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After six months of what has been characterized by all parties as friendly negotiating, the Screen Actors Guild, the American Federation of Television and Radio Artists, and the advertising industry agreed Aug. 7 to extend their current contract covering TV commercials. Although the basic terms of the pact, if ratified by the unions' membership, will remain the same for two years, actors will receive a 6 percent pay raise across the board and an increase, from 14.3 percent to 14.8 percent, in their employers' contributions to pension and health benefits, effective immediately. The decision to approve the extension is now in the hands of union members eligible to vote. Ballots were mailed Sept. 5 and are due Sept. 26. The current contract expires Oct. 29.

If voters say no, all parties will have to come up with a new contract before Oct. 29, or commercials on TV, radio, and the Internet will not be under union jurisdiction.

Perhaps the most important aspect of the proposed contract is its focus on ads broadcast across new media such as the Internet, cell phones, and personal digital assistants—entertainment platforms that have proven viable vehicles for actors and the ad industry in a relatively short time. The current contract—last negotiated in 2003—covers Internet work but not the technologies that have evolved since then.

Rather than setting a new payment structure for new-media work, SAG, AFTRA, and the Joint Policy Committee of the Association of National Advertisers and the American Association of Advertising Agencies opted to step back and carefully examine the situation. According to a joint SAG-AFTRA press release, an independent consultant will conduct an extensive study over two years, examining "alternative methods to compensate performers for their participation in commercials appearing on television, radio, and the growing array of new media." That study will be taken into consideration when all sides return to the boardroom in October 2008. Douglas Wood, chief negotiator of the JPC, said three consulting candidates are currently under consideration, but he could not divulge their names.

From the advertisers' perspective, actors should be compensated fairly for all commercial work regardless of the platform, but it's too early to know how much revenue new-media advertising will yield, especially because advertisers primarily use new media to reach a younger, more unpredictable demographic: teens, preteens, and young adults. "The next demographic that's come up, it's going to be really hard to get their attention," Wood said. "The cell phone, the iPod, the PDA, the [video] game, the whatever it is that the advertiser is going to use to reach that consumer, whether it's going to be effective or not, I don't have that crystal ball. I have no idea."

David Jolliffe, chair of the SAG negotiating committee, agreed but noted that part of the unions' modus operandi is to avoid getting the short end of the stick as they did when signing agreements in the 1980s covering the cable and home-video industries—the "new media" of that time. SAG took a lesser deal when inking its first contract for a basic-cable show in '86, because producers similarly argued that it was too soon to tell how viewers would respond to pay television. But it took nearly 20 years for the union to secure higher residuals for basic-cable work, during which time the industry exploded in popularity and revenue: A 2005 SAG study found the cable industry had increased 500 percent since the contract had last been negotiated in 1992, while actors' minimum rates rose by 35 percent. In April, SAG secured a new basic-cable animation agreement that included a 21 percent increase in residuals, and in July its national executive committee approved a separate agreement for live-action cable shows with a 21 percent boost in residuals for repeats—the first increase in 16 years. However, to reach that live-action agreement, SAG National President Alan Rosenberg suspended talks for three months and returned to the table in June with members' authorization to strike.

The fight to raise residuals for DVDs and home videos has been an even steeper uphill battle. SAG won a 9 percent pay raise and more money for health plans in its TV/Theatrical contract ratified in March 2005 but had to give up higher residuals for DVDs to seal the deal. In the first contract covering a "mobisode" (a show made to be broadcast on cell phones), ABC offered in February to pay members of SAG, AFTRA, the Writers Guild of America, and the Directors Guild of America residuals for The Lost Diaries mobisodes based on the home-video formula signed 20 years ago. Each of the unions argued that formula is archaic and not applicable to handheld media.

According to Jolliffe, reassessing new media's financial viability in two years will help prevent history from repeating itself. Said Jolliffe, "We're not going to let this happen under our watch. We are very cognizant that the new media—Internet, mobile devices—could very well be where this industry is going, and we want to be right on top of it." He pointed out that Section 4 of the extension "gives coverage of any new media or [any] ever to be invented in the future."

Unfortunately, it will be a tremendously busy time for SAG negotiators when they sit down with the JPC in October 2008. Jolliffe, who was also on the committee for those negotiations, said, "We have the TV/Theatrical contract expiring at the end of June. The Commercials contract will expire at the end of October…. Many of us believe that we'll be able to handle this. Is it a potential problem? Yes, we recognize that. Would we have preferred not to do it that way? Yes, but we believed that the longer term was the better for performers."

Wood and Jolliffe agreed the actors' six-month commercials strike of 2000 loomed large in the boardroom. Wood said neither side benefited from the work stoppage. "It hit everybody. Nobody won," he said. "Clearly, both sides for their own legitimate reasons wanted to avoid that again. No one wanted a repeat of 2000, because it would have made no sense for anybody."

Jolliffe pointed out that the strike gave actors more bargaining power in the advertising arena. "[The strike] was very difficult, but we just finished doing a study that showed the Commercials contract from 2000 to 2005 increased 41 percent," he said. "So I believe it was successful." A strike in the current situation, however, would be unnecessary because the union and the JPC are negotiating amicably.

Jolliffe is optimistic that SAG members will ratify the extension at the end of the month. "Ninety-nine percent of the people I talk to are glad that the contract is going to continue. They are pleased with the continued continuity and stability. They like the familiarity of the contract," he said. Wood said he has received positive feedback from advertisers.

The reactions of about 10 SAG voters interviewed by Back Stage ranged from positive to questioning. SAG New York board member Tom Ligon wrote via email, "I support and applaud the extension recently to be recommended to the membership. It gives good gains and sets the renegotiation period up for a time, [so] that we will not only know more about the diffuse ad area we are all dealing with but will put it in proximity to the DGA and WGA and SAG negotiations for a new TV/Theatrical contract in 2008."

Another actor who requested to remain anonymous wrote, "In my opinion the two-year extension is not a 'wonderful' deal, it's not a bad deal—but it may be a very smart deal."

The majority of the actors said they didn't have enough information about the convoluted contract to form a definitive opinion. To help educate members, SAG and AFTRA held three informational meetings in Chicago, New York, and Washington, D.C. The last meeting, in San Francisco, takes place Sept. 14.

For more information about the Commercials contract extension, visit www.sag.org or www.aftra.org.

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