SAG Board Sees No Conflict in Pisano-Netflix

The Screen Actors Guild national board of directors has officially found no conflict of interest in Robert Pisano, SAG's national executive director-chief executive officer, serving on the board of directors of Netflix, an online DVD rental firm which has revenue-sharing agreements with the major studios. The board action may lead to two SAG members -- who have complained of an alleged conflict for Pisano -- to take the matter to court.

The board approved a resolution last Sunday saying they saw no conflict, Seth Oster, the guild's deputy national executive director for communications, told Back Stage on Tuesday.

The board had reviewed the alleged conflict in executive session.

Oster had explained the deliberation last Friday, saying, "After numerous legal reviews have repeatedly found there to be no conflict, we consider that this matter is resolved. But there remains the legal matter of the national board formally responding to the members who filed the original complaint."

The two complaining SAG members, Scott Wilson and Tom Bower, however, are still contending the matter. Their attorney, Christopher W. Katzenbach, had called on the SAG board to give a "full consideration" to the issue. Oster contended Tuesday that the board had done that.

David White, SAG's general counsel, had informed Katzenbach in an April 2 letter that the board would "take up" the conflict charge at the April 24-25 meetings.

Katzenbach responded in an April 13 letter, "Any full consideration of this issue would require the board to review all the correspondence on this matter, plus the various documents submitted by Netflix to the SEC describing its business and relationship with the studios."

Opponent Pushes SEC Papers

Katzenbach has said in earlier correspondence with White that he believes the Netflix filings with the federal Securities and Exchange Commission prove Pisano's conflict of interest. He particularly noted Netflix's indicating that labor relations with the studios could economically affect the online firm's business. Pisano leads SAG's negotiations on its major contract with the studios, including those with Netflix revenue-sharing agreements.

In their latest correspondence, White told Katzenbach that a side letter to the producers-SAG contract provides that guild members receive video/DVD residuals based on "20% of receipts derived by the distributor," meaning firms like Netflix.

Katzenbach's response indicated he believes the SAG board should pay close attention to that point: "The fact that SAG is collecting residuals from Netflix's transaction on the 20% formula indicates that the SAG considers Netflix as a producer, or...affiliated with a producer, under the [SAG] contract."

The SAG board evidently didn't agree with Katzenbach's argument.

Katzenbach, in his April 13 missive, attempted to head off any chance for the board passing a resolution absolving Pisano. He challenged that such a resolution would be illegal, noting a section of federal labor law that forbids "exculpatory" -- meaning to clear of guilt or blame -- constitutional provisions or resolutions by governing bodies.

The SAG leaders, obviously disagreeing, approved a resolution.

Evidently expecting little support from the SAG board, Wilson and Bower have begun an effort to raise money to take the conflict issue to court. The two have sent an April 19 letter stating their arguments on the alleged conflict, and also warning that another SAG-AFTRA merger effort is in the offing. The writing indicates they also foresee a legal fight on merger.

"To carry on these legal battles we need your help," the letter -- addressed to "Dear Friend and Fellow Member" -- states. "We must act now to save our guild and the Film and TV contract negotiations from this blatant conflict of interest."

The guild earlier this year agreed to a one-year extension to the lucrative film-TV pact. Negotiations on a full three-year pact -- including DVD residuals -- will take place this coming fall.

"At stake are millions of dollars of DVD and digital media residuals," the letter stresses.

The letter then immediately turns to merger, saying, "If the guild launches another push for consolidation with AFTRA, we will need legal advice to protect your pension and health plan."

The benefits plans, especially health, were a major issue in both the '99 merger vote and the consolidation vote last year. AFTRA members approved both ballots. SAG turned down the first, and barely defeated the second.

Wilson and Bower's correspondence carried a letterhead reading "Actors Rights," and providing a post-office-box number in Los Angeles.