The WGA West just issued its first Contract Bulletin about the upcoming TV/Theatrical contract about to be negotiated with the AMPTP. Issues discussed include New Media and Pension & Health:

WGAW Member Meetings to Discuss Negotiations for the 2011 Contract

Please join President John Wells, Executive Director David Young, Negotiating Committee Co-Chairs John Bowman and Billy Ray, and members of the WGAW Board to discuss plans for the upcoming negotiations and potential priorities for contract demands. Members will have the chance to give input and pose questions to Guild leaders. Los Angeles area members can choose from three meeting opportunities:

Tuesday, November 9, 7:00 p.m. at the Sportsmen’s Lodge
4234 Coldwater Canyon Ave., Studio City

Tuesday, November 16, 7:00 p.m. at the Loews Santa Monica
Beach Hotel, 1700 Ocean Avenue, Santa Monica

Thursday, Dec 2, 7:00 p.m. at the Writers Guild Theater
135 South Doheny Dr., Beverly Hills

Challenges for the Guild this Year

As hard as it may be to believe, we are now entering the final six months of the contract we negotiated to end our 2007 strike. With our contract expiring on May 1, 2011, your Board and staff have been working over the last year to identify the areas we believe will need to be addressed in our upcoming 2011 MBA negotiations. This process has involved months of staff effort, extensive surveys of our members in screen and television, and many hours of Board discussion.

While this bulletin outlines many of the areas we believe will need to be addressed, it is not intended to be exhaustive. There are other issues we are examining further, and we are anxious to begin our membership outreach meetings to gather more member input into the issues (both
economic and workplace) that are confronting writers in this challenging economic climate.

We are very fortunate to have John Bowman and Billy Ray accept the Board’s request to co-chair the Negotiating Committee. John ably chaired our 2007 Negotiating Committee, and Billy is one of our most distinguished screenwriters and a current member of the Board. They will soon begin the process of assembling a Negotiating Committee in anticipation of our setting a date to start discussions with the companies.

We are convening outreach meetings November 9, November 16, and December 2 (for more details see the meeting announcement on page three). Members of the Board and staff will be in attendance to outline our current thinking, answer your questions and hear what you want to see addressed in our upcoming negotiations. Your participation and insights are essential to this process so do try to find the time to attend.

This is the first of what will be regular updates on our progress. Please read it carefully and attend a membership outreach meeting to let us know your thoughts. If you’re unable to attend a meeting, please forward an email to us at the Guild.

Your participation is crucial to a successful negotiation. Thank you –
John Wells, President WGAW
David Young, Executive Director WGAW

Pension & Health

The financial meltdown in 2008 and its aftermath have had drastic consequences for millions of Americans hit by falling home prices, the loss of jobs, tightening credit and significant stock market declines. The market downturn has left pension plans around the country dealing with significant reductions in the value of the investments that fund their pension payouts, and health plans dealing with reduced contributions, the consequence of fewer people working.

The dramatic market declines put particular pressure on pension plans, including our own. Although we have now recovered a significant amount of our losses at our Pension Plan, we do need to take steps to address the long-term financial solvency of our plan in order to make sure we protect our pension benefits into the future.

Pension and health benefits are two of the most important achievements of half a century of collective bargaining by the WGA. They are the cornerstone of the MBA, providing security to writers who forge careers in an often insecure industry. That’s why ensuring the financial health of our Pension Plan and Health Fund is so essential.

Multi-employer plans like ours operate under complex and often changing governmental regulations intended to protect the benefits of plan participants. These rules require the funds constantly to assess their ability to meet commitments based on revenue and long-term cost projections. For example, one federal statute, the Pension Protection Act of 2006, requires an annual certification of a pension plan’s financial well-being.

If certain funding requirements are not met, the statute requires changes in the plan. Under current federal standards, our Pension Plan is adequately funded and likely to remain so until 2014 or 2015. But investment returns in the current environment are highly unpredictable and the plan will need an extra infusion of contributions to maintain the current level of benefits.

We are certainly due for an increase – the pension contribution rate has been set at 6% of writer compensation since 1982!

In much the same way, the Health Fund has been run efficiently to maximize our benefits. Our trustees have done an excellent job of controlling costs and taken care not to spend beyond our means. Many of you will recall that in 2003, when the Health Fund was under pressure due to soaring health care costs, the trustees made a series of difficult decisions, such as increasing the threshold of earnings necessary to get coverage and instituting a dependent premium. But as we continue to face increasing health care costs, it is clear that we will need to increase contributions to the health fund. It’s time for the companies to increase contribution rates to both our pension and health plans.

New Media

While the 2007-08 negotiations successfully addressed many aspects of new media writing, the evolution of the market over the last three years has pointed out several areas that were either incompletely addressed in 2007, or have now emerged as new areas requiring our attention. Among the issues needing our attention:

Initial Streaming Window
When a television program is reused on the Internet in ad-supported streaming, our current contract allows for a free 17-day window before residuals are paid. The free window is 24 days for a series in its first year. These free windows are too long and should be shortened in the upcoming negotiations.

Fixed Residual for continued streaming
If the company chooses to leave an episode online after the free period, the residual paid to the writer is calculated as 2% of a imputed license fee of $40,000 for an hour program and $20,000 for a half-hour program, i.e., $800 and $400. For other programs, the amount is calculated as 3.5% of the applicable minimum, resulting in a payment of $817 for an hour or $450 for a half hour. These residuals were based on the approximate ad values for streaming our work at the time of the 2007 negotiations. More recently, the companies have told the press and advertisers that the value of these online streams is closer to 10% of a network TV rerun. We need to increase the ad supported streaming residuals to bring them into line with the current online marketplace.

Clips used in new media
Under our current contract, most short excerpts (five minutes or less) from television programs and feature films used by the companies on the Internet are considered “promotional”— meaning that no payment is due to the writer. Clips are increasingly becoming entertainment in their own right and are generating revenue for the companies. As this market develops, we need to review the circumstances under which these clips may be used for free and make certain we receive our fair share of any monies the companies are collecting for the use of our work.

Coverage of made-for-new media programs
Terms and conditions for writers working on made-for-new media programs were established in the last contract. Over a hundred programs, both original and derivative of TV series, have now been produced under Guild contracts. We have now discovered, however, that there are limitations based on budget and other issues that may be unnecessary or undesirable and need modification.

All in all, we made excellent progress in new media jurisdiction and compensation during our 2007 negotiations. But it is essential that we continue to improve upon our existing contractual provisions as the market matures and that we stay vigilant in monitoring these new media businesses in a rapidly evolving new media marketplace.

Addressing the Effects of New Business Practices

Over the last two years members have reported significant changes in hiring practices and working conditions, that harm writers both economically and creatively. Part of the problem for screenwriters is that, while theatrical box office receipts continue to increase, studio development budgets and the number of produced films have decreased. Screenwriters report they are being asked to pitch multiple times on a project before being offered employment, and are even being asked to provide written material before being hired (a clear violation of our contract). After pitching, they often discover that many other writers were vying for the same project. Writers have reported as many as ten writers competing for the same job, and many of them are asked to return and pitch as many as five times.

In television, there is significant downward pressure on staff sizes and salaries. Even as employment opportunities shrink, members report that exclusivity clauses and options in their contracts hamper their ability to develop and to search for work. Abuse of option periods is particularly rampant in basic and pay cable. To address an deteriorating pitching process, disadvantageous deal points and other member concerns, the Guild’s Screen and TV Committees on the Professional Status of Writers (CPSW) have been meeting with studio heads and studio development executives during the past year. While the dialogue has been generally positive, Guild leaders and staff are also preparing contract proposals to address these workplace issues.

During contract negotiations we also wish to enhance programs that have already proven beneficial to both writers and the companies. The Showrunner Training Program is a prime example: established in 2004, the industry-funded program has completed five cycles, training 133 senior level writer-producers, many of whom are now running shows. Last year an all-day session for studio execs was added to give our members the opportunity to discuss how executives and writers can better work together.

