’s:


Dear Screen Actors Guild Member,

A number of National Board members have expressed concern about the organized opposition to SAG's vote "yes" campaign to encourage members to authorize the National Board to determine whether to call a strike in the TV/Theatrical contracts. While almost 100 high profile members and 2524 total members have endorsed the strike authorization vote mandated by the National Board, more than 100 high profile actors and 1373 actors have lent their names to the opposition campaign. This division does not help our effort to get an agreement from the AMPTP that our members will ratify.

Accordingly, President Rosenberg and I have decided to call a special face-to-face National Board meeting in Los Angeles, during the week of January 12, to discuss how we can address this unfortunate division and restore the consensus demonstrated by the National Board at our October meeting.

The Christmas and New Year's holidays, and the Commercials Contract W&W plenary in New York the first week of January, preclude scheduling such a meeting before the week of January 12. In accordance with our Constitution, this special meeting will constitute one of our two face-to-face plenary meetings for 2009.

In light of the subject matter of this special meeting, the strike authorization balloting will be re-scheduled to take place over a three-week period immediately following this special board meeting. This will provide us with more time to conduct member education and outreach on the referendum before the balloting.

This meeting will replace the January 24, 2009 plenary and will occur in Los Angeles all day January 12, and part of January 13.


Doug Allen
National Executive Director and Chief Negotiator


Dear Screen Actors Guild Member,

As 2008 winds down I am hopeful that 2009 will bring us a fair contract and labor peace. I truly believe that if we move forward in unity with the collective strength of 122,000 professional actors behind us, we will achieve our goals. I implore you to learn as much as you can about the issues at stake, and stand with us and grant the board a strike authorization.

Actors have experienced the strife that this economic turmoil has brought, as have all Americans. Our hearts go out to our union brothers and sisters who have lost heir jobs, and to the thousands of United Auto Workers facing uncertain futures. But unionism is alive and well in this country as union workers rely even more on their unions for protection and advocacy.

Stop for a minute and think back to the day you got your SAG card. If you're like most of us, it was a moment of pride and accomplishment. That membership card in your wallet means you are a professional and you are entitled to union wages and working conditions. I am determined to see that your pride in your union continues and that your SAG card continues to shine.

You can rely on your Guild. Screen Actors Guild is strong, financially sound and ready to take on whatever the future brings. Your staff and elected members are working around the clock to provide leadership and to advocate and negotiate on your behalf. Residual checks are getting to you faster than ever, our website has been enhanced to meet your growing needs, and our professional staff is pursuing and collecting claims on our behalf around the country, every day.

While your leadership is not always in agreement, we must all pledge to keep our disagreements inside the boardroom and not air our differences in the press. We must all represent you with integrity and a commitment to stand together as we take on the huge global media corporations that want to break our union. We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.

We have a diverse membership spread throughout the United States. Each with common needs, as well unique career and geographical concerns. I am proud to represent each one of you and I wish you and your families a happy and healthy holiday.

In unity,

Alan Rosenberg

Also, make sure you take a moment to read the new post at SAG Talk "A Message from Eric Bogosian" available by clicking here and watch new videos with Alicia Witt, Hal Holbrook and Martin Sheen at and SAG TV.

More than 2,500 working actors have signed on to the SAG solidarity campaign at If you haven't yet signed the Guild's solidarity statement in support of a fair contract and a "yes" vote on the strike authorization, do so now at

Also, join our Facebook group Empower SAG -- Vote Yes at

Please visit for up to the minute information and email (this is an email address and not a live web link) with your comments and questions.

Your support is crucial to our success in this effort.

Friday, December 19, 2008

SAG: When Will There be a Deal?

Lately, we’ve been lost in a morass of letters from SAG board members, stars and activists … wandering through a thicket of politics … reading the offer from the AMPTP (studios)… observing meetings in LA, NY and LA again … taking note of other developments … enjoying press releases … trying to parse the issues … and wondering if SAG will strike.

With all that, it’s easy to overlook the long-term question that should be on everyone’s mind: when will there be a deal? My answer: not until March 1 at the earliest; possibly as late as next fall; and, in the extreme case, SAG might go years without a contract.

Here’s the analysis, which depends on whether the strike authorization succeeds or fails (a question which I consider too close to call):

Scenario 1: The Strike Authorization Fails

The strike authorization ballots go out Jan. 2 and are due back three weeks later, Jan. 23. The national board then meets the next day. If the authorization fails, SAG President Alan Rosenberg has told me that the union will have to accept the offer on the table.

The Union Might Attempt to Negotiate

Given how adamant the SAG control group is (key members of Membership First plus National Executive Director Doug Allen), I’m guessing they would go back to the studios, take new media and DVD off the table if they are truly committed to making a deal, and try to make a few improvements to the deal. Whether or not they succeed, this process would take several weeks, given the glacial pace at which these negotiations have advanced. That takes us to the first week of February at the earliest.

Then the deal would have to be sent to the members for a vote. This is probably also a three week process. That takes us to roughly March 1. Then, if the deal is approved, we will have achieved a deal by March 1. So, under this best case scenario, a deal would be done by that date. BTW, this is well into pilot season, meaning that SAG will lose significant portions of pilot season to AFTRA. This die is already cast; SAG has almost certainly already passed the point of no return on this issue.

What if the deal is not approved? Then we enter a twilight zone: no strike and no deal. SAG would have to go back to management and attempt again to win some concessions, this time arguing that although the union can’t strike, it also can’t agree to the existing deal. This form of passive-aggressive leverage actually creates an incentive for the union to have the deal not be approved. The way the union might try to obtain this result is to send the deal out with a recommendation for a No vote, as opposed to sending it out without a recommendation (let alone doing so with a positive recommendation, which is unlikely, given the union leadership’s fierce opposition to a deal). In any case, if the deal is not approved, things could drag on. The negotiations would be hard fought and hence lengthy.

How Long Could Things Drag On?

Things could then drag on for quite some time. The SAG commercials contract expires March 31, and negotiations on this economically important contract will distract staff to some degree from negotiations over the theatrical and television contract. This date is unlikely to be extended, since the contract was already extended twice (from 2006 to 2008 and then from the end of October), and the JPC (representatives of the advertisers and advertising agencies) has said it will not agree to another extension. Also, this contract is being negotiated jointly with AFTRA (the process is actually going well so far), who would probably balk at an extension. Of course, an extension is always a possibility despite these factors.

In any case, if a deal is not made by sometime in June, then we enter another danger zone: the run-up to September’s SAG board elections. Nominating petitions are due in late July and campaigning lasts until balloting closes in late September (assuming the schedule is the same as it was this year). No one will want to make a deal during this period, for fear of losing electoral standing by being tarred with what the hardliners consider a bad deal. (Indeed, this proved to be a dead period this year.) Then the new board would probably have to meet before things restart. That means that negotiations would not resume until October. Who knows how long they will last. We might not see a deal until well into the fall or even later.

What happens to SAG if matters go this long? Again, who knows; this is a nightmare scenario. AFTRA will further cement its place in network television, ramping up for the 2010 pilot season (the already-impending 2009 pilot season is itself shaping up to be very AFTRA heavy). Union members might start going fi-core. Fractures in the union would deepen, and the union might even tear itself apart. The deal might get resubmitted to members, with little or no change. Some of this would probably depend on whether the September election prove an electoral bonanza for the moderate Unite for Strength faction or not.

