Friday, January 18, 2008

WGA Strike: The Directors Guild of America Makes a Deal

Joss Whedon & Jaime Paglia. Steps of Harvard Lampoon, Cambridge, MA. Dec, 2007.
photo Brad Searles. Click for LARGE image.

A Deal is Stuck. Did the Directors Sell Out?

The DGA has a history of being rolled.

The infamous DVD rate. The Directors Guild fell for that bullshit.

They've been on strike precisely once. For five minutes.

Yeah, they're tough guys, those directors. Balls of, um, well, actually, they pretty much have no balls. They tend to roll over pretty easily.

But this time, even the DGA had to know they had leverage, what with the writers out on strike since November, the Golden Globes reduced to a fracking news show that cost NBC millions, the Oscars breathing down everyone's neck, not to mention the Upfronts with $25 Billion Fucking Dollars and the whole 2008 season on the line, plus, oh yeah, the ACTORS set to strike in June if this isn't settled by then.

A blind man whose dog is deaf with a busted cane would have leverage.

The DGA negoiations took longer than anyone thought they would.

They took longer than hoped.

They took longer than rumored.

And then they just fucking dragged on, over what? New media, baby. 'Cause that's what the whole strike's about.

But now it's done.

In a moment, I'll lay the terms of the DGA deal on you. And then some commentary from some WGA strike captains, followed by my thoughts.

But first, a caution.

There is a time to break heads and bust balls. This isn't it.

This is a time to move slowly and carefully, to think things through. If you are a member of the WGA, there's no rush. The longer you wait, the more leverage you'll have. The point of this whole kurflunkle, is to get the best possible contract.

We will not get less than the DGA deal. That's how pattern bargaining works. But the needs of the Writers Guild are different from the needs of the Directors Guild. Over the next few days, the negotiating committee and lawyers will break down the DGA proposal, line by line and booby trap by trick wording, figuring out precisely what it means for the Guild.

If it's a good contract, we can take it (perhaps with a little more in it for forms' sake.) If it isn't, then we stay out until we get what's fair.

Right now, some people likely want to take any contract, just to go back to work. Mistake. We haven't come this far to settle for shit. We're here to get a fair deal on the future of our profession. Anything less, we stay out.

Enough from me. To read the full posts, make sure to click through.

Here's the WGA announcement:

United Hollywood

DGA Official Announcement

We're working on analysis now, as is the WGA and pretty much everyone else in town. Here's the DGA's statement:


DGA Gains Solid Wage Increases with No Rollbacks Plus Precedent-Setting Jurisdiction Over New-Media and a Doubling of EST Residuals Rate

LOS ANGELES – The Directors Guild of America (DGA) announced today that it has concluded a tentative agreement on the terms of a new 3-year collective bargaining agreement with the Alliance of Motion Picture and Television Producers (AMPTP).

Highlights of the new agreement include:

Increases both wages and residual bases for each year of the contract.

Establishes DGA jurisdiction over programs produced for distribution on the Internet.

Establishes new residuals formula for paid Internet downloads (electronic sell-through) that essentially doubles the rate currently paid by employers.

Establishes residual rates for ad-supported streaming and use of clips on the Internet.

"Two words describe this agreement - groundbreaking and substantial," said Gil Cates, chair of the DGA's Negotiations Committee, in announcing the terms of the new agreement. "The gains in this contract for directors and their teams are extraordinary – and there are no rollbacks of any kind."

Formal negotiations between the DGA's 50-member Negotiations Committee and the AMPTP began Saturday, January 12, and were concluded today. Talks were led by Cates and DGA National Executive Director Jay D. Roth. They were preceded by months of informal discussions and nearly two years of preparation and research by Guild staff and consultants.

"This was a very difficult negotiation that required real give and take on both sides," said DGA president Michael Apted. "Nonetheless, we managed to produce an agreement that enshrines the two fundamental principles we regard as absolutely crucial to any employment and compensation agreement in this digital age: First, jurisdiction is essential. Without secure jurisdiction over new-media production—both derivative and original—compensation formulas are meaningless. Second, the Internet is not free. We must receive fair compensation for the use and reuse of our work on the Internet, whether it was originally created for other media platforms or expressly for online distribution."

The agreement includes the following gains in New Media:

· Jurisdiction: The new agreement ensures that programming produced for the Internet (both original and derivative) will be directed by DGA members and their teams. The only exceptions are low-budget original shows on which production costs are less than $15,000 per minute, $300,000 per program, or $500,000 per series—whichever is lowest.

· Electronic Sell-Through: EST is the paid download of features and TV programming. The agreement more than doubles the EST residual for television and increases the feature film residual by 80% over the rate currently paid by the employers.

Specifically, the EST residual rates will be .70% for television downloads and .65% for film downloads, above a certain number of units downloaded. Below that, residuals will be based on formula employers currently pay.

