SAG: No Good Reason to Strike

The strike authorization vote may get canceled altogether--or it might not. In light of this uncertainty, it's still critical to ask whether a strike authorization and possible strike make sense.
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There's turmoil planned for the upcoming Jan. 12-13 SAG National Board meeting, reports the LA Times. SAG's National Executive Director Doug Allen and the current negotiating committee may find themselves bounced out unceremoniously by the moderates--or they may not. The strike authorization vote, postponed from its original Jan. 2 mailing date, may get canceled altogether--or it might not.

In light of this uncertainty, it's still critical to ask whether a strike authorization and possible strike make sense. SAG's hardline leaders and their supporters have made a lot of statements in support of both an authorization and a strike itself. Do their statements stand up to scrutiny? I say no, but you be the judge. Here are SAG's most oft-repeated arguments, and my analysis.

BTW, there are three UPDATES below--a new "SAG Statement" item 3 items down, some further discussion about the item 11 items down, and some corrections and further analysis in the Asner item about 15 items down.

SAG Statement: A strike authorization is not a strike.

Analysis: True, but disingenuous. The SAG leadership, which could have had a deal nine months ago, has instead stumbled from one ill-considered strategy to another, most of which involved attacking AFTRA in some way or another. Throughout the turmoil, one constant has remained: the leadership is wedded to demands that the studios won't agree to, and seems at least as concerned about internal politics as about actually making a deal. Granting SAG leaders a strike authorization means they'll almost certainly use it, unless the moderates on the National Board indeed try to stop them and in fact succeed in doing so.

SAG Statement: "Will a SAG TV/Theatrical strike 'shut down the Industry?' !" (Doug Allen email)

Analysis: Also disingenuous. This statement attempts to imply that a strike would not cause pain to the industry--yet, a strike is useless unless it causes pain. The statement is just spin intended to minimize the significance of voting yes on a strike authorization. The writers strike cost the industry $25 million per day, and there's no reason to believe a SAG strike would be any less devastating. There's also good reason to believe a SAG strike, if one happens, would be long and bitter, as I've previously discussed.

The email goes on to say that "jobs in commercials, basic cable, video games and industrials would continue during a TV/Theatrical strike." This is true, but other than commercials, these contracts are small potatoes, as SAG's own figures demonstrate. And even though commercials are significant, how many actors can earn a living just from commercial work--especially in an economy in which television ad spending is declining?

The email then says that "jobs would continue on more than 800 independent movie projects by producers not associated with AMPTP companies." This is deceptive. SAG issued several hundred "guaranteed completion contracts" (strike-proof contracts) to non-studio producers (I have no way of knowing if 800 is an accurate number, but let's assume it is). However, not every one of these turned into a production. Many indie projects fail to materialize, usually for lack of financing (especially in an environment of financial crisis). Also, some of the projects that did come together are presumably already completed (or principal photography is), since these contracts started being issued in March or so. Also, of course, indie projects usually involve fewer actors and lower pay than studio projects. Bottom line: these independent movie projects would only amount to a small fraction of the normal film and SAG television work.

Next, the email says that "jobs would continue ... on more than 800 independent new media projects under SAG's new media agreement." This is also deceptive, because (based on SAG statements to the press several months ago) this number appears to represent the number of Internet letters of adherence that SAG has issued since the inception of these letters in 2001, not the number of Internet agreements currently active and outstanding. In addition, Internet projects involve far fewer actors and far lower pay than film or TV projects.

Finally, the email contains a rather intriguing statement:

Also, actors on any shows signed to AFTRA before the effective date of such a strike would be required by their personal contract and AFTRA's CBA [collective bargaining agreement] to report to work on any AFTRA-covered projects in its jurisdiction (primarily dramatic network primetime and pay TV shows, and movies made for television or DVD.)

This is true, but what's odd is the limitation to "shows signed to AFTRA before the effective date of such a strike." It's unclear why this would not also apply to shows signed to AFTRA after a strike. SAG seems to be suggesting the possibility that dual cardholders need not, or must not, report for work on shows that signed to AFTRA after a strike. The reasoning behind this apparent implication is unclear.

UPDATE--SAG Statement: The arguments over jurisdiction, residuals, and other issues are not about rich, millionaire actors; they're about middle-class actors.

Analysis: Absolutely true. Powerful actors have the leverage to have their agents and lawyers negotiate their deals, which are significantly better than the terms of the Guild's collective bargaining agreement. Some people, especially some members of the public, believe the debate is about greedy actors, especially millionaires, trying to grab more than what they deserve. That's not true, or fair.

SAG Statement: The terrible economy is no reason not to (potentially) strike. After all, SAG itself was founded during the Depression.

Analysis: The terrible economy significantly increases the number of actors and other workers who would, as a result of a strike, lose their healthcare, their homes, their livelihoods, and their ability to remain in the entertainment business at all. Does SAG have enough of a reason to cause such harm in the middle of the worst economy in many decades? Read the rest of this blog article and decide for yourself.

SAG Statement: The effect on non-actors is no reason not to (potentially) strike. After all, SAG represents actors, not below the line workers, writers, directors, or other people who work in, or supply goods and services to, the entertainment business.

Analysis: A discussion of whether this point of view is or is not selfish will generate a lot of anger but not change anyone's mind. The more useful analysis is the same as the preceding "SAG Statement" item regarding the economy.

SAG Statement: What SAG wants is not better than what the other unions got, just different.

Analysis: That's just silly. SAG is seeking more inclusive new media jurisdiction than AFTRA and the other unions (DGA, WGA, and IATSE) got; broader new media residuals coverage; increased DVD residuals; and consent and compensation for product integration. Those things are all better than what AFTRA and the other three got, not just different.

SAG Statement: All SAG wants is what the other unions got: a chance to negotiate.

Analysis: SAG and the studios held 46 negotiating sessions, but SAG didn't like its options. The real problem is that SAG deleveraged itself--i.e., weakened its negotiating position--by refusing to negotiate early, and then by attacking AFTRA to the point that AFTRA ended the Phase 1 joint bargaining relationship the two unions had had for 27 years. As a result, AFTRA and IATSE did their deals first, leaving SAG as the caboose in a train led by the DGA, WGA, AFTRA and IATSE. Even now, however, it's likely that there will be some room to negotiate on traditional media issues if SAG drops its demands in new media and DVD.

SAG Statement: SAG can't wait three years to negotiate new media.

Analysis: Yes, it can, and it will be better positioned if it does. In three years:

  • SAG will have financial data on the performance of new media shows and copies of contracts, because the deal on the table requires studios to share this info.
  • There will be no strike fatigue as there is now from the WGA strike.
  • The WGA deal will expire at virtually the same time as SAG's (2 months before SAG's), allowing the threat of a dual strike. Such a threat might even succeed in increasing the DVD residual as well, which is long overdue. On the other hand, if SAG doesn't accept the deal on the table, the studios are likely to revise the expiration date, since they do three year deals. Indeed, although the WGA contract expired at the end of October 2007, the new contract commenced in February and expires at the end of May 2011. In other words, expiration dates do get adjusted as more time passes without a deal. Adjustment would desynchronize the SAG and WGA expirations and dramatically reduce both unions' leverage.
  • The AFTRA deal will expire at the same time, which will allow joint negotiation if SAG can repair its rift with AFTRA, as it now seems to be doing with the commercials process.
  • The economy will (hopefully) be better. If it isn't, then many people and companies will be out of business and a SAG improvement on new media will be the least of anyone's worries.

In contrast, by refusing to accept the deal on the table now, none of the above applies, and instead:

  • SAG members have lost and continue to lose losing millions in film and TV increases--increases which AFTRA members are enjoying now. The increases are 3.5% annually, in an economy where most workers are enduring wage freezes, wage rollbacks, layoffs, and increased workloads for those who remain and must handle work formerly performed by their now laid off colleagues.
  • SAG risks losing the increases even on a going forward basis, since the studios at some point may take them off the table or reduce them, in light of the weakened economy.
  • SAG will have (and currently has) zero support from the industry, zero support from the public, and only partial support from its own members. This is a formula for SAG leadership's own actions breaking the union, not a formula for a better deal.

In my view, a strike would end badly for SAG:

  • There would be a deal no better and possibly worse than what SAG could have had 9 months ago.
  • A large number of pilots will be AFTRA. This is already happening.
  • There will be more primetime reality and game shows, and less scripted programming, reducing job opportunities for actors. And, incidentally, this migration (which, of course, is already happening) helps AFTRA, since these shows are often under its jurisdiction (for the hosts and judges).
  • A significant number of SAG members will go fi-core, and the divisions within the ranks will harden and intensify.
  • If a strike goes on long enough, as it might, the studios may pressure AFTRA to seek jurisdiction over digitally-shot theatrical films, despite AFTRA's statement now that it doesn't seek such jurisdiction.

