DGA to focus on pensions

Guild treads cautiously as talks with AMPTP approach

Hollywood’s seeing a low-tension, rhetoric-free negotiating season so far.

Reflecting its usual cautious approach, the Directors Guild of America has singled out pension and health plans as a top priority at upcoming contract negotiations with the congloms — three months before talks start — without specifying any other issues.

The development, announced Friday in a letter to members by chief DGA negotiator Gil Cates, signals that the DGA’s maintaining its low-key style and playing its cards close to the vest. As usual, it’s probably going to keep saber-rattling at a minimum as it preps for the mid-November start of talks with the Alliance of Motion Picture & Television Producers.

The DGA’s scheduled to begin its negotiations following seven weeks of AMPTP contract talks by the Screen Actors Guild and the American Federation of Television & Radio Artists.

Negotiating committee members for SAG and AFTRA met this weekend to hammer out the specific contract proposal as the conclusion of the unions’ “wages and working conditions” process. That proposal is set to be approved Sept. 12 at a joint board meeting, with talks set to start Sept. 27.

SAG and AFTRA had no comment about the proposal but sources have indicated that sweetening the employer contribution to pension and health will be among their top issues. And with the self-styled moderates in charge at SAG, it’s probable that the performers unions won’t dial up any kind of ruckus during negotiations.

Still, the negotiations won’t be free of acrimony. The unions will undoubtedly point out to the congloms that media companies have just posted the strongest quarterly results since the recession began two years ago as nearly every major outlet reported double-digit gains in ad revenues (Daily Variety, Aug. 13).

But if there are any fireworks over the upcoming round of guild negotiations, they are most likely to come from the Writers Guild of America, 2½ years removed from its bitter 100-day strike. Leaders of the WGA haven’t yet set any dates with the AMPTP, even though the WGA contract’s the first to expire on May 1; the DGA, SAG and AFTRA master contracts all expire on June 30.

The WGA announced last month that it had tapped John Bowman and Billy Ray as heads of its negotiating committee. Bowman headed the panel during the strike.

But unlike the year before the strike, when WGA leaders and late AMPTP Nick Counter battled extensively, the two sides have sheathed their swords for now.

The DGA and the WGA lag SAG and AFTRA in terms of overall employer contributions to the industry-union plans.

Employers pay 14% (8.5% to health, 5.5% to pension) for the DGA, 14.5% (8.5% health, 6% pension) for the WGA, 15% (9.25%, 5.75%) for SAG and 15% (9.75%, 5.25%) for AFTRA on top of every dollar of compensation into the pension and health plans. Those plans are operated separately from the unions, with an industry-union board overseeing each.

Cates is heading his fourth straight DGA negotiating team. He said in his message that the negotiations committee held its first meeting Aug. 14 and reviewed the initial proposals, then began debating and prioritizing the issues.

“Part of this meeting also included reviewing the latest DGA research on trends in the entertainment industry, the economics of various business models and the cumulative impact on the DGA’s health care and pension plans of the recent recession, stock market fluctuations, rising costs and health care reform,” Cates said. “The security of our health and pension plans will definitely be a top priority in our negotiations with the AMPTP.”

After being clobbered in 2008 and losing 26% of its value, the DGA’s pension plan regained most of its value last year. Assets in the DGA plan, which covers nearly 10,000 participants, carried a fair market value of $946.7 million as of Dec. 31 compared with $786.6 million at the end of 2008.

The 2008 decline of the value of the DGA pension plan was similar to that of the SAG, WGA and AFTRA plans.

Cates asserted Friday that the DGA’s in good shape in terms of preparation.

“We’ve spent millions of dollars and a great deal of time and effort making sure that we know at least as much as anybody sitting across from us at that negotiations table,” he said. “We’re confident that our forecasts will serve to once again arm the negotiations committee with the best and most up-to-date information available.”

Cates also repeated the DGA’s endorsement of SAG and AFTRA’s move to go first in the upcoming negotiating cycle. The DGA’s traditionally gone first to the negotiations with the AMPTP, but SAG negotiated the seven-week bargaining period into its current two-year contract last year.

The DGA has often concluded its deals half a year or more before expiration in the belief that providing the congloms with the security of a new deal — rather than the prospect of a work stoppage — incentivizes the employers to include a premium to the DGA.

The DGA played a crucial role two years ago in bringing the WGA strike to an end, hammering out a deal in January 2008 with far more detailed language covering new-media compensation. That language became the template for the deals for the WGA, SAG and AFTRA.

The DGA deal came after the guild had conducted its own research over the previous two years into the parameters of new media. There were two keys to closing that pact: spelling out the specifics of jurisdiction over new-media productions and reuse, and guaranteeing access to the new-media deals and data.

In 2004, the DGA opted for an increase in healthcare contributions and decided against holding out for an increase in DVD residuals. The DGA asserted when it made the deal that without an increase, the DGA Health Plan would have been without funds to pay benefits by 2008.

DGA president Michael Apted said at that point that it was too risky to seek changes in the residual system.

“Directors have continued to receive substantial residuals payments whether or not their pictures are profitable,” he said. “The current formula ensures that all our members are being compensated for the reuse of their work. At this time, we do not feel that it is worth risking this system that rewards all of our members.”The WGA’s contract had gone five months past expiration at that point in hopes that the DGA would be able to secure a change in the DVD residuals formula. The writers agreed a month later to settle for a similar hike in health contributions with no change in DVD payouts.

That decision led to many of the WGA’s elected leaders complaining about the strategic approach of then-WGA West exec director John McLean. The board fired McLean a year later and replaced him with current exec director David Young, who became a key architect of the strike.

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