SAG & Studios Agree to Tentative Deal

The Screen Actors Guild and the AMPTP (alliance representing studios and producers) reached tentative agreement yesterday on a two-year TV/theatrical contract, potentially ending a ten-month stalemate that halted production of most studio movies and put thousands of people out of work.

The deal will probably be approved by the SAG board today or tomorrow and ratified by the membership by mid-May, but the hardline MembershipFirst faction has vowed to fight the deal, so ratification, although likely, is not assured. Assuming the deal is in fact ratified (which takes a 50% majority), the stalemate would be over by mid-May. Some production might resume before then, in anticipation of ratification, but this is unknown.

In separate news today, the SAG and AFTRA boards meeting jointly approved the commercials contract reached April 1 with the advertising industry. Ratification ballots will go out to the members of both unions next week, with a return date in mid-May. The deal has wide support among the leadership and is expected to pass easily.

Back to the tentative TV/theatrical deal: Critically, this deal would expire on June 30, 2011, effectively synchronizing it with the Writers Guild, Directors Guild and AFTRA (smaller actors union) deals. That means all four unions will be able to coordinate negotiations and strategy, even to the point of threatening a joint strike by two (WGA and SAG) or three (WGA, SAG and AFTRA) of the unions. (The DGA has essentially never gone on strike, and AFTRA seldom does.)

This synchronicity should give the unions significant leverage, which raises the question of why the studios agreed to it. Probably they needed to restart theatrical film production soon in order to have movies for 2010. That would seem to be the only pressure point SAG had, since the union was widely understood to be unable to strike (a strike authorization would have taken a 75% affirmative vote of those voting, and the union didn’t even seek such a vote for fear of failing).

The gain—synchronicity—came at a price to SAG, however. The new deal compromises the force majeure claims SAG has pending from the 2007-2008 WGA strike. These are claims by actors for lost wages due to the strike, and amount to tens of millions of dollars. It’s unknown as yet how much will be foregone. Also, since the claims were the subject of a pending arbitration process, it’s unknowable how much SAG would have gotten if it had continued to pursue the claims. Thus, it’s hard to calculate the dollar cost of the compromise. The new deal also modifies the force majeure language in the union contract, but the details are unknown.

The deal includes no changes in new media from the AMPTP’s February offer, according to sources. That offer, in turn, is essentially the same as the new media provisions that the DGA, WGA, and AFTRA (in two separate deals) agreed to. (IATSE’s new media provisions are similar in several respects as well.) No change was expected by anyone, yet, ironically, new media was the reason the hardliners stalemated for ten months in a futile attempt to improve on the template accepted in the other five union deals.

The deal will take effect upon ratification, and includes an immediate 3.0% increase in minimum pay rates plus a 0.5% increase in pension and health contributions. A year later, there will be an additional 3.5% increase in minimums, which will run through contract expiration.

In contrast, AFTRA members have been enjoying a 3.5% increase for the last ten months (when AFTRA did its deal), and will receive their 3.0% + 0.5% bump on June 30 of this year. That means that for virtually the entire contract period, AFTRA rates will be about 3.5% higher than SAG’s. In other words, the new deal does not give SAG a double increase in order to catch up with AFTRA.

If SAG wants to ever catch up, they’ll have to seek a double increase in 2011, but that will involve giving up some other issue that SAG would otherwise have negotiated for, and in any case a double increase in 2011 would not be retroactive to the 2009-2011 period. This is part of the damage that the hardliners inflicted on the union.

Speaking of retroactivity, that’s an element that, not surprisingly, this deal doesn’t include either. That means that SAG actors who worked in TV over the last ten months will not receive makeup payments to bring them up to higher minimum pay levels that they would have received if the deal had been done promptly. This also is a result of the delay that MembershipFirst caused by not making a deal almost a year ago. And, of course, the whole issue of expiration date was caused by the hardliners’ delaying tactics.

