Inside Look: SAG/AFTRA Negotiations Almost Unraveled at 'Perilous Moments'

An exclusive look inside the bargaining room of last Sunday's deal that insiders say went right down to the wire.

 

The SAG/AFTRA deal with the studios that came last Sunday after six weeks of negotiation almost didn’t happen, THR has learned from sources on both sides of the table.

Describing the process as “down to the wire” and “touch and go,” sources described brinksmanship that involved holding fast to positions until the last few hours of negotiation, with much of the negotiation conducted in small sidebar meetings out of view of most participants in the talks.

One knowledgeable source said s/he was “actually surprised we made a deal . . . there were perilous moments.”

Ultimately, labor sources indicated that the unions would have refused an agreement without a 1.5% increase in employer contributions to pension and health benefits. Essential to management, according to management and labor sources, was a revision in air travel rules to favor business class and coach.

Trading the one for the other led to a deal.

In addition, another key move came when the studios dropped a proposal to revise television syndication residuals. Interestingly, neither new media nor even basic wage increases were described as having been do or die issues.

Wage increases in the three-year deal are set at 2% annual bumps, which is the same percentage as the Teamsters were forced to accept in negotiations earlier this year.

A collapse of negotiations would not have meant a strike, because the actors’ current agreements don’t expire until June 30. Instead, talks would likely have resumed in the spring.

However, both sides were motivated to reach an early agreement. The studios wanted some assurance of labor peace, while the actors unions wanted to make a deal prior to the DGA doing so (those talks begin this week) and also wanted to spend 2011 focused on merging the two unions, not on studio negotiations.

It was also, of course, to SAG’s benefit to be – and be seen as – dealmakers, in contrast to the image the union had developed under previous leadership, which had shepherded the guild to a year-long stalemate that achieved nothing except a loss of wages, goodwill and market share.

SAG senior advisor John Maguire, who has been with the union for over 40 years, was singled out for praise by sources on both sides of the table. A labor source called Maguire “monk-like” and analytical, with the ability to anticipate the AMPTP’s likely response to union negotiating moves, while a company-side source cited his “tenacity, toughness and steady hand.”

A management-side source also noted, more generally, that the union negotiators were not pushovers. A union-side source described the process as “a fight for every inch of land.” But all sources described the negotiations as respectful and with little rancor, even as sources on each side of the table acknowledged divisions in their own camps.

SAG, AFTRA and the AMPTP declined to comment for this story.

The studios were particularly concerned with reducing costs in television, including in the area of syndication residuals, i.e., residuals payable when a network primetime program is rerun in syndication. Those residuals are calculated as a percentage of actors’ total applicable minimum compensation, with the percentage declining with each rerun.

Studios dislike residuals of this sort, based not on revenue (such as license fees) but on actors’ wages, because the residual formula is not responsive to softness in the market.

Indeed, because minimum compensation under guild agreements increases annually, the residuals cost actually increases from year to year even if the marketplace is declining, as is the case with off-network syndication. That’s why this kind of residual (somewhat confusingly known as “fixed residuals”) are so disfavored by the companies.

The studios proposed to change the syndication residual formula for 1 hour and long-form product from fixed residuals to a formula based on a percentage of revenue (“percentage residuals”), employing the formula used when network TV product is released to basic cable. They argued that this would open up new, regional syndication markets, since it could become cost effective to syndicate programs of localized interest in those sub-markets without trying to clear the entire country for such product.

The unions considered the proposal a rollback, and the studios ultimately abandoned the idea.

Management also sought, but didn’t achieve, modifications that would have enabled them to promote television programs by allowing them more freedom to use clips from earlier episodes without paying additional clip fees to the actors. The studios lost that fight as well.

The major concession obtained by the AMPTP, as previously reported, was modification of the contract provision that previously required all actors’ air travel to be in first class. Under the new rules, on flights over 1,000 miles, actors will fly business class where available, otherwise first class. On flights under 1,000 miles, it’s coach. LA-Vancouver and NY-Toronto are coach as well, even though those routes are slightly over 1,000 miles. According to a company-side source, revision of the air travel rules had long been a management goal.

Those changes bring the SAG and AFTRA deals closer to general corporate policies. Indeed, even a business class rule is apparently more generous than many corporate policies: a white paper by the Association of Corporate Travel Executives reports that “many companies are eliminating business class on shorter haul international flights.”

In contrast, even with the giveback, the SAG and AFTRA contracts provide for business class both domestically and internationally, so long as the route is over 1,000 miles. In addition, of course, actors with clout remain free to negotiate for first class travel for themselves, spouses, children and in a few rarified cases nannies, trainers and assorted hangers-on.

Interestingly, neither side sought major changes in new media, other than the expansion in coverage that SAG and AFTRA achieved. That change was a modification to the definition of “covered performers,” whose presence in a made for new media project is one trigger for union coverage.

In particular, the unions did not seek a reduction in the 17 or 24 day initial period during which no residuals are payable for ad-supported streaming of traditional television programs. That’s an area that has rankled some union members.

The unions did seek a few, more minor changes in new media. The AMPTP successfully resisted those points. Despite the presence of a “sunset clause” in the existing contract, which theoretically opened the entire area up for renegotiation, neither party wanted a substantial reopening – particularly since new media revenue is still much lower than receipts from traditional media.

The unions sought, but did not receive, any changes in the area of performers working on motion capture sets, which had emerged as a priority for them. A source indicated that discussions on this point foundered on attempts to draw a distinction between performance capture (where aspects of the actor’s facial expression, for instance, are captured and replicated in CGI) and motion capture (which focuses more on body movement).

The idea is that performance capture entails more “acting,” and thus would entitle the performer to better minimums and other terms than would apply to motion capture. Indeed, according to a management source, some motion capture type work was historically viewed as entirely non-union.

In any case, the inability to agree on definitions of the two concepts doomed the proposal, according to a management source. As a result, movies that are heavy on performance capture will probably continue to be produced under case-by-case agreements between SAG and the production company.

Another group of actors who did not receive specialized improvements were stunt performers and coordinators. SAG sought 4% increases for stunt performers, and a 10% premium for coordinators. AFTRA sought certain enhancements as well. They didn’t achieve those goals.

In the area of background performers (extras), which are currently governed by different rules in Los Angeles and New York, SAG sought to combine the most advantageous features of each set of rules into a single schedule of provisions. The proposal didn’t gain traction.

For their part, the studios sought to eliminate liability for loss by background performers of valuables such as jewelry, laptops and cellphones brought to the set when not requested by the production company. It’s unclear why some version of this proposal didn’t fly, since SAG staff are known to be frustrated by the volume of relatively small-dollar complaints racked up by background performers.

The unions also sought a contract provision to require that the SAG or AFTRA logo be included at the end of movies and television programs produced under their jurisdiction. The studios, citing a fear that other unions would make the same request, refused. In the U.S., only IATSE has such a provision. Some Canadian unions do as well.

Other changes sought by the studios that didn’t make it into the deal include revision of residuals formulas for syndication on digital intermediate channels (such as ch. 4.1 in Los Angeles; there are as yet few such channels); changes to the drop and pickup rules; institution of “French hours” (meals being catch-as-catch-can rather than at designated meal breaks), which the studios sought and failed to achieve in the last round of negotiations; flexibility in holidays when shooting in another country; a broader definition of awards show for which clip fees need not be paid; new rules regarding recap and compilation shows; and changes in night-time premiums.

Other union proposals that were ultimately abandoned related to overtime; prepayment of residuals; creating a category of “featured background performer” (which SAG has repeatedly sought and failed to achieve); and disability.

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