SAG-AFTRA commercials talks starting up

Parties set to meet Monday in New York

No rest for the weary.

Fresh from addressing the AMPTP's "last, best and final offer" on its TV-theatrical contract at a national board meeting Saturday, SAG will join with AFTRA in starting negotiations with the advertising industry for a new broadcast commercials contract. The parties will meet Monday at 2 p.m. EST in New York in a bid to work out a new contract with advertisers and ad agencies in the new-media age.

The existing commercials contract has been extended twice. In 2006, the sides pushed back its expiration for two years and spent $1.4 million to commission Booz Allen Hamilton to independently study advertising in new media and compensation of actors.

In August, the unions and the JPC bought themselves another five months -- until March 31, 2009 -- to study the results and to give SAG more time to work out its contract issues with the AMPTP.

Despite the lack of resolution there, SAG has not asked the JPC for another extension, and the industry alliance was unlikely to grant another one. Commercials contract negotiations are scheduled to run throughout the week, take a week off and then reconvene through the rest of March until a deal is reached (or not).

In October, SAG's national board approved conditions under which SAG and AFTRA could return to their Phase One joint-bargaining agreement, which had fractured earlier in the year. The unions share 44,000 card holders, and between them, there are 36,000 actors who work in commercials.

Mathis Dunn is AFTRA's chief commercials contract negotiator, and John McGuire, who replaced Doug Allen in January, will serve as SAG's chief negotiator during these talks.

Chief negotiator for the ANA-AAAA Joint Policy Committee on Broadcast Talent Relations, or JPC, which negotiates for the advertising industry, is Doug Wood, a partner at Reed Smith and a 35-year bargaining veteran. Wood negotiated the extension in 2006.

On Tuesday, the sides exchanged their formal bargaining proposals leading into Monday's session, when opening statements will be delivered and a specific meeting schedule will be nailed down for the week. Each party presented 30 proposals, many of which are cosmetic enough to be resolvable quickly.

But as with other recent industry contract negotiations, the impact of new media on compensation patterns will take center stage. From 2003, when the last new full commercials contract was negotiated, to 2007, online advertising tripled to $21 billion, according to the Interactive Advertising Bureau. TV and radio advertising, meanwhile, plateaued.

After six months of discussions, Booz Allen came back in September with a number of new compensation models designed to address fair compensation for actors and a workable return-on-investment measurement for advertisers. The JPC is pushing to adopt a model based on gross rating points, a measurement it already uses to apportion dollars spent on media buys.

The unions ultimately bypassed any of the Booz models and proposed a 6% per year increase on the framework of the current contract.

The JPC's proposed new GRP model, which would pay talent based on the amount of exposure to consumers' eyeballs, would break decades of precedent. It promises to pay the same aggregate compensation to actors that the current model pays (about $900 million) but proposes changes that would shift payouts within the framework for both advertisers and actors across cable and network platforms.

The upshot is that it could fracture SAG and AFTRA internally, as some actors would be more amply compensated and others less so. Additionally, it would shake up the standards of payment that actors are used to and introduce questions about accurate tracking, monitoring and auditing by advertisers.

Actors have traditionally sought a pay-for-play system on network television.

Also likely to be a focus of conflict is an equally precedent-busting JPC proposal to implement a cap on the commercial producers' contributions to the unions' pension and health funds. While motion picture producers and TV producers have had caps on their P&H contributions, commercial producers have not.

SAG and AFTRA went on strike for six months before reaching a deal in 2000.