In our upcoming negotiation, we plan to propose a similar training program for screenwriters. While the Writers Guild Foundation and the Writers Guild Education Committee organize valuable programs on craft, there is a dearth of opportunity for screenwriters to teach each other successful business practices in features.

There is obviously also a need for structured dialogue between studios, producers, and screenwriters about how to work collaboratively to develop and create projects.

Parity for Writers in Basic Cable

Management negotiators always argue that when a new technology emerges, compensation to artists must reflect the uncertain economics of new markets. That was the case in the 1980s when basic cable was developing, and we negotiated with the companies for minimum compensation rates that reflected a new, as yet untested market. But the companies are always reluctant to apply that logic in reverse, and refuse to raise compensation rates when a market clearly matures and becomes profitable.

As writers are well aware, basic cable is now a mature and highly profitable market for the companies. It is no surprise viewers think of network television and basic cable television as being interchangable. Ask anyone what their favorite TV shows are and the answer will almost certainly include series like Mad Men (AMC), Damages (FX), Burn Notice (USA), iCarly (Nickelodeon), and Hannah Montana (The Disney Channel). The growth of basic cable in the last decade has been explosive.

Eighty-eight percent of TV households subscribe to basic cable, a growth of 15 million homes in the last ten years. Basic cable’s popularity is further demonstrated by its expanding share of primetime viewing. In the last ten years, basic cable’s share of primetime household television viewing has grown from 42% in the 2000-01 season to 58% in the 2009-10 season. Original dramatic series written by Guild members have driven cable’s success.

In just five years, basic cable dramatic series have grown from 20 series in 2004 to 70 in 2010. Think of series like Breaking Bad (AMC), Sonny with a Chance (Disney Channel), My Boys (TBS), Sons of Anarchy (FX), and Hot in Cleveland (TV Land) – all are basic cable dramatic series.

Cable’s growing popularity has translated into healthy revenue growth for our employers. Basic cable revenues have grown almost 9% each year over the last four years. The $42.9 billion in advertising and subscription fee revenue that cable networks earned in 2009 is greater than the annual revenue of the domestic box office, DVD sales, and broadcast network ad sales combined.

Notably, five of our employers control 77% of this revenue. While cable is a large market comprised of numerous segments including news, sports and entertainment, basic cable channels use WGA covered series to drive their growth. These channels are hugely profitable enterprises that generate a disproportionate amount of revenue due to the value of the content we create.

The kind of high quality programming we have created for the broadcast networks and pay television in the past is now seen throughout basic cable. Twenty seven percent of 2010 Primetime Emmy Awards went to basic cable programs including Mad Men, Breaking Bad, and The Closer.

But there is one place where basic cable programming is not the same as network or pay TV programs – our pay. Writers of one-hour dramatic episodes on pay TV or network series like Dexter (Showtime) and CSI (CBS) are paid script fees of $33,681, while writers of basic cable series like Burn Notice (USA) and The Closer (TNT) are paid only two thirds as much ($23,370).

And it’s not just hour writers, a 30-minute basic cable episode pays only about half what a network writer would receive. The current script fee for a 30-minute story and teleplay on network primetime is $22,900. On basic cable it’s just $12,857. Residuals for made-for-basic cable programs also significantly lag broadcast. A network primetime rerun generates 100% of the applicable minimum; for a 30-minute dramatic show, it’s $12,857.

By contrast, the second run of a 30-minute made-for-basic cable dramatic program typically generates a residual of 17% of the applicable minimum. In fact, under the standard “Sanchez” residual formula in basic cable, a writer is paid residuals for runs two through five when the episode first reruns on basic cable. This might not seem so bad until you realize that the total payment for runs two through five on basic cable is just 50% of the applicable minimum, whereas each rerun payment for a network primetime show is 100%.

The basic cable market has evolved from its humble beginnings into a highly profitable business. Viewers do not distinguish between made-for-network and made-for-basic cable programs, and writers must deliver comparable product for both markets for a show to be successful. On most basic cable shows, staffs and staff compensation are also significantly reduced, so writers are working harder for less while their employers are making record profits. It’s long past time to change this.