For a number of years, AFTRA basic cable deals paid lower residuals than SAG's, which was one trigger of open warfare between the unions in 2007-2008. The conflict led to a breakdown in joint bargaining and a year-long period where SAG worked under an expired contract.
At the time, AFTRA said the point of doing such deals was to organize productions and then later raise rates. There was no way to know how the strategy would play out, and SAG leaders at the time, who are anti-merger advocates today, scoffed at that explanation.
It turns out AFTRA was right. "The Hollywood Reporter" has learned from a source close to the union that as of mid-May 2011, a surprising 91 percent of AFTRA basic cable shows on the air are produced under the industry standard "Sanchez" formula, which pays residuals for every rerun. Most are at so-called Exhibit A rates, rather than lower rates provided in a supplementary agreement.
In addition, AFTRA shows in basic cable (as well as primetime and syndication) pay 3.5 percent higher minimums than SAG as initial compensation, a differential which began when AFTRA reached a deal with studios in mid-2008 but SAG took a year longer. That also slightly increases the Sanchez residuals, since they're calculated as a percentage of applicable minimums. The same is true in primetime and syndication.
Basic cable was the one key area were AFTRA's customary deals were – formerly – lower than SAG's. In particular, primetime and syndication residuals were paid at the same rates as SAG.
Sanchez has been the standard SAG formula but, ironically, it's one that SAG abandoned for the first time in the guild's mid-2011 King Street Productions / TV Land deal that came to light in the last couple days. Instead, SAG used a formula that pays no residuals for the first 12 exhibition days or first year.
The 9 percent of AFTRA shows that still use an exhibition day formula allow at most 10 exhibition days – not 12 – or one year. Some allow less than 10. An "exhibition day" is any day on which a program is aired, no matter times it's aired in that day. Thus, typical saturation broadcasts pay nothing under an exhibition day formula, whereas each rerun is payable if the Sanchez formula is used.
As an example, FX's "It's Always Sunny in Philadelphi" was initially bargained in 2004 under an exhibition day formula, but AFTRA successfully bargained it up over time, reaching Sanchez levels in 2009.
Ironically, among AFTRA's Sanchez deals are four with King Street Productions / TV Land, for "Hot in Cleveland," "Happily Divorced," "The Exes" and "Retired at 35." A SAG spokesperson said last night that its agreement with TV Land's King Street "expands SAG's coverage in television."
Thus, it appears that SAG, in an attempt to regain some television jurisdiction from AFTRA, bargained for lower rates than AFTRA – an apparent example of the "race to the bottom" that merger advocates cite as a reason to combine the unions.
SAG has also lost enormous market share to AFTRA in network primetime. In 2008 and preceding years, SAG garnered about 90 percent of pilots and a comparable percentage of series pickups. Starting in 2009, as a consequence of the guild's stalemated contract talks, that reversed to a percentage of about 90 percent AFTRA. As THR first reported at the beginning of February, early figures showed that trend continuing for a fourth year in a row, albeit with a slight dip to about 80 percent. Updated numbers show AFTRA's share at 87 percent, meaning that there has been no drop-off in the union's share or increase in SAG's.
The Sanchez rates are significantly lower than network or even syndication residuals, but they are what are used by the DGA and, usually, SAG, and are one of the two alternatives that the WGA allows producers to choose from. (The other WGA formula is yet a third approach to basic cable, rather than exhibition days.)
As a related matter, AFTRA shows produced in Canada are required to be produced under full Sanchez Exhibit A terms.
AFTRA's coverage in basic cable began in the late 1980's and early 1990's, not 2003 or so as is sometimes asserted. Early AFTRA basic cable shows included "Keenan and Kel," "Clarissa Explains It All" and "Big Brother Jake."
SAG's TV Land deal was reached in mid-2011, but apparently first became public on Friday when an item was published on Arlin Miller's SAG Watchdog, a website strongly opposed to merger (and not to be confused with SAGwatch, a website with a pro-merger view).
Earlier Monday, THR ran a story on SAG's TV Land deal headlined "SAG Signs AFTRA-Type Cable Deal with TV Land." In light of the newly discovered developments, that headline has been rephrased as "SAG Signs Discounted Cable Deal with TV Land."
– The Hollywood Reporter