The WGA issued this news release just now. Below it is the MPAA reaction:

California Senate Judiciary Committee Passes Fair Market Value Bill

Landmark Legislation Aims to End Unfair Accounting Practices in Hollywood

Sacramento –The California State Senate Judiciary Committee today passed Senate Bill 1765, the Fair Market Value Bill. It was introduced by Senator Sheila Kuehl (D-Los Angeles) and coauthored by State Senators Darrell Steinberg, Gloria Romero, Carole Migden, Elaine Alquist and Assembly Members Fiona Ma, Sandré Swanson, and Mike Davis. The bill would end the practice by some major studios of “underselling” television series or movies, thus shortchanging the talent community as well as production workers. The bill can now move to the full Senate for consideration and then to the State Assembly.

“Studios should not be allowed to undervalue their products in sweetheart deals with their own parent company and cost creative talent and crewmembers their rightful share in residuals and contributions to health and welfare funds,” said Senator Sheila Kuehl.

“This bill is good public policy because it ends a long-standing Hollywood accounting technique that has cost the talent community, both above and below the line. We thank the Senate Judiciary Committee for their affirmative vote, and we will continue our efforts to help this reasonable bill become law,” said Patric M. Verrone, president of the Writers Guild of America, West.

Since the major media networks in the United States have come to own many cable channels, the practice of selling TV series or movies for less than the fair market value of the content has become more and more prevalent. In many cases, the product is sold or licensed from one entity to another entity within the same parent company. This creates a problem for actors, writers, and performers who rely on the amount of a sale of material for their residuals – payments made to the creators or performers of a work for showings or screenings after an initial use. Other union members in the entertainment industry, including the Teamsters, also rely on the amount of a sale price to determine contributions to their health and pension funds. Lastly, major profit participants are often short-changed when a movie or television series is sold for less than the fair market value of the content.

In the last few years, there have been many high profile court cases on this issue. Profit participants from TV series, such as The X-Files, Will & Grace, and Home Improvement among others, have filed suit to prevent the practice of selling television programs from one entity to another for less than fair market value.

Barry Broad, Legislative Director of the California Teamsters Public Affairs Council, commented: “Our members, who are truck drivers, animal trainers, location managers, and casting directors in the film and television industry, depend on residual payments for their health and welfare benefits. If games are being played to avoid paying these hard working men and women their fair share, then the time has come for the Legislature to pass a law that will protect workers in the entertainment industry from such unfair conduct.”

Here’s the MPAA statement issued after the hearing today (The Motion Picture Association of America members include: Walt Disney Pictures Studios; Paramount Pictures; Sony Pictures Entertainment.; Twentieth Century Fox Film Corporation; Universal Studios LLLP; and Warner Bros. Entertainment Inc.):


LOS ANGELES, CA — “Though not unexpected, today’s vote by the State Senate Judiciary is regrettable. SB 1765 is an ill-conceived bill that would criminalize legitimate business decisions by producers of movies and TV programs as they seek to generate revenue created for producers and talent alike. Films and television shows would have to be immediately sold to the highest bidder, upending the successful business practices that have made the entertainment industry a vital engine in the California State economy, creating more than half a million jobs and bringing nearly $43 billion of economic activity to the State each year.

“Of equal concern, this bill would essentially force a legislative ‘do-over’ of the collective bargaining agreement that settled the writers’ strike, which cost the California economy $2.5 billion. Writers and producers made an extraordinary effort to reach a fair deal that put an end to that work stoppage. Enabling the Writers Guild to do an end-run around the collective bargaining process would set a dangerous precedent for future labor negotiations.”