Theoretically, the union might go years without a contract. After all, the contract (called a franchise agreement) between SAG and the talent agents expired in 2002, and has never been renewed. However, the contract with the studios is more critical to the union’s existence. Failure to achieve a contract over a period of many months might lead AFTRA to seek jurisdiction over digitally shot theatrical movies, despite their present position that they have no intention to do so. Whether or not that happens, failure to achieve a contract for such a long and indefinite period could effectively break the union. For that reason, one has to believe that cooler heads would ultimately prevail.

Scenario 2: The Strike Authorization Succeeds

If the strike authorization succeeds, the union will probably attempt to negotiate for a bit with the studios. That takes us to at least the first week of February. If SAG obtains what it wants from the studios, then we probably would see a deal by March 1 at the earliest, because of the three week voting period described above in “The Union Might Attempt to Negotiate.”

However, the studios are unlikely to agree to SAG’s demands; they’ve been quite firm in their refusal to break the new media template and reward SAG for its obstreperousness—and punish the unions that compromised to make a deal—by giving SAG provisions that were denied to those other unions (DGA, AFTRA, IATSE, as well as WGA). That would lead to a strike.

If the strike is relatively short, say three weeks, then we might see a deal towards the end of April. This timeline assumes the following: three week strike takes us to March 1; contentious negotiations take four weeks (it could easily be longer) but result in a deal (April 1); and three week authorization vote results in ratification (presumably), by approximately April 22.

However, I believe that if there is a strike, it will be long and bitter, given how dug in the parties are. Membership First has staked its future on getting a deal with new media provisions that the studios are equally determined not to accept. In addition, Nick Counter, who has been at the AMPTP for a quarter century and is rumored to want to retire, is probably unwilling to leave the organization with a SAG deal undone, or done on terms the studios consider odious. In any case, a long strike means there wouldn’t be a deal until next fall at the earliest, or perhaps much later. See “How Long Could Things Drag On?” above.

Whether the deal gets done in the fall, or even at all, depends on whether Membership First maintains effective control of the union, as they continue to have now, despite the moderates having won a narrow majority on the SAG national board. If MF holds or gains seats, they will probably continue the strike. If the moderates win solid control, they might at long last fire the National Executive Director, dissolve the negotiating committee, and end the strike.

A Few Other Notes

1. What if the union changes the NED and negotiating committee at some earlier point in the process; would that shorten any individual timeline? No, because it will take time to ramp up if these changes are made. A new chief negotiator would have to be appointed, and even if he or she is an existing guild staffer, there’s some ramp up time involved, even if short. Also, the national board would have to meet, dissolve the negotiating committee, and appoint a substitute negotiating committee, or more likely, a task force composed of some members of the board itself. This would take time too. So, these changes might result in a shorter option being pursued, but no such changes would result in a process before March 1.

2. The basic cable contract is up for negotiation at some point this year; I’m not sure when. This too will distract staff and further delay matters, if the negotiations take place. It’s more likely though that these would be deferred until after the main theatrical and television contract is negotiated.

3. Three months ago, I predicted no deal until January or February at the earliest. The schedule has obviously slipped.


A deal can’t be achieved before roughly March 1 at the earliest. If there’s a strike, we may be looking at next fall before there’s a deal. In a nightmare scenario, all bets are off. People will go fi-core, cross picket lines, and fracture the union, while the studios resume theatrical and television production with fi-core SAG members and AFTRA members (perhaps even theatrically).

In short, the union leadership is playing with fire by seeking a strike authorization. Members have already been burned with respect to the upcoming pilot season, as well as by loss to date of 3.5% fee increases. The leadership is risking permanent loss of those increases and loss of a synchronized expiration date in 2011 with the Writers Guild and AFTRA. In the extreme case, the current SAG leadership’s actions may end up breaking the union.

Wednesday, December 17, 2008

Why Obama Picked Rick

For a good ten minutes, I puzzled over why President-elect Barack Obama would select an anti-gay conservative preacher, Rick Warrant, to give his invocation speech. Several reasons occurred to me.

Perhaps Obama wanted to distance himself from Bill Clinton, who began his presidency on a pro-gay note by loosening restrictions on gays in the military. That didn’t turn out well for Clinton, so Obama may be taking a different tack. Maybe Obama enjoyed the controversy over his last pastor, Jeremiah Wright, so much that he wanted another brouhaha. After all, that contretemps led Obama to give a moving and well-regarded speech on race in America; maybe we’ll get a gay rights speech this time. Or possibly the soon-to-be President wanted to prove that he could pander to conservatives as well as John McCain. Watch out: If Biden gets tired of the vice-presidency, maybe Sarah Palin will get her chance after all.

As awful as these possibilities are, I soon realized that there was a more logical explanation: Obama, Warren, and Illinois Governor Rod Blagojevich must have crafted a three-way deal! It’s simple, really:

(1) Blago has obviously promised Obama that he’ll appoint whoever Obama wants as Senator, if there’s anyone left who will accept an appointment from the tainted Governor…

(2) Obama, in turn, selected Warren to give the invocation…

(3) … and Warren, for his part, will give Blagojevich a no-show job at his Orange County mega-church. Blago gets to collect his loot, live in Southern California, and take sanctuary in the church if the feds try to haul him off to prison.

This is a smart strategy. It’s sophisticated and elegant, and it sure keeps everyone off balance, liberals and conservatives alike. No elementary quid pro quo for this Administration. Instead, welcome to the era of quid pro quo pro quid. Now that’s change we can believe in.

Will SAG Strike? – Conference Call

There’ve been a lot of developments at SAG in the last few days: town hall meetings filled with members, many of whom in LA were pro-strike and in NY anti-strike; an anti-strike letter from A-list stars; an anti-strike op-ed in the LA Times; and more. There’s another town hall meeting in LA in a few hours.

What’s it all mean? I’ll examine that question in a free conference call, open to the public, this Thursday (tomorrow) at 11:00 a.m. Pacific Time / 2:00 p.m. Eastern. Please dial in. Here’s the information:

RBC Capital Markets Institutional Conference Call
: Will The Screen Actors Guild Go On Strike And Why We're Concerned
Hosted by: David Bank, RBC Analyst
Guest Speaker: Jonathan Handel of TroyGould, Los Angeles
Date: Thursday, December 18, 2008
Time: 11:00 a.m. Pacific / 2:00 p.m. Eastern
Participants dial in: 877-871-4056
International Dial in: 416-620-5683
Replay phone number: 416-626-4100 or 800-558-5253
Replay available until: Thursday, December 25, 2008
Reservation #: 21405650

Monday, December 15, 2008

SAG NY Furious

SAG leaders came under heavy fire at a New York membership meeting today attended by a standing-room only crowd of about 400 members. Members demanded that guild National Executive Director Doug Allen be fired, that President Alan Rosenberg resign, and, over and over, that the negotiating committee be replaced. The hostile crowd, though described as generally respectful, booed and hissed the two Allens on several occasions, according to one source (another disagreed). According to two attendees, Rosenberg turned pale and became so emotional at one point (after a personal remark was made to him) that he had to leave the room.

Virtually all of the audience members who spoke were against the strike authorization. In addition to middle-class actors, Alec Baldwin spoke: he passionately urged that the negotiating committee be replaced, a deal be done, and that there be no strike, in light of the economy. Another celeb who spoke, Joe Pantoliano, was described as leaning against a strike. Meryl Streep was also in attendance, but didn’t speak. Several past presidents of the NY division spoke, all urging that SAG accept the deal on the table or, at least, something similar.

Twice, members called for merger with AFTRA. This was met with applause both times. One attendee told me that Allen evaded questions and kept returning to talking points. Another said that one audience member accused Allen believing that “everybody is wrong but you [i.e., Allen himself].” Still another said that it was clear that New York members were unwilling to accept the SAG national leadership’s “party line,” and that the weekend letter by the New York board opposing the strike authorization accurately represented the feeling of New York members. Members repeatedly asked the Allens “Do you hear what we’re saying,” but were not convinced that they did.

