SAG TV/Theatrical Ballots Later Than Expected; SAG Litigation Continues; and More

The ballots for SAG’s recently approved TV/theatrical contract won’t be going out until mid to late May, a source tells me, several weeks later than the early May target that the Guild stated as recently as a week or so ago. That means that ratification, if achieved as expected, will not come until early to mid June, since balloting is expected to be a three week process. UPDATE: The ballots will go out May 19 and are due back June 9, SAG announced today.

The source, who spoke on condition of anonymity, explained that writing the pro and con statements has only just begun. That process takes a week, and then another week is allowed for rebuttal statements to be written.

(BTW, a copy of the proposed TV/theatrical agreement is available here. I’ve not yet done an analysis, but in the meantime you can read SAGWatch’s.)

Meanwhile, ballots for the commercials contract will be mailed to both SAG and AFTRA members Thursday, and due back May 21, reports Variety. It’s expected to pass easily. In contrast, the TV/theatrical contract will probably pass with a yes vote in the 60%-75% range, roughly in the neighborhood of the AFTRA deal, which achieved 62%. Only a simple majority (i.e., just over 50%) is required.

In other SAG news, Unite for Strength revealed in a Facebook email several days ago that the force majeure compromise is 33 cents on the dollar. “Force majeure” refers to arbitration claims on behalf of about 500 actors for a portion of wages lost due to the 2007-2008 Writer Guild strike. The claims amount to about $63 million, and, thus, the total settlement is about $21 million. The compromise goes into effect if the TV/theatrical agreement is ratified. Each company can opt out on a company-wide basis if they wish. SAG members will receive checks from those companies that don't opt out several weeks after the agreement is ratified, I'm told.

That settlement amount—33 cents on the dollar—is on the low side, but that was a tradeoff. SAG wants its contract to expire in mid-2011, to synch up with the WGA, AFTRA, and DGA. That’s an issue created by the ten-month delay that the hardline Membership First faction inflicted on the union; without the delay, the deals would have synched up as a matter of course. To get synchronicity at this late date, SAG had to give something up.

Remember also that the claims are under arbitration. SAG could have gotten zero cents on the dollar if the arbitration had proceeded; or it could have prevailed altogether. With that much uncertainty, a settlement in the 50% range might have been expected. That would have yielded a total of about $31 million, rather than $21 million. So, it’s a reasonable conclusion that SAG gave up about $10 million in order to get the synchronized expiration date—and prompt payment to the affected members.

The Guild also had to agree to modify the TV-related force majeure language in a way that reduces the likelihood of future force majeure claims. To put this in context, though, I’m told there has never been an industry-wide force majeure claim before. The studios obviously want to avoid seeing one again, not only to reduce their costs, but also to decrease the strength by which SAG members would support a writers strike in the future. (In other words, if actors have to bear the entire cost of their own lost wages, they may be less likely to enthusiastically support a strike by a sister union.)

Speaking of lost wages, I also have a couple of factoids on the SAG layoffs: the total number of people laid off was 36 (not 35, as previously reported), with an additional 26 unfilled positions that will remain unfilled. That’s a total reduction in force of 62 positions, and the annual savings to the Guild is $2.5 million in salaries ($4 million if bonuses and other factors are included).

Moving from lost wages to lost causes, there are developments in the lawsuit filed against SAG by the union’s own president, Alan Rosenberg, and his fellow Membership First plaintiffs 1st VP Anne-Marie-Johnson and board members Diane Ladd and Kent McCord. That suit, as you may rather have forgotten, seeks to unseat the TV/theatrical negotiating task force, as well as interim National Executive Director David White and Chief Negotiator John McGuire. That group—plus the commercials negotiating committee—is the team that managed to close two deals in as many months, while MF closed nothing at all over several years.

The lawsuit, in my opinion, hasn’t got a Popsicle’s chance in hell. After all, what judge is going to unwind a twice-ratified union leadership change? Incredibly, the lawsuit proceeds on not one but two tracks, since there are now both a trial court action and a concurrent appeal. Rosenberg’s and his co-plaintiffs’ solicitude for the members apparently includes spending their money on pointless multi-pronged litigation—understandably, since abandoning the litigation before this summer’s SAG election would be no boon to MF’s election prospects. Indeed, if MF ever wins control of the Board again, you can expect a motion to have SAG reimburse Rosenberg et al. for their no doubt considerable litigation costs.

