Disney/ABC Residuals Payments Delayed Due to Tech Snafu

Walt Disney Studios - CC - H 2017
Coolcaesar/Creative Commons

The company’s changeover to a new processing system has resulted in lengthy delays.

Residuals payments across a swath of Disney and ABC product have been delayed due to technical problems with the processing process. 

SAG-AFTRA first noted in a July 2 message to members that Disney payments were delayed for four months, due largely to the studio’s changeover to a new residuals processing system. The result is potential financial hardship and the risk of health insurance disqualification, as eligibility for entertainment union benefit plans depends on earnings.

The union said it had filed claims “across the library” and will be collecting late penalties, as well as working with Disney to facilitate resolution. “Payment delinquencies, due in large part to Disney’s recent changeover to a new residuals system, has resulted in processing issues and payment delays,” stated SAG-AFTRA in the note. “This is impacting a small number of members who worked on recent Disney films and reruns of some basic cable television shows.”

At least one other union is affected as well. “The DGA is aware of the issues and is working to resolve them,” said a guild spokesman. The other key stakeholders — the Writers Guild of America, the musicians' union’s residuals fund and the IATSE-affiliated pension and health plan — did not respond to requests for comment.

Entertainment residuals across all unions total about $2.1 billion per year, according to estimates. SAG-AFTRA alone processes millions of paper checks a year received from the studios, although it unveiled a direct deposit option in April. But the Disney problem appears to reside in the software that generates the calculations and payment instructions, not in the more straightforward printing of checks. Other studios have had residuals processing problems, too, and one observer believes that as much as $300 million per year in residuals goes unpaid as a result of software problems and data errors.

Disney’s fourth-quarter 2018 residuals (due March 1) were reported late, but should be mailed soon, said SAG-AFTRA, which added that first-quarter 2019 residuals (due May 31) are also late, as are payments for reruns of basic cable shows. In addition, the message said, there have been cast list problems that affect some residuals that were reported. The union said it hoped the delinquencies would be completely cleared up within 90 days.

Disney did not respond to a request for comment.

In the past, residuals problems have affected pension and health plan eligibility, and the latest incident is potentially no exception. “We are aware of this issue and are working closely with the Union and Disney to help minimize the impact to our participants and have always worked to accommodate participants that are negatively impacted by any issue outside of their control,” said Michael Estrada, CEO of the SAG-AFTRA health plan and SAG pension plan. The AFTRA retirement fund, also affiliated with SAG-AFTRA, did not immediately respond to a request for comment.