Directors' deal: It's a wrap

New-media gains put onus on WGA

The DGA has accomplished in six days what the WGA hasn't in six months: securing a deal from studio reps that the guild says it can take to its members.

Whether WGA brass will feel similarly positive about the terms the DGA has delivered is another matter. But on Thursday, the directors announced a new three-year tentative agreement with the Alliance of Motion Picture of Motion Picture & Television Producers featuring:

Increases in wages and residual bases for each year of the contract.

DGA jurisdiction over programs produced for distribution on the Internet.

New residuals formula for paid Internet downloads, or "electronic sell-through," roughly doubling the rate currently paid.

Residual rates for ad-supported streaming and use of clips on the Internet.

The key new-media provisions appear substantial.

The agreement more than doubles the current residual on downloads of TV programming and boosts film residuals on downloads by 80%, officials said. A roughly $600 payment for ad-supported streaming kicks in after the first 17 days of streaming, followed by additional payments after 26 weeks totaling $1,200 for a year's worth of streaming.

Specifically, downloads residuals would be paid at 0.7% of the distributor gross for TV downloads and 0.65% for film downloads, after certain levels of downloads. On fewer film downloads, current residual terms would apply.

An exception on new-media guarantees involves low-budget original shows with production costsless than $15,000 per minute, $30,000 per program or $500,000 per series, whichever is lowest.

The DGA said the agreement includes a sunset provision allowing "both sides to revisit new media when (the) agreement expires."

That's essentially an acknowledgment that the new-media terms might have to be reworked to compensate for future developments, like the potential loss of lucrative TV residual payments if TV reruns are shifted more dramatically to the Internet. The point is a particularly sensitive one for those who lament that the home video formula concocted more than two decades ago remains in place for DVD residuals.

As for basic wage hikes, the pact provides boosts of 3.5% per year in all categories, except for directors of network primetime dramatic programming and daytime serials, who would get 3% boosts. And directors of high-budget basic cable dramatic programs would enjoy an additional first-year increase of 12% in their daily rate.

Terms call for boosts in TV residual bases of 3.5% each year of the contract, except for reruns in network programming, which would get residual boosts of 3% a year.

The agreement must be approved by the DGA board, which will meet Jan. 26 to review the pact. It then would go to membership ratification, but details on that timeline were unavailable.

"Two words describe this agreement: groundbreaking and substantial," said Gil Cates, chair of the DGA negotiations committee, in announcing the terms of the new agreement. "The gains in this contract for directors and their teams are extraordinary, and there are no rollbacks of any kind."

DGA president Michael Apted said the deal might have come quickly but not necessarily easily.

"This was a very difficult negotiation that required real give and take on both sides," Apted said. "Nonetheless, we managed to produce an agreement that enshrines the two fundamental principles we regard as absolutely crucial to any employment and compensation agreement in this digital age.

"First, jurisdiction is essential," he said. "Without secure jurisdiction over new-media production — both derivative and original — compensation formulas are meaningless. Second, the Internet is not free. We must receive fair compensation for the use and reuse of our work on the Internet, whether it was originally created for other media platforms or expressly for online distribution."

DGA leaders including national executive director Jay Roth laid a groundwork for their negotiations with the studio group by holding preliminary informal discussions with studio reps on key issues over several weeks before the Jan. 11 start of formal contract talks.

The WGA, which launched since-aborted talks with the AMPTP on July 16, has been out of contract since Oct. 31 and on strike since Nov. 5. The AMPTP has refused to negotiate further with the writers since Dec. 7, when it insisted the WGA drop demands including reality TV and animation jurisdiction and the right to sympathy strike.

"(T)erms of the deal will be carefully analyzed and evaluated by the WGA, the WGA's negotiating committee, the WGAW board of directors and the WGAE Council," the WGA West and WGA East said in a joint statement. "We will work with the full membership of (the WGAW and WGAE) to discuss our strategies for our own negotiations and contract goals and how they may be affected by such a deal.

"For over a month, we have been urging the conglomerates to return to the table and bargain in good faith," the WGAW and WGAE added. "They have chosen to negotiate with the DGA instead. Now that those negotiations are completed, the AMPTP must return to the process of bargaining with the WGA. We hope that the DGA's tentative agreement will be a step forward in our effort to negotiate an agreement that is in the best interests of all writers."

CEOs of the eight studio and network groups on the AMPTP board issued a joint statement lauding the pact for its "important precedent" on new media. The media chiefs also extended an olive branch to the striking WGA.

"We hope that this agreement with DGA will signal the beginning of the end of this extremely difficult period for our industry," the CEOs said. "We invite the Writers Guild of America to engage with us in a series of informal discussions similar to the productive process that led us to deal with the DGA to determine whether there is a reasonable basis for returning to formal bargaining. We look forward to these discussions and to the day when our entire industry gets back to work."

Fox Group chairman and CEO Peter Chernin went so far as to phone WGA negotiating chair John Bowman and offer to engage in informal discussions, a management insider said.

AFTRA applauded the pact and stressed its interest in seeing WGA talks resumed. SAG said it would review the deal, but one of its more prominent members went further.

"I'm very pleased with the new agreement, and I hope it helps speed up the negotiations with the WGA," George Clooney said through his publicist.

"We have yet to have an opportunity to review the specifics of their deal, but we remain optimistic that the Writers Guild will soon resume negotiations with the studios, so people can return to work," AFTRA president Roberta Reardon said.

The Association of Talent Agents said the deal "creates positive momentum for progress in the writers' negotiations." And a top studio executive said he doubts management will try to punish the WGA for its now 75-day strike but noted any one guild's deal might have to be adjusted for another deal.

More ominously, the studio boss added, "But if (WGA leaders) come out swinging, they will have a real problem."

AMPTP president Nick Counter said issues tackled in the talks have been some of the most challenging in the 26-year history of the group.

"The formal negotiations that led to this agreement were preceded by weeks of tough and candid informal discussions," he said. "In the end, though, both parties were determined to focus on the core issues that are most important to all of us, and the result is an agreement that breaks important new ground for our entire industry."

What They're Getting
Highlights of the DGA's tentative three-year pact

WAGES: Annual increases of 3% for primetime dramas and soaps and 3.5% for all other programming.

RESIDUALS: Annual increases of 3% for primetime shows and 3.5% for all others.

NEW MEDIA: Jurisdiction over shows produced for the Internet. The rate for paid downloads of TV shows more than doubles to 0.7%, and the movie rate rises to 0.65% of the gross of the distributors rather than the producers. For ad-supported streaming, directors would receive 3% of the residual base for the first year and 2% after that.