The reception in New York couldn’t have been more different than in Los Angeles last week, where most members appeared in favor of the strike authorization, or an actual strike. Add to this the letters from the NY and Chicago boards and from the A-listers, all opposing a strike authorization and it’s clear that this is now a union in open civil war.

Meanwhile, only silence has been heard from the Hollywood moderates elected this past September, the Unite for Strength faction. They may have a strategy, but to me it looks like a mistaken one. The message that members get, unless they are involved enough to parse strategy to the nth degree, is that there’s no opposition among the Hollywood rank and file. A letter from the A-listers is not enough; it’s too easy to dismiss them as elites with no stake in contract negotiations. (I called UFS leader, Ned Vaughn, but had not heard back as the time I posted this article.)

Whether the leadership will get the 75% affirmative vote it needs to pass the strike authorization is unknowable, and some people are wondering if the authorization will go out at all. Still, there’s another member meeting scheduled in LA for Wednesday, and it will probably be another love fest of self-selected Hollywood attendees. Remember too that the SAG control group has lashed itself to a platform that essentially guarantees a strike, and has seemed committed to following that path no matter the cost to the membership. Thus, I think it likely that they’ll send out the authorization regardless of the opinions of NY, the regions, or the A-listers. Will it pass? Hard to tell.

SAG: Over 130 Stars Against Strike

Over 130 stars have weighed in on the SAG strike authorization, coming out firmly against. Citing the economy, the A-listers “strongly” urged SAG members not to authorize a strike, and instead “take the high road … unite with our brothers and sisters in the entertainment community and … three years down the line … make a great deal” when all the union contracts expire roughly simultaneously.

Finally, we’re hearing from the A-listers, and it may be enough to pull SAG back from the brink. Meanwhile SAG Board members in NY and Chicago came out against the authorization over the weekend.

In addition, SAG President Alan Rosenberg was forced to cancel the emergency in-person National Board meeting he had scheduled for this Friday, after SAG activists pointed out in the strongest terms that Rosenberg had no right under the SAG constitution or state law to require that the meeting be in person, rather than by videoconference. (SAG uses videoconference for many of its meetings.)

Here’s the A-listers’ letter.

Dear SAG Board Members, officers and staff:

We feel very strongly that SAG members should not vote to authorize a strike at this time. We don't think that an authorization can be looked at as merely a bargaining tool. It must be looked at as what it is -- an agreement to strike if negotiations fail.

We support our union and we support the issues we're fighting for, but we do not believe in all good conscience that now is the time to be putting people out of work.

None of our friends in the other unions are truly happy with the deals they made in their negotiations. Three years from now all the union contracts will be up again at roughly the same time. At that point if we plan and work together with our sister unions we will have incredible leverage.

As hard as it may be to wait those three years under an imperfect agreement, we believe this is what we must do. We think that a public statement should be made by SAG recognizing that although this is not a deal we want, it is simply not a time when our union wants to have any part in creating more economic hardship while so many people are already suffering.

Let's take the high road. Let's unite with our brothers and sisters in the entertainment community and prepare for the future, three years down the line. Then, together, let's make a great deal.


Alan Alda

Jason Alexander

Dave Annable

René Auberjonois

Diane Baker

Bob Balaban

Alec Baldwin

William Baldwin.

Barbara Beck

Ed Begley, Jr

Maria Bello

Barbara Bosson

Bruce Boxleitner

Josh Brolin

Pierce Brosnan

David Boreanaz

Blair Brown

Lizzy Caplan

Jennifer Carpenter

Steve Carrell

Mark Cassen

Erika Christensen

George Clooney

Glenn Close

Scott Cohen

Jack Coleman

Stephen Collins

Peter Coyote

James Cromwell

Billy Crystal

Matt Damon

Ted Danson

James Darren

Bruce Davison

James Denton

Brian Dennehy

Danny DeVito

Cameron Diaz

Garret Dillahunt

Larry Dorf

Minnie Driver

Olympia Dukakis

Patty Duke

Charles S. Dutton.

Shelley Fabares

Bill Fagerbakke

Mike Farrell

Sally Field

Kate Flannery

Morgan Freeman

Jennifer Garner

Teri Garr

Melissa Gilbert

Sara Gilbert

John Goodman

Christopher Gorham

Heather Graham

Kelsey Grammer

Jennifer Grey

Michael Gross

Christopher Guest

Annabelle Gurwitch

Michael C. Hall

Tom Hanks

Tess Harper

Mariette Hartley

Ed Helms

Marilu Henner

Cheryl Hines

Felicity Huffman

Helen Hunt

Jeremy Irons

Kathryn Joosten

Carol Kane

Diane Keaton

Jamie Kennedy

Mimi Kennedy

TR Knight

Sarah Knowlton

John Krasinski

Diane Lane

Michele Lee

Lucy Liu

Rob Lowe

Tobey Maguire

Janel Maloney

Camryn Manheim

Marlee Matlin

Melanie Mayron

Andrew McCarthy

Mary McCormack

Chris McDonald

Neal McDonough

Rob McElhenney

Ewan McGregor

Eva Mendes

Debra Messing

Helen Mirren

James Naughton

Edward Norton

Michael Nouri

Gail O'Grady

Kaitlin Olson

Sam Page

Eva Longoria Parker

Adrian Pasdar

Steve Pasquale

Rhea Perlman

Jaimie Pressley

Jason Ritter

John Saxon

William Schallert

Adam Scott

Tony Shalhoub

Armin Shimerman

Christian Slater

Kevin Spacey

Jerry Sroka

Mary Steenburgen

Marcia Strassman

Brenda Strong

Donald Sutherland

Kitty Swink

David Tadman

Jeffrey Tambor

Charlize Theron

Ally Walker

Tracey Walter

Belinda Waymouth

Bradley Whitford.

Lee Wilkoff

Brian Wimmer

Kevin Zegers

Louis Zoric

Friday, December 12, 2008

SAG: Opposition Grows to Strike Authorization

Developments over the last few days:

  • SAG leaders met with business managers and publicists, and, separately, with agents, to brief them on SAG’s positions and plans. SAG apparently did not win any converts at the meetings.
  • A Hollywood-based SAG member, Keri Tombazian, launched a website called, as a hub for materials opposing a strike authorization.
  • Today, the AMPTP sent out a letter to politicians in key film-producing states—Cal., NY, Ill. and Mich.—blasting SAG’s refusal to make a deal. Reportedly, the letter may go out to additional states as well.
  • Also today, members of the NY SAG Board began what Back Stage’s blog describes as a “regional uprising,” releasing a letter opposing a strike authorization. Similar letters are expected over the weekend from multiple regional leaders around the country.
  • UPDATE: In response to the NY Board members' letter, SAG President Alan Rosenberg will be calling an emergency national board meeting, “for the purpose of discussing the ramifications of this extraordinarily destructive and subversive action of the New York Board,” according to a SAG statement. FURTHER UPDATE: The meeting will be this Friday, all day, in person, in LA.
  • UPDATE: SAG announced a "solidarity campaign" in which members can electronically sign a statement of support for a strike authorization. The campaign launched with 31 signatures, including 12 SAG National Board members, and also including a number of celebrities.

Thursday, December 11, 2008

Exclusive: SAG-AFTRA New Media Battle?

