New SAG-AFTRA Deal Builds on DGA Template, Looks to Future (Analysis)

The "hard-fought" agreement continues the process of merging SAG and AFTRA.

The new deal reached just after midnight Friday by SAG-AFTRA and the AMPTP (representing studios and producers) achieved several key union goals: it unifies the legacy SAG and AFTRA television agreements, incorporates basic cable into an industry-wide agreement for the first time and includes wage increases and new media improvements similar to those obtained by the DGA and WGA.

Television is at the heart of the deal, and The Hollywood Reporter has learned that the television provisions in the new unified agreement are based on legacy SAG rather than AFTRA provisions. That means that the basic cable terms will reflect the “Sanchez” residuals formula used in the SAG, DGA and WGA agreements, rather than the AFTRA “exhibition day” approach that frequently paid lower residuals or none at all.

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It also likely means that primetime minimums in the new agreement will be based on the legacy SAG wage rates, not the slightly higher legacy AFTRA rates. The difference is about 3.5 percent and stems from SAG’s delay in reaching a deal back in the 2007-2008 negotiating cycle, a time of political turmoil within the union. AFTRA achieved and ratified a contract in summer 2008, while SAG didn’t reach an agreement until almost a year later, causing it to miss one annual wage increase.

The flip side of that trade-off is that the annual wage increases in the new agreement — 2.5 percent the first year (and a 0.5 percent increase in pension and health contributions) and 3 percent in the second and third years — apparently apply across the board. That consistency means that legacy AFTRA shows, even though they’re at a higher rate, will also get the benefit of the annual wage increases, as will legacy SAG shows.

Incorporating basic cable into the industry-wide television agreement also brings SAG-AFTRA to parity with the DGA and WGA, whose collective bargaining agreements include basic-cable terms. Previously, SAG, AFTRA and then SAG-AFTRA relied on stand-alone basic-cable agreements. Producers could choose which agreement they wanted, and the AFTRA basic-cable agreements were often modified or waived in part.

In a message to members, the union’s national executive director and chief negotiator David White called the agreement “hard-fought,” and that’s probably the most telling of the comments. The deal wasn’t reached until three days after the original expiration of the previous contracts, which were extended three times for 24 hours each time. Although it’s simple to say “merge the television agreements,” the devil is in a host of the details.

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SAG-AFTRA and the AMPTP declined to comment.

The coming months — and, realistically, years — will see the merger of legacy benefit plans as a major agenda item. There is now a limited form of reciprocity between the two health plans, and the new contract includes a mechanism to amend contract provisions to facilitate a merger of the health plans. The next steps are up to the SAG and AFTRA benefit plans, which remain separate entities despite the merger of the two corresponding unions in 2012.

Not yet addressed is the even harder question of how to reconcile SAG and AFTRA's separate pension plans. In addition to being a more economically complex matter than merging the health plans, a discussion of the pension plans is high stakes for the union because the studios may resist setting up a new pension plan with the same worker-friendly defined-benefit structure as the existing plans, pushing instead for a defined contribution plan akin to a 401(k).

That, in any case, is the position that much of corporate America has taken over the past several decades as union power has waned. Defined benefit plans guarantee the employee a certain monthly payment (based on income and years of service) upon retirement, whereas defined contribution plans come with no guarantee at all and expose the retiree to market risk. With only about 7 percent of private sector jobs covered by union agreements, the labor organizations in many industries have been unable to prevent erosion of what was once for many a key benefit.

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Not affected by the new agreement is the AFTRA network code “front of book,” which applies to daytime serials (soap operas) and other non-dramatic or non-primetime programming. That agreement expires November 15, and negotiations are expected to commence in the fall.

Union leaders praised the new pact. “Unifying the legacy SAG and AFTRA contracts was essential, and I am very pleased that we were able to achieve that,” said SAG-AFTRA president Ken Howard in the message to members. “As important, we have established an industry-wide, basic cable agreement — something we have wanted for two decades.”

White said, “The leadership has done exemplary work here and has secured a hard-fought and valuable agreement. Not only did we unify our agreements, a critical step in our march towards a merger of our benefits plans, but we now have improvements in the pension, health and retirement contribution rates, outsized gains for background actors and stand-ins and significant enhancements in other areas.”

In a statement released Friday, the AMPTP said, “We are pleased to have reached a tentative agreement with SAG-AFTRA for theatrical, television and new media production. This deal memorializes our partnership with the new union as we worked together to forge a new unified television agreement. The entire industry gains the assurance of a third and final agreement with the above-the-line unions. We congratulate SAG-AFTRA president Ken Howard, national executive director David White, chief contracts officer Ray Rodriguez and all of the members of the SAG-AFTRA bargaining committee on a successful negotiation.”

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Key terms of the new contract are as follows:

* Three-year agreement commencing July 1, 2014, and expiring June 30, 2017

* Contract unification including the first SAG-AFTRA industry-wide agreement covering basic cable

* Wage increases of 2.5 percent in the first year, 3 percent in the second year and 3 percent in the third year

* A half-percent increase in the current rate of employer contributions paid to the Screen Actors Guild-Producers Pension Plan and AFTRA Health & Retirement Funds in the first year of the agreement, raising the total contribution rate to 17 percent effective July 1, 2014

* An outsized increase for stand-ins of 5 percent per year in each of the three years of the contract

* A contribution allocation method to help stabilize the funding of the pension, health and retirement funds

* An agreement to pursue the merger of the legacy unions' industry cooperative funds

* A mechanism to amend contract provisions, as necessary, to facilitate a merger of the health plans

* Other gains including an increase to the rate paid to performers for streaming product, a reduction in the free streaming window from 17 days to 7 days and improved residuals formulas

* An increase in the amount of money performers must be paid before their residuals can be advance paid in several areas, including under The CW Supplement

* Additional covered background actor positions in the Western Zones in TV and theatrical beginning in year two of the contract by excluding more stand-ins from the count. Two additional stand-ins will be excluded from the count in television in the second year and one stand-in will be excluded from the count in theatrical productions

* Allowance increases in several areas

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Email: jh@jhandel.com

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