Letter to SAG Members -- Weaknesses in the DGA Deal

This letter was just sent out to SAG members by Doug Allen (Executive Director and Chief Negotiator) and Allen Rosenberg (President). Emphases in red are from us at UH -- LK.

Dear SAG Member:

Everyone hopes the WGA strike will end with a fair deal for the writers. There has been much speculation about the impact on the WGA strike of the tentative agreement between the Directors Guild of America (DGA) and the employers' representative, the Alliance of Motion Picture and Television Producers (AMPTP). Some have rushed to anoint their deal as the “solution” for the entertainment industry. We believe that assessment is premature.

All we know of the deal are the general terms described in a joint AMPTP/DGA press release. That press release leaves many important questions unanswered. Apparently, many elements of this deal remain unresolved and/or have not been reduced to writing.

The DGA press release suggests progress in some areas, but until the details are known, that is only speculation. Several examples: The formula for new media “electronic sell through (paid downloads or EST)” is based on the higher distributor’s gross revenues, rather than producer’s gross revenues, but the definition of distributor’s gross is vague and not sufficient to protect against manipulation by the employers. Also, information regarding employer “deals and data” will be available to the DGA to monitor distributor’s gross and paid downloads on the Internet, but the press release does not detail what data, who provides the data, and what happens if the data is not provided. The devil is in the details. In the tri-guild audits under the current guilds’ collective bargaining agreements (including the DGA’s), for example, some audits are still open after eight years, because of problems with enforcement under current contract language.

Some have suggested that the new DGA deal contains a “fair market value” test for revenues included in the new media residuals calculation, to protect against self-dealing when one part of a conglomerate sells new media content to another part of the conglomerate at an unfair, low price in order to reduce residuals. We hope this is true, but the press release does not use “arms-length transaction” or “fair market value test” language, and says only, “If our exhibitor or retailer is part of the producer’s corporate family, (DGA has) improved provisions for challenging any suspect transactions.” This language could mean anything, and certainly does not guarantee against self-dealing by media conglomerates to hurt creative talent.

Fair market value and distributor’s gross are two issues that the AMPTP demanded that the WGA take off the table, along with four other items, which resulted in talks breaking off in December. Now after prolonging the strike for another month, the AMPTP has negotiated these two issues with the DGA.

That is the good news. There are also even more serious problems with other provisions described in the DGA press release, particularly those involving new media. For example, why are residuals for electronic sell-through (paid downloads or EST) for directors based on their lower DVD formula (.3%) rather than the higher pay TV formula (1.2%) in their current agreement? All three guilds – SAG, WGA, and DGA – filed for arbitration to overturn management’s attempt to impose the DVD formula for residuals on the calculation of residuals for downloads under the current agreement. The DGA stated in their arbitration filings that payment of the lower amount is a violation of the collective bargaining agreement and the proper residual formula is the higher pay TV percentage. The concession by the DGA in the new deal, to use the formula that management improperly imposed under the current agreement, is an AMPTP roll-back. The new agreed-upon percentages for television (.7%) or feature films (.65%) are much lower in the DGA deal than the percentage that the DGA claims is appropriate in its arbitration (1.2%). And these “increases”, which are based on the discredited DVD formula, do not increase residuals on the sale of DVD’s, but only apply to downloads; despite the fact that DVD’s will generate billions in revenue to the studios and networks for years to come.

The very high thresholds in the DGA deal for full jurisdiction for made for new media content may well incentivize non-union work below the threshold amounts ($15, 000/minute, $300,000/program, $500,000/series, whichever is lower). What will stop the industry from making cheap, non-union pilots at below $300,000 per episode, for testing first on the Internet before the productions migrate to broadcast or basic cable?

Your Guild has signed 210 Internet producers to SAG contracts in the past two years and only seven of them (or 3%) would fall inside the high DGA jurisdictional thresholds. We have worked hard, just as we do with low budget features, to capture this Internet work and to make sure it is done union. This DGA proposal appears to abandon jurisdiction over a huge swath of actual Internet productions, which we currently cover.

