How labor talks will be different this time

Health, pension concerns temper guild stances

Hollywood labor negotiations are notoriously fractious and fragile. Distractions and roadblocks can pop up with little provocation or warning, and with a lot of explosive recrimination.

But the big surprise this bargaining season could be the very lack of drama. For several political and economic reasons, the dealmaking this time out could be the least combative in many years.

To take just one major sign: A source close to the SAG-AFTRA negotiations indicated that the DVD-residuals issue, a perennial battleground and bargaining chip in every negotiation cycle during the past 20 years, didn't even make it into the guilds' joint package of bargaining proposals approved last weekend. This despite resistance from board members in several camps.

On the heels of national board elections at SAG and the WGA, formal negotiations will begin Sept. 27 between SAG and AFTRA, bargaining jointly, and the Alliance of Motion Picture & Television Producers for a new TV/theatrical basic agreement. The DGA is scheduled to start its talks immediately afterward, in mid-November.

SAG and AFTRA share about 44,000 members; SAG's membership totals 120,000, and AFTRA totals 70,000. With 80%-85% of SAG's membership typically struggling for work, they can become unruly during bargaining. But the rank-and-file tends to vote for ratification as the board directs it to, and moderates control the board.

The WGA and DGA each have about 13,000 members, with unique compensation structures and needs. Their smaller memberships, however, make it easier for leadership to corral a unified response to the companies.

At the moment, SAG and the WGA are led by union members widely considered more pragmatic and moderate: Last fall, Ken Howard was elected to run SAG, and John Wells took the presidency of the WGA.

The DGA, under president Taylor Hackford, and AFTRA, run by president Roberta Reardon, are consistently more conciliatory in their bargaining sessions with employers. So, by personality and philosophy, all four guilds are looking to make deals.

But even if they weren't, the economic downturn, the debilitating after-effects of the last protracted SAG-AMPTP contract talks and the four-month WGA strike in 2007-08 and the resulting penny-pinching on the part of studios and networks has forced a shift in priorities for the unions. With members getting less work and the companies making less product, the union pension and health funds to which they contribute have taken huge dives during the past 18 months.

Although all of the major guilds' P&H funds showed gains during the most recent report, that revenue remains far below the levels of those funds before their tremendous losses in 2008. The WGA pension plan dropped 34% in 2008, taking asset values down from $2.17 billion the year before to about $1.54 billion. It now stands closer to $1.82 billion.

The DGA weathered a similar 26.6% decline in 2008, though it is back on the upswing. SAG and AFTRA's losses were in the same range (22.7% and 23.4%, respectively), and this year trustees of SAG's plan told participants that funding remains "endangered."

Employers pay a combined premium of 14%-15% on top of every dollar of compensation into the major guilds' P&H funds. But employer contributions to the SAG pension fund last year, for example, were down 10% on average.

Health care is its own potential double-hit for union members because they must maintain minimum income and working hours to be eligible. This means that as work opportunities have decreased, not only have employer contributions diminished but also those members might no longer be meeting the necessary thresholds to claim health care as a benefit. At the same time, many guilds have had to tighten eligibility requirements for the same reasons.

As a result, battles over residual structures for new media and other lingering hot-button issues are likely to take a back seat to shoring up those P&H funds.

Consider recent precedent: In July, the Hollywood Teamsters Local 399, representing transportation workers, pushed back hard against AMPTP squeezing only to accept a 2% annual wage increase for its new two-year contract. Last month, the DGA leadership sent a message to members that "the security of our health and pension plans will definitely be a top priority in our negotiations."

Two weeks ago, unionized SAG employees ratified a contract with its union that mimicked the same 2% standard over the next three years.

There's also just plain fatigue. SAG and the WGA fought the good fight in the last round three years ago, and whether the results are judged as having been successful, those hardball efforts aren't likely to be repeated without serious provocation, of which the AMPTP certainly is capable.

When bargaining began in July 2007, employers walked in with a proposal to revamp the 40-year-old residual formula for writers to one in which writers would receive payments only after producers had recouped basic costs. Many at the WGA labeled it a "draconian" rollback and continued to reference the offensive proposal throughout the strike for its perceived audacity and combative tone-setting.

But if the AMPTP, which bargains on behalf of the major studios and independent producers, takes a stance this time that aims for quick closure, it very well could get it.

The AMPTP isn't discussing specifics about the upcoming round of negotiations and hasn't seen the SAG-AFTRA proposals. But communications director Jesse Hiestand said, "Early negotiations will give both sides the best opportunity to work through the difficult issues and reach a deal that is fair and keeps everyone working."

So when negotiations begin at AMPTP headquarters in Sherman Oaks next week (likely under an expected news blackout), they could have a tone much different than the tripwire tension of the 2007-2009 window.

Lead AMPTP negotiator Nick Counter, who was president of the AMPTP for 27 years, passed away in November, seven months after retiring. His successor, Carol Lombardini, will lead the bargaining sessions with the guilds after serving for decades as Counter's right hand.

SAG members finally approved its last deal with the AMPTP in April 2009, and the new agreement stipulated earlier-than-usual preliminary talks for this round. Howard and Reardon are co-chairing negotiations, and AFTRA national executive director Kim Roberts Hedgpeth and SAG counterpart David White will serve as the unions' co-lead negotiators.

Gil Cates will represent the DGA during bargaining for the fourth time. John Bowman and Billy Ray are the negotiations committee co-chairs for the WGA West, and David Young is the guild's lead negotiator, though no formal talks have been scheduled. The WGA frequently declines to begin bargaining until much closer to the expiration of its contract, which is May 1.

The current SAG, AFTRA and DGA contracts expire June 30.

Meanwhile, SAG is expecting national board election results four days before negotiations begin. About one-third of the 71 national board seats are open for election this year, with the Hollywood Division electing 13 national board members and 22 alternates and the New York Division electing five national board members and nine alternates. The regional branches, some of which already have held elections during the past few months, will contribute nine national board candidates.

Although the national board is held by a majority coalition of the self-styled moderate branches of SAG -- Unite for Strength, the regional offices and the New York division represent about 60% of the board -- the Hollywood division is a stronghold of the more aggressive MembershipFirst party. But because the Hollywood national board seats up for grabs are filled by MF-affiliated members, there is no possibility the national or Hollywood boards will shift toward more hardline partisans, which also means a strike authorization is that much less likely.

In addition, a long-contested potential merger between SAG and AFTRA -- the sister guilds recently established the Presidents' Forum for One Union to push the process along -- is playing a major role in SAG elections. MembershipFirst members for the most part support a combining of the unions that includes only actors, and Unite for Strength stumps for a wholesale merger that includes all members.

Some critics of the recent focus on integration talks worry that it could signal a degree of disunity or distraction that could hurt the unions at the bargaining table. But those who support the merger maintain that anything that promotes a perception of greater unity between the guilds means they'll be more in sync during negotiations.