When (if?) SAG eventually does a deal with the studios, will SAG and its smaller rival, AFTRA, peacefully share jurisdiction in new media? Answer: probably not. Although no one else has publicly raised this issue to my knowledge, buried in the SAG deal on the table are the seeds of a scathing fight for control of the future of new media.

The issue is which union has jurisdiction over original programming made for new media. The AFTRA deal, which was ratified four months ago, has a provision that says “[i]t is understood and agreed that AFTRA shares jurisdiction” over such programs. That provision would seem to give producers a choice of unions when making such shows.

However, when reviewing the AMPTP offer to SAG, I noticed that the comparable language—“[i]t is understood and agreed that SAG shares jurisdiction”—is struck out. Instead, there are a footnote and another paragraph which state that the studios and SAG disagree on whether jurisdiction would be shared. The language then states that each party reserves its legal positions on the issue. In other words, SAG refuses to agree to shared jurisdiction, and the AMPTP is not pressing the point.

That language means that even if and when a deal is eventually done—which is at least two months off, and probably more—we’ll may find the two unions battling over whether they share jurisdiction in original made for new media production. The studios might well get dragged into the fight too. As such productions grow in importance, the battle is likely to become more pitched, and could rival or exceed the animosity between the two unions on the subject of basic cable jurisdiction and terms. One thing’s sure: there’s are no dull moments in Hollywood labor, only dull contracts.

The Right Way to Sell a Senate Seat

Once again, a politician is taking flac for doing the right thing. Just two months ago, VP candidate Sarah Palin drew unfair criticism for accepting a complimentary makeover. Now Illinois Governor Rod Blagojevich has been arrested by FBI agents, not because his name is hard to spell, but instead for conduct inaccurately alleged by an Elliott Ness soundalike to be “a political corruption crime spree.” Blagojevich himself might benefit from a new haircut, and no doubt will receive a complimentary wardrobe if he ends up in prison for his purported misconduct, but leave that aside.

Instead, take a look at what the Gov is alleged to have done, and it will be easy to see why there’s less than meets the flinty eyes of a humorless prosecutor. We’ll save the main event for last, since the headliner, so to speak, always appears after the opening acts. The recitation here is based on a press release helpfully prepared by the U.S. Attorney’s office, which in turn is based on a short criminal complaint and a long FBI affidavit. The latter, at 76 pages, is almost a novella, and I intend to actively pursue the movie rights. Failing that, I may develop a series for cell phone streaming, a natural medium, since much of the affidavit is based on wiretaps anyway.

But I digress. The chief allegations against the Governor are as follows:

Tollway Project. Blagojevich allegedly sought political contributions totaling $500,000 from a highway contractor, in return for committing additional state money to a tollway project. That can scarcely be illegal—after all, it’s called a “tollway.” Highway contractors should pay tolls just like the rest of us. If anything, the Governor should have required the contractor’s execs to wear toll tags (or EZ Pass, whatever they’re called in Illinois) each time they visited the statehouse, to automate the collection of contributions and shorten lines at the back room doors. Blame the Gov for inefficiency, yes, but don’t charge him with some trumped-up offense.

Children's Memorial Hospital. The Governor is accused of seeking a $50,000 contribution from the CEO of Children's Memorial Hospital in Chicago and, when the contribution was not forthcoming, discussing with “Deputy Governor A” (in the quant parlance of the affidavit) the feasibility of rescinding the funding. Probably the most unsettling thing here is the possibility that there might be a Deputy Governor B, i.e., that the state of Illinois may have more than one deputy governor. Why a panoply of such officials would be needed is unknown, and bespeaks further inefficiency.

Moving on, note that the contribution allegedly requested was $50,000. The highway contractor, in contrast, was squeezed for ten times as much. Clearly the governor is showing solicitude for children here. As for why they should pay at all, wake up bucko: in the real world, stuff costs. There’s no such thing as a free lunch, even if it’s hospital food. The sooner kids learn that, the better. Blago was simply providing a teachable moment for children too ill to attend school.

By the way, although Blago sounds like a type of asphalt used by highway contractors—which I suppose in a sense it is (see “Tollway Project,” above)—it’s actually the Governor’s nickname, and please don’t confuse it with “blogger,” which is what I am. I’m not the governor of anything, and I left Chicago at age 6, with my morals more or less intact.

Casinos and Horses. This one is more Vegas than Hyde Park: the Gov allegedly sought a contribution in exchange for which he would sign into law a statute that funnels a percentage of casino revenue to the horse racing industry. Who knew that Illinois had either of these industries? Indeed, the Chicago of yore was filled with slaughterhouses—for cattle, I suspect, rather than horses, but any equine in the vicinity would probably have raced out of the city, not around a track. Also a mystery is why casinos should be paying, rather than playing, the ponies. In any case, it’s hard to see how the Governor’s shakedown could have hurt, since both casinos and horse racing were once so thoroughly mobbed up that his actions were more anachronistic than criminal.

Chicago Tribune. Rod (may I call him that?) allegedly threatened to withhold state financial assistance to the Chicago Tribune’s parent company unless the Trib fired editorial board members who editorialized for his impeachment. The assistance in question would have helped the parent company sell the Cubs and Wrigley Field. So what? Criminalizing this conduct is wrong for so many reasons I scarcely know where to start. First of all, why should the state help a company that hasn’t had the good sense to sell stadium naming rights to a company with a more sexy product than chewing gum? There’s probably all too much gum underfoot and under the seats at the stadium anyway. Yuck.

Second, there’s the possibility that the buyer for the Cubbies would have turned out to be the hot-headed Mark Cuban. Ignore the possibility that he might erroneously hire basketball players for the Cubs, which would be a woeful mistake, save for their greater ability to catch fly balls. The real question is, who wants his courtside demeanor imported to another city? Then there’s the matter of Cuban’s recent insider trading indictment. And finally, the possibility that he might not only be named Cuban, but actually be one, in which case a sale to him would violate the embargo so effectively maintained against that island nation.

Third, look at the newspaper’s conduct—it’s highly culpable. How dare they criticize an elected official? It’s baffling that a newspaper, in these Bushian days, could think it had any right to be other than a lapdog. Bad enough that prosecutors see fit to criticize public servants. Do newspapers really have to mix in as well?

Finally, look at Tribune Company itself. Subjected by its still-new overlord, Sam Zell, to a crushing debt load, it was foreseeable that the company would file bankruptcy, as indeed it has. At this rate, there’s a good chance the editors will be fired anyway, along with reporters, copy editors, and other ink-stained wretches who do little that newspaper ad salesmen couldn’t do in their now copious downtime. Tossing out these deadweight personnel, burdened as they are with an inordinate respect for the news, is certainly the operating approach taken by another Tribune property, the LA Times, which sheds editors, publishers, reporters and news sections on an almost monthly basis. Since the Trib editors might well have been fired anyway, the Governor’s little nudge falls under the category of no harm, no foul.

Senate Seat. Finally we come to the main event: Blago allegedly tried to sell the Senate seat vacated by Barack Obama, whose reasons for resigning remain unclear. While Obama seems likely to fade into obscurity as a result of abandoning a perfectly fine office in the Capitol, Blagojevich’s attempt to amass capital—remember, it’s –al for everything but the building—has brought him publicity of the sort that the former Senator can only dream of (or nightmare of, if there were such a verb, and why isn’t there?).

