Not surprisingly, the Directors Guild of America has struck a tentative deal with Big Media. The DGA has always been perceived as more producer-friendly in the business because many of the heavy-weight directors are producers themselves and some are mini-empires. Of course, the spin that is being put out is that this is a great deal:

“It’s really an excellent deal,” Gilbert Cates, who led the directors’ negotiating committee, said in a telephone interview.

Okay, so you can take that for what it is: self-congratulation that comes before most people
can study the fine print. I would say the same thing if I was the negotiator. The deal appears to be predicated on the DGA’s view that Internet-based revenues will be quite small over the life of the three-year deal.

The question is: did the DGA sacrifice terrain that is now lost forever?

From my vantage point, there are some good things here but also some areas of concern.
Before looking at some of the specifics, in my humble opinion, whatever the deal is, it has to be absolutely clear to the DGA–even if they may not want to admit it because the DGA historically sees itself as the elite among the Hollywood unions–that the strike by the Writers Guild of America strengthened the DGA’s hand. Big Media has been rattled by the strike and, obviously, wanted to reach a deal with the DGA to try to, then, bring some closure to the WGA walk-out.

So, let’s talk specifics here:
Here is what the DGA has given out on some of the highlights of the deal and what I think this means. And, remember, these are just highlights–the devil is truly in the details when it comes to labor contracts and I reserve the right to say I’m sorry, I was wrong:

Wage Increases: Compensation for all categories except directors of network prime time dramatic programs and daytime serials increases by 3.5%, each year of the contract.

Compensation for directors of network prime time dramatic programs and daytime serials increases by 3%, each year of the contract.

Outsized increase in director’s compensation on high budget basic cable dramatic programs for series in the second and subsequent seasons:

For ½ hour programs: 12% increase in daily rate and increase in guaranteed number of days to 7 days.

Results in show rate increasing from $9,009 to $11,760.

For 1-hour programs: 12% increase in daily rate and increase in guaranteed number of days to 14 days.

Results in show rate increasing from $18,010 to $23,520.

My view:The wage increases are okay. But, remember, the standard reported rate of inflation is running at far above the 3.5 percent annually so this does not keep pace with inflation. In a world of mostly rollbacks, one could say that at least that didn’t happen. And keep in mind, I said ‘standard reported rate of inflation’ because I have, for a long time, maintained, as other have, that the way inflation is calculated does not really measure the cost of living stress that lots of people are under.

Residual Increases: Residual bases increase by 3.5%, each year of the contract, except for reruns in network prime time. Residuals for reruns in network prime time increase by 3%, each year of the contract.

My take:Ditto on the residual increases: not a cut but not going to keep pace with the stated inflation number.

New Media Jurisdiction over: All new media content that is derivative of product already covered under current contracts.

Original content: All original content above $15,000/minute or $300,000/program or $500,000/series, whichever is lowest.

Original content below the threshold will be covered when a DGA member is employed in the production.

My take: I think this is really a problem. It goes to the very question of union jurisdiction and what kind of world we will see in ten and twenty years. The DGA only gets jurisdiction over product currently under contract. That means that all non-union work–such as reality shows–will remain outside the new media jurisdiction.

And any work done under those thresholds will not be covered. The industry is precisely moving to a lower-cost structure–doesn’t that sound familiar? It’s the ‘kid-in-the-garage’ problem–content coming from everywhere and everyone. As I described it in a panel discussion I just spoke at this week, it’s similar to the off-shoring of work in manufacturing. You have the world of the WGA, where the standards are decent, with wages, health care and pensions. And, then, you have Big Mediastan–that would be the world where there is no union, where there are no residuals, no pensions, no health care. The above provision agreed to by the DGA seems–seems–to allow the growth of Big Mediastan.

As an aside: it is one reason I believe that a critical component of the WGA’s future–and that of the Screen Actors Guild–is to focus intensely on organizing the young kids today who are cranking out material using IMovie and other software. The unions have to get those younger–and older people–who are now producing content into the union now so that they don’t become this mass of unorganized, low-wage labor that has no connection to the labor movement.

If the WGA agreed to those terms, it would basically be giving up on an important issue: union jurisdiction.

Therein lies the tough fight that all unions face: how do you convince current member to fight for the rights of members in the future? The answer is: you have to be able to show that organizing new members and broadening the reach of the union is critical to keeping the union’s power what it is–and being able to bargain with strength ten and twenty years down the road. It’s hard–when you’ve been out on strike for many weeks, any worker will feel, ‘damn, let’s take the best deal for the present…who knows what will happen later?’ But, I can guarantee one thing–if the union jurisdiction shrinks, you, buddy, will be in deep shit down the road.

Electronic Sell-Through (Paid Downloads)

More than doubles the rate currently paid by the employers on television programming to .70% above 100,000 units downloaded.

Below 100,000 breakpoint: rate will be paid at the current rates of .30% until worldwide gross receipts reach $1 million and .36% thereafter.

Increases rate paid on feature films by 80% to .65% above 50,000 units downloaded.

Below 50,000 breakpoint: rate will be paid at the current rates of .30% until worldwide gross receipts reach $1 million and .36% thereafter.

My take: this sounds good. Wow, you get double!!! But, as I remember from high-school math, double of zero is zero. Okay, it’s not that bad. But, recall, that the formula of .3 percent was the pathetic rate that was being paid out based on the bad deal shoved down the throats of the creators in the 1980s over videocassettes and, then carried over into the DVD era. In my opinion, this sets a producer-friendly standard that will be hard to break.

Distributor’s Gross

Payments for EST will be based on distributor’s gross instead of producer’s gross, a key point in our negotiations. Distributor’s gross is the amount received by the entity responsible for distributing the film or television program on the Internet. We would not have entered the agreement on any other basis.

Companies will be contractually obligated to give us access to their deals and data, enabling us to monitor this provision and prepare for our next negotiation. This access is new and unprecedented.

If the exhibitor or retailer is part of the producer’s corporate family, we have improved provisions for challenging any suspect transactions.

My take: it is a good thing that now payments will come out of the distributor’s gross–and it was an important demand by the WGA. Without boring people with the intricacies of film economics, the pie is bigger before it gets into the hands of the producers, who, then, use creative math to pretend like, ooopppssss, the picture made no money. Anyway, the one caveat here: there are no details on how, exactly, transparency will happen. Call me suspicious and unkind but i don’t trust the liars and skunks in Big Media–they have a bad track record.

Ad-Supported Streaming:17-day window (24-day window for series in their first season).

Pays 3% of the residual base, approximately $600 (for network prime time 1-hour dramas), for each 26-week period following 17-day window, within first year after initial broadcast.

Pays 2% of distributor’s gross for streaming that occurs more than one year after initial broadcast.

My take: I don’t particularly think this is great shakes, either. Basically, the producers get a residual-free window for ad-supported streaming–i.e., they get all the money–for the time period when the product is most valuable. We all understand that, right? First-run gets the most eyeballs. Creators, then, get to scrape for a smidgen of a much smaller pie.

Let me conclude with one other observation. The New York Times, in particular, seems to have spent a lot of time during the WGA strike trying to look for internal disputes within the WGA. Here, for example, in today’s story, are two examples:
Patric M. Verrone, president of the West Coast writers guild, said he planned to thoroughly review the directors’ contract.
“Ultimately, the membership will weigh in, too,” said Mr. Verrone, who has been struggling to maintain the writers’ solidarity. To dismiss the directors’ settlement out of hand would risk an open rebellion in his ranks.
And…

On Monday, a group of prominent writers met with two members of the writers guild negotiating committee to discuss the ramifications of any deal by the directors. According to two people who were briefed on the meeting but requested anonymity to avoid conflict with guild leaders, the group stopped short of making an overt break with the union leaders.

This is prose looking for a story. I’ve been around a lot of strikes. There is always debate within a union during a strike about developments. But, The Times has repeatedly–as have other outlets–tried to paint a portrait of a union about to come apart. I’m going to guess that the two reporters who wrote the above rubbish have spent very little time on the picket line. I’ve been there dozens of times and, even now, weeks after the strike began, the turnout is huge, including among the ‘show runners’–the writers who are the headliners for the big hits. I worried, frankly, that after a week, the adrenaline of being on strike would wear off and people would stop coming. But, each rally brings out consistently big numbers–those are my observations from the New York City pickets but I understand the same thing is true out in Los Angeles.

Jonathan Tasini is executive director of Labor Research Association.

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