1/17/2008

DGA Official Announcement

We're working on analysis now, as is the WGA and pretty much everyone else in town. Here's the DGA's statement:

DGA AND AMPTP REACH TENTATIVE AGREEMENT
ON TERMS OF NEW CONTRACT

DGA Gains Solid Wage Increases with No Rollbacks Plus Precedent-Setting Jurisdiction Over New-Media and a Doubling of EST Residuals Rate

LOS ANGELES – The Directors Guild of America (DGA) announced today that it has concluded a tentative agreement on the terms of a new 3-year collective bargaining agreement with the Alliance of Motion Picture and Television Producers (AMPTP).

Highlights of the new agreement include:

Increases both wages and residual bases for each year of the contract.

Establishes DGA jurisdiction over programs produced for distribution on the Internet.

Establishes new residuals formula for paid Internet downloads (electronic sell-through) that essentially doubles the rate currently paid by employers.


Establishes residual rates for ad-supported streaming and use of clips on the Internet.

"Two words describe this agreement - groundbreaking and substantial," said Gil Cates, chair of the DGA's Negotiations Committee, in announcing the terms of the new agreement. "The gains in this contract for directors and their teams are extraordinary – and there are no rollbacks of any kind."

Formal negotiations between the DGA's 50-member Negotiations Committee and the AMPTP began Saturday, January 12, and were concluded today. Talks were led by Cates and DGA National Executive Director Jay D. Roth. They were preceded by months of informal discussions and nearly two years of preparation and research by Guild staff and consultants.

"This was a very difficult negotiation that required real give and take on both sides," said DGA president Michael Apted. "Nonetheless, we managed to produce an agreement that enshrines the two fundamental principles we regard as absolutely crucial to any employment and compensation agreement in this digital age: First, jurisdiction is essential. Without secure jurisdiction over new-media production—both derivative and original—compensation formulas are meaningless. Second, the Internet is not free. We must receive fair compensation for the use and reuse of our work on the Internet, whether it was originally created for other media platforms or expressly for online distribution."

The agreement includes the following gains in New Media:

· Jurisdiction: The new agreement ensures that programming produced for the Internet (both original and derivative) will be directed by DGA members and their teams. The only exceptions are low-budget original shows on which production costs are less than $15,000 per minute, $300,000 per program, or $500,000 per series—whichever is lowest.

· Electronic Sell-Through: EST is the paid download of features and TV programming. The agreement more than doubles the EST residual for television and increases the feature film residual by 80% over the rate currently paid by the employers.

Specifically, the EST residual rates will be .70% for television downloads and .65% for film downloads, above a certain number of units downloaded. Below that, residuals will be based on formula employers currently pay.

Payments for EST will be based on distributor's gross, which is the amount received by the entity responsible for distributing the film or television program on the Internet. Having distributor's gross as the residuals basis was a key point in our negotiations.

The companies are now contractually obligated to give us unfettered access to their deals and data. This access is new and unprecedented and creates a transparency that has never existed before. Additionally, if the exhibitor or retailer is part of the producer's corporate family, we have improved provisions for challenging any suspect transactions.

· Ad-Supported Streaming: After an initial 17-day window for free promotional streaming of Internet programs, companies must pay 3% of the residual base (approximately $600 for network prime time 1-hour drama) for 26 weeks of streaming. They can continue to stream for an additional 26-week period by paying an additional 3% -- or a total of $1,200 for one year's worth of streaming. (During a program's first season, the 17-day window is expanded to 24 days to help build audience.)

· Sunset Provision: Allows both sides to revisit new media when agreement expires.

"Our fundamental goal in these negotiations was to protect our interests in the present while laying the groundwork for a future whose outlines are not yet clear," said Cates. "We knew that gaining jurisdiction over new-media production and winning fair compensation for the reuse of our work on the Internet were the key issues for setting a framework for the future, but we also had to secure real gains for our members in today's world."

The new tentative agreement includes the following:

Annual wage increases of 3% for primetime dramatic shows and daytime serials and 3.5% for all other covered programming.

