SAG, ad biz seek way out

Mixed expectations for strike resolution

How do we get out of this mess?

That’s what cooler heads in Hollywood are wondering, with the strike by union actors against advertisers entering its fifth month.

Negotiations will begin Sept. 13 in New York amid mixed expectations. “The unions have gotten religion, and the advertisers need access to celebrities,” is how one insider puts it.

But others believe there is so much hostility that a deal may be impossible. “I’m not hearing good things,” sums up Steve Netburn, whose Angel City Prods. has done virtually no work since the strike started.

Advertisers have not budged since making a “final” offer April 14; by their calculations, members of the Screen Actors Guild and American Federation of Television & Radio Artists have given up $2 million a day from commercial work.

At hundreds of demonstrations, SAG and AFTRA have accused advertisers of union-busting and have managed to summon help from such high-profile members as Richard Dreyfuss, Susan Sarandon, Allison Janney, David Hyde Pierce, Paul Newman and Martin Sheen.

Firm stance

The union’s leadership has proclaimed in no uncertain terms that there is no way they will accede to the advertisers’ demand to eliminate residuals for network TV ads. Advertisers insist that they can no longer afford to pay residuals with network market shares eroding.

So is there a deal to be made? The answer is absolutely yes, but getting there will be tricky.

“Both sides need to be able to tell their constituencies that they have won something in return for the months of sacrifice,” said UCLA labor expert Daniel Mitchell, professor of management and public policy.

“The problem is that the longer they stay out, the more both sides have to justify why the stayed out for so long.” That’s why federal mediators, who set up the upcoming negotiations, can be useful, according to Mitchell. “Mediators are good at helping negotiators find a way to explain the deal to their constituents when they may have painted themselves into a corner.”

The simplest way to make a deal would be for one side to give in on network residuals.

If it’s SAG and AFTRA, they could receive far higher buyout fees along with their on-the-table demands for a monitoring system and Internet jurisdiction.

But SAG insists it cannot give in on residuals.

“Without health care and residuals, you don’t really have any reason for SAG,” an insider explains. “So if you give in, you’re signing a death warrant because they’ll just come after you even worse in the next negotiation.”

But others say it’s stretching a point for SAG to maintain that residuals will disappear from TV in next year’s contract if they are taken out of this year’s advertising contract.

“Individual actors make a big difference on ads perhaps 2% of the time,” a casting director noted. “They don’t have the same impact as they do for TV and film. There’s not a non-union Tom Cruise out there.”

At any rate, if advertisers give in and yield a slight increase to residuals, they might be able to make a deal without meeting SAG’s other demands for cable residuals, monitoring and Internet jurisdiction.

Varied options

But if there is a final solution, it’s not likely to appear in such broad form. Among optimists, the hope is that negotiators will be offering an array of possible solutions, such as:

  • Bring in a third party — other than the mediator — to work out a deal.

    “The baggage between the two sides is way too heavy now,” one casting director asserts. “The last straw was the advertisers saying in the middle of August that they couldn’t meet until mid-September. To drag it out like they have really looks like union-busting.”

  • Change the length of the use cycles from the current 13 weeks to give advertisers more flexibility in how they run ads.

  • If advertisers truly believe they must get rid of residuals, make the upfront buyout much more attractive than the current $2,500 offer.

    “If it were $7,500 per cycle, you can bet SAG would listen to that,” one veteran asserts.

  • Although both sides have professed sympathy for the little guy, they should focus on what the big players need. “A big star shouldn’t have to worry about someone endlessly exploiting their image on the Internet, so SAG needs to get some kind of protection for its members on that issue,” an entertainment attorney said.

  • Change the basic payment system to calculate talent payments based on what the advertisers spend on media buys.

    This proposal, dubbed C2K and floated recently by a group of former ad agency execs, is designed to tie compensation directly to revenues.

    But insiders are unimpressed, not only because the proposal has no research backing it up, but also because it could leave actors vulnerable to being short-changed through creative accounting.

  • Bring celebrities to the table. “The only thing SAG really has going for it is that advertisers want to play golf and have lunch with high-profile actors so they can brag about it,” a casting agent said.

  • Limit the number of issues by agreeing to defer one or two of them to an economic study. “One of the ways you get a train wreck at the negotiating table is by having too many issues,” one observer noted.

  • Focus on getting an Internet agreement because it will make both sides look good.

    “That’s the diciest area because no one knows how to value it,” one attorney observed.

  • Above all, stop worrying about the PR and make a deal because the situation is not going to improve for either side.

“The actors have made a fairly convincing case that they amount to less than 2% of the costs, but that doesn’t mean much to the man on the street,” one lawyer said. “So SAG has done about all it can do.

“On the other hand, I don’t believe advertisers who say it’s ‘business as usual’ when they’re being vilified by recognizable stars. If there’s a group that’s sensitive to negative public opinion, it’s advertisers.”

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