The deal next goes to the SAG national board tomorrow for approval and then to the members for ratification over a several week period. SAG hardliners will fight the deal—SAG president Alan Rosenberg, 1^st VP Anne-Marie Johnson, and former Hollywood board member David Jolliffe are among those who have already spoken in opposition—but I expect it to pass, although not with the over-90% margin the Writer Guild deal did a year ago. The deal will almost certainly go out to the members with a minority statement in opposition. Nonetheless, people are sick of not working and will probably agree that the deal was the best obtainable in a bad economy and with SAG weakened in large part by the hardliners themselves.

One thing that’s clear is that this is a time of enormous change for the Hollywood actors unions. Most immediately, actors have a lot to vote on over the next several months: the commercials contract, the TV/theatrical contract, the AFTRA Board elections, and then the SAG presidential and Board elections, the latter of which are expected to run from July through September.

In addition, several of the Hollywood unions’ pension and/or health plans have made cutbacks (AFTRA, AFM, and IATSE), due to the stock market collapse and to the continued increases in health care costs. Also, SAGWatch reports today that SAG itself is in difficult financial straits, due to MembershipFirst’s mismanagement: loss of union dues due to the production slowdown over the last 10 months, departure of television work to AFTRA due in large part to SAG’s internal strife, the expenses of futile battles with AFTRA and internally, and, most significantly, alleged bloated hiring practices that added 100 staff members to the union payroll. Layoffs are apparently expected, and the LA Times is reporting today that the union has a deficit exceeding $6 million.

SAG’s new leaders have difficult work to do on various other contracts that expired or were ignored on MembershipFirst’s watch, including the franchise agreement between SAG and the town’s talent agents, which expired seven years ago. Then there’s the perennial question of SAG-AFTRA merger, which will probably be a factor in the upcoming SAG elections, as will vituperative arguments about the new TV/theatrical deal and the responsibility for the large-scale decline in SAG’s power and prestige.

Change isn’t limited to the labor side. The AMPTP’s longtime head, Nick Counter, retired several weeks ago. Also, interestingly, the new TV/theatrical deal was negotiated primarily on an informal basis by key SAG leaders and studio heads, not by formal bargaining between the union and the AMPTP. Although AMPTP acting head Carol Lombardini played a part late in the discussions, this process raises questions as to the future role and effectiveness of that organization.

Hanging over all of this are the twin factors of the economy and new media. The troubled economy will continue to harm the entertainment industry for some time to come. New media will continue to evolve, and will probably roil the unions, and the industry as a whole, for a decade or more.

And, of course, with mid-2011 expiration dates set for the WGA, DGA, AFTRA (two deals) and new SAG deals, negotiations will start again in the towards the end of next year. No rest for the weary, or sleep for the sinful, it seems.

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SAG Stalemate Update

The Screen Actors Guild stalemate grinds on. Variety says there are back-channel talks with studio heads, but it’s hard to know whether talks are actually in progress or, if any, how substantive they are. These rumors have persisted off and on for almost two months at least.

Causing the stalemate is the issue of contract expiration date rather than new media; there’s talk of a trade-off between this issue and the (unrelated) SAG demand for force majeure payments per the previous SAG agreement. Meanwhile, the passage of time itself threatens to generate new roadblocks.

The SAG Board is meeting this weekend, and Variety suggests a proposed TV/theatrical deal might be presented to the Board then. I’m skeptical, but you never know. The SAG story has had a surprise around every corner, although for the last year, stalemate has unfortunately been the one constant.

What is known is that the SAG and AFTRA boards will spend part of the weekend meeting jointly to review the proposed commercials contract, a deal reached earlier this month between the two unions and the ad industry. That deal, a good one for labor, has garnered little opposition and is expected to be approved overwhelmingly, first by the two boards, then by the two unions’ membership, a process that will take several weeks.

In contrast, the TV/theatrical deal—even though there isn’t one—has garnered opposition. The MembershipFirst hardliners have pledged to oppose any deal endorsed by the current leadership, in part because of new media issues. A small band of MF-ers, in groups of 50-100, have been protesting the nonexistent deal in small weekly rallies around town for the past 6-8 weeks. That group is led by Scott Wilson, and has included, from time to time, SAG President Alan Rosenberg, 1st VP Anne-Marie Johnson, former national board alternate David Jolliffe, and even twice-ousted National Executive Director Doug Allen.

