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Update: Writers Reach Tentative Deal

13 Oct, 2004 By: Holly J. Wagner

The Writers Guild of America (WGA) officially threw in the towel on DVD residuals for the near future, although the Screen Actors Guild (SAG) is holding fast to its vow to pursue the issue.

The writers achieved gains in health care and other areas in a surprise contract announcement Oct. 13, but walked away from the increasingly hot issue of DVD residuals.

“There is no question that this tentative agreement was heavily influenced by pattern bargaining, for good and ill,” said WGAW president Daniel Petrie. “While we are very pleased with the total dollar amount of the deal, which is equivalent to the DGA's success, we are disappointed that our deal, like the DGA's, contains no gains in DVDs. In the end, we felt that protecting the health benefits of writers and their families had to be our top priority, and continuing to pursue a DVD increase would mean putting those gains at risk.”

The new proposed three-year, $58 million deal, includes agreements to discuss giving writers the same 1.2 percent from Internet download sales as their 2001 contract secured from Internet rentals. They also got a 20 percent annual increase in half-hour residuals and a 15 percent increase in one-hour residuals for made-for-pay TV productions.

Meanwhile, SAG officers plan to pursue the issue.

“In recent years, we've watched downstream markets explode for employers,” SAG president Melissa Gilbert said in the October issue of the guild's Screen Actor magazine. “The residual structure isn't as fair as it should be when it comes to the ones who make TV and movies magical — actors.”

The article outlining key elements of negotiations refers to “the DVD juggernaut which has produced a world where Finding Nemo sells 8 million units in one day, and TV shows like “Sex and the City “and “Seinfeld” are released on DVD and generate huge revenue for a studio.”

The guild wants to “adjust the antiquated formula used for calculating video residuals at was crafted when the market was in its infancy and long before DVD. And finally, the guild wants to address the appropriate residuals formula for so-called video-on-demand — including film and television programs downloaded from the Internet.”

The actors' existing contract pays them 4.5 percent of the first million dollars a movie makes on videocassette and 5.4 percent of profits thereafter; 3.6 percent of gross receipts of theatrical movies via broadcast or pay television; and 6 percent of total worldwide gross from pay television paid to SAG after the first 10 airings or the first year, whichever comes first.

The WGA opted instead to focus on health-care support in its stalled negotiations.

The guild suspended negotiations with the Alliance of Motion Picture and Television Producers (AMPTP) in June, in the hope the Directors Guild of America (DGA) would win concessions and pave the way for the other guilds.

The DGA negotiated its new contract with substantial gains in support for health benefits, but chose not to fight for changes to DVD residuals. A letter from DGA president Michael Apted noted that video has generated so much more revenue overall in the past few years that directors are making more money than ever before even without a larger percentage of residuals.

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