Also, I think the studios are unlikely to punish the unions (DGA, AFTRA and IATSE) that were easier to deal with and made compromises, by rewarding SAG for being tough to deal with. Imagine the firestorm they'd be buying themselves by doing this. Also, as a somewhat lesser factor, it is understood that Nick Counter wants to retire, and he's probably unwilling to have his last big deal be caving to SAG (and hurting the DGA, AFTRA and IATSE).

SAG Statement: There's a ton of original content being made on the Internet.

Analysis: Not using professional actors there isn't. If you're an actor, ask yourself: When's the last time you auditioned for an original show made for the Internet? ("Original" means not based on an existing TV show.) Maybe never. And the stuff that's up there is not making much money. SAG cites Hulu as making $12m in profit, but that ignores the fact that this is a small amount of money, and that Hulu is mostly move over content, whose residual formula SAG does not appear to be challenging (it's not in SAG's list of outstanding issues). ("Move over" content means existing TV shows that are then replayed on (i.e., moved over to) the Internet.)

SAG Statement: You can already buy a set top box or new TV with an Internet connection and therefore new media is here now (Justine Bateman video on SAG website).

Analysis: Misleading, because few people buy these things. They're too hard to use and too expensive. And many websites, including broadcast network websites (and YouTube, which would be the big draw), are not available on some or all of these boxes. Until these devices become user-friendly, inexpensive, and capable of accessing a wide range of Internet content, they'll remain novelties.

Even Apple, which has had so much success with the iPod and iPhone, can't get people to buy the Apple TV box--which most people haven't heard of even though it's been out for about 2 yrs. Indeed, Steve Jobs describes that box as a "hobby" for Apple rather than a true business.

Plus, in this down economy, who's going to spend precious cash on new set top boxes and TVs? As one independent industry analyst said, "Consumers are reluctant to pay for another service and find a home for another box in their living rooms to duplicate much of the content they already get from cable." Not surprisingly, electronics and appliances sales were down 27% this holiday season as compared to last.

With these realities in mind, electronics companies are going to be cautious about rolling out new and better products. And, these realities, combined with the credit crunch, mean that entrepreneurs will be hard-pressed to find capital for startups that might develop such products. All of this will retard development, let alone consumer adoption, of the devices that SAG points to.

SAG Statement: Why wouldn't CBS do all of its pilots next year on instead of on their network (in light of the lower labor costs if SAG accepts the proposed deal)? (Justine Bateman video on SAG website)

Analysis: Because the overwhelming majority of viewers watch TV on TV, not on the Internet. Why would CBS abandon most of its viewers, and millions of dollars of ad revenue? It won't. Most people watch far more programming on television than on the Internet.

UPDATE: There is, however, the risk that a network would do pilots under the guise of being for new media, but actually intending the pilot to be for a broadcast show. That's a matter to be rectified by negotiating the contract language and/or, secondarily, by arbitration.

SAG Statement: "It's not new media, it's 'NOW' media " (Doug Allen video on SAG website).

Analysis: Actually, it's closer to "no media," if you're looking for slogans. See the preceding two "SAG Statement" articles for an analysis. Allen's email claims that the Internet will be "the platform of choice for television programming not in decades but in months, or years." Months? That's ridiculous. Does Allen really think that television will disappear in a few months? Or even in a few years?

SAG Statement: The new media deal will be "the end of residuals as we know it."

Analysis: This statement pretends that the rather distant future is today. It's a form of fear-mongering that telescopes reality, and is built on two assumptions: (1) The assumption that broadcast networks will completely stop rerunning programs on their networks, and rerun programs only as move over content on their websites. (2) The assumption that broadcast networks and cable channels will completely stop creating scripted programs for their networks and channels, and create programs only as original made for new media content.

These are two big and speculative assumptions. Studios and networks would do these things only if the audience has virtually all disappeared from existing networks and cable channels, and all migrated to the Internet. That's not going to happen any time soon, for reasons discussed in the preceding four "SAG Statement" items. Indeed, it may never happen at all; the future is a slippery thing.

So far, the Internet is a supplemental market, not a replacement market. That's because the large audiences and large ad dollars are still in television, not the Internet. As long as this remains true--as long as the networks use their traditional networks and the Internet--then the Internet compensation/residuals will be additive to the compensation and residuals provided by traditional media.

