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Labor Law Expert Criticizes SAG-AFTRA As “The Merger That Solves Nothing”

By NIKKI FINKE, Editor in Chief | Monday January 30, 2012 @ 12:11pm PSTTags: Hollywood actors, SAG AFTRA, Screen Actors Guild

Actors Largely Support Proposed SAG-AFTRA Merger At SAG Awards
SAG Will Include Anti-Merger Statement With Voting Materials

Scott J. Witlin is a partner in the Los Angeles office of Barnes & Thornburg and a member of the firm’s Labor and Employment Law Department and the Entertainment and Music Practice Group. His bonafides to comment on the proposed SAG-AFTRA merger include serving as chief negotiator on behalf of a group of leading videogame companies in their negotiations with the AFTRA and SAG. He is frequently quoted in the media on issues involving labor and employment law. Deadline is posting opinions on all sides of this issue in the weeks leading up to both memberships’ referendum vote:

SAG-AFTRA: The Merger That Solves Nothing

by Scott Witlin

The Screen Actors Guild’s National Board has approved its merger agreement with the AFTRA, the American Federation of Radio and Television Artists. If approved by AFTRA’s Board and the membership of both unions, the new union will be known as SAG-AFTRA.

Merger of these two unions with overlapping jurisdictions has been attempted several times in the past without success — most recently in 2003. However, this attempt has fed off a significant rank and file sentiment to address two key concerns: 1. Having to pay dues to two unions; and 2. Split benefit contributions. However, the proposed merger addresses neither of these issues.

The proposed merger agreement does nothing to streamline the staff of the newly merged union. As a result, the expenses of the two unions will remain largely unchanged. Even if some cost savings could be found, SAG’s shaky financial condition means that a dues reduction for members is highly unlikely. [One unconfirmed media report says] that for some members dues actually will increase. That the two unions are not touting how this merger will mean reduced dues for all their members likely means this goal was not achieved.

The benefit contribution issue arises from the fact that although the two unions have overlapping jurisdictions, and indeed bargain several of their contracts jointly, they have never unified their benefit funds. As a result, performers who split their work throughout the year between jobs under the SAG contract and jobs under an AFTRA contract may fail to meet the earnings thresholds under either contract to qualify for benefits. SAG and AFTRA chose not to attempt to address this issue before entering merger talks and as a result, the two unions could not solve this problem through their merger agreement. Instead, they must now bargain with the various employers with whom they contract such as the Alliance of Motion Picture Producers and the Joint Policy Committee of advertisers and manufacturers.

However, agreeing to merger without solving the benefit plan issues is like putting the cart before the horse. If the merger goes through, in order to appease the members who have agreed to this combined entity, the union will have to achieve a solution to the split benefit issues. However, the SAG and AFTRA pension plans each have deficits hundreds of millions of dollars in magnitude. Making changes to either plan will be prohibitively expensive. The employers are going to resist having to cough up hundreds of millions of dollars to solve the new Union’s problem. That is why if the merger does get approved, there are going to be many unhappy members down the line.

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Can Actors Be Sold On The VOD Business Model? Sundance Buyers Ponder That…

By MIKE FLEMING JR | Monday January 23, 2012 @ 9:35pm PSTTags: Hollywood actors, Margin Call, VOD
Mike Fleming

The longer the 2012 Sundance Film Festival deal-making stalemate continues, the more VOD-centric deals will take center stage as they did in Toronto. A lot of the movies that came in with visions of theatrical releases are considering overtures from bidders who intend to emulate the Margin Call model where video-on-demand is equal to or more important than theatrical.

If VOD is to become a viable business that leads films on the margins to being widely seen, some obstacles have to be worked out of the system. The biggest: convincing actors accustomed to seeing their work play on 2,000 movie screens that the VOD model doesn’t mean their careers are on the downswing and that they’ve been relegated to pay-per-view. The only real equivalent actors have had for this was when they made a stinker that went straight to video obscurity. Will those actors spark to the potential of VOD riches and embrace the idea of promoting films to cable delivery systems instead of the ego-boosting traditional selling system of commercials and print ads? This is a psychological hurdle for stars. When Margin Call sold at Sundance last year with the Lionsgate/Roadside Attraction distribution VOD deal, veteran actors like Kevin Spacey had to be convinced this wasn’t necessarily a step down from a traditional theatrical release.
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