Directors' New Labor Deal Puts Big Pressure on Actors (Analysis)

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Paris Barclay

The Directors Guild's pre-Thanksgiving pact with the major studios makes it hard for unions like SAG-AFTRA to claim victory when their deals come up for review.

This story first appeared in the Dec. 13 issue of The Hollywood Reporter magazine.

Just before Thanksgiving, the DGA and the major studios reached a new three-year deal. Compensation for directors will increase by about 3 percent a year, a notch higher than the previous pact's 2.5 percent. (Those are combined figures reflecting wages and pension and health benefits.) TV network primetime residuals will grow 2 percent in each year of the agreement -- better than the last time around, when the studios got a three-year freeze. Clearly the "cost control" mantra has loosened, giving DGA president Paris Barclay and national executive director Jay D. Roth a solid win.

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Still, network primetime residuals now are increasing more slowly than wages. That might be less of a blow than it seems, since primetime reruns are evaporating as reality TV grows and viewers shift to new platforms like Hulu. The new deal ups the rates on those platforms, too -- but even with increases, new-media residuals will be about one-tenth the size of network primetime residuals. That's a tough reality for talent.

The other tectonic change in TV has been the growth of original programming made for subscription VOD services. Those shows -- Netflix's House of Cards, Amazon's Betas -- now will be subject to network primetime or basic cable rates and conditions. Residual rates increase for such programs as well.

No rule requires Hollywood's other guilds to accept the deal terms negotiated by the DGA, but they almost always do. And those other negotiations are coming soon. The American Federation of Musicians is expected to go next, probably by year's end, followed by the WGA and then SAG-AFTRA.

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The actors union, which merged in 2012, will want to merge its SAG and AFTRA TV contracts. The AFTRA wage rate is about 3.5 percent higher than SAG's and has been since 2008, when AFTRA reached a studio deal expeditiously, while SAG, wracked by political divisions, stalemated and took nearly a year longer.

As a result, SAG lost out on a year of wage increases, a differential that persists. Thus, the SAG rates may have to grow more quickly than 3 percent a year and AFTRA rates more slowly to achieve parity in three years. Portraying that as a victory will be tough.

By the time studio negotiations end, SAG-AFTRA will get the benefit of the DGA deal terms but not the bragging rights. Thus, other issues like making it easier for members to qualify for health insurance -- not even a matter of collective bargaining -- might be the measure by which SAG-AFTRA is judged this negotiating cycle. Months from now, if there's still no progress on health insurance, actors might wonder whether the SAG-AFTRA merger truly led to more power or simply marked the end of an interunion feud.