The Writers Guild of America couldn’t have asked for a better Christmas present than the pact it cut last week with David Letterman’s Worldwide Pants.
Deal allowed guild leaders to look reasonable, in contrast to the image painted by their harshest critics, and it gave them a unique opportunity (given Letterman’s rare 100% ownership of his shows) to amp up the pressure on another of NBC Universal’s key profit centers, namely, the Peacock’s latenight programming. Letterman’s camp also got what it wanted most: the ability to bring “Late Show With David Letterman” and “The Late Late Show With Craig Ferguson” back to CBS with writers on board and no pickets outside the studio.
But was it a Christmas miracle or a carefully crafted decoration? The WGA said Worldwide Pants agreed to the same proposals it was about to present to the Alliance of Motion Picture and Television Producers when the majors broke off the last round of talks on Dec. 7. But what, exactly, were those deal terms, especially for with regard to the new-media compensation that has been the flashpoint of the labor strife?
Neither the WGA nor Worldwide Pants were eager to go into detail on those points. But industry insiders with knowledge of the pact said the formula for compensation for original material and reuse compensation is simple — Worldwide Pants agreed to pay the scribes a residual of 2.5% of “accountable receipts,” which could be interpreted as distributor’s gross under the guild’s Byzantine definitions of how scribes should be compensated for supplemental markets beyond traditional film, broadcast and basic cable.
Deal is said to be the same for free Web streaming and for paid downloads, with a three-day window of free usage (included as part of scribes’ initial compensation for working on the seg) for promotional purposes.
Those terms are surely more lucrative for scribes than the last offer on the table from the AMPTP: a six-week promotional window and a fixed residual based on 1.2% of the applicable WGA minimum for the type of program (about $250 for an hourlong drama, or about $150 for a hourlong comedy-variety program a la “The Late Show”) for the first year and then 1.2% of the producer’s license fee thereafter.
Distributor’s gross is something the WGA has sought in its new-media deal because it amounts to the largest pool of money to draw on in a percentage-based residual system. But as CBS has been quick to note, the Eye controls the new-media distribution rights on Worldwide Pants’ latenight skeins. And Worldwide Pants doesn’t get a cut of the revenue CBS derives from making Letterman’s and Ferguson’s shows available digitally.
How might that potential disparity be resolved? Most likely, it will be a moot point before the first residual bill comes due on the traditional quarterly payment sked. The Worldwide Pants deal also includes the safety net of a favored nations clause that allows it to revert to whatever terms the WGA and AMPTP eventually settle on.