SAG lists main strike issues

When the Screen Actors Guild and the American Federation of Television & Radio Artists begin negotiations for a new film and TV contract, the unions' main issues will focus on residuals, salary compression, industry consolidation, diversity, digital technology and the Internet.

No date has been set for the start of the talks, but SAG on Wednesday issued a lengthy "summary of principal issues" outlining the main topics that the unions will bring to the bargaining table.

The unions discussed these issues with the industry's top CEOs when they met informally Dec. 4, but until now, details had not been made public.

Residuals will be a top priority. According to the unions, current residuals formulas are outdated and must be modernized to reflect today's "economic realities."

"The current revenue-based formulas were introduced in the early 1980s to foster the growth of the then-infant markets of video, pay television and basic cable," the unions' summary said. "These formulas were very much a product of the economics of the era. An alternative to the higher-yielding fixed residuals formulas found in broadcast television, revenue-based residuals imposed a lesser burden commensurate with the infant markets' economics."

But those infant markets have grown up, and the unions believe it is time for the outdated revenue-based residuals formulas to be switched to more generous fixed residuals formulas.

But the unions said that "once a formula is bargained into the contract, updating it to accommodate changed industry conditions is often impossible without a strike."

The unions also are concerned about the falling salaries of "middle-class" actors -- a phenomenon the unions call "salary compression."

"Despite the fact the overall earnings generated by the SAG television/theatrical contract have grown fairly consistently over the past decade, many of its 'middle-class' members have suffered a compression of wages earned under the contract," the summary said. "Seasoned performers were at one time able to negotiate significantly above minimum scale based on their well-established skills and experience. Today, there is little, if any, ability for these performers to negotiate above minimum levels set by that contract that have in essence, through industry practice, become the maximum."

Industry consolidation is another problem affecting actors' pocketbooks. Over the years, many actors have alleged that they have been shortchanged on residuals when one entity -- a studio, for example -- sells its product to a network that the studio owns.

According to the unions, "continuing consolidation of our industry into fewer, more diversified entertainment conglomerates gives rise to ... 'transfer pricing' abuses, where companies in the same corporate family license SAG-covered product to or from each other without regard to fair market value."

Once again, the unions feel that a fixed residuals formula -- rather than a revenue-based formula -- would help remedy this problem.

"In a revenue-based residual structure, a transaction that results in a below-market license fee will yield a lower residual for the SAG performer," the summary said. "As industry consolidation continues and there are fewer entities buying from and selling to each other, this handful of entities will become 'the market.' Fair market value will cease to be the result of objective market forces but will instead become whatever these few companies say it is."

The unions, which first added affirmative-action language to their contracts 21 years ago, said a lot still needs to be done to increase diversity on the screen.

"There are several points," the summary said, that "should be taken up concretely in implementing an effective affirmative-action/diversity strategy in film and television," including an "assessment and update" of the unions' current nondiscrimination clause and the development of a plan of action "to implement affirmative action/diversity within the industry."

Digital technology also poses new problems for actors.

"Now that films can be digitally manipulated in postproduction, we need to strengthen language in our contracts to keep producers from being able to alter performers' performances," the summary said.

Digital distribution of films also might pose a residuals problem.

"If one can download films and bypass the need for videocassettes, this may result in savings to the producers," the summary said. "The resultant savings may increase the profit to producers or lead them to reduce prices without reducing their profit margin. In the case of reduced prices, performers will see a drop in residuals even though the producers are not losing revenue. If the producers maintain prices and see increased revenue, performers should participate in that, too. We will need to ensure that benefits from increased efficiency in the industry are fairly distributed to producers and performers."

The Internet poses similar problems. Both unions now have contracts covering the Internet, but the summary said that "we want to make sure that the producers do not dispute our jurisdiction in this area."

The unions also want to make sure that actors are compensated if producers find new revenue sources by distributing old product over the Internet.

"Some types of Internet distribution do not fit our current residuals models," the summary said. "For instance, if a television episode is made available without charge in an advertising-supported revenue model, there is no direct corollary under the television agreement. The TV agreement calls for payment per 'run' or based on gross receipts, neither of which fits this type of Internet distribution."

The unions said that "where traditional residual models don't properly cover Internet distribution, we will have to make sure that performers are adequately compensated."