Directors, Studios Reach New Contract

After less than a week of formal talks, the Directors Guild of America has reached a new contract with TV and film studios, and now it remains to be seen if the striking Writers Guild of America will resume their negotiations and work toward a similar pact.

On Thursday the DGA announced it had concluded a tentative agreement on the terms of a new three-year collective bargaining agreement with the Alliance of Motion Picture and Television Producers.

The new contract gives the DGA jurisdiction over content created for distribution of the Internet and addresses other issues on new-media compensation, but it remains to be seen if the striking writers will view those terms as a template for their own new contract with the AMPTP.

The WGA, which has been on strike since Nov. 5, had its talks with the AMPTP break off Dec. 7. The DGA and AMPTP started their formal talks last Saturday.

The WGA issued the following statement late Thursday afternoon in response to the DGA deal: “Now that the DGA has reached a tentative agreement with the AMPTP, the terms of the deal will be carefully analyzed and evaluated by the WGA, the WGA’s Negotiating Committee, the WGAW Board of Directors, and the WGAE Council,” the writers’ union said. “We will work with the full membership of both Guilds to discuss our strategies for our own negotiations and contract goals and how they may be affected by such a deal.

“For over a month, we have been urging the conglomerates to return to the table and bargain in good faith,” the statement continued. “They have chosen to negotiate with the DGA instead. Now that those negotiations are completed, the AMPTP must return to the process of bargaining with the WGA. We hope that the DGA’s tentative agreement will be a step forward in our effort to negotiate an agreement that is in the best interests of all writers.”

Highlights of the new DGA agreement include: 

*Increases in both wages and residual bases for each year of the contract;

*Establishes DGA jurisdiction over programs produced for distribution on the Internet;

*Establishes new residuals formula for paid Internet downloads (electronic sell-through) that essentially doubles the rate currently paid by employers;

*Establishes residual rates for ad-supported streaming and use of clips on the Internet. 

“Two words describe this agreement - groundbreaking and substantial,” Gil Cates, chair of the DGA's Negotiations Committee, said in a statement. “The gains in this contract for directors and their teams are extraordinary – and there are no rollbacks of any kind.” 

Members of the AMPTP put out a joint statement on the new DGA contract.

“The agreement between the Alliance of Motion Picture and Television Producers and the Directors Guild of America establishes an important precedent: Our industry's creative talent will now participate financially in every emerging area of new media,” the statement said. “The agreement demonstrates beyond any doubt that our industry's producers are willing and able to work with the creators of entertainment content to establish fair and flexible rules for this fast-changing marketplace.”

The joint statement came from: Peter Chernin, president and chief operating officer of  News Corp.; Brad Grey, chairman and CEO, Paramount Pictures; Robert Iger, president and CEO, Walt Disney Co.; Michael Lynton, chairman and CEO, Sony Pictures Entertainment; Barry Meyer, chairman and CEO, Warner Bros.; Les Moonves, president and CEO, CBS Corp.; Harry Sloan, chairman and CEO of MGM; and Jeff Zucker, president and CEO, NBC Universal.

“We hope that this agreement with DGA will signal the beginning of the end of this extremely difficult period for our industry,” the AMPTP statement said. “Today, we invite the Writers Guild of America to engage with us in a series of informal discussions similar to the productive process that led us to a deal with the DGA to determine whether there is a reasonable basis for returning to formal bargaining. We look forward to these discussions, and to the day when our entire industry gets back to work.”

According to the press release on the WGA pact, the agreement includes gains in new media such as:

* Jurisdiction: The new agreement ensures that programming produced for the Internet (both original and derivative) will be directed by DGA members and their teams. The only exceptions are low-budