The WGA Strike for Dummies, and My Concerns Over the DGA Deal

Once we accept a deal similar to the DGA's, it will be almost impossible to significantly improve it once we realize how much money the Internet networks are making and how little in comparison we are.
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There's been a lot of confusion and misinformation regarding the essence of the Writers Guild Strike. Some people just don't understand why we've taken up arms nineteen years after our last strike in 1988.

But it's relatively simple. It's about fairness and greed. Fairness about keeping some semblance of the income we've gained over the years, even as it has dwindled over the past decade, and greed of the Alliance of Motion Picture Television Producers (AMPTP), who seem determined to take back the royalties we've won by employing deceitful tactics that seek to take advantage of the new technologies in the entertainment business.

It's about the money produced when our work is exploited in a manner beyond its original intent, such as reruns in other markets and the rental and sales of our product to home consumers.

And even worse it's about our rates for original compensation when the product we write is conveyed to the consumer over a new medium not previously covered in our contracts.

A short history lesson.

We've had residuals (rerun money) since the 1950s, which have grown from six runs to ten and are now paid "in perpetuity" for broadcast runs of our work. It's a not too complicated formula (when you're in the business you learn to understand it) of decreasing percentages of the original fee (though to complicate it a bit, our residuals are based on a percentage of the syndicated cost of a show, not the prime-time network fees, which are 50% higher).

So, for example, if you wrote an ER or CSI and you got $30,000 for it for one network run, when it reruns on a local channel (not prime-time -- that's another matter), it will be, let's say for the third run 30% of the syndicated payment rate, which is $20,000 -- so you'd get $6,000. If it reruns during any prime-time period, you get 100% of that syndicated rate, a whopping $20,000.

However, the problem is that the Guild, until recently, has become weaker and weaker in its negotiations with management. I know, as I was on the Board of Directors from 1990-1994. Anyway, in 1981, in order to "help" the new cable industry, we agreed to a very small percentage of the sales price to cable networks, on the assumption that in those years they were only going to be airing very old series like The Donna Reed Show or Alfred Hitchcock Presents.

I reminded the Board in 1994 that there was a new practice in town, not earlier foreseen, whereby most dramatic shows and even some comedy shows were going directly from their broadcast run of original airing and perhaps one network summer rerun to a cable station like USA or Lifetime (instead of local broadcast channels and syndicated at 7 p.m. or 11 p.m. -- which pay the fees I describe above.)

So, instead of getting 4-figure residuals at a declining rate, 30% for the third run, 25% for the fourth through sixth run, 15% for the seventh to tenth run, etc. etc., we were now getting 2-figure or low 3-figure residuals for shows that reran on these cable networks, even though over the years they have grown enormously. Back in 1994, Murder She Wrote was getting $80,000 for a 30-second spot on USA. Those networks weren't getting chump change anymore.

Because we had a bunch of strikes in the 80's, writers were tired of being militant, and so more and more people agreed to settle for less and less -- such as what we get for DVDs, an average of 4 cents per each unit, while the studios make billions. What this strike is about is that writers -- especially newer ones -- have awakened to the reality that the studios are trying to corner us into a situation where we will ultimately get no residuals at all, simply by keeping the same contract we already have for the other transmission media, such as broadcast and cable, but not providing a decent rate when shows are broadcast originally or emanate from the network and are rerun over the Internet.

The day will come -- not too many years from now -- when you will watch TV the same way you do today, but the signal will be coming over the Internet, not by cable, satellite dish or your rabbit ears. And because it is a different transmission, if we have not inserted new language to that effect with an appropriate financial arrangement into the new contract, when that day does come we are at the mercy of the studios, who will be able to pay us anything they want. And then, like our experience with cable, where increase attempts have long since been abandoned as unwinnable since it's been so long since we accepted the formula, we will have to accept nothing or miniscule amounts for reruns.

Their last offer over a month ago was to pay us $250 for unlimited reruns of an episode for an entire year! And even that is paid only after a six-week period of what they stream currently as "promotional" material -- even though they sell advertising when you watch that Ugly Betty episode that you missed the other night. That part of the Internet is already happening, and we get nothing. They also offered NOTHING for original shows that air over the Internet.

So, what does that mean? It means that when the scenario I described above happens, when most people are watching TV in the same manner, but it is transmitted over the Internet, all new shows would have new "floors" -- meaning that the current rates, which determine what future rates are (since there's always some sort of cost of living adjustment), will be very, very much lower. It also means that they will be able to go back to the old days and pay us nothing at all or very little at all for the reshowing of our work for which they get billions domestically and in their sales around the world.

It would undo all the progress of financial partnership, which the Guild and the DGA (directors) and SAG (actors) have won over the years as new markets and technologies to exploit new markets have been discovered.

So, we are fighting to essentially retain the economic benefits we've struggled to achieve over sixty years before we sign any new contract. Benefits that the studios and networks -- just because it's a new medium of transmission -- want to take away from us even though for the purpose of the average viewer or filmgoer, it will be business as usual. Meaning in future years, they will turn on the TV or go to the movies and still be entertained. But those who create the stuff or creatively work on it (like directors and actors) will be left hanging out to dry.

There has never been so much solidarity since I've been a Member of the WGA. TV and film writers are united (they usually have different grievances), and myriad actors (famous and not famous) walk the picket lines with us, because they know their contract is up in June. The actors refused to go to the Golden Globes, which turned into a press conference with dismal ratings. Many won't appear on struck TV shows such as the Tonight Show or Late Night With Conan O'Brien. Whereas David Letterman and his subsidiary show, The Late Late Show signed an interim agreement, so writers are working on these shows and they will not be boycotted. Interim deals have also been agreed to by important indie companies like United Artists, The Weinstein Company, Lionsgate, Sidney Kimmel Entertainment and Bob Yari's production group, all putting added pressure on the major players in the AMPTP to negotiate fairly.

All that said, I am concerned with the DGA deal and we must remember that the DGA traditionally signs an early contract and is not nearly so aggressive, since approximately 45% of its membership are not directors (they're primarily production managers, assistant directors, stage managers and associate directors) and don't have the same stake in the outcome, because, with the exception of Supplemental Market monies, they do not receive residuals. No residuals at all for reruns on free or basic cable TV. Only directors receive those. And even in the Supplemental Market category, which includes DVDs and Pay-TV, the crew members described above receive (depending on their job) only about 4.5% to 7% of the residual amounts that directors receive.

Why am I concerned about this deal after a cursory glance?

I think it's smoke and mirrors to a large extent. They have satisfied the longing for basing royalties on the distributor's gross (100% revenue) instead of the producer's gross (20% of the revenue), but the percentages against those grosses given to the directors for streaming and other reruns are enormously low and so much hasn't changed.

Before we start thinking that the DGA has made great strides in our understandable eagerness to get back to business, just remember that everything -- including the prime-time network rerun money to which we have become accustomed for almost thirty years will be subject to the paltry Internet rates negotiated by the DGA. This will definitely be so if the only way we see programs in the future is through technology that transmits TV to us by surfing to an Internet-based company and is no longer available over the airwaves. This notion should be of much greater concern to us than fighting to get a bit more of the relatively small amounts currently generated by advertising in the streaming of shows. Of far greater concern should be the reduction of our royalty payments to a level much less than the trifles we now receive for cable reruns. Indeed, if we accept the DGA deal, it will give us token payments for everything we do now -- new TV shows and the rerunning of TV shows -- when bandwidth gets large enough to put those programs on our home TV sets over the Internet.

There will be no cable. No satellite. No rabbit ears any longer. We will mostly not watch TV or other such things on our computer screens as we currently stream things now. We will be watching it on the same sort of TV sets that we watch them on now -- but -- and I cannot stress this enough -- because all the rerun rights for new broadcast shows will be bought by newly created Internet networks, they will be rerun at the Internet rate. Kiss syndication and even cable good-bye. It's going to be Internet companies buying shows from the dying broadcast networks just like the cable companies have been doing for the past twenty years, except, if we accept the DGA deal, the Internet rerun rates will be much much more miniscule.

And it gets worse, because as the Internet grows, newly formed networks will emerge and most probably the current networks will morph into networks. These new entities will replace the current broadcast and cable networks, buying new shows directly from studios and production companies subsequently transmitting them over their website. This may be a bit off into the future, but not as far as one might think. However, once we accept a deal similar to the one the DGA negotiated, it will be almost impossible to significantly improve it once we realize how much money the Internet networks are making and how little in comparison we are. No more possible to achieve a significant improvement than we were ever able to gain on royalties for cable or DVDs once we accepted those dismal formulas.

So be careful before you get too giddy -- unless your only concern is working for the moment and thinking any money you get later is a little extra fluff. That's fine as long as you keep on making the big bucks. However, history tells us that most of you won't have enormously long careers.

Look, let's take advantage of the fact that we have been overwhelmed by the public's support when they take the time to understand the issues, that it's not just about a lot of rich writers -- most of whom as we know are not working throughout the year.

And we have been bolstered by rallying cries of support from around the world. Take a look at these brief videos from German actors Andreas Stenschke and Detlef Behr on the WGAAmerica You tube website under "The Perspective from Germany."

They're amusing and insightful and warn us about what might happen to entertainment professionals here if we don't hang tough.

Summing up, most people following the strike understand that residuals are a delayed form of payment when the studios make "afterlife" money as well. They understand that most writers, when they work and most don't at any given time, are at best making upper middle class wages and only a very few are millionaires. They understand that, simply put, this strike is about a fair future for entertainment professionals.

The optimal word is fair. Take a deep breath. I know some of you are looking for a chance -- any chance -- to get back to work without looking like the past two and a half months was a waste of time. Just don't sell yourself and your future and the future of those who come after you too short.

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