With SAG negotiations looming, high-profile attorney Ken Ziffren has advised the performers union to cool down its expectations — and make the same kind of deal on new media as in the DGA and WGA pacts.
Leaders of the Screen Actors Guild are going into Tuesday’s start of negotiations with the stated goal of improving the terms of the directors and writers deals. But Ziffren, who advised the DGA during its negotiations, said in an interview in the DGA Quarterly magazine that the new-media sector is still a long way from generating significant revenues and that the key gains came from the guaranteed access to congloms’ data along with hammering out an exact definition of “distributor’s gross” as the basis for calculation of residuals.
Ziffren said the biggest challenge for the industry — in the wake of the DGA and WGA deals — would be convincing SAG and AFTRA that this is not a “watershed” moment since media is still evolving. “It’s better right now to have access to the information that’s needed to try to track the new-media industries and their business patterns,” he added. “If the other guilds can understand that concept, then we can get back to work again in full force and follow the trends that the industry may take in new media. And so that is, to me, the major short-term issue and hopefully that will get resolved before June 30, or long before, if possible.” Ziffren had been focused on two areas: access to data and defining “distributors’ gross.”
Following the Dec. 7 collapse of WGA negotiations with the AMPTP walking away, the DGA began informal negotiations with Disney CEO Robert Iger and News Corp. prez Peter Chernin. Formal talks began Jan. 11 and concluded six days later.
“Basically, by the time the negotiations formally started for the DGA and AMPTP, our part of the deal was essentially done,” Ziffren said. “There were a few dots and commas and semicolons that needed to get resolved, but I’d say we were 98% done by the time the formal negotiations had started. When the formal negotiations had concluded, our roughly five, six pages of materials were included in the overall agreement that the parties had negotiated.”
The DGA’s pact on ad-supported Internet streaming provides a fee of 3% of the applicable residual for the first 26 weeks of streaming and a 17-day window of free use for promotional purposes (24 days in the case of new series). For TV programs that exceed 100,000 units downloaded, the residual rate more than doubles from the current 0.3% of distributors’ gross (which bumps up to 0.36% once a title generates $1 million in gross receipts) to 0.7% of distributors’ gross; the rate for feature films that exceed 50,000 downloads climbs 80% to 0.65% of distributors’ gross.
Ziffren said the work to craft that proposal began from a retreat in 2006, which led to consultants given an assignment to develop “unbiased” forecasts of the future of new media through various models. Ziffren said he and DGA counsel David Korduner drafted the preliminary proposal on “distributors’ gross” agreements and allocations, record keeping, reporting, and audit rights.
Ziffren also disclosed that the DGA, after it signed the deal with the AMPTP, agreed to a request by the WGA to share the details with WGA general counsel Tony Segall, WGA assistant exec director Charles Slocum, and attorney and WGA consultant Alan Wertheimer.
“They all seemed to be quite satisfied and pleased with what we had negotiated,” he noted. “The WGA subsequently requested some minor clarifying language changes that we all agreed to incorporate — making the final ‘distributors’ gross’ language between the WGA agreement and the DGA agreement identical.”
Ziffren also noted that TV and features will see a growth rate that is probably flat or down over the next three to five years.
“New media, while it may eventually be additive to existing distribution structures, will be cannibalistic in the short run, and that will present a major challenge not only to the studios, but obviously to the guilds in terms of how talent is employed and what structures are desirable or necessary to either maintain or augment their current income,” he added. “Additionally, it’s just knowing more and more as time goes on about what new technologies are available and whether they are again additive, cannibalistic or both, and how to manage those in a way that’s good for talent — and the industry.”