Speaking of Johnson and Jolliffe, they are two of the several dozen candidates in the upcoming AFTRA national and LA board elections. MF, which bitterly opposes merger between SAG and AFTRA and burns with hatred for AFTRA, has adopted a strategy of attempting to attack merger from within AFTRA itself—not that AFTRA is likely to be keen to merge with SAG at this point anyway, given the turmoil the Guild has endured at the hands of MF for over a year.

Thus, as Variety points out, MF-ers Bonnie Bartlett, Frances Fisher and Sumi Haru currently sit on both the SAG and AFTRA national boards. MF candidates in the upcoming AFTRA elections, in addition to Johnson and Jolliffe, include Steven Barr and David Clennon. Ballots will be mailed May 8 and due back June 3.

The AFTRA press release is below.

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AFTRA press release:

American Federation of Television and Radio Artists, AFL-CIO

Los Angeles, California (April 16, 2009)—The Los Angeles Local of the American Federation of Television and Radio Artists—the people who entertain and inform America—announced the complete list of candidates for its 2009 election of Los Angeles Officers and Board members, Los Angeles-based National Board members, and delegates to the 2009 AFTRA National Convention.

All seven incumbent AFTRA Los Angeles Officers were named candidates for re-election by the AFTRA Los Angeles Nominating Committee and will run unopposed for additional two-year terms. They include Los Angeles President Ron Morgan; First Vice President Susan Boyd Joyce; Second Vice President Gabrielle Carteris; Third Vice President Bobbie Bates; Fourth Vice President Jason George; Recording Secretary Patrika Darbo; and Treasurer Jay Gerber.

A total of 22 AFTRA Los Angeles Board seats are up for election with candidates either having been selected by the Los Angeles Nominating Committee or qualifying for the ballot by Nominating Petition. Actors named by the Nominating Committee to fill 11openings include incumbents David Bowe, Raza Burgee, Andrew Caple-Shaw, Gabrielle Carteris, Bob Joles, and Kate Linder, along with David Andriole, Mimi Cozzens, Sandra de Bruin, James Schneider, and Marcia Strassman. Qualifying for the ballot by Nominating Petition are incumbent actors Nancy Daly and Paul Napier, joined by actor David Jolliffe.

Incumbent announcer Mike Sakellarides and announcer Chuck Southcott were named by the Nominating Committee as candidates to fill two vacancies representing that category. Dancer Galen Hooks, also an incumbent Board member, was named as a candidate by the Nominating Committee to fill one vacancy in that category.

Candidates to fill two singer vacancies are incumbents Susan Boyd Joyce and Dick Wells, both also selected by the Nominating Committee. Incumbent broadcaster Pepe Barreto was named by the Nominating Committee as a candidate for re-election representing the newsperson category with two additional newsperson seats remaining to be filled. There are also three vacancies representing the sportscaster category to be filled.

Thirteen seats representing Los Angeles on AFTRA's National Board are up for election, with one seat guaranteed for Los Angeles Announcers and one for Los Angeles Newspersons. The remaining 11 seats will be filled based on the plurality of votes received. All National Board candidates qualified for the ballot by Nominating Petition. Candidates include incumbents Bobbie Bates, Susan Boyd Joyce, Gabrielle Carteris, Jay Gerber, Ron Morgan, Paul Petersen, and Sally Stevens. Also running are members Granville Ames, Steven Barr, L. Scott Caldwell, David Clennon, Milo Edwards, Carole Elliott, Anne-Marie Johnson, D. W. Moffett, Jason Priestley, Elizabeth Reynolds, and Alan Ruck.

Officer and Board Candidates will have the opportunity to address the membership at the AFTRA Los Angeles annual "Meet the Candidates" forum on Wednesday evening, April 29, at the union's headquarters.

Los Angeles members will also elect 198 delegates to represent their performing categories at the 2009 AFTRA National Convention scheduled for August 6-8 in Chicago, Illinois.