Payments for EST will be based on distributor's gross, which is the amount received by the entity responsible for distributing the film or television program on the Internet. Having distributor's gross as the residuals basis was a key point in our negotiations.

The companies are now contractually obligated to give us unfettered access to their deals and data. This access is new and unprecedented and creates a transparency that has never existed before. Additionally, if the exhibitor or retailer is part of the producer's corporate family, we have improved provisions for challenging any suspect transactions.

· Ad-Supported Streaming: After an initial 17-day window for free promotional streaming of Internet programs, companies must pay 3% of the residual base (approximately $600 for network prime time 1-hour drama) for 26 weeks of streaming. They can continue to stream for an additional 26-week period by paying an additional 3% -- or a total of $1,200 for one year's worth of streaming. (During a program's first season, the 17-day window is expanded to 24 days to help build audience.)

· Sunset Provision: Allows both sides to revisit new media when agreement expires.

"Our fundamental goal in these negotiations was to protect our interests in the present while laying the groundwork for a future whose outlines are not yet clear," said Cates. "We knew that gaining jurisdiction over new-media production and winning fair compensation for the reuse of our work on the Internet were the key issues for setting a framework for the future, but we also had to secure real gains for our members in today's world."

The new tentative agreement includes the following:

Annual wage increases of 3% for primetime dramatic shows and daytime serials and 3.5% for all other covered programming.

Outsized increase in director's compensation on high-budget basic cable for series in the second and subsequent seasons.

Annual residual increases of 3% for primetime shows and 3.5% for all other covered programming.

Specific advances that pertain to members of the director's team.


Details of the new agreement will be submitted to the Guild's National Board for approval at its regularly scheduled meeting on Saturday, January 26, 2008. The DGA's current contracts expire on June 30, 2008.

There's more...
Here's commentary:
United Hollywood

First Glance at the Deal Summary


We're a group of volunteer WGA strike captains, and we're posting our reactions to the DGA deal summary that was released today. These are our thoughts alone. They are not official, they don't reflect the WGA's opinion, and frankly, they will probably include a few mistakes.

Which brings us to our second caveat: The DGA deal summary is just that, a summary. It's not the final comprehensive contract. That document, we've been told, is still being drafted by the DGA. So the unclear items in the summary will remain so until the DGA releases the contract.

Since the conversation is raging already, we want to weigh in with our preliminary thoughts. Caveats in mind, here we go:

Issues of Wage Increase, Residual Increase and Healthcare
From what we can see in the summary, there are no rollbacks and some decent increases. As rollbacks on just about everything were such a big part of the congloms' proposal to the WGA, we are, cautiously, optimistic here.

Jurisdiction on Internet Productions
The good: Content that is derivative of something already covered would likewise be covered. In other words, mobisodes, webisodes, whatever-isodes based on something that's already a series or a movie are automatically covered, no matter what the budget.

The bad: We can't tell from the deal summary language if that includes the WGA concept of "separated rights." And there are few concepts more important to writers than separated rights. When you create a character, you have merchandising, sequel and other exploitation rights to that character. Those rights can be a very important source of income -- just ask the creators of a character named Captain Jack Sparrow.

Original Internet-first content
The good: there's coverage for productions costing $15,000/minute, when before there was no coverage at all.

The bad: No minimums are mentioned. We don't know for sure, but that could mean the DGA didn't negotiate any. Also, no mention of separated rights in the summary for Internet-first.

Here is a nightmare scenario: Networks start making inexpensive pilots with a budget of $299,000 and put them up on the Internet (on say, Hulu) to gauge their popularity. It's bargain-basement R&D. If a pilot hits, it gets aired on conventional TV, but pays no residuals, contributes no health & pension, provides no separated rights... provides no protections at all. Fifty years of hard-fought creator rights would vanish.

The ambiguous: Regarding coverage of original content below $300,000 per episode, the summary says: "Original content below the threshold will be covered when a DGA member is employed in the production." That language is unclear. If a single DGA member is employed in a sub-$300,000 production, is the whole production covered (including btl crew)? Or just the DGA member? If it's the whole production, that's a "good." But if it's just one person? That's a "bad."

Electronic Sell-Through (aka downloads)
For the first 100,000 downloads of a TV show, the payment is the DVD rate: 0.3%. After the first 100,000, it rises to .7%

For features, the rate is 0.3% for the first 50,000 downloads and 0.65% thereafter.

The good: It's more than twice what we had before.

The bad: What we had before was based on the miserable DVD formula. WGA, SAG and DGA had all agreed that that number really should be 1.2%, and the unions have actually sued the congloms over it, claiming that the use of the DVD formula for downloads is a misinterpretation of their respective MBAs.