This deal gingerly addresses certain issues now, with the apparent hope that in three years or more, revenues will grow and the agreement can be improved to capture more of it. Bargaining history in the entertainment industry, however, teaches that it is much harder to get a fair share of revenue after management puts it in their pockets for years. Residual compensation should be based on a fair share of revenue generated by covered content from the first dollar. Rather than a “percentage of revenue, payment from first dollar” approach to residuals, the DGA deal instead provides for a 17 day window for free streaming of television programs over the Internet without compensation (24 days for the program’s first season). The deal also allows a one year buy-out of $1200 for Internet use v. $20,000 for one re-run on broadcast television.

For these specific reasons, and because so much of the new DGA/AMPTP deal is unknown, no one should assume this new deal is a template for anyone else, certainly not for actors. It is up to the leadership and membership of the DGA to decide if their new deal with the studios and networks is acceptable, but whatever they decide, their decision will not determine what will be satisfactory for the leadership and membership of Screen Actors Guild. Each guild must act in the best interest of its own membership, including rejecting management-imposed “pattern bargaining.”

In solidarity,

Alan Rosenberg, President
Doug Allen, Executive Director and Chief Negotiator


UNITED said...

Way to go Doug. I haven't heard a single person on the picket line say that they think the DGA deal is fair or workable. Your concerns are our concerns. I'm a DGA member and I voted NO on ratifying that ridiculous deal with the AMPTP. 17 days of FREE programs and a flat fee of $1200 for the UNLIMITED use of our work is far worse than the lousy 4 cents per DVD that made us vote in new leadership, fire our old negotiator and STIKE! Get real AMPTP! SAG AND WGA will not be pushed into this bad deal.

Harold said...

My apologies for this off-topic post, but I noticed the compensation graphics on UH today (e.g., "The average Big 6 AMPTP Company CEO makes more than 464 Airline Pilots").

It's obviously fair to point this out, but it refers back to one of my common (and yes, repeated) complaints. That complaint is AMPTP driving the agenda and the WGA always behind responding to it.

464 airline pilots or 335 teachers, 335 fire fighters, etc. falls into that. A comparison to one of those occupations is comprehensible, but a comparison to 464 or 335 of something loses its power. If one is going to reply to AMPTP's salary graphics, why not change the comparison?

For example,

$32,135,675 - K. Rupert Murdoch, Chairman and Chief Executive Officer, News Corporation (owner of FOX properties)

$27,699,201 - Robert A. Iger, President and Chief Executive Officer, The Walt Disney Company

$22,479,353 - Richard D. Parsons, Chairman and Chief Executive Officer, Time Warner, Inc. (owner of Warner Brothers properties and co-owner of The CW network)

$17,863,452 - Jeffrey R. Immelt, Chairman and Chief Executive Officer, General Electric Company (80% owner of NBC Universal)

$28,600,240 - Sumner M. Redstone, Executive Chairman and Founder, Viacom Inc. and CBS Corporation

$28,637,111 - Leslie Moonves, President and Chief Executive Officer, CBS Corporation (owner of CBS network, Showtime, and co-owner of The CW network)

$11,190,049 - Philippe P. Dauman (compensation is only a partial amount due to Thomas Freston "resigning"), President and Chief Executive Officer, Viacom Inc. (owner of Paramount Pictures, Dreamworks, MTV properties, Comedy Central, Nickelodeon, and several other cable channels)

$89,302,968 - Thomas E. Freston (compensation includes a $71,752,741 "resignation" payment), Former President and Chief Executive Officer, Viacom Inc.

Those are the most recent total compensation amounts for those people that were reported in proxy statement filings with the SEC. Sony, a Japanese corporation, does not report executive compensation by individual. Eighteen top Sony executives received a total of $24,337,930.

For those that have compensation amounts available, the total compensation was over one quarter of a BILLION dollars ($257,908,049) for EIGHT people for an average of $32,238,506.

The $32 million average is equivalent to the cost of one Trident II missile with eight warheads that can deliver a total of 3.8 megatons of nuclear devastation.

Considering the ability of these CEO's to destroy livelihoods, the comparison to a nuclear weapon is appropriate. Whether you lose your home to uninsured destruction or foreclosure, it's gone all the same.

4merBTLer said...


It's nice to see this letter because I think it's important to know that the WGA isn't alone in its concerns re: the DGA deal. I would wish that it would be published in every trade and newspaper, but that's probably impossible, given media ownership. *sigh*

Here's the thing: I, and so many others in and around the Industry stand to lose everything we have. I personally support the WGA in its goal of a fair deal, and fervently hope that if I have to lose everything through this action, it will have been worthwhile. This labor action may well affect workers all over the world, in every walk of life, as thanks to the internet, information can no longer be completely quashed by big media and awareness of the strike and its issues is more widespread than in any previous labor action. Please make this action count. Stay united, show up on the lines and get a FAIR DEAL. Make no mistake; whatever you end up with won't just set a pattern for SAG to follow or fight, it will set a pattern for how management everywhere will deal with labor. And to the AMPTP, you are labor. You produce product for them to make money on, and they would like nothing more than to reduce you to hourly "guns for hire" (with no overtime, holidays, P&H, etc...).

One of the most disturbing things I saw as a young'un was the sight of armed guards walking around a factory in Brazil, forcibly "discouraging" attempts of the workers to organize. Perhaps this is why I am so pro-labor, even now, as a fledgling business owner.

I realize that your concern is focused on the needs of your membership (as well it should be), but in this history-making time, your struggle and the struggle of everyone around you must conclude with a deal that shows management everywhere that fair treatment of labor isn't a pipe dream, it's a necessity.

You are not alone; you have the support of many fans around the world, and you have the support of SAG, a group of people much-loved and very much in the public eye. Draw on that support to remain united in your goal, and get a fair deal.

Oh yeah, and for what it's worth, you have me.

"Collateral Damage"

Benjamin said...

Alan is the voice of reason. I am a longtime member of the WGA, and I find it disturbing that Alan and Justine Bateman appear to have a better handle on this than many WGAers. I have not seen anything about the DGA deal that would make it remotely palatable for writers or directors.

lj said...

This letter only makes me realize... something that I knew but I was suppressing for whatever reason... directors are total pussies. I mean seriously, their Board approved these terms unanimously? What a joke. They can talk all they want about being "adults" and condescend to the rest of us about how reasonable and mature they are, but I think there's another word for it. SUCKERS.

Nice job for calling it like you see it, SAG. And Apted's response-- already up over at Scribe Vibe-- just goes to show he's a defensive out of touch old hack. "Streaming? What the hell is that? Somebody get me Jimmy Stewart!"

P.S. if I were DGA I'd want a rebate on my dues. That $2 million research report was a waste of money.

Jason said...

As an outsider looking in, it seems odd to me that so much about the AMPTP/DGA deal is still unknown. Is there a specific reason it's still unknown, or are we (the general public) never likely to really know the deal that was struck?

Venice said...

Amen. I hope that our WGA negotiators are similarly resolute. There's absolutely no reason to fold to these ridiculous terms.

Michael said...

I have to say that I think about 70% of this letter is unhelpful to anyone. No kidding, the language in the press release is vague on several issues. It's a *press release.*

Also, I'm pretty sure the writer is misconstruing the fair market valuation issues implicit in the deal (though that's a big complication issue nobody's really talked about much-- how to do a formal Fair Market Value audit for streaming at this point)

And, as for the residual percentages being lower than what the guilds are asking for in arbitration, well, it's a negotiation, and obviously SAG (and WGA) is entitled to stake out a higher position than the DGA if they choose, but the tone of that paragraph is so weirdly taunting.

Geo Rule said...

Your Guild has signed 210 Internet producers to SAG contracts in the past two years and only seven of them (or 3%) would fall inside the high DGA jurisdictional thresholds.

Ouch. Ouch, ouch, ouch. Did I mention "OUCH!"?

just a thought said...
This comment has been removed by the author.
mheister said...

As a SAG member who's out picketing when I can, I'm glad to see our guild's leadership speaking out so clearly and forcefully on the various shortcomings of the DGA deal.

It doesn't matter so much so who contributes what to the accumulated pot of knowledge about New Media, the Internet, and what the guilds need for a fair deal; it only matters that we all continue to persevere and settle for nothing less than what's fair.

And what's fair for the guilds, whether the AMPTP realizes it or not, is in the longer term what's going to help them keep at least some of the content-creating talent that's going to be stripped away by Google, Yahoo, and the next few Mark Cubans to come down the pike.

cory said...

You know what? If it is this much trouble to get Hollywood going, then I would rather not have Hollywood. Or at least, not this current version of it. I hope the writers stay on strike, I wish the directors would have gone on strike, I hope the actors go on strike, and I hope the studios shut down. Then everybody out there in La-La Land can go get real jobs and see what it's like to actually have to work for a living.

Leeroy said...

If so much about the deal is unknown, why are they dissecting it? Why not, oh .. I dunno .. STFU until the details are available and studied?

jimmy said...


If you vote down this deal, the AMPTP loses ALL of their leverage.

They cannot blame the writers for stalling. They cannot blame the writers for putting the Oscars in jeopardy. And they will be cornered to finally deal fairly.

Vote it down, and YOU will get a deal closer to what the studio will then be forced to give the writers.


(although, it sounds like you already voted)

jimmy said...

And also, what I don't understand is how DGA members can be voting on a deal if no one knows the details.

Do even the DGA members not know? Does the Executive Committee who recommended it not know?


jimmy said...

cory - I understand that complaint. but don't pretend there is not a huge demand for the talents of the people on strike right now.

they don't get paid well because they are stealing it, they get paid well because the market has shown there is a high monetary value on their work.

that doesn't mean they are better people or worth more, it just means the free market system gives it a higher value than many jobs. just like being a doctor or lawyer, or other high paid jobs.

you're right, writers don't get very dirty, they don't punch clocks, they rarely break a sweat, they are not saving any lives or curing any diseases.

but entertainment is important to people. story telling has been a part of our culture since language was invented. it has value.

so if the vaule of a writers product in collaboration with other artists is collectively measured in billions, they need to be paid unfairly relative to that value. I don't think even you believe they should let their employers take an unfair share just so people with "real jobs" can feel better about themselves.

every writer I've ever met knows how incredibly lucky they are to have a job like this. they love it. and they will fight to be paid fairly relative to its value in the market. just like any other worker should.

D said...

Cory - unions and free markets are mutually exclusive economic concepts. Unions inhibit free markets (usually for betterment of those in the union) by not allowing prices (wages) to float freely based on demand. Sometimes it works (auto unions in the 20th century), sometimes it doesn't (auto unions in the 21st century).

Rob Gilmer said...

I've been a proud, fiercely supportive member of the WGA since 1978. The benefits (health, pension, residuals, minimums, arbitration, etc.) fought for by
writers in the past have greatly benefited enriched my life, my career and my art.

Today, I walk the picket lines, I hand out flyers, I spread the word about our struggle and our just
demands -- and I do so not only for myself, but also to honor the hard foughts battles of the past, the sacrifices made for me by thousands of writers who went
and wrote before me, and to protect the rights and privileges of younger writers and future members of the WGA.


Regardless of what the DGA has settled for, it is imperative that the WGA never falter, never lose sight of what we know is fair and equitable.

We cannot, we MUST NOT, turn tail and run, settling for a mediocre deal that is short-sighted and
superficial. We have allowed our pockets to be picked
in the past (I'm thnking of 1988) and we shouldn't, we can't, we must not be fooled again.

I know I echo the strong pro-WGA, pro-negotiating committee and pro-Board sentiment of our memebership when I strongly them to continue the fight!

I remember that kick ass song by the Who ("Don't Get Fooled Again"), with lyrics that included:

'And then I'll get on my knees and pray we don't get fooled again. No, no! We don't get fooled again!'