Ballots will be mailed on May 8 with a voting deadline of June 3. Elected Los Angeles Officers and Board members will begin their terms July 1. National Board members begin their four-year terms at the conclusion of this summer's National Convention.

SAG and the Studios: The Next Roadblocks

Last year proved that time is not on SAG’s side. Recall that the union’s then-leadership wanted better terms in new media than the other Hollywood unions got. Without leverage, all SAG achieved was stalemate, and it’s had no contract with the studios since last June. SAG hardliners fiddled while the calendar burned, and the extended delay, in turn, created a new issue: contract expiration date.

That issue, in essence, is this: SAG wants any new deal to expire in mid-2011 (3 years from when the old deal expired), while the studios are offering what amounts to mid-2012 at the earliest (3 years from whenever the new deal is ratified). It makes a difference, because a mid-2011 expiration would synchronize SAG with other Hollywood unions, giving the Guild and its allies more bargaining power then—perhaps enough to achieve improvements in new media.

The studios, of course, want nothing to do with a stronger SAG and so, although the Guild’s under new leadership, the stalemate continues. Up until this evening, there’d been little news lately about SAG and the studios—and understandably, since SAG’s been busy working with AFTRA on the just-concluded talks with the advertising industry. A few hours ago, stories appeared on the Variety and LA Times websites suggesting that back channel talks may have led to a mutually-acceptable compromise; however, that claim was essentially denied by a SAG spokeswoman. In any case, the apparent stasis is deceiving, because time marches even if the negotiations perhaps do not. So we have to ask: would delay itself bring more roadblocks?

Unfortunately, yes. Right now, AFTRA’s minimum are 3.5% higher than SAG’s. That’s because AFTRA did a deal last June, and received an increase at that time. SAG has continued to work under the expired agreement and old rates. Come June 30 of this year—a scant 12 weeks from now—AFTRA’s minimums will kick up another 3.0%, plus a 0.5% increase in pension and health contributions, while SAG will still be stuck in neutral if there’s no contract. At that point, it would take a 7.0% increase to bring SAG up to parity.

Are the studios likely to cough up such a large increase? Maybe. And maybe you’ll find dollar beers and fifty-cent pizzas at the local multiplex. In other words, not likely—or not easily, at any rate. The point is, the pay gap would become yet another tough issue to fight over, and yet another impediment to a deal. Indeed, even the current 3.5% gap may be an impediment, because SAG’s increases will always lag AFTRA’s by more than nine months, unless the studios are willing to give SAG another bump in just a few months, or unless the unions merge.

But there’s more. The start of summer also heralds the SAG election cycle. Candidates for SAG board and the SAG presidency will probably be announced in July, and the campaigning will continue through close of balloting in mid to late September. During that time, candidates will be nervously jockeying for position. The one thing they’re not likely to be doing is making tough compromises in order to close a deal with the studios.

So there it is. Either a deal is made in the next couple months, or it likely slips out of reach until October or beyond. But if that happens, the expiration date issue becomes all the more difficult. Then one wonders if the Guild might work without a contract for the next two years, then threaten a joint strike with the writers. That’d be one way to re-synchronize expiration dates, at a tremendous cost in lost wages however.

Of course, hovering behind it all is the question of whether motion picture production will, or can, resume in the absence of a contract. That’s a tough one, and the answer may differ depending on the financing: self-financed studio pictures don’t need production bonds, but independent movies do, and such bonds have been unavailable due to the possibility, however theoretical, that SAG could strike. (I’m unclear as to whether studio pictures financed under hedge-fund slate deals require bonds.) The studios no doubt need to resume production soon, in order to assure an uninterrupted flow of product for 2010. That may drive some sense of urgency on the management side; if so, it’s probably the only leverage SAG has.

The takeaway: for the sake of the industry, and the Screen Actors Guild, let’s hope Variety’s right and a deal is imminent. Otherwise, we’ll slip further and further into the uncharted waters of labor stalemate.

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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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Auld Lang SAG

Should old NED’s be forgot, and never brought to mind? That’s the question I had—and my answer was “yes”—when I read Variety’s report that ousted National Executive Director Doug Allen stopped by a picket line organized yesterday by SAG hardliner Scott Wilson. The surprises never end.