Now, the Governor sought many buyers for the Senate seat, the affidavit alleges. For instance, Obama and his posse apparently had a candidate in mind, but, said the Governor, “they’re not willing to give me anything except appreciation.” A perfectly valid objection. As the Governor said, “I've got this thing”—meaning the Senate seat—“and it's fucking golden, and, uh, uh, I'm just not giving it up for fuckin’ nothing. I'm not gonna do it.” Just so. A Senate seat is indeed golden, if a little shopworn, in light of Illinois’ almost 200 years of statehood. As the Governor said, it’s “a fucking valuable thing, you just don’t give it away for nothing.” Not in Illinois you don’t, no siree Bob. Why cough up a federal bauble for nothing more than a Hallmark “Thank You” card with a DC postmark?

The Governor allegedly went on to say of the seat, “And, and I can always use it”—who couldn’t, after all?—and then to add, damningly “I can parachute me there.” Now, this last is disturbing. That a state’s top elected official could say such thing is unfortunate—to use “me” when “myself” is called for! But this, of course, should have earned him an arrest by the grammar police, not the FBI.

We learn also of Blagojevich’s motivations for possibly parachuting himself through DC’s restricted airspace and into the Senate seat. One was frustration at being “stuck” as governor. Who can blame him for that? State capitals are often cesspools of corruption, and Blagojevich would scarcely want to find himself tarred with that black brush. He allegedly expressed a half-dozen or so other reasons, including a desire to avoid impeachment by the Illinois legislature. The desire to stay one step ahead of the law in such fashion is logical and, at the end of the day, if you’re going to get expelled from office, better that it be by the U.S. Senate itself, rather than some downstate, down-market legislature.

Yet another potential transaction involving the Senate seat was a complicated affair that entailed a more or less do-nothing job for the Governor at the Service Employees International Union. Here again, we must invoke the principle of no harm, no foul and the defense of anachronism: since unions are and/or were so enamored of feather bedding, what’s another quasi-job amongst friends?

It goes on and on. One suitor for the Senate seat sent “[a]n emissary,” in the Governor’s words, not to be confused with an “emirate.” The latter would have implied a king’s ransom, or a king’s payoff more precisely, whereas all Blagojevich wanted was $250,000-$300,000 per year.

As I read on, absorbing the details of the alleged sale of the Senate seat, something rankled. All of a sudden it came to me: Blago’s conduct, in this one instance, was indeed criminal. Attempting to sell the Senate seat in this fashion was unlawful. A quick Google search revealed why: The sale violated an Illinois statute, 30 ILCS 605/7(b)(1), governing “[d]isposition of other transferable [state] property by sale”:

[T]he property [shall] be advertised for sale to the highest responsible bidder, stating time, place, and terms of such sale at least 7 days prior to the time of sale and at least once in a newspaper having a general circulation in the county where the property is to be sold.

The Governor’s approach to the transaction failed to comply with two key elements: the sale—i.e., of the Senate seat—was not advertised (although word seems to have gotten around) and there was apparently no attempt to ensure that the bidders were responsible. On the other hand, he presumably did attempt to maximize the bids, and his failure to advertise in a newspaper as described can be excused due to the Trib’s unconscionable conduct described above.

So there’s the indictable offense. It’s no comfort to the U.S. Attorney, because the quoted statute is a state law, not a federal one. Sounds like a job for the Cook County State's Attorney. Unfortunately, the federal court doesn’t seem to see it that way. The Governor was arraigned Tuesday and, in the ultimate insult, the man accused of attempting to sell a Senate seat for hundreds of thousands of dollars was released on a mere $4,500 bail. Is the value of a governor just 1% of that of a senator? So it seems. No wonder Blago wanted out of that job, one way or another.

Wednesday, December 10, 2008

Leno Strips Down

A day or two ago, NBC officially decided to dump its 10 p.m. dramas five nights a week and slot a new Jay Leno show in their place. That marks the first time ever (or, at least, in a long time) that a variety talk show has occupied a network primetime slot. (Running a show every day is called “stripping” it.)

As I told LA’s KNBC-TV Channel 4 on Monday night, the deal is a twofer for the network. They get to keep Leno in the family, rather than see him defect to a rival when Conan O’Brien takes over the Tonight Show next year. In addition, it allows the troubled network—number 4 in the primetime ratings overall—to shed five hours of scripted primetime. That saves the net a lot of money, since a week of Leno shows, even with his no doubt lucrative contract, are less expensive to produce than five hours of scripted content. It also lets the net sidestep the effects of labor unrest, since no scripted dramas means little exposure to a writers strike (such as occurred for part of the last 12 months) or a SAG strike (an unfortunate possibility for next year).

“Little exposure” is not no exposure, of course. The writers strike meant the talk shows had no writers to pen their hosts’ opening monologues. It also meant that movie and TV stars, in solidarity with the writers, generally refused to appear on the talkers, driving down their ratings. Another boycott might occur next year if SAG strikes too, although it’s far from certain, since some significant A-listers have come out strongly against a strike and might defy their union and appear on the shows.

Network scripted programming in general has been giving way to unscripted fare. Indeed, network television and cable seem to be exchanging their DNA, blurring the distinctions in the sort of content carried by each. A key reason is that scripted production on network television is subject to higher union minimums and residuals formulas than cable, particularly basic cable. It’s also significant that cable is not subject to FCC regulation (whose reach extends only to terrestrial broadcast television), allowing for edgier fare.

As a result of these factors, plus a desire on the part of cable networks to differentiate themselves from each other, some scripted programming has moved to pay cable (HBO and Showtime) and, more recently, to basic cable (such as FX and AMC) as well. In turn, low-cost nonscripted fare, which in the guise of documentary-type programming has always been a staple of cable, has now migrated to network television in the form of reality TV and game shows, a development accelerated by the 2007-2008 writers’ strike. Now Leno has barged in as well, diversifying the menu of non-scripted network primetime programming. This is likely to accelerate the migration of scripted programming to cable.

These changes mean less work available for SAG and Writers Guild members in particular. In addition, the new cable work that takes up some of the slack is lower-paying, in terms of both upfront fees and residuals. The unions aren’t happy with this, but there’s little they can do. Only AFTRA benefits to any extent, since some of the reality shows are under AFTRA jurisdiction (i.e., the hosts or celebrity judges may be AFTRA members).

Add to all this the competition that all television faces from the Internet, especially YouTube, and it’s tough times for TV. Broadcast audiences are aging and advertisers are falling away due to the recession and, to some extent, the Internet. Observers agree that the business won’t be the same five years from now, but no one’s quite sure what it will look like. Leno’s stripping, but the networks themselves may be losing their shirts.

SAG Strike Authorization Ballots

The Screen Actors Guild just announced that strike authorization ballots will be mailed Friday, January 2 and will be due back and tabulated three weeks later, Friday, January 23. The AMPTP issued a statement denouncing the move, and urging that actors study the studio offer on the table carefully. I’ve posted a summary of the offer and an analysis of the disagreement between the two sides.

Tuesday, December 9, 2008

Report from SAG Town Hall Meeting

I visited the SAG Town Hall meeting in LA tonight. Here are some key takeaways:

  • About 450-500 people attended, a capacity crowd at the venue (Harmony Gold theater). After the meeting started, people continued to trickle in slowly; no one, so far as I could tell, was turned away. The meeting lasted about 3 hours, from 7:00-10:00 p.m. There was an open mic period, and many people spoke. Most people were apparently in favor of a strike authorization, but there were some dissenters.
  • The next Town Hall meeting in LA will be at the Hollywood Renaissance hotel, next Wednesday, December 17. It’s a much larger venue.
  • No date was announced for sending out the strike authorization ballots. However, a well-placed SAG source told me the ballots will probably not go out until the end of the month, after Christmas—contrary to previously published speculation.
  • Doug Allen told me that increasing the DVD residual is a fifth priority, after the top three (new media jurisdiction, new media residuals, and force majeure) and product integration.
  • SAG handed out an information sheet that presented the union’s point of view on what a Yes or a No vote on authorization means, and that listed outstanding negotiation issues. Those were, in order, as follows:
    • Union Contract Coverage in New Media (i.e., new media jurisdiction)
    • Residuals in New Media
    • Residuals for Programs Produced Prior to 1974 and Moved Over to New Media
    • Product Integration
    • Background Actors
    • Stunt Coordinators’ Television Residuals
    • DVD Residuals
    • Force Majeure
    • Union Security in New Media
    • Mileage
    • Major Role Premium
    • French Hours (Motion Pictures Only)

That’s it for now. If I learn more, I'll add updates.