In any case, there are developments on two fronts. In the trial court, SAG filed its Answer to the plaintiffs’ first amended complaint. A variety of defenses are asserted, including that the complaint is moot (because the SAG Board re-fired the previous NED, Doug Allen, at a meeting, after having first done so by a written assent document), interferes with the union’s right of self-governance, and is barred by the wrongful acts of Rosenberg and his co-plaintiffs (this presumably refers to the 28-hour filibuster over which Rosenberg presided in an attempt to prevent Allen from being fired).

Meanwhile, in the Court of Appeal, Rosenberg & co. filed their Appellant’s Opening Brief several days ago, accompanied by multi-volume, multi-hundred page appendices of documents. The arguments are simply a rehash of the arguments Rosenberg and his co-plaintiffs made in the trial court–which were rejected not only by the trial court judge, but also in an earlier appeal. Yes, the current appeal is actually the second, and the case is only three months old.

What next? As the name implies, the Appellant’s Opening Brief is the first brief in the appeal. The next few weeks will see the filing of the respondent’s brief (SAG’s brief) and the reply brief (in which Rosenberg et al. get to reply to SAG’s brief). Then comes oral argument, unless the court decides to proceed based on the briefs alone (which I think the court has the right to do, but I’m not sure).

For those who find appellate work dry and lifeless (it’s all briefs and legal arguments, with no witnesses or jury), the trial court action will grind on as well, doubtless with demurrers, a motion to dismiss, motions for summary judgment, depositions, interrogatories, requests for production of documents, and all of the other costly accoutrement of modern-day litigation. Actually, that’s pretty dry and lifeless too. This could go on for months, providing amusement to everyone except SAG’s accountants. As in entertainment, so too in litigation: the show must go on.

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SAG-AFTRA Ad Deal Done

Score one for labor. SAG and AFTRA jointly reached a deal late last night with the advertising industry, retaining the current lucrative compensation structure for broadcast network commercials, and largely resisting the industry’s attempt to reduce pension and health contributions. Solidarity, it seems, makes a difference. In the words of a labor-side source close to the talks, “the unions effectively won.”

The industry’s chief negotiator, Doug Wood, had a different perspective: “neither side won or lost,” he said in an interview; rather, the deal was “fair on both sides.” He described the process as one of “give and take,” and contrasted it with TV and theatrical labor negotiations, which he called “crazy.” (SAG will presumably wade back into that thicket now that the ad deal’s done, and attempt to revive the stalled talks with the studios.)

The three-year deal was reached just hours after the last contract expired. If ratified as expected by the union boards and membership (a process that’s likely to take 4-6 weeks), it will run through March 31, 2012. The deal is worth more than $2.8 billion over three years, said a union source. Wood approximated the deal at $1 billion per year, and said the total increases amounted to $30 million per year, or 3%.

Under the new agreement, actors will continue to be paid under the so-called “Class A” structure for their work on broadcast network commercials, though the unions agreed to an industry proposal for a two-year pilot study of an alternative approach, called the Gross Rating Points (GRP) model.

The current system, based on the number of times a commercial is run, has become a sore spot for the industry: network advertisers balk at making high payments to actors even as broadcast network audiences have declined. Nonetheless, it looks like they’ll continue to make those payments for several more years at least. Wood counseled patience: “If I had my druthers, I’d get [a switch to the GRP model] done sooner rather than later,” he remarked, but he expressed conviction that if the pilot study goes well, the unions will essentially be forced to change to the new approach by 2012. At that point, the GRP model will be a “fait accompli,” said Wood, and software and systems will be in place for an quick changeover at that time.

The GRP model, according to the industry, would maintain the same aggregate compensation to actors as a whole, but shift the allocation in favor of actors in cable ads. The issue has been bubbling since at least 2006, when the contract was extended for two years to allow a study of alternative approaches. The GRP model emerged from that study.

Union concerns with the GRP proposal include an interesting gender issue, according to a labor-side source. Women, it turns out, appear disproportionately often in daytime commercials for household products and the like. Those commercials have lower viewership than primetime commercials do, and the unions want to ensure that a ratings-based formula would not adversely affect female actors’ earnings.

The new deal also includes a 5.5% overall increase in wages and other compensation over the life of the contract. It also, for the first time, sets rates for commercials made for the Internet, though those minimums don’t kick in until the third year of the contract, Wood noted (he nonetheless called the minimums a “big victory” for the unions). Interestingly, new media did not prove to be the flashpoint in these negotiations that it has in the deals between Hollywood studios and actors, writers, directors and crew.

In addition, the advertisers’ contribution rate for pension and health plans was increased by 0.5%. Under the new deal, the contributions will be subject to an annual cap, as the industry sought, but the cap is much higher ($1,000,000 per performer, per contract, per year) than the advertisers had proposed ($250,000).