Outsized increase in director's compensation on high-budget basic cable for series in the second and subsequent seasons.

Annual residual increases of 3% for primetime shows and 3.5% for all other covered programming.

Specific advances that pertain to members of the director's team.

PLEASE SEE FACT SHEET BELOW FOR MORE DETAILS

Details of the new agreement will be submitted to the Guild's National Board for approval at its regularly scheduled meeting on Saturday, January 26, 2008. The DGA's current contracts expire on June 30, 2008.

FACT SHEET
DGA Tentative Agreement
January 17, 2008

Basic Agreement

Wage Increases
Compensation for all categories except directors of network prime time dramatic programs and daytime serials increases by 3.5%, each year of the contract.


Compensation for directors of network prime time dramatic programs and daytime serials increases by 3%, each year of the contract.

Outsized increase in director's compensation on high budget basic cable dramatic programs for series in the second and subsequent seasons:
For ½ hour programs: 12% increase in daily rate and increase in guaranteed number of days to 7 days.
Results in show rate increasing from $9,009 to $11,760.
For 1-hour programs: 12% increase in daily rate and increase in guaranteed number of days to 14 days.
Results in show rate increasing from $18,010 to $23,520.

Residual Increases
Residual bases increase by 3.5%, each year of the contract, except for reruns in network prime time. Residuals for reruns in network prime time increase by 3%, each year of the contract.

Healthcare
Employers continue to make health care contributions at specially negotiated rate of 8.5%, secured in the 2005 Basic Agreement to address the impact of the growing cost of health care on the DGA Plan. Provisions permitting decrease in contribution rate by employers removed.

Other Provisions
Second Assistant Directors to manage locations in New York and Chicago.
Establishes a wrap supervision allowance of $50/day for the Second Assistant Director who supervises wrap on local and distant locations.
Increases incidental fees and dinner allowances for Unit Production Managers and Assistant Directors.

New Media

Jurisdiction over:
All new media content that is derivative of product already covered under current contracts.


Original content:
All original content above $15,000/minute or $300,000/program or $500,000/series, whichever is lowest.


Original content below the threshold will be covered when a DGA member is employed in the production.

Electronic Sell-Through (Paid Downloads)
More than doubles the rate currently paid by the employers on television programming to .70% above 100,000 units downloaded.

Below 100,000 breakpoint: rate will be paid at the current rates of .30% until worldwide gross receipts reach $1 million and .36% thereafter.

Increases rate paid on feature films by 80% to .65% above 50,000 units downloaded


Below 50,000 breakpoint: rate will be paid at the current rates of .30% until worldwide gross receipts reach $1 million and .36% thereafter.

Distributor's Gross
Payments for EST will be based on distributor's gross instead of producer's gross, a key point in our negotiations. Distributor's gross is the amount received by the entity responsible for distributing the film or television program on the Internet. We would not have entered the agreement on any other basis.


Companies will be contractually obligated to give us access to their deals and data, enabling us to monitor this provision and prepare for our next negotiation. This access is new and unprecedented.

If the exhibitor or retailer is part of the producer's corporate family, we have improved provisions for challenging any suspect transactions.

Ad-Supported Streaming:
17-day window (24-day window for series in their first season).
Pays 3% of the residual base, approximately $600 (for network prime time 1-hour dramas), for each 26-week period following 17-day window, within first year after initial broadcast.
Pays 2% of distributor's gross for streaming that occurs more than one year after initial broadcast.

Clips
· Provides the companies with limited windows where they can distribute clips of feature films and television programs in new media to promote a program. Provides for payment for all other uses in New Media.

Sunset Provision
Allows both sides to revisit new media when the agreement expires.

25 comments:

actorinsupport said...

Are DVD residuals still ON the table for the WGA deal? Only the INCREASE proposal was taken off? Or the entire DVD residuals was taken off?

Captain Obvious said...

Some of this looks like it might not be too bad at first blush, with the exception of the residual windowing for "new media" ... that seems somewhat sketchy to me.


