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Writers Guild Details Hikes in Employer Funds for Health Plan Solvency

The Writers Guild of America has unveiled details of its new three-year contract with production companies — highlighted by an $86 million hike in funds from employers for the guild’s troubled health plan.

The guild, in a summary issued Friday to members, also disclosed specifics of how the deal addresses the financial pressures that television writers have encountered when working the same amount of time, or longer, on shows that run 6-13 episodes as they would on a traditional 22- or 24-episode season.

Additionally, the summary also said minimums will increase 2.0% in the first year of the contract, 2.5% in the second year, and 2.5% in the third year. And one of the key provisions, agreed to near the end of the negotiations, included the first-ever parental leave coverage of up to eight weeks.

The tentative agreement was reached early Tuesday morning, averting a strike that could have started that day,  and was then approved Thursday night by both the WGA West board of directors and the WGA East Council. Those approvals have triggered a ratification vote by the 13,000 WGA members. The guild has not disclosed when those ballots will go out nor the deadline for voting.

Neither the guild nor the Alliance of Motion Picture and Television Producers, the bargaining arm for Hollywood studios and networks, has released the complete contract.

The WGA had disclosed during during negotiations that its health plan had been losing money in recent years and issued a projection of a $65 million deficit in 2020.

The summary said the new deal will make the plan solvent. It said employer contributions to the fund would increase from 9.5% of writers’ gross compensation to 10.5% at the start of the agreement, then increase to 11.0% in the second year and to 11.5% in the final year — resulting in a total of $65 million in additional contributions. The guild also agreed to make cost savings of $7 million per year for the health fund, which has $150 million in annual spending.

Here’s the entire summary:

With strong member support, and the leadership of a resolute but practical negotiating committee, the Guild has achieved a contract accomplishing key goals, earning writers additional earnings and benefit contributions above that provided by the 2014 MBA, and securing key rights, such as parental leave with job security.

The highlights are as follows.

Increased Compensation for Short Seasons

Writers at the producer level on TV staffs will have a cap of 2.4 weeks of work per episode that their episodic fee pays for. For example, ten episodic fees pay for up to 24 weeks of work. Weeks in excess of that cap are paid at the writer’s individual weekly rate, computed by dividing the episodic fee by 2.4. These limits will take effect May 2, 2018 and will apply to series with episode orders of 12 or fewer episodes on broadcast networks, and 14 or fewer episodes on cable and digital platforms. Additionally, these rules will apply only to writers guaranteed $350,000 or less in a year, excluding script fees.

Increased Health Plan Contributions

The health plan contribution rate on reportable earnings will increase from 9.5% to 10.5% at the start of the 2017 agreement; to 11.0% in the second year; and to 11.5% in the third year. These increases will generate an additional $14.0 million in the first year of the contract, $21.0 million in the second year, and $30.0 million in the third year. The Guild agreed to implement cost savings of $7 million per year (from about $150 million in spending per year), for $21 million total during the contract. The additional revenue and cost savings provide $86.0 million to the fund.

The health plan will also receive additional funding from an increase in the contribution base for writers on overall deals under Article 14.E.2 from $250,000 to $275,000 per year for writers earning more than $250,000. This contributes $850,000 during the contract and prevents the use of this provision to underpay the health fund.

These changes provide $86.85 million to offset about $80 million in projected cost increases during the next three years, achieving the goal of solvency for the health plan for the duration of the agreement, and for some time thereafter.

Increases in Minimums

Most MBA minimums will increase 2.0% in the first year of the contract, 2.5% in the second year, and 2.5% in the third year. Some minimums and rates increase less, typically 1% or 1.5% per year, or increasing only once or twice during the contract. A few items do not increase during the term of the 2017 contract. Most of these exceptions are the result of patterns established in the industry.

Expanded Limits on Options & Exclusivity

The limits on the options under which series writers can be held and the exclusivity requirements they have been subject to have been extended to a broader range of writers. The eligibility threshold has been increased from $210,000 under the 2014 MBA to $275,000 starting May 2, 2018 ($280,500 starting May 2, 2019) for most programs, and to $250,000 and under starting May 2, 2018 for writers working on children’s programs.

Increased Residuals for Made-For-Pay TV

Residuals for made-for-pay television are increased 10% in the first year of the contract and 5% in the second year of the contract.

In addition, writers on made-for-pay television comedy-variety programs, who were excluded from fixed residuals under prior MBAs, will now receive them.

Increased Residuals for Programs Made For High Budget Subscription Video On Demand (HBSVOD)

Domestic use of made-for-HBSVOD programs now triggers a residual after 90 days, rather than after one year. The base for the residual will be increased and the residual is increased 50% for the largest SVOD service.

In addition, the contract establishes a new residual for affiliated SVOD use outside the US, such as the extensive use Netflix makes of most of its WGA-written original content. This residual starts at 35% of the domestic residual each year, and declines to 10% of the domestic residual by year 13 for each year thereafter of the life of the program.

Existing series and programs with license agreements that pre-date May 2, 2017 are grandfathered under the current provisions, even if the writing is done after May 2, 2017. If the company changes the deal terms of the license agreement, the 2017 HBSVOD terms apply.

Increased Residuals for Reuse on Ad-Supported Video On Demand (AVOD)

The residual that compensates writers for AVOD on cable and the Internet is increased from 5.0% of the base to 5.5% for each 26-week exhibition period. Also, the base is increased.

Parental Leave with Job Security

In a first-ever provision in a WGA contract, writers on term contracts in episodic television will be entitled to up to eight weeks of unpaid job-protected parental leave for the birth of a new child, the adoption of a child, or the placement of a foster child.

Additional Items

The Guild also agreed to several additional items:

The Guild extended the scope of provisions for sales to secondary digital broadcast services and second sales to basic cable channels. The current provisions, first negotiated in 2014, required that series be off the air for 18 months or more. Those waiting periods are now eliminated. Instead, a definition of “out of production” will be included which permits newer series to be sold in these ways, but which ensures the series are truly cancelled.
When a live awards show is rerun on the West Coast only, the residual will be one-third of the normal residual.
The Guild agreed to allow television series made-for-basic cable to be released on a domestic foreign language basic cable channel for 2% of the license fee rather than triggering fixed residuals.
The Guild agreed to allow limited theatrical release of television programs under a percentage of revenue residual rather than the current theatrical release payment, to encourage such release without undercutting payment for full releases.
The Guild added MOWs to previously agreed terms for foreign remakes of television episodes.
In the case where a writer reacquires a script, The Guild agreed that the original signatory will be released from any residual obligations.
The Guild agreed to a definition of “Virtual Multi-Channel Video Program Distributors” (vMVPDs). This provides that the new “skinny bundle” services such as Sling TV, PS Vue, YouTube TV, and CBS All Access are treated as cable TV providers under the MBA. Some of these services also carry original content, which will continue to be treated as made-for-SVOD, as they currently are.
Program fees, payable to writers on network series, are now payable all at once after the season rather than during the season.
Work lists, through which companies report to the Guild which writers are working for them each week, are now required in new media.
The tri-guild audit program was extended for three years.
The definition of a professional writer, which applies to certain technical provisions under the MBA, is broadened to include writing for new media as qualifying work.
The Guild agreed to accept Notices of Tentative Writing Credits by email, which was not previously permitted as a method of submission.
The Guild extended provisions for compensation for compilation episodes of weekly series to four-per-week series.

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