Sunday, December 7, 2008

SAG-AFTRA Non-Disparagement?

A month and a half ago, SAG and AFTRA signed an agreement not to disparage each other, with significant fines apparently being the consequence for violation. Although the terms of the agreement are confidential, Variety quoted an AFTRA officer at the time explaining that AFTRA was advised to “scrub” all critical material on the Internet about SAG.

Looks like SAG didn’t get the same advice. Go to and click on “Vote No” in the left-hand navigation bar—or, just go to—and you can read all about how AFTRA’s deal with the studios “achieves few if any real gains for actors.” Two fact sheets and an ad are available for your perusal, all artifacts from SAG’s ill-fated campaign against the AFTRA deal.

What a blast from the past. This stuff takes you back to a simpler time—just six months ago—when a strike seemed unlikely and the collapse of major banks and automakers even less so. I have emails in to SAG and AFTRA asking whether the continued presence of this material violates the non-disparagement agreement. I’ll update this post accordingly. UPDATE: SAG informed me that they decline to comment.

SAG & The Studios: What Are They Fighting Over?

Several days ago, I analyzed the studios’ offer, which has sat on the table for over five months pummeled by SAG’s rejection and which the studios recently made public. Today, let’s drill down on the key issues that separate the two parties and ask, what are they fighting about, and which issues truly matter today and in the next few years?

This is a long post, but I think you’ll find it useful if you want to understand the issues, rather than just listen to slogans and each side’s self-interested positioning. As always, I welcome comments, corrections and questions.

UPDATE: Just as background: Before I posted this piece, I called both the AMPTP and SAG to discuss various aspects of it. The AMPTP took my calls, including during evenings and the weekend. SAG, however, never returned my call. In addition, the AMPTP read the piece after it posted and pointed out a few factual inaccuracies, which I have corrected as updates below. SAG has not given me any feedback on the piece. Representatives of both SAG and the AMPTP, as well as the other guilds and unions, are on my email list, so all of them are aware of the piece.

1. Jurisdiction Over Original Made for New Media Productions.

The AMPTP (studio) offer gives jurisdiction to SAG over derivative made for new media productions. Those are new media productions based on an existing television show. In the studios’ view (and, after reviewing the language, I agree), SAG does not currently have this jurisdiction, though the union has signed one-off deals for specific productions. SAG contends that under existing language, it does have such jurisdiction. In any case, that’s not what the fight is about.

What SAG objects to is this: the studio offer does not give jurisdiction over original made for new media productions unless the budgets are unrealistically high or the production uses a “covered performer,” such as an actor with two movie or television credits, for instance. Original made for new media productions are those that are not based on an existing television show.

SAG wants jurisdiction for all such productions, regardless of budget or covered performer status. The studios say no, arguing that they didn’t give any other union this unrestricted jurisdiction, and that the covered performer clause means most of these productions will be covered anyway, unless they’re truly experimental (i.e., no experienced professional actors at all). They want the freedom to compete effectively with non-union productions.

The studios are right, plus there’s another point: they can already shoot non-union by setting up sister companies, as Disney has done by creating Stage 9, a non-union company. (This practice is known as "double breasting" or “dual shop operations.”) SAG’s not fighting this. So why the big fuss over jurisdiction? SAG should drop this issue and move on.

On the other hand, you might turn the argument around and say, why don’t the studios just concede this point, since they can already shoot non-union using a sister company? Fair enough. The studios respond by pointing to the same or similar provision in the new media deal accepted by the Directors Guild, Writers Guild, the smaller AFTRA actors union (in two separate deals), and the IATSE union (which covers technical and craft workers, i.e., crew members).

So, you get finger pointing. SAG says it wants to uphold the sanctity of the principle that signatory companies should only do covered work—even though the SAG one-off Internet deals apparently have no minimums, which drastically reduces the significance of making something a union job, and even though non-signatory sister companies can do whatever they want. The AMPTP wants to uphold the sanctity of the new media template, and not reward SAG for negotiating late and being difficult to deal with. Nor does the AMPTP want to poke a finger in the eye of the other four unions for being willing to make a compromise.

Thus, each side says the other should concede on this issue that, as far as I can tell, means very little. Meanwhile, SAG is missing out on 3.5% increases in television and theatrical minimums, and other increases that I blogged about two days ago; also, pilots are shifting dramatically to AFTRA (which does have a deal). Does it make sense for SAG to forego these increases, continue to lose market share, and strike over something so meaningless today? No.

To reiterate: The dollars involved in original made for new media product are trivial, and almost certainly will be for the next three years. In contrast, what SAG is losing in increased minimums is a much greater amount. If there's a strike, the studios will likely pull the offer, and then—particularly in light of the collapsing economy—SAG won't even get the 3.5% increases that the other unions got and that are on the table. This is an economy where people in general are losing their jobs, not getting increases.

SAG argues that the next round of negotiations will be too late, since the contract language, once in place, will be hard to dislodge. There’s some truth to this; the home video (VHS/DVD) provisions in the union contracts, which are very unfavorable to actors, writers and directors, have been in place for 24 years without material change. (The unions also object to cable TV minimums and residuals.) So, to some extent, the studios are reaping the whirlwind they themselves have sown.

Nonetheless, striking now would be shortsighted, because the guild will have more leverage in three years. That’s because there’s something else in the offer as it stands today—something else that SAG may lose if it delays much longer: a synchronized expiration date with the WGA. Under the offer as it now stands, the WGA and SAG contracts will expire in three years virtually simultaneously. That will give the two unions true leverage, because they can threaten a joint strike. That will be the time to fight—a time when there’s more leverage, a better economy (hopefully), and perhaps some real money at stake.

2. New Media Residuals on Original Made for New Media Productions.

Now let’s turn to another major sticking point for SAG: residuals for original made for new media productions. Under the AMPTP offer, there would be no residuals in most cases that involve such productions.

Again, let’s be clear about the issue that SAG is objecting to. This scenario does not involve “move over” reuse—i.e., when a television show is rerun on the Internet instead of on network television. That scenario deprives the actor of large fixed residuals, and pays much smaller residuals in its place (under the deal on the table, which has been accepted by all of the other guilds and unions). It’s a real threat to actor’s livelihoods—and to studio profitability as well, since the ad revenue for a given broadcast (i.e., streaming) on the Internet is much lower than a network broadcast. However, the audience is moving online. They’re going to watch television content through pirate sites if it’s not available on network sites and Hulu (co-owned by News Corp. (Fox’s parent company) and NBC Universal).

So, “move over” reuse is a real economic issue. But—SAG is not objecting to this scenario. It’s conceded the issue. Nor is there an issue regarding derivative made for new media productions.

Instead, SAG is objecting to the fact that there would be no residuals for original made for new media productions when they are rerun repeatedly on the Internet. SAG says there should always be residuals for reuse of any kind of production, and that this is the opening gambit in an attempt to eliminate residuals altogether. SAG’s probably right. The studios say that original made for new media productions make little or no money, and object to paying residuals on top of a losing proposition. They’re probably right too.