I suggest, as writers, we take that provision's implications with plenty of salt, and keep the DGA's much-touted disinterest in residuals at the forefront of our considerations as we ponder such implications.

Hopeful Fan said...

AMPTP issued a statement asking the WGA to resume talks:

From www.amptp.org :

"Today, we invite the Writers Guild of America to engage with us in a series of informal discussions similar to the productive process that led us to a deal with the DGA to determine whether there is a reasonable basis for returning to formal bargaining. We look forward to these discussions, and to the day when our entire industry gets back to work."

mheister said...

Before we all get too excited about this, give the WGA leaders and their experts however much time they need to comb through the fine print. The WGA - and SAG after them - are no under requirement to accept pattern agreements based on the DGA pact if the DGA pact doesn't meet the needs of the other guilds.

Evan Waters said...

Well, it's something.

I would have hoped for at least 1%, but it's better than $250 (which I've best heard described as "radio contest winner money"). And better than nothing at all.

What about the whole "we can declare this promotional" thing? Is that dead?

C. A. Bridges said...

I'm sure we're about to see a ton of analysis from people good with numbers, but my initial reaction was that this would have been an excellent counteroffer two months ago, one that the WGA would have welcomed in their negotiations. Why the wait? So the studios could get the force majeure firings out of the way?

I also note that the same .3% rate is in there, compared to the 2.5% in the WGA's version. As more and more content goes to the web, is the deal worth watching your 2.5% rerun residuals dwindle to .3% online residuals?

Then again, the transparent books part, if accurate, is huge. Maybe honest bookkeeping would make up for lower residuals?

AnthonyDe said...

First thing that jumps out at me is the "17-day window (24-day window for series in their first season)." Does this apply to original internet shows? A show like Quarterlife that airs multiple episodes per week would be completely stale after 17 days. Or any even network shows that they can easily air first on the web before broadcast TV. Seems to me that would be the loophole. Since there are no reruns on the web the promotional period should be applied to the length of the first run. The first run should be defined as until the next episode airs.

derekcbart said...

I am not a member of any of the involved unions, so they will need to look at this very closely, but at first glance it looks pretty good. I'm especially surprised to see that all internet residuals are based on distributor's gross which is one of those things the AMPTP was telling the WGA was completely unacceptable.

cory said...

So, writers, weigh-in on this "tentative deal". Does this look like something you guys will be able to accept? Come on, let us lay-folk know.

Jake Hollywood said...

Pays 3% of the residual base, approximately $600 (for network prime time 1-hour dramas), for each 26-week period following 17-day window, within first year after initial broadcast.

I'm no math major, so a show, say CSI: NY, goes on the internet and is watched say 3 or 4 times a day for six months. The ad revenue for that repeat episode is $2000 (which is more than fair) per showing. That's a simple formula of: $2000 x 3 x 26 = $156000. subtract the $600 from that = $155400. Not bad. Fair, too. Now multiply that by 100 shows, A more than $15 million net gain for networks.

Quite the deal, isn't it?

Caitlin said...

Huzzah!

Okay, moment over. I'm no expert, so I don't know how good or bad this will look to the WGA members and leadership. However, I am fairly sure it's progress, something to build off of. Not that I think it means anything, or that I'm trying to convince anyone to just accept these terms. There are still many steps that are going to have to be taken. But at least we've started taking them. Now the question is: why was that so damn hard for the AMPTP?

Good luck, everyone. I'm cautiously optimistic right now, and hope this leads to what the WGA deserved from the start.

J. said...

I see the directors are getting a 12% raise in their pay for TV directing. 12% seems very high and is obviously something that doesn't apply to writers.

I am waiting for strict scrutiny to be applied and to see all the terms....

actorinsupport said...

$1200 for a YEAR? For Streaming TV? That mght be a sticking point. Much more per RUN now.

Geo Rule said...

I hope WGA leaders will take up the AMPTP on their offer of "informal" talks. Even if "informal" is semantically null other than as a face saver for AMPTP to come back to the table without admitting that's what they are doing.

4merBTLer said...

Hooray for the DGA!!!