Also, if this does happen--if the audience does move entirely to the Internet--the producers and networks are likely to make a lot less money than they have to date, as I discuss in Hollywood Under Siege. The business is changing, and becoming tougher for everyone. If there's less money for producers, the reality is that there will be less money for talent as well.

SAG Statement: The proposed deal would strip SAG of jurisdiction in original made for new media productions--unless the budget for the production is over $15,000/min., which virtually none are today.

Analysis: This is misleading. The portion of this statement after the dash is true, but what SAG often omits (for example, in this Doug Allen video on the SAG website) is that, under the proposed deal, SAG would also have jurisdiction if there's a "covered performer" in the cast (a SAG, AFTRA or Equity member with 2 TV or film credits, or 2 Broadway, off Broadway, or national touring credits, or with certain other credits). In that case, the production is covered (all of the actors on it, not just the "covered performer"). What this means is that productions would be non-covered only if they are truly experimental--i.e., the cast is composed only of actors who are non-union, or who have only a single TV or theatrical credit.

Also unstated by SAG is the fact that the studios can set up non-union sister companies anyway (this is called "double-breasting")--as Disney already has, with a company called Stage 9. So then they can go non-union anyways, and SAG actors can't even compete for those jobs (because of Rule 1). Is it better to let non-union actors--and AFTRA members--get experience in new media, while SAG members get frozen out? When I ask SAG leaders why they're fighting over jurisdiction, in light of the fact that double-breasting makes the issue almost irrelevant, they say it's the principle. That is, they'd rather fight for an empty principle, and lose millions in increases, cause people to lose jobs and their houses, and endanger the union as well as the industry. Where's the logic in that?

SAG Statement: "The offer in new media ... includes zero minimum compensation, zero overtime, zero residuals structure, zero forced call consideration" (Ed Asner LA Times op-ed).

Analysis: Not entirely true. Specifically:

  • Not true for move-over new media, which is most new studio/network media online today.
  • UPDATE: Only partially true for derivative new media content (new media programs based on an existing TV show or movie). See detail below.
  • UPDATE: Only partially true for original made-for new media content with at least one covered performer. See detail below.
  • UPDATE: Only partially true for original made-for new media content above $15,000/min. budget (but there are very few such productions, because this is a high budget level). See detail below.

UPDATE: Here's the detail:

  • Derivative and Original--zero minimum compensation: Asner is correct. However, state and federal law set a minimum wage. In , this is $8/hr. For a 12-hour day, this works out to about $100/day. This is low, but note that the SAG Ultra-Low Budget Agreement (summary here), which covers theatrical projects up to a $200,000 budget, also allows low day rates ($100/day for an 8-hr day, $175/day for 12-hr. day), so there is some precedent for very low day rates.
  • Derivative and Original--zero overtime: Asner is correct. However, state law provides for overtime.
  • Derivative--zero residuals structure: Not true. There are residuals for reuse of derivative content (a) in new media and (b) in traditional media. See offer pp. 9-12. Asner is wrong on this point.
  • Original--zero residuals structure: Not true. There is a residual structure. It's true, and not good, that for reruns of new media on new media, the residuals are mostly zero (see AMPTP offer pp. 17-18), as I've previously blogged (see item 2 here). Also, for reruns of new media on traditional media there are in fact residuals (see AMPTP offer pp. 18-19). So it's not accurate to say that there is "zero residuals structure."
  • Derivative and Original--zero forced call consideration: Asner is correct.

I regret the errors in the original post.

SAG Statement: It's critical to lock in a favorable deal now, because it will be impossible to change it later, as the 24-year old home video formula and the cable TV minimums and formulas demonstrate.

Analysis: It may not be easy to change the deal later, but it will be even harder to change the proposed deal now. See the analysis above under "SAG Statement: SAG can't wait three years to negotiate new media." In part, this is because SAG leadership mishandled the current negotiations, spending its energy (and members' dues money) fighting AFTRA, rather than trying to present a unified front against the studios. In part, as well, it's because the Writers Guild elected not to wait before striking, rather than wait eight months and threaten a joint strike with SAG. A unified strategy will be an option in three years, as discussed above, but only if SAG takes the deal while it's still on the table in its current form.

SAG Statement: "Pattern bargaining" is not obligatory--that is, SAG is not legally required to accept the new media template accepted by the other unions.

Analysis: True, but a bit of a red herring, since the AMPTP has not made this argument, so far as I'm aware.