SAG also says or implies (they haven’t made their proposal public) that the residual formula it seeks would be a percentage of distributors’ gross revenues, and that this means that “if they (the studios) make money, we make money,” and, conversely, if the studio doesn’t make money on a show, then SAG members won’t either (in the form of residuals).

Unfortunately, that just not true, because it ignores the difference between gross revenues and net revenues. A percentage of gross means that SAG members would receive a residual from any revenue the studio receives, even if the studio had not yet recouped its costs on the show. In other words, the actor would receive a residual even if the studio was still losing money on the show. The sloganeering obscures the reality. Not surprisingly, the studios object to SAG’s position; they also point to the fact that the other unions accepted the deal.

So why not have a residual formula based on net profits—i.e., a formula that kicks in once the studio has recovered its costs on the show? That might be a good idea, though there are problems. One is the difficulty in defining the costs that would be deductible from gross revenues. In talent contracts, for instance, the definition of net revenues can go on for pages. Another difficulty is that studio accounting, in the area of net revenue, is filled with sharp practices, and, at least in some cases, outright dishonesty. That’s what led Eddie Murphy to refer to net points (i.e., percentages of net revenues) as “monkey points,” because you’d have to be a monkey to think they meant anything. A third consideration is that no other residuals formula in the guild and union agreements, to my knowledge, is based on net (rather than gross) revenues. In any case, I don’t know whether there has been any serious discussion of a net-based residual formula for new media. There may have been (and there probably should be), but I just don’t know.

So does this mean that the issue of residuals for original made for new media productions is significant? Eventually, yes. Today, no. If you’re an actor, ask yourself this: when is the last time you auditioned for an original new media production, let alone worked on one? Probably never. When's the last time you even watched an original made for new media production (made by a studio, not some 20-something in his garage)? Maybe never as well. Simply put, there are very few productions of this sort, and even fewer that generate any revenue to speak of. Their economic value is dwarfed by television and theatrical production. Once again, SAG is fighting over pennies while ignoring the real dollars that members are losing by foregoing the 3.5% annual increases in television and theatrical minimums.

In response, SAG says that “new media is really now media”—i.e., implying that all media today is new media. That’s catchy, but false. There are television productions being shot across this city and elsewhere. That's not new media. There were studio theatrical motion pictures being shot across this city and elsewhere until the SAG contract expired. They're not new media either. There are a small number of derivative new media productions (new media based on existing television shows) being shot. They are indeed new media, but they aren’t relevant to the discussion, because SAG has not threatened to strike over them. (That’s because the studio offer on the table in this area gives union jurisdiction from dollar one and pays residuals in all cases.) There are television programs being rerun on Hulu and movies available for download on Amazon, but these aren’t relevant either, because SAG’s not threatening to strike over them.

All that’s left of “now media,” when it comes to a discussion of whether to authorize a strike, is a very small number of original made for new media productions. Their economic value is miniscule today. That’s not “now media”—it’s closer to “no media,” if you insist on a catchy slogan. Sometime in the future, there may be real money here; there probably will be. But, as I said in the preceding section, SAG should fight over these issues in three years, when the economics may actually mean something and when the guild may actually have leverage.

And, another point to remember—AFTRA has shared jurisdiction over made for new media productions, including original made for new media productions. If SAG tries to obtain gains in this area, more of this work will probably shift to AFTRA, which has the same exception to jurisdiction that SAG objects to. The work will then be non-union under the AFTRA deal, rather than union under the SAG deal. SAG’s boxed in: the more it fights for, the more it loses to AFTRA.

3. Product Integration.

Now we leave the area of new media and move on to other issues SAG has raised. The first of these is product integration. It’s a form of product placement on steroids. With traditional product placement, a can of Red Bull might sit on the table while two characters discuss how to save the world. With product integration, one character would actually have to drink the Red Bull, or mention it by name (“I’ll save the world after I get hopped up on Red Bull”).

In either case, the brand (i.e., the company that makes the product) pays the studio or production company. Sometimes the payment is in cash, which helps defray the cost of production. Other times the payment is “in kind,” i.e., in the form of products or services (this is also called a barter deal). For instance, an airline might give the production company free tickets, which helps defray the cost of flying to a location shoot.

Product integration is often distracting and annoying to the audience, but studios argue that they need the money, because traditional forms of revenue are declining—in particular, ad revenue on television. That’s in part because people use TiVo and other DVRs to fast forward past ads.

SAG has presented three objections to product integration: (1) It’s artistically objectionable. (2) Actors should have the right to refuse to do integration; that is, they should have a right of consent. (3) Actor’s should be compensated for integration. These objections need to be separated out and considered one by one, not jumbled together. So let’s look at each in turn.

(1) The artistic objection, although valid from the audience’s point of view, is simply not a credible or tenable position for the union to take. Entertainment is “show business.” It’s a business. The person funding the show generally gets to decide its artistic parameters. As an audience member, I certainly dislike product integration—and still, paradoxically, I also skip ads with my TiVo. You probably do too—even if you’re actor whose livelihood is being diminished by the softness in the ad market. That’s nice for us as viewers. Yet, someone has to pay for content. In any case, SAG is not the TV and Movie Artistic Czar.

(2) As to consent, it’s not reasonable for SAG to expect blanket consent, as much as actors would like it. Producers need the revenue that product integration provides. But, some forms of consent are reasonable. For instance, actors should be able to indicate prior to employment that certain sensitive categories of products are not acceptable to them. These might include tobacco, firearms, alcohol, meat, leather, fur, animal products generally, and even junk food (for the health-conscious) or contraceptives (for the religious conservatives). As long as the producer knows these things prior to hiring the actor, the producer can make an informed decision as to whether to hire the actor or not.

A more complicated issue relates to commercial conflicts rather than ideological ones. If an actor has a Coke commercial running, or has a commercial hold, he or she should be able to so indicate prior to employment, and not have to do an integration for Pepsi. Of course, there are complicated variants on this issue: what if the Coke commercial was a year ago and there’s no hold, or what if the commercial opportunity comes up mid-season? Those are issues worth negotiating. They’re not worth striking over.

(3) What about compensation? I agree that actors should be compensated for integration, for four reasons: (a) Actors have always gotten compensated for doing commercials, and a product integration is an embedded commercial. (b) An integration for one product, such as Pepsi, means the actor loses the potential to do a commercial for another, such as Coke. (c) An integration for Pepsi, for instance, means that the actor might not even get a commercial for Pepsi either (why should Pepsi bother, since they already have the actor in character endorsing the product?), or that the compensation would be less than on the open market. (d) As conventional advertising declines and product integration grows, actors as a whole are losing economic ground in the arena of traditional commercials and should be allowed to make it up, at least partially, in the replacement arena of product integration.

So, for those reasons, actors should receive compensation, at least when the product integration is a cash deal. In a barter deal, the production company is not receiving any cash, so it’s harder to argue that it should pay cash out of pocket to the actors if it isn’t receiving any cash in the first place. (You could argue that the producers will just have to ensure that they always get at least some cash.) Actors should also receive additional payment if a clip of the product integration is aired separately, since it would then be functioning as a standalone commercial.

The compensation issue is complex, and it may interact as well with the upcoming negotiations over the SAG commercials contract. That adds another layer of complexity, since that contract is with advertisers and major brands, not with the studios. Getting the studios to pay compensation for integration will be extremely difficult. This is an area where hard bargaining is certainly appropriate. Once again, though, there should be ground for compromise—and there might be, if SAG would abandon the new media issues.

