Initial proposal calls for revamping system

With its contract talks with SAG and AFTRA in a news blackout, the ad industry has unveiled outlines of the contract proposals — revealing that the two sides were far apart at the start of negotiations two weeks ago.

Key demand for the actors is a 6% annual salary hike over three years in all categories including adjustments, allowances and expense reimbursement.

The initial proposal from advertisers called for a structural revamp of the compensation system based on gross rating points rather than the traditional pay-per-play method. Under the proposal, thesps would continue to receive about $900 million in annual pay — “current aggregate compensation levels intact” is how the ad biz negotiators described it — but the allocations would be shifted to reflect changes in viewing patterns.

Douglas Wood, lead negotiator for the industry, gave out the details in a Tuesday presentation at a conference held by the Assn. of National Advertisers. Talks are in recess this week and will resume Monday; the contract expires March 31.

In his presentation, Wood also disclosed that the unions are seeking a hike in the pension and health contributions by employers from the current 14.8% to 16% while the ad industry seeks a cap on contributions. The ad industry has long complained that advertisers pay a disproportionate amount — far more than movie and TV producers — into SAG’s P&H fund, partly due to the absence of contribution caps in the commercials contract.

That means advertisers have been required to make P&H contributions for actors making more than $125,000 per engagement, even when the actor’s compensation included “noncovered” services such as print advertising and public appearances. But the ad industry won a key ruling in federal court in December that upset three decades of practice. The judge found that disputes over P&H contributions must be resolved by mandatory bargaining on a case-by-case basis (Daily Variety, Dec. 23).

SAG and AFTRA also proposed that all stunt drivers be classified as principals while the industry asked that the definition be narrowed to require that a stunt involve both skill and a hazard.

The unions also demanded that athletes hired for athletic performance be deemed principals; that Internet and new-media rates be increased by an additional session fee; and that actors receive a holding fee for made-for-cable in exchange for exclusivity.

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