Allen apparently made no comment to Variety, but, according to Wilson, did remark (to Wilson) “I heard that some of my friends were here.” As if SAG didn’t have enough distractions.

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Actors Commercials Negotiations Deteriorate

Though it gets less play than the stalled SAG TV/theatrical talks, SAG and AFTRA have been jointly negotiating for several weeks with the advertising industry over the commercials contract. That contract is SAG’s second most important, economically, and represents hundreds of millions of dollars per year to SAG alone (I don’t have the AFTRA figures). Now, after industry statements that the negotiations had been going reasonably well, the talks seem to have hit a snag, and the unions may seek a strike authorization vote from their members, reports The Wrap.

The report goes on to say that the unions have already written—and someone has leaked—a draft letter to be sent to the membership of both unions seeking a strike authorization. A separate report in Blog Stage adds that the letter would also include a separate set of pro-authorization talking points, also leaked. That report cautions that the leaks may be just a negotiating ploy. A statement from SAG and AFTRA described the leak as an “unauthorized distribution of . . . one of many contingency documents that we prepare in the course of any negotiations.”

Nonetheless, I’m guessing the leaks are a trial balloon intended to pressure the Joint Policy Committee, or JPC, representing the advertisers and ad agencies. If the JPC doesn’t move on the issues and if the union membership doesn’t rebel at the idea of an authorization, then we may indeed see an authorization put to a vote of the members. (It’s important to remember that an authorization does not automatically mean a strike, especially since the more strike-averse AFTRA is part of the mix, unlike with the SAG TV/theatrical negotiations, where the more strike-happy hardliners were unconstrained last year.)

So, will the JPC move on the issues in the absence of a strike authorization? Apparently, they often play hardball until a strike authorization vote is held, note the Hollywood Reporter. That seems especially likely today, since the JPC recognizes that SAG is now a fatigued and overextended union, thanks largely to the hardliners’ stalling tactics last year and into January.

Those tactics have left SAG actors with virtually no studio theatrical work since June 30 of last year, no increase in minimum compensation levels for TV work (and the theatrical work that does exist), a dramatically diminished share of pilots, and a panoply of expired contracts in other areas. All of this, combined with the state of the economy, leaves SAG members more vulnerable and less likely to support a strike. (AFTRA actors are likewise vulnerable, if for no other reason than the fact that most of them are SAG members as well.) The result is less leverage at the bargaining table for the unions, and more for the JPC.

Speaking of issues, let’s look at the major ones. The fundamental roadblocks are (1) new media and (2) the economy. New media, of course, had been the major stumbling block in the negotiations between SAG and the studios before being at least partially eclipsed by the issue of contract expiration date. Among other things, the current commercials contract apparently has no minimums in new media. The unions want to change that.

As for the economy, it’s reared its ugly hydra-head in several ways. For one thing, the JPC has apparently yet to make an offer regarding wage increases. When they do, don’t count on it to make the unions happy.

On another economic front, the recession has decreased the value of pension plan and individual retirement assets everywhere. In addition, economists worry now about deflation of prices generally, but one area that still features high prices is health care. In this environment of benefits-related anxiety, the JPC is apparently seeking rollbacks and caps on the companies’ contributions to the unions’ pension and health funds. The unions, not surprisingly, want an increase in those contributions.

(Side note: P&H rollbacks also feature in the campaign by some members of IATSE, the union that represents most crew members, to derail that union’s proposed contract with the studios. Ballots are due back tomorrow, March 18—or perhaps have to be postmarked by then, I’m unclear—but either way, we’ll soon know the fate of that agreement. It’s expected to pass.)

Yet another significant issue is a proposal by the JPC to dramatically alter the way residuals are paid for national commercials—so-called Class A residuals. This comes in response to declining viewership of national ads due both to commercial-skipping by DVR users and to audience fragmentation, i.e., viewer migration away from network TV and towards cable TV, video games and the Internet.