Seems that $2 mil. in research was well spent, and the DGA made good use of the pressure WGA and SAG have been applying.

Distributors' Gross!!! WOOHOO!!! That's my favorite!

DGA's priorities may not mesh completely with yours, but this sure looks like a step in the right direction to me.

Then again, what do I know? Take your time to analyze, confer, argue and iron out the details; what works for the DGA doesn't have to work for you... But at least the AMPTP sounds like they're willing to talk now.

Anyhoo, I'm having a MUCH better day now, so thanks for the great news!

JimBob said...

I don't know where anyone gets that this is a big move in the right direction. The numbers are still tiny; there's still that pesky window which, someone pointed out, in the fast-lane world of the Internet could easily be long enough to generate the majority of downloads or streams that item is ever going to get; I don't see "fair market value" to prevent self-dealing anywhere.
The DGA is saying, if I read the statement right, "We're willing to take a tiny slice of the Internet now, just to get our toe in the door -- we'll worry about getting something substantial three years from now, when it's clearer what the "business model" is. I say phooey to that. We've been screwed too many times by the biz-jet set telling us how murky the future looks and how we risk killing the goose that lays the golden egg. This looks like chickenfeed to me; we want a truly substantial piece of the action because we deserve it. I fear the companies may have achieved their goal of making a crappy deal with the directors to make us look like the unreasonable ones. As unfortunate as that is, it only strengthens my resolve (and I'm a working writer who's losing boo-koo money in this strike).

Samantha said...

actorinsupport, i've been asking that question for weeks now...

no one's offered an answer yet.

Dorkman said...

So $20,000 for one episode, rerunning one time, becomes $1200 for one episode with unlimited ad-supported streaming for a full year?

And all residuals are less than a percentage when you've got a product and distribution model with essentially no overhead?

No Deal, Howie.

Sometimes Showrunner said...

Even with this "very reasonable" deal in place with this "far more mature and reasonable" Guild. If we writers are still on strike, what is it they're going to direct for these pittance New Media residuals again?

Wool in Sunshine said...

Speaking as a fan - hooray! Speaking as a wanna-be writer - hooray?

I'll wait for the analysis to come out, but I think I'm pretty split on this. Yes, it's HUGE and establishes a great precedent, but is it enough? That 17-day window is particularly sneaky...who's to say the nets won't pull streamed shows offline after 17 days? They'll likely stay on itunes longer, but the official streams on the websites could definitely get pulled in order to skirt that aspect of the residuals.

MrKlaatu said...

What about a favored nations clause in regards to a final WGA or SAG contract? Does anyone know if that's part of the deal?

Joseph said...

I'm confused. During the first year there is a 24 day window during which they may stream a program without paying residuals TO HELP BUILD AN AUDIENCE? What does that mean?? How does not paying the artist encourage more people to watch something the first 24 days?? Are people like, "huh, I might watch that episode of 30 Rock, but I don't want the Studio to have to pay residuals on it."

Hopperfan said...

This should be no deal times 1000. The DGA rolled over again. No wonder why the AMPTP decided to wait and negotiate with them. The promotional period of 17 days (24 for first season) is moot since the moguls can pull shows right after that period is ending. This means that everything but the salary increases is moot. The DGA didn't negotiate anything and they should get Michael Ampted and Gil Gates the boot after rejecting this deal. Let alone the WGA, this deal doesn't even help the DGA in the long run.

Ruthie said...

I only hope the DGA members can live with the subtsntially higher residual rates we're going to get.

Captain Obvious said...

Joseph said:
I'm confused. During the first year there is a 24 day window during which they may stream a program without paying residuals TO HELP BUILD AN AUDIENCE? What does that mean?? How does not paying the artist encourage more people to watch something the first 24 days?? Are people like, 'huh, I might watch that episode of 30 Rock, but I don't want the Studio to have to pay residuals on it.'


Good job. Glad to see someone's paying attention. This is part of the AMPTP's complex web of Orwellian Newspeak. It's being used constantly to trick the guilds and sway the industry against us. All employees need to stand united.