The joint SAG-AFTRA press release is below. UPDATE: Also below is a blog post from industry chief negotiator Doug Wood.

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Here’s the SAG-AFTRA joint press release:

AFTRA AND SAG REACH TENTATIVE AGREEMENT WITH ADVERTISING INDUSTRY ON NEW COMMERCIALS CONTRACTS

NEW YORK (APRIL 1, 2009)—Screen Actors Guild and the American Federation of Television and Radio Artists announced today that the AFTRA/SAG Joint Negotiating Committee has reached a unanimous tentative agreement with the Joint Policy Committee (JPC) of the American Association of Advertising Agencies (AAAA) and the Association of National Advertisers (ANA) on terms for successor agreements to the AFTRA Television and Radio Commercials Contracts and the SAG Television Commercials Contract, subject to approval by the SAG/AFTRA Joint National Board.

The new three-year agreement contains a more than $36 million increase in wage rates and other payments for all categories of performers in the first year of the contracts, approximately $21 million in increased contributions to the SAG Pension and Health Plan and the AFTRA Health and Retirement Fund, establishment of a payment structure for work made for the Internet and other New Media platforms, important new monitoring provisions, and improvements for choreographers, extras, and Spanish language performers.

The new contracts also contain an agreement in principle outlining terms for a pilot study for the purpose of testing the Gross Rating Points (GRP) model of restructuring compensation to performers as proposed by Booz & Co. The two-year study is scheduled to commence on April 15 and will be conducted by a jointly retained consultant engaged by the Unions and the Industry. The results and possible adoption of the study’s findings will be subject to negotiation by the parties not later than January 3, 2012.

The unions successfully protected the critical “Class A” payment structure and continued unchanged the editing provisions in the existing contract.

Highlights of the new agreement include:

• Three-year agreement, term effective April 1, 2009 to March 31, 2012

• 5.5% overall increase in wages and other compensation over the life of the contracts, including a 4.43% increase, effective April 1, 2009, in Class A, Wild Spot, and basic cable session fees

• For product made for the Internet or in New Media, 1.3 times the minimum session fee for 8 week’s use and 3.5 times the minimum session fee for one year’s use

• 0.5% increase in the employer contribution rate to the AFTRA H&R and SAG P&H plans bringing the total contribution rate to 15.3%. The agreement provides for a cap on P&H and H&W contributions, but the committee successfully negotiated the industry from their initial demand of $250,000 to $1,000,000 per performer, per contract, per year.

• Secured five, new covered jobs for commercial extras, up from 40 to 45

• Established new exclusivity provisions for made-for cable only commercials

• Instituted, for the first time, a contract provision to pay extras a round-trip mileage fee of $8

• Increased foreign use payments under the Spanish Language section of the contract

• The across the board increase under the AFTRA Radio Commercials Contract is 5.3%, including contributions to AFTRA H&R and the AICF

• All of the unions’ proposals regarding diversity issues were addressed in the negotiations

“The AFTRA and SAG commercials contracts provide our members with the solid foundation they need to sustain their careers and families,” observed AFTRA National President Roberta Reardon and AFTRA Chair of the Joint Negotiating Committee. “In this round of negotiations, during the worst economic crisis since the Great Depression, we successfully improved wages and expanded benefits to keep our members working now and in the future. This is a major victory for our unions—and a victory for organized labor as a whole—and I applaud the Joint Negotiating Committee for their vision, hard work, and solidarity.”

“I am so proud of the work of our Joint Negotiating Committee. It was a hard-fought negotiation and our greatest victory was in protecting Class A residuals payments. By securing a joint study to research and develop a workable compensation model, our negotiating committee protected every member who works under these contracts across the country,” said Sue-Anne Morrow, Screen Actors Guild Chair of the Joint Negotiating Committee.

“Our Joint Negotiating Committee held together in the face of some very tough issues and they stood firm for our core principles. We have achieved a deal that brings significant improvements to these contracts. Our gains include establishing the first-ever payment structure for made-for-the Internet and new media commercials and significant increases in wages during a very troubled global economy. I am proud to take this tentative deal to our Joint National Board,” said John T. McGuire, Screen Actors Guild Chief Negotiator.

“The Joint Negotiating Committee provided us with clear objectives borne out of the nationwide Wages and Working conditions meetings leading up to the negotiations,” said Mathis L. Dunn, Jr., Chief Negotiator for AFTRA and Assistant National Executive Director for Commercials, Non-Broadcast, and Interactive Media.“ Among the priorities, our members asked us to increase minimum compensation and preserve Class A. We achieved those objectives and more, including agreement on a test study that will allow for a meaningful exploration of how best to adapt our contracts to meet the changing needs of all performers working in the shifting landscape of new technology.”

