Talks Between SAG and Commercial Advertisers at a Standstill

News   Talks Between SAG and Commercial Advertisers at a Standstill Following a particularly tough series of negotiations on July 20 and 21, sources on either side of the Screen Actors Guild's (SAG) 86-day-old commercial strike report no significant progress between the union and the producers of television commercials. At this juncture, no significant discussions or arbitration meetings are planned.

Following a particularly tough series of negotiations on July 20 and 21, sources on either side of the Screen Actors Guild's (SAG) 86-day-old commercial strike report no significant progress between the union and the producers of television commercials. At this juncture, no significant discussions or arbitration meetings are planned.

SAG called a strike against the producers of commercials on May 1 over residual payments to actors for broadcast work and to force the issue of a royalty system for commercials on the Internet. While both sides agree on the high stakes involved with developing a SAG contract that provides a mutually acceptable residual rights system, the often bitter strike is expected to continue indefinitely.

Ira Shepherd, who serves as counsel and lead negotiator for the Joint Policy Committee for Talent Union Negotiations (JPC), and represents the commercial advertisers, says these are "watershed negotiations."

"This contract has basically run one-way since television was invented and long before there were many commercials," Shepherd said. "It's long overdue for change and modernization. The contract still has tenets in the '50s and '60s when three networks controlled 95 percent of the viewers. That contract worked for years but today it's a completely different story. Most companies have changed and the telecommunications world has changed dramatically. Instead of three [network] options, you now have six networks with 50 percent of the audience and another 200 stations have the rest"

Advertisers want to change the existing system, Shepherd says, because today's advertisement has to play "many, many more times instead of playing to just three networks," in order to reach the same amount of people. The advertisers want a "guaranteed residuals format" where an up front fee would be paid to actors at the outset of each successive 13 week residual cycle. Union spokesperson Ethan Getto told Playbill On-Line that this amounts to a roll back, which the union says is a deal breaker. "They want SAG to roll back on broadcast residuals that have been paid since the 1950's and they just refuse to discuss it," Getto said. "They say it's non-negotiable. But this is the single most radical departure from the way things have been done, effectively ending a half-century-old system for royalties. "In terms of absolute numbers," Getto said, "the broadcast audience is roughly constant with the growth in population. The percentage of the audience may be down, but when you factor in population growth, it's constant. SAG is facing a very recalcitrant industry. We think they have ulterior motives and that they are not entirely focused on the economics of the strike, which would be preferable. Rather, they may be trying to set a precedent in anticipation of major contract talks with writers and directors next year."

JPC's Shepherd argues against SAG's claim that the broadcast audience is essentially the same. "It's not like we're [advertisers] getting more of an audience. We haven't doubled our population. There are twice as many networks and 200 additional options. But, while the options have increased by seventy fold, the population itself hasn't increased by seventy fold. As for our proposal for a guaranteed residuals format, the union says it's a roll back, but it is not. We are not taking anything away, we are modernizing the system into something that works in a new environment. Their numbers aren't accurate. They're adamant, but they're also wrong and that's why we have a strike. They want to utilize pay-per-play on cable but there's a smaller viewership and that's not economically feasible. "

SAG is also pushing hard to establish an Internet beachhead, where some sort of royalty scheme is established. "It doesn't have to be finalized at the time we sign a contract," Getto suggested. "We would be agreeable to a process where we mutually discuss and negotiate what would be fair for the Internet."

The advertisers, Shepherd says, feel it is too early to establish a contract for Internet royalties where moving images (featuring SAG and AFTRA talent) have yet to replace poster-driven advertising. Shepherd, who believes that mediators will be called back into the talks with SAG eventually, says that "in the past, no union that has ever tried to operate in the past has succeeded."

"The advertising agencies routinely lie," Getto said. "In 1999, the unions tracked 38 specific television commercials, which were chosen at random from a range of advertisers. What they uncovered was $154,572 in unpaid residuals. By extrapolation, these underpayments are believed to be costing actors millions of dollars a year. The ad agencies are cheating the actors and their clients; they're saying to actors that their commercials ran less than they actually did and, at the same time, they're fudging costs to their clients because they're not really paying what they say they're paying."

Shepherd said that as far as the advertisers were concerned, the way to break the log jam in the negotiations would be for the union to "get on our page and start talking to us about guaranteed residuals and what they really want. They need to get on the guaranteed residuals page. We didn't say we wouldn't negotiate. That's the crux--if they get there, we can solve everything else."

-- By Murdoch McBride