Pretty relevant lyrics for today --and tomorrow.

I thank and support everyone involved in the strike effort from the bottom of my heart.

You all represent the very best of the WGA and stand -- and fight -- for everything we believe in.

Keep up the great work. Let's make history TODAY!

Rob Gilmer

Jeremy said...

Um, so people criticise Nikki Finke for commenting on the DGA deal while the WGA leadership is in a press blackout, yet it's high fives to the SAG leadership (and UH for that matter :D) when they do the same? I am compelled to read this stuff too but can't we all just keep a level head until we have something concrete about the WGA deal? Shouldn't all you writers and actors be on the picket line or something?

Luzid said...

@ cory:

Creating IS a real job. Don't knock it just because you can't do it.

jimmy said...

jeremy - people that criticized Nikki Finke for reporting during a press blackout were completely wrong. it's not Nikki's job to enforce the blackout. If people leak info to her, THEY are the ones breaking the blackout -- not Nikki.

This blackout is between the WGA negotiators and the AMPTP negotiators, and no one else.

SAG should feel free to comment on how crappy they might think the DGA deal is, just as the DGA continues to say how great it is. Odd how Apted feels it's fine to do interviews touting its breakthroughs without feeling he might be interfering with the informal talks, but if SAG has some problems...that's interference? Give me a break.

SAG is not under a blackout. Neither is DGA. Neither are any rank and file writers not in the negotiating room.

This site has asked for restraint and has shown some. But as time has passed and more and more people are concluding there might real problems with the DGA deal for writers and actors, it seems completely appropriate to discuss it.

After all, it's not a secret agreement about national security or something. It's the contract that all of these writers will have to live with for the next three years. And the precedents set, perhaps for decades.

Maybe it's just me, but I say keep the discourse going.

Venice said...

d and cory

first d:

Major corporations wield the concentrated power of the production of thousands and thousands of employees and billions and billions of dollars. I'm not sure what is inherently wrong with workers acting collectively, just as a corporation does, to negotiate a wage based on supply and demand (i.e. free markets).

Just as a corporation can choose the amount that it is willing to pay, the union can decide if that amount is acceptable. It's like any negotiation.

Beyond that, unions provide a service to corporations as well as union members by facilitating an efficient process for new contracts with large numbers of workers. I doubt any of the studios want to negotiate a separate deal for every writer in Hollywood today.

Please explain why you feel unions and free markets are mutually exclusive.

The negotiations freely and voluntarily occur between two parties: management and the union. Just as the union can strike, management can lock out.

Unions also provide experienced negotiators to compliment management's experienced negotiators. See how well it works?

Unions just correct a power imbalance, that's all.

How much more of a free market could it be?


why are you so angry? if you don't like hollywood, turn off the tv. why denigrate what you know nothing about? you know nothing about writing, acting or directing. I know this because if you did you would never suggest that they are not "real jobs." Writing is hard. If you don't believe it, try it sometime. It's fucking torture most of the time. Many days I ask myself why I didn't take the easy way out and become a surgeon (not to pick on surgeons). But for some reason, this is what I love to do, despite the struggle, despite the grind, despite it all. I invite you to write a spec or shoot a film before you shoot off your mouth. or maybe just look into why you're so angry.

D said...


I wasn't saying unions are good or bad. What I was saying is that they exist to push back against a real free markets. By definition, a wage contract fixes prices (wages and benefits) for a period of time. In certain circumstances, primarily industries and areas where laws and regulations are undefined, unions do protect workers and thereby assist in the development of the industry in question (this is a good thing for both sides). In mature industries, however, where the union's primary function is wage negotiation, it can be detrimental to both sides as it inflates expenses beyond what the market will bear. As was the case with the recent auto union negotiations, they actually agreed to significant wage decreases in order to be competitve with other non-union companies (Toyota, Honda, et. al.).

Jeremy said...

