Negotiations Between SAG-AFTRA And The AMPTP Continue

After the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) and the Alliance of Motion Picture and Television Producers (AMPTP) spent the weekend in negotiations, there is a sense of hope that a resolution to the strike is imminent. The actors have been on strike for 109 days now, a stretch of time surpassing the 1980 dual strikes by SAG and AFTRA, which were separate labor unions at the time, against the studios. Not only are actors being impacted, but so are tangential businesses which rely on the entertainment industry for their livelihood, such as caterers, prop houses, set builders, hair and makeup professionals, dry cleaners, and professional drivers to name a few. With the financial fallout to the California economy estimated to have exceeded $6.5 billion, there are many professionals that are waiting with bated breath to see this stalemate come to an end.

The labor dispute between SAG-AFTRA and the studios officially began on July 14. However, it would not be until October 2 until the two sides would sit down at the negotiating table at SAG-AFTRA’s headquarters on Wilshire Boulevard in Los Angeles. Steady talks then resumed from October 4 through October 9 before breaking down on October 11 with the issuance of a statement from the AMPTP stating that the gap between the two sides was “too great to bridge.” Negotiations then resumed on October 24 before daily talks would be held from October 26 through October 29. As communication continued on October 29, a source from SAG-AFTRA told Deadline Hollywood that “There is a sense of optimism” while another source from the studio side said, “Looks like we’re in the final stretch.”

Given that representatives from both sides see an end in sight for this lengthy labor stoppage that has largely shut down production in Hollywood and negatively impacted thousands of people, on which issues are the gaps being bridged? Let’s now examine two of the key points in the strike negotiations, pay increases and viewership-based residuals, and consider the movements on each side throughout the negotiations as well as the proposals that are currently on the table.

Pay Increases

When the strike began, SAG-AFTRA was demanding an 11% increase in the minimum rate for the first year of the new contract, followed by 4% for the second and third years. The union has argued that these percent increases are necessary in order to keep up with inflation. The AMPTP was offering a 5% increase to the majority of minimum rates in the first year of the contract followed by 4% in the second year, and 3.5% in the third. The studios felt that this was fair given that these rate increases were the same as those offered to the Directors Guild of America.

Last Tuesday, October 24, the AMPTP increased its minimum rate offer from 5% to 7% for the first year of the new contract. Two days later, SAG-AFTRA lowered its demand two percentage points to 9% for a first-year increase. Clearly, both sides are making concessions with respect to pay increases for minimum rates.

Viewership-Based Residuals

Initially, SAG-AFTRA was seeking 2% of the revenue that a streaming show generates for the studio to be paid to performers. The actors’ union had suggested using Parrot Analytics’ Content Valuation tool to determine the value of a show to a streaming platform. The measurement tool relies on Google
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searches, social media mentions, and additional data to measure the demand for each program. SAG-AFTRA has argued that revenue sharing is necessary given how much streaming has changed the structure of the entertainment business. Shows produced for streaming tend to have much shorter seasons than has been the case with cable and broadcast television shows. Not only does this equate to less in potential residuals per episode, but also longer gaps of time between seasons for actors.

From the beginning, the AMPTP has resisted the idea of using the Content Valuation tool by Parrot as the studios have claimed that their viewership metrics are proprietary and not shared with creators. In addition, they contend that much of the data for which this measurement platform is based, such as social media engagement, does not translate into viewership or subscriptions.

When negotiations resumed on October 2, SAG-AFTRA removed the Content Valuation tool from their proposal but continued to push for a 2% revenue share. Fran Drescher, president of SAG-AFTRA, declared that such a revenue split would “change the world” for actors. However, after receiving some pushback from the AMPTP, the union decided to cut its proposal in half to a 1% revenue share. Despite this concession by SAG-AFTRA, the CEOs of the major studios comprising the AMPTP stood firm on their commitment to not accept a revenue share at any percentage.

On October 11, SAG-AFTRA then presented a proposal to the AMPTP asking for 57 cents per subscriber. Because this proposal would result in an estimated $500 million annually across all platforms, the studios walked away from the negotiating table calling the offer an “untenable economic burden.” The AMPTP has basically offered actors the same proposal that was approved by the Writers Guild of America in their new contract ratified on October 9. Under this proposal, actors on successful shows will receive a 50% bonus on their fixed residual with shows qualifying once their domestic views reach the equivalent of 20% of their domestic subscriber base within 90 days. It is estimated that about one-quarter of streaming shows would reach this threshold and be able eligible for the residual bonus. In terms of annual expense for the various streaming platforms, this would translate into a payout of $20 million. Comparing this amount to that of SAG-AFTRA’s proposal of $500 million demonstrates a $480 million gap.

Coming to an agreement on the issue of viewership-based residuals and closing this $480 million gap between SAG-AFTRA and the AMPTP is paramount to both sides coming together and working out a resolution that will end the strike. This gap is much wider than that of the pay increase percentages proposed by the actors and the studios. With negotiations continuing today and this week, we can be cautiously optimistic that an agreement between both sides is on the horizon.