Formal negotiations between the 26-member AFTRA/SAG Joint Negotiating Committee and the Industry began on February 23 and concluded on the morning of April 1 in New York City.

Details of the new agreement will be submitted to the SAG/AFTRA Joint National Board for approval at a date to be determined, and if approved, will be jointly mailed to the membership of both unions for ratification thereafter.

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Here’s the post from Doug Wood:

New Collective Bargaining Agreement with SAG and AFTRA

I am pleased to announce that the JPC and SAG and AFTRA have tentatively agreed on terms for a new collective bargaining agreement commencing April 1, 2009 and ending March 31, 2012.

Formal negotiations began on February 23 and concluded in the early morning of April 1. Since the opening of negotiations, the two sides met for a total of 25 days.

In many ways, these negotiations set a new stage in the relationship between the advertising industry and the unions. Rather than approaching the bargaining table as adversaries, the two sides sought to find solutions to one another’s key issues. While many of these issues were difficult to resolve, the conviction by all parties to find reasons to agree rather than disagree resulted in a fair and balanced agreement.

Full details of the agreement will be released shortly.

I would like to thank the members of the JPC who worked many hours in developing the industry proposals and particularly Danielle Korn and Leslie Meeds who fully participated in the negotiations and were at the bargaining table every day, including days that went well into the night. A special thanks goes to Kathleen Quinn of the AAAA. Kathleen is the glue that keeps the JPC working. Her tireless efforts at the negotiations and years of knowledge working with the unions proved to be invaluable. I’d also like to thank the ANA, particularly Bob Liodice, Christine Manna, Dan Jaffe and Keith Scarborough for their support and assistance.

Most importantly, I’d like to thank the union negotiators – John McGuire, Mathis Dunn, and Ray Rodriguez -- for their tireless efforts throughout the negotiations.

Lastly, I’d like to thank my colleagues, Elky Stone and Greg Hessinger. Their assistance, knowledge, and wisdom throughout the negotiations helped us all focus on the key issues and accomplish the tasks at hand.

In the end, our success was a team effort that I extend my thanks to everyone involved.

SAG-AFTRA Commercials Update

Small moves by each side, but movement nonetheless, characterizes the ongoing commercials contract negotiations being held in New York between SAG and AFTRA jointly and the advertising industry, according to a source close to the talks.

The unions retain the option of seeking a strike authorization, the source added, but are not planning to do so as yet, given the incremental progress being made. No doubt the uncertainty of obtaining authorization in this financial and industry climate is also a factor.

A welcome bit of news: the source said that SAG and AFTRA are working well together, with no evidence of factionalism. Most SAG-AFTRA decisions are being made by consensus, with little need to vote, and with disagreements being debated forcefully but respectfully.

Talks are believed to be ongoing. The contract expires March 31, one week from today, although negotiations could always continue past expiration if necessary, if both parties agree.

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Hollywood Crew Deal Ratified

As expected, the membership of IATSE, the union representing Hollywood crew members, ratified that organization’s proposed contract with the studios yesterday, although not without significant opposition. The new contract takes effect August 1 and runs for three years, as is usual with Hollywood labor agreements. It includes 3% annual wage increases.

The deal had been opposed by some members, who cited rollbacks in the healthcare plan, as well as concerns regarding new media. However, IA President Matthew D. Loeb remarked, “We feel we have given our members the best protection we can at a time when the bottom is falling out of a lot of traditional business models.”

Unofficial partial ballot totals posted on the No campaign’s web site showed a wide difference of opinion from local to local, with opposition ranging from 20% to 45% among the 7 locals for which data was available. Turnout was unclear from the figures. The 15 Hollywood-based IATSE locals covered by the contract encompass over 35,000 members.

Meanwhile, the Screen Actors Guild is still in stalemate with the studios, with no evident movement. In NY, negotiations between SAG and AFTRA jointly with the advertising industry continue this weekend. SAGWatch quotes a source reporting “some progress,” which contrasts with indications earlier in the week. That contract expires in ten days.

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SAG Commercials Negotiations Process Advances

The SAG-AFTRA commercials contract seems to be suffering little of the turbulence afflicting the long-expired SAG TV/theatrical contract. So far anyway ... fingers crossed. Here's a joint statement released today by both unions:

On Saturday, February 7, the Joint National Board of Screen Actors Guild and the American Federation of Television and Radio Artists met in videoconference plenary in Los Angeles and New York and approved by an overwhelming majority a package of proposals for the changes to the AFTRA Television and Radio Commercials Contracts and SAG Television Commercials Contract. The SAG and AFTRA Commercials Contracts will be bargained under the terms of the Phase One Agreement that applies to the Commercials Contracts negotiations only. Negotiations are scheduled to commence on February 23 in New York.