The JPC says that its proposal is revenue neutral but simply changes allocations—in other words, that some union members would gain (those doing cable and Internet commercials), others would lose (those doing national broadcast network commercials), but as a whole they would receive the same amount of residuals in aggregate. (The same amount as what? As today? As under the union proposal? I don’t have the details, because there’s a news blackout.) The unions appear skeptical.

There’s a multi-way struggle here, by the way, because actors (and other production expenses) are only one aspect of the advertising cost structure. The other, of course, is the cost to air the ads—i.e., the prices that the networks and other outlets charge. That means that the more the networks push to maintain ad prices in the face of declining viewership and a softening ad market (which results from the slackening demand for consumer products), the less money the advertisers can afford to spend on production. Thus, they put the squeeze on actors. In a struggle between networks and actors for piece of the advertisers’ purse, guess who’s likely to win.

So, theatrical production is stalled and likely to stay depressed even after (if?) the stalemate ends, scripted television is eroding, advertising is soft, and the Internet pays everyone (producers and talent alike) mere pennies on the dollar. What’s a thesp to do? “Keep your day job” is too flip a response, but it sure isn’t an easy time to be an actor.

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In other Hollywood labor news, Variety reports that SAG interim National Executive Director David White sent SAG members a message today stating that, although no new formal talks with the studios are set, union negotiators are working behind the scenes to achieve a deal. No word on what exactly that means,

Meanwhile, SAG president Alan Rosenberg’s lawsuit against his own union slowly winds its way through the legal system. Rosenberg’s lawyers filed some documents last week. I doubt they’re significant, but don’t know, because I haven’t seen them. The lawsuit seems, at least for now, to be a mere sideshow, but even defeats at both the lower court and appellate level haven’t deterred Rosenberg and his fellow plaintiffs (1st VP Anne-Marie Johnson and board members Diane Ladd and Kent McCord) from pursuing their now-moot claims.

In another development, the WGA is cutting 10% of its staff, Variety reports. The causes: (1) a recession-caused decline in value of the WGA’s investment portfolio; (2) a reduction in dues-generating work for WGA members, due to last year’s writers strike and no doubt exacerbated by the slow decline in scripted television; and (3) expenses incurred in the so-far unsuccessful attempts to organize reality TV and animation. The WGA had no comment, says Variety.

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Pilot Season 94% AFTRA

66 out of 70 TV pilots this year will be shot under AFTRA jurisdiction, reports the Hollywood Reporter today. That’s 94% for AFTRA and only 6% for SAG. Meanwhile, I’ve been told somewhat different numbers that calculate out to about 87% AFTRA. Either way, it’s a 180 from typical figures, as I’m told that AFTRA typically has 10% or fewer pilots.

Who’s to credit for this development? Primarily Membership First, the SAG hardline faction whose obstructionism over the last year has also led to SAG members working under 2007-2008 rates, while AFTRA members have enjoyed a 3.5% raise since June 30 of last year. The pilot flip-flop is also due to the cost advantages of digital production as opposed to film, but the SAG hardliners’ tactics have clearly accelerated the transition, and the studios are unlikely to turn back in years to come.

It’s ironic that Membership First, whose partisans generally hate AFTRA, has turned out to be one of the best things to have happened to that union in a long time. By holding out for the best deal imaginable, rather than the best deal achievable, MF boosted its rival.

Now SAG’s new management is left with seven expired (or, in one case, nearly expired) contracts, as well as TV/theatrical negotiations so stale that contract expiration date has become a major issue. Cleaning up MF’s mess will be a tall order: not only have the hard-liners driven pilots (and thus series) away, they’ve educated the industry that it can function without SAG, at least in TV. Nick Counter, the retiring head of the AMPTP (studio alliance), could scarcely have asked for a better going away present.

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KCRW Interview re SAG

I was interviewed on KCRW's "The Business" show today regarding SAG. The interview covers a range of topics and is available for download or streaming at http://www.kcrw.com/etc/programs/tb/tb090302oscar_assumptions_sa. The SAG segment begins at about 3 and a half minutes in, and is 11 minutes long.