Jimmy - I respect your position because you're (apparently) being consistent. I just find the outrage at DHD over Nikki's remarks on the DGA deal kind of annoying considering all the praise and "hell yeahs" over here aimed at SAG doing the same.

I am certainly not saying that no one has the right to comment on anything. It's even helpful to discuss things among yourselves, be it on the picket lines or on boards. That said, I don't think I have heard any real constructive discussion of what would be a good deal. I have no idea what writers think of what would be an acceptable deal. All I hear is that the DGA deal sucks.

Jeremy said...

I've read some of the past articles and it does seem that there has been some constructiveness. Nevertheless, here is a good reason that WGA membership should not be so happy about SAG leadership's statements:

AMPTP Releases Statement

So in effect, the AMPTP gets to make public statements about the things they are negotiating with the WGA about because they are responding to SAG and not talking directly about the WGA negotiations. If the WGA wants to counter any of those points in the public, the AMPTP will be able to claim that it was the WGA who broke the silence, not them because they were talking to the SAG leadership, not the WGA. I'm not saying they don't have the right to speak up but let's not kid ourselves into thinking that the SAG leadership's "helpfulness" is anything but unhelpful right now.

Luzid said...

@ jeremy:

Okay, like Victor in another thread - you're not paying attention to the suggestions that have been made, or you somehow missed them.

For example, the percentage-vs-flat fee debate. Several posters have suggested a fair deal would be a percentage of any monies collected on ad-supported streaming (which is completely reasonable - if they make money, writers make money, as they should).

I admit it's easy to be distracted by the AMPTP trolls (or those who might as well be, with their disdain for writers), but the discussion has taken place, and continues.

What do you think a fair deal would be?

Luzid said...

@ jeremy take 2:

Oops. I see you did go back and see constructive arguments. My apologies for missing that (oh, the irony BURNS)!

Jeremy said...


He he, no problem. I shouldn't have jumped the gun in the first place.

As to what a fair deal is, I really don't know. I'm not a writer so I really can't speak for the writers. I agree that the percentage of ad revenue is the fairest. I think the lowering of the minimum budget for union juristiction is a fair one as well but you may have to give up the rates you want in order to get that. Whatever the case, I think a hard line is not a good one for either side.

Luzid said...

@ Jeremy:

Sadly, with the fact that the AMPTP are proven liars (witness the "DVDs off the table" at the start of the strike - oh, and decades of precedent), a hard line is the only stance that will protect writers (and others).

Jerry Monaco said...

In case anyone is interested I put all of my posts related to the writers' strike @
Solidarity with the WGA


I don't know if you have noticed but the recent story told by the corporate press is that "United Hollywood" is part of the problem.

I wrote about this in a post called The Corporate Media Tries Out a New Narrative for the Writers' Strike

Much of this Web log has concentrated on media analysis and union history. I am not a member of the WGA but support you gals and guys!


Jerry Monaco

Venice said...


Thank you for the thoughtful response. You clearly know a lot about this topic. You sound as if you have studied it. I have not studied it all that much, other than this real-life case study.

So, as far as free markets go, how do you feel about the major studios bargaining collectively through the AMPTP? It's not a rhetorical question.

The auto manufacturers never negotiated collectively with the UAW, so to cite those negotiations in relation to the WGA/AMPTP negotiations might not be useful.

Do you think that the studios negotiating collectively as the AMPTP represents the "free market"?

What about vertically integrated conglomerates controlling production and distribution?

How do you think the opportunity to self-deal fits in the free market?

I just read that Time Warner, which provides the *only* broadband internet service I can access (i.e. a monopoly) is weighing a move to charging based on bandwidth use. Time Warner is also a major movie studio. So, once distribution of all media is through ISP pipes (maybe years away), and Time Warner controls both production and has a monopoly on distribution, how do you fit this in the free market model (which depends on competition)?

There's a lot here, a lot at stake, a lot of smart people trying to take it all. I don't even blame them. I get the motive.

It's just that the real producers of the content from conception also have that same motive and at the end of the day, we control conception.

What's so bad about a good old fashioned negotiation?