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SAG Contract Graveyard

Where do SAG contracts go when they expire? Who knows, but wherever it is, it’s getting more crowded by the day. The Guild's got a lot of unfinished business, it turns out. Here’s the tally of contracts that have expired or will do so shortly, in order by expiration date:

• Agency Franchise Agreement (expired 2002). This is the agreement between the talent agents and SAG. As SAG itself explains, the Franchise Agreement’s expiration means that SAG members have less protection from agents who, for instance, seek commissions greater than 10%, or a longer contract term length (for the representation) than the previously-effective franchise agreement allowed. AFTRA, DGA and WGA all have franchise agreements in place.
• TV/Theatrical Agreement (expired June 30, 2008). This is the agreement that has been the subject of turmoil for the last nine months or more.
• Basic Cable Agreement (was set to expire June 30, 2008, then extended to December 19, 2008, and now expired). As Variety reports, this contract with about 20 cable companies expired last month, and no date has been set for negotiations. Ironically, this is the agreement that SAG accuses AFTRA of undercutting with one-off deals. Now there isn’t even a deal in place to undercut. SAG members continue to work under the terms of the expired agreement.
• Interactive Media Agreement (expired December 31, 2008). This is the agreement with video game companies. It expired, but automatically extends itself unless either party actually sends a notice of termination to the other. But by not negotiating an explicit renewal, SAG has failed to obtain any increases or other improvements that might be possible. UPDATE: I left this one out of the original post; thanks to Voiceguy for alerting me to it.
  
• TV Animation Agreement (expires January 15, 2009). I’m informed that this contract for voiceover work expires next week and that no talks have been set.
• Basic Cable Animation Agreement (expires January 15, 2009). Another voiceover contract, with expiration next week and no talks set.
• Commercials Contract (was set to expire 2006, then extended to October 29, 2008, then again to March 31, 2009). On this one, at least, SAG, and AFTRA, working jointly, are making progress. They meet Friday to start crafting a contract proposal. However, no date has been set for negotiations; the expiration is approaching quickly; the ad industry has said it won’t grant another extension; and SAG staff and Board members are naturally preoccupied with the TV/Theatrical agreement. Will they be able to negotiate the Commercials agreement with the ad industry while simultaneously struggling internally and with the AMPTP (and possibly even running a strike, should that come to pass)? We’ll see. SAGWatch opines that the road may be rocky. I agree.

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Phase One Reanimator

Aieee, it’s alive!  Remember Phase One?  That’s the 27 year old joint bargaining arrangement between SAG and AFTRA that collapsed this spring, leading to AFTRA making a separate primetime TV deal with the studios and networks and SAG sliding into a stalemate, leaving it with no deal after unsuccessfully trying to defeat AFTRA’s.  Hostility abounded.

With all that, Phase One appeared to be a dead letter, although officially it was only suspended or something like that.  Now it seems Phase One may not be so dead after all.  The SAG and AFTRA commercials contracts expire March 31, 2009 (extended from October 31) and AFTRA has taken a step towards joint negotiation, approving a deal that would set conditions for joint bargaining with SAG under Phase One.

Of course, the devil is in the details.  The AFTRA press release did not include the terms of the agreement, saying that they were confidential until the SAG National Board acts on them.  That meeting is scheduled for October 18. 

In any case, AFTRA noted that the agreement was facilitated by the AFL-CIO, which is a good sign, and Back Stage magazine’s Blog Stage blog says SAG approval is likely (though no source or explanation is offered for this, so the basis for the conclusion is unclear). 

In another surprising touch, AFTRA National President Roberta Reardon commented to Blog Stage that “I do have to commend President Rosenberg and Doug Allen [SAG's national executive director] for working hard on this.”  That’s probably the nicest thing either union has said to the other all year.  Let’s hope the spirit of comity continues, and the unions can negotiate together.

Of course, the town’s more immediate concern is whether SAG will go on strike against the studios and networks.  (In contrast, the commercials contracts are negotiated with associations of the major advertisers and ad agencies, a completely separate group.)  It looks like Reardon shares that concern, telling Blog Stage that it would be difficult for SAG to negotiate a commercials deal while simultaneously waging a strike but “you still have to prepare.”  Indeed.