Directors undercut writers’ strike

January 25, 2008

Cindy Kaffen reports on the prospects for striking writers after directors agreed to a new contract.

SOME 12 weeks into the Writers Guild of America (WGA) strike, indications are that negotiations between the union and the Hollywood producers may soon resume for the first time since the bosses walked out of talks December 7.

The impetus for this is the tentative deal between the Alliance of Motion Picture and Television Producers (AMPTP) and the Directors Guild of America (DGA). The DGA's existing contract, set to expire June 30, covers 13,000 members, including directors, assistant directors and unit production managers.

While the DGA is known in the industry for its conciliatory history with the studios (the one strike in its history lasted for seven minutes), the deal nevertheless breaks new ground in the area of digital media compensation, which was the main issue for the writers.

Points of the new DGA deal of interest to the WGA include:

Programming produced for the Internet, which will be covered under the DGA contract, with the exception of low-budget original shows;

An increase of residual rates for downloaded programs, known as "electronic sell-through" (EST), above a specified number of units downloaded;

Payments for EST will be based on distributors' gross, (instead of the current producers' gross, whose numbers are suspect) which is the amount received by the entity responsible for distributing the film or television program on the Internet;

Greater access to the media companies' financial books to check their data;

Residuals formula established for the first time for programs streamed online with paid advertising.

While the AMPTP clearly hopes to use this deal as the pattern for bargaining with the WGA and the Screen Actors Guild (whose contract expires June 30), many writers aren't happy with the numbers.

Exempting low-budget productions for the Internet could exclude much of the current online programming and would just encourage a race to the bottom, as the studios hold out for the lowest-cost, non-union bidder to create new shows.

The residual rate on TV program downloads is still the same low rate currently used for DVDs--0.3 percent for the first 100,000 downloads, only doubling after that threshold is reached. For films, the higher rate will apply after 50,000 downloads. Writers are frustrated that the formula is based on the lowball DVD rate, and that the threshold for the new rate to kick in is too high.

While the concept of residuals based on distributors' gross is new for the industry, it's unclear how transparent and available that information will really be.

While the writers have been fighting for pay for streamed TV programs, some WGA members say the numbers in the DGA formula don't add up to much.

For example, for the first 17 to 24 days, there are no residual payments at all, on the basis that any streaming is promotional programming. After that first run, there are flat fees of $600 for six months, up to $1,200 for the first year of unlimited streaming. After the first year, payments would equal 2 percent of distributor's gross.

This formula would still come out far below the $20,000 paid for primetime network shows rerun on television.

Despite the weaknesses of the directors' deal, industry commentators agree that the WGA strike put pressure on the AMPTP to make some concessions with the directors. But now the pressure will be back on the WGA to be "reasonable."

So while the WGA leadership has announced it has already begun informal discussions with some of the studio heads, the need to keep the pressure on for a better deal remains.

After all, the media companies can afford it. Disney, which owns ABC, gave its president Robert Iger a 7 percent raise last year, for a total of $27.7 million in 2007. The cost to Disney for everything the writers want would come out to $6.25 million a year.

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