4. Force Majeure.

This is a legal phrase, but it has a real dollar impact. Here’s what it means. The SAG agreement has a provision that applies if production is suspended or terminated because of certain kinds of events outside anyone’s power. Such events are called “force majeure,” and include riots, earthquakes, terrorism, or—significantly—strikes by other unions. The provision says that under these circumstances, the studio has to continue paying certain of the actors for three weeks at half-salary. After three weeks, the situation becomes more complex, but involves paying full salary in some cases.

SAG says this language applies to the 2007-08 writers strike—i.e., that actors are owed money under the force majeure provision because production was interrupted by the writers strike. The studios disagree, for reasons they’ve never made clear. The language seems unambiguous to me, and, despite my requests, the AMPTP has never explained their reasoning, citing a pending arbitration claim brought by SAG.

This battle is being fought on two fronts. First, the studios are refusing to pay force majeure claims relating to the writers strike, so SAG has brought an arbitration claim against them. Second, the studios want the contract language changed so that force majeure protections would be effectively eliminated. SAG calls this a rollback, and I think they’re right.

This issue, like product integration, is a good candidate for tough bargaining. There may be compromises to be had here; I don’t know. In any case, it will take a lot of force, no pun intended, for SAG to push back. But this is more feasible if the new media issues are dropped.

5. DVD Residuals.

SAG wants a 15% increase in DVD residuals. (More specifically, they want pension & health contributions to be paid on DVD residuals.) That's a valid issue—an increase is long overdue, as I blogged during the writers strike—but the issue is a complete non-starter. The studios will never give on this when SAG has so little leverage. It’s simply a dead letter, unfortunately.

6. Other Issues.

SAG has publicly raised various other issues, more minor than the above. Most or all of them are worthy of negotiation; all are resolvable though negotiation; and none of them are strike worthy.

7. Why the Stalemate?

There's really no chance of SAG changing the new media template, so far as I can tell. If SAG would drop the new media issues, a negotiation could ultimately resolve the rest. A tough negotiation should produce a reasonable compromise: not perfection for either side, but not a strike either.

Why won’t SAG do this? The answer is politics. In particular—believe it or not—the issue is politics relating to next September’s SAG elections. As horrible as it may be, the good of the membership is being sacrificed on the altar of elections that don’t even happen for another ten months. Here’s the dynamic at play:

The hard line, Hollywood-based Membership First (MF) faction has yoked itself to unreasonable and unobtainable demands. The leaders of SAG are all from or aligned with this faction—the President, the National Executive Director, the head of the negotiating committee, and others. This faction also controls the negotiating committee and the Hollywood Board. They have spent months trying to marginalize AFTRA and defeat its deal (see my posts starting in April of this year onward for details), rather than taking a hard and realistic look at their own negotiating position. In the meantime, the economy has deteriorated dramatically, to say the least, further undermining SAG’s leverage.

In contrast is the moderate Unite for Strength (UFS) group, also based in Hollywood, which scored a victory in the SAG board elections two months ago. This faction is aligned with the NY and regional board members; in combination, they now have a thin majority on the National Board. Why don’t they change SAG’s approach to negotiations—and also derail a strike? Several reasons:

(1) SAG rules and other considerations make it difficult to change the approach to negotiations. The key operatives who are driving SAG’s train off a cliff are the National Executive Director, the President, the chair of the negotiating committee, and one or two others. But, as I have previously blogged, it would be expensive to fire the NED, and it’s difficult to change the negotiating committee, thanks to a rule that MF put in place last year to help cement their control. The President’s term doesn’t expire until next September. So change isn’t easy.

(2) UFS is focused on a long-term goal, merger with AFTRA. Fair enough, but unfortunately, this focus has come at the expense of forcefully dealing with the current stalemate.

(3) In service of its long-term goal, UFS wants to elect more board members next September. For that reason, they don’t want to be vulnerable to a charge by MF that they (UFS) undercut the guild’s leverage by opposing a strike authorization vote or by appearing soft on the issue of new media. So, UFS shilly-shallies—sending out an email urging SAG members to “carefully weigh[] all the issues and the potential consequences”—rather than coming out against the authorization. Meanwhile, MF and the control group at SAG surge forward, clear in their goals, aggressive in their strategy, even if unencumbered by any vision of reality.

MF is in a win-win situation, since they can blame UFS for their likely failure to achieve unrealistic goals. Unfortunately, a win-win for MF has turned into a lose-lose for the members, and for the industry. As yet, there’s no end in sight, although failure of a strike authorization vote might hasten the day that the stalemate gets resolved.


Postscript: A Response to Robert Elisberg

A recent HuffPo article by Robert Elisberg argues for a strike authorization. I think a response is useful. In essence, the article misses the points above, including that the dollars involved in the specific new media issues SAG is raising are trivial, whereas the loss to the members (due to delaying ratification or rejecting the deal) in traditional media (such as the 3.5% annual increases) are huge. The article also has what I consider overbroad or misleading statements regarding new media. These statements, and my responses, are as follows:

  • “ … just made a $12 million profit, streaming video”: Maybe true—I haven’t double checked, and I’m also not sure if Robert means “profit” or “revenue,” which are two very different things (profit equals revenue minus costs). However, Hulu is mostly content from traditional television. Residuals are payable on such a “move-over” reuse—and SAG does not appear to be objecting to the formulas in this area.
  • “[I]n New Media, … [t]he proposed minimum rate is zero.”: Only true in original made for new media productions that don’t use a covered performer. Not true in other original made for new media productions, or in derivative new media productions.
  • “[I]n New Media, … [t]he proposed residual structure is zero.” : Only true in original made for new media productions that don’t use a covered performer. Not true in other original made for new media productions, or in derivative new media productions.
  • “[I]n New Media, … [t]he proposed overtime protections are zero.” : Only true in original made for new media productions that don’t use a covered performer. Not true in other original made for new media productions, or in derivative new media productions. Also, note that state law has some overtime protections.
  • “[I]n New Media, … [t]he proposed ‘forced call’ protections are zero.” : Only true in original made for new media productions that don’t use a covered performer. Not true in other original made for new media productions, or in derivative new media productions.
  • “[I]n New Media, … [t]he proposed protections for minors are zero.” : Only true in original made for new media productions that don’t use a covered performer. Not true in other original made for new media productions, or in derivative new media productions. Also, note that state law has some pretty specific protections for minors.
  • “Warner Bros.’ … Internet division had already cleared 15,000 TV episodes.”: Don’t know if this is true, but even if it is, so what? SAG is apparently not objecting to the residual that applies to such uses (see bullet point above re Hulu).
  • “[T]he AMPTP companies have … failed to make proper payments on streaming, blaming ‘technology problems.’”: True in some cases (the studios admit it), but somewhat understandable. The new media deals are about 30 pages each of dense legalese, with dozens of details. You can’t reprogram computers for this stuff rapidly. And the studios have stated that they’ll pay interest on the late payments. (Note: "in some cases" is an UPDATE; the first version of this post did not include this qualifier.)
  • “[T]he AMPTP companies have … even claimed that the new rates for downloading doesn't apply to any material produced before the strike - and therefore insist they owe nothing on the studio libraries.” Guess what—they may be right that the new rates don’t apply. I’ve read the contract language—has Robert? The language in this area contains an explicit start date of February 13, 2008 for payment. Thus, the issue is at best ambiguous. The WGA cites 1971 and 1977 dates that don’t even appear in the applicable section. It’s just not true to imply that AMPTP has no justification for its position. (The WGA may also, but the AMPTP may have the better of the argument.)