Phyllis Nagy, who is challenging Writers Guild of America West President David Goodman, has warned that guild leaders are endangering future residuals.

Nagy, in a message posted Wednesday on her Writers Forward Together site, said residual payments are the most important issue the WGA faces during upcoming negotiations on a successor deal to the current master contract. That deal with Alliance of Motion Picture and Television Producers expires May 1.

“It’s the second, third and fourth most important issues, too,” she added in a post titled “The Residual Costs of Ignoring Residuals.” “Residuals are what see us through lean times and provide a measure of security while we secure new work. Only those with multi-year overall deals and other highly overscale deals don’t lose sleep over how we get from year to year, how to qualify for health insurance and how to cease worrying about where the next check comes from.”

Nagy and her slate have contended that WGA needs to get back to the bargaining table after two months of staying away. The contest, which includes races for secretary-treasurer and eight board seats, is viewed as a referendum on the WGA’s hard-nosed approach versus more accommodating tactics. Election results will be announced on Sept. 16.

The WGA West disclosed last month in its annual report to its 10,000 members that collected residuals in 2018 jumped 7.2% to $462 million with TV residuals jumping 10% to $307 million. New media residuals surged 16.5% to $76.5 million. Film residuals edged up 1.1% to $155 million.

“If we enter the 2020 talks with the Companies without having resolved our action against the agencies, most of us will not be in a strong enough position to weather a potentially long and
difficult strike to preserve our residuals,” Nagy said. “I urge all of us to think carefully about this as we contemplate the efficacy of a divide-and-conquer strategy with the non-packaging agencies in the hope that the most powerful agencies will capitulate.”

“I don’t plan to play a waiting game against a ticking clock headed into AMPTP talks,” she added. “Our residuals are too important for that roll of the dice. If we have to go out, I want it to be for something that will impact every single writer’s future in a profound way.”

Nagy asserted that the current license-based residuals system will be disrupted amid the growing use of streaming services through SVOD (Subscription Video On Demand).

“By late 2020, three of the five major studios will have SVOD distribution arms, which means that they will have direct contact with the consumers of our product,” she said. “The traditional structures for distribution/access and the ‘middlemen’ will largely disappear, as the percentage of the population who accesses our work through streaming grows.”

Nagy said the WGA needs to unite in advance of the talks with the Directors Guild of America and SAG-AFTR to deal with the issue from a position of “unassailable” strength. The DGA and SAG-AFTRA master contracts both expire on June 30.

“Are we in the best position to do this when we are still at war with the ATA?” she asked. “Emphatically not. Does it mean that new leadership will strike an ill-informed deal? Emphatically, no.”

Goodman announced on June 20 that the guild had called off negotiations with the Association of Talent Agents in favor of pursuing individual talks with nine top agencies as it enforces its total ban on packaging fees and affiliated production for agents representing guild members. A trio of mid-size agencies — Verve, Buchwald and Kaplan Stahler — have signed WGA agreements in recent months.

Earlier this week, the WGA withdrawn its state court suit against WME, CAA, UTA and ICM Partners alleging packaging fees are illegal and re-filed suit in federal court. Nagy criticized that action as electioneering, asserting that the guild leaders wanted to avoid an unfavorable ruling before balloting closes. She added Wednesday that making a deal with the ATA would enable the WGA to team with agents to prepare for the AMPTP negotiations.

Nagy concluded by saying that by electing her slate, agencies can be held accountable for unfair practices concerning packaging and affiliate production along with creating a revenue sharing solution. She noted that most WGA members were required in April to fire their agents.

“This is not a strike,” she said. “But it is, for many of us, a de facto work stoppage. To believe otherwise is simply shutting your eyes to the damage that’s already been caused. The clock is ticking.”