SAG Statement: The new media template accepted by the other unions doesn't work for actors.

Analysis: AFTRA is a union of actors, as well as broadcasters and others, and AFTRA accepted the new media template on behalf of its 50,000-plus actor members--44,000 of whom are also members of SAG.

SAG Statement: The "pattern"--the new media template--is not even a pattern, because it differs from union to union (Frances Fisher video on SAG website).

Analysis: True in part. SAG cites three examples, and I have a fourth:

(1) The WGA deal sets minimums for writing for derivative new media productions, whereas the SAG deal on the table doesn't. I agree with SAG--this seems unfair. However, note that it is not in SAG's list of outstanding issues, which suggests that SAG has abandoned the issue.

(2) When a television episode is streamed on the Internet (i.e., move over new media) for 26 weeks, the writer or director receives a residual of "over $600" (for a half-hour show), but an actor who works as a day player receives a residual of only $22.77. This is (almost) true, but nonetheless misleading. That's because the formula in both cases is identical: 3% of applicable minimum compensation. (The formula changes over time, and the WGA formula ultimately differs slightly from the formula in the DGA, AFTRA, and proposed SAG deals. The latter three stay synchronized.)

In other words, there is indeed a pattern that is maintained. However, the dollar figures are different because the applicable minimums (to which the percentage is applied) are different. In other words, writers and directors get paid more than day players. That's no surprise: a writer or director works far longer than a single day. Also, (for purposes of the formula as Fisher describes it) there is only one writer or director on a show, whereas there are many actors on a show. Thus, the total residuals payable to a show's actors is more than $22.77.

(I say "(almost) true" and "(for purposes of the formula as Fisher describes it)" because Fisher is not quite correct when she says that a director or writer receives a residual of over $600. Rather, all of the writers on the show (i.e., episode) split the WGA residual. For instance, if there are two writers, each would get a little over $300. Likewise, the director doesn't receive the entire $600-plus DGA residual. Rather, he or she splits it with other DGA crew members (1 AD, 2 AD and UPM) and with the DGA pension and health fund.)

(3) Actors have consent right over the use of clips on the Internet, whereas writers and directors don't. This, of course, benefits actors (as Fisher notes).

(4) Under the SAG offer, derivative new media includes new media productions based on theatrical films (as well as television programs), whereas this is not the case in the DGA and WGA deals (nor in the AFTRA deals, of course, since AFTRA has no theatrical jurisdiction). This benefits actors, since the provisions regarding derivative new media content are better for talent than those regarding original new media content.

SAG Statement: Quality of life is lower in new media.

Analysis: Probably true, to some extent--just like at startup companies themselves. If you don't want to take risks and experiment, stay in traditional media, just as, if you're a risk-averse computer programmer or exec, you should work for a traditional company, not a startup. For that matter, the quality of life in a low-budget independent movie is probably lower than in a studio movie as well.

SAG Statement: The studio offer effectively eliminates the SAG contract's force majeure provision, which has been in place for decades.

Analysis: True (see "Force Majeure" in this article). This is clearly something that the union should resist--and would be better able to do so if it dropped its economically meaningless and/or fruitless demands in new media and DVD. (For an explanation of force majeure, see item 4 in this article.)

SAG Statement: The studio offer fails to give actors consent rights and compensation for product integration.

Analysis: True (see "Product Integration" in this article). The union should fight some aspects of this. Again, it would be better able to do so if it dropped its demands in new media and DVD. (For an explanation of product integration, see item 3 in this article.)

SAG Statement: The proposed deal fails to increase DVD residuals, and an increase is long overdue.

Analysis: True, but SAG National Executive Director Doug Allen stated to me that this is his fifth priority at most (he put it after new media jurisdiction, new media residuals, force majeure, and product integration). That presumably reflects a recognition by SAG leadership that the issue is a non-starter. For further discussion, see item 5 in this article.

SAG Statement: The AMPTP is not even honoring the new media deal signed with the Writers Guild less than a year ago.

Analysis: Not persuasive. SAG cites two issues:

(1) The WGA says that the studios have failed to make proper payments on streaming, and that the studios blame technology problems. This is 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.

(2) The WGA complains that the studios have claimed that the new rates for downloading doesn't apply to any material produced before the WGA strike. True, the studios are making this claim, but the trouble for the WGA is that the studios may be right. The contract language in this area contains an explicit start date of February 13, 2008 for payment (the date the strike ended). 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.)

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