So the 0.7% and 0.65% numbers are still terribly low. In addition, many downloads will not reach the 100,000 or 50,000 threshold, and will generate only the abysmal 0.3%.

It's frustrating to us that the DGA couldn't increase that number out of the DVD range. The DVD formula was based on the notion that "home video" meant a bulky plastic VHS tapes with enormous manufacturing and transportation costs. Those costs decreased dramatically over the years. But no increase in residuals. They decreased dramatically again with birth of DVDs. (You can slip them under a door!) But no increase in residuals. With downloads, the manufacturing cost is exactly zero dollars. And terabytes of storage are getting cheaper by the hour. But we still can't improve that DVD formula? Really?

Distributor's Gross
Payments for EST and, we assume, downloads will be based on distributor's gross, which is much better than producer's gross.

The good: This is what the WGA was asking for, and up until now, the congloms said it was a non-starter.

The bad: How will the accounting be kept transparent? The deal summary doesn't provide any guidance. Until we know how the DGA plans to guarantee that the distributor's gross is an accurate number, we can't know if this is meaningful. ("Net profit" points, anyone?)

Ad-Supported Streaming
For the first 17-24 days, no residual payments at all. After that first run, $600 for six months, up to $1200 for the first year of unlimited streaming. After the first year, 2% of distributor's gross.

The good: 2% of distributor's gross is a meaningful number, again with the caveat that the accounting has to be transparent.

The bad: In the near future -- and in some cases, the present -- rerunning television shows on the Internet will replace conventional reruns. This structure, as described in the summary, to our eyes appears to be the end of television residuals. Whereas a primetime network rerun would be worth $20,000, unlimited streaming on the Internet would be worth only $1200, assuming the episode is kept available for an entire year.

Now, as the companies point out, the current Internet streaming market cannot support a residual level that conventional TV can. It may in the near future, in the distant future, or never. So that's why it seems to us (as the WGA NegComm has said in the past) that the best strategy here is to grant the writer a percentage of real revenue. That is not only the best way to fairly compensate writers, but also a hedge for the companies. If and when the streaming market takes off, flat fees for reuse will be egregiously unfair. The percentage model could, in time, make up for the loss of TV residuals as advertising moves solidly to the Internet.

In years two through infinity, 2% of distributors gross is a meaningful formula. But 2% of what? Even if an episode is kept online for more than one year (and who's to say it would), the demand to view it will be minimal. After a year, the episode will likely be available on a DVD set, and has probably been available as a paid download for some time. The minimal number of streams will mean a minimal ad rate. So enjoy your 2%, writer.

If the ad revenue even in the first year of streaming turns out to be negligible, then giving writers a percentage is insurance that the congloms won't have to overpay. But if something takes off and becomes wildly successful, then a percentage-of-revenue model would reward the writer appropriately.

There's more...
My immediate concerns:

1. The streaming rate is a deal breaker.

$1200 bucks for a year of unlimited downloads, after 17 to 24 free days? Vs. $20,000 for one rerun on network television.

Yeah, right. And within six months, there will BE no reruns on network television. EVERY rerun will be on the internet, and just like that, kiss braces and health benefits and every other damn thing goodbye.

It's still them trying to take over the internet for nothing. Fuck that.

2. Too many loopholes, from the nightmare scenario, to the DVD rate being too low (which isn't a loophole, but is an insult.)

3. More will surface when the full contract does.

This is not an acceptable contract for writers in my initial read, based completely on the internet land grab. Turn that from a flat fee into 2% of Distributor's Gross (which is the deal after the first year anyway), and the rest of this can be worked out.

What the AMPTP has got to understand is, the writers are willing to stay out the next year if that's what it takes to get a fair deal. No kidding. REALLY no kidding.

And come June, the actors -- 90% of whom are unemployed anyway (as actors; they have day jobs) will happily go on strike and shut down all production everywhere, as the stock prices of all six studios falls straight into the crapper.

Strike. Strike. Strike.

From the GNB Union Desk, this is Jesse Wendel, picket sign raised high.

PS. So no, the Directors Guild didn't sell out. Not precisely.

But they didn't negotiate as if their future depended on it either. They didn't negotiate as if they had genuine leverage, and they sure as shit didn't ever consider pushing these studio mother-fuckers to the goddamn wall.

They negotiated like insiders. Like part of the system. Like partners with management. Like elegant fellows who are willing to give up actual power, in exchange for not undergoing the indignity of having to walk around in circles out in the rain and the snow and the sun holding a sign. Because they're like, above all that. They're Directors.

Which is a shame. Because if the Directors Guild had shown some damn stones, between the writers, the directors, and the actors, we could have broken the studios major.

We still can... between the writers and the actors, that's all the true strength we need. 'Cause ain't no one going to work without a script and someone to act it.