Thesps, ad biz extend contract

Move to be approved by SAG, AFTRA members

Leaders of SAG and AFTRA have agreed with the ad industry on a deal to extend the commercials contract by two years in order to conduct a jointly funded study on the fast-changing revenue models for the ad biz.

The extension, announced Friday, will have to be approved by SAG and AFTRA members.

The move was not a surprise since both sides had agreed to the general outlines of a deal four months ago (Daily Variety, April 12). SAG and AFTRA leaders were willing to agree to the extension in order to support the study, given the recent proliferation of platforms for advertising such as iPods, cell phones, video-on-demand and embedded commercials.

Extending the contract preserves the current model of paying SAG actors for primetime TV ads via residuals. The ad industry has been floating the idea of replacing residuals with a $19,000 buyout that would cover a year.

The extension will include the following provisions:

  • Coverage of all commercials that appear in new media–for existing platforms such as cell phones and for future platforms yet to be developed.

  • A 6% increase in minimum rates and the employers’ contribution to pension and health plans will increase from 14.3% to 14.8%.

  • Advertisers will have “more flexibility” to edit commercials for the Internet and new media.

  • A new media committee, comprised of reps from both the unions and the industry, will be formed with the power to make adjustments to the agreement to accommodate changing technologies and “shifting paradigms.”

  • Advertisers will be able to move over TV commercials to the Internet and other new media for a lower rate for a year.

SAG Chief Negotiator John McGuire and AFTRA Chief Negotiator Mathis L. Dunn Jr. issued a joint statement: “Because of the tremendous growth of the Internet and digital technology, the unions have agreed to a two-year extension to conduct a comprehensive joint study that will allow us to determine whether existing pay structures should remain the same or be modified. This agreement also means that actors will have achieved increased opportunities for work and better wages and benefits. In a rapidly evolving media environment, our agreement demonstrates that performers and advertisers can work together to deal with change and build a stronger partnership that benefits us all.”

The ad industry first asked for a yearlong extension last year in order to perform a jointly funded study of changing revenue models, then announced March 15 that it was going to hire a consultant to perform the study even if the thesp unions declined to participate.

That consultant has not been hired yet.

SAG and AFTRA struck against the ad industry for six months in 2000 in a strategy that’s still the subject of bitter debates within the unions. They gained big hikes in cable rates; the strike stopped only after the industry dropped its demand that network TV residuals be replaced by buyouts and SAG gave up its demand for residuals in cable rather than buyouts.

In 2003, SAG and AFTRA agreed to the current deal, which included a hike in pension and health contributions and a gain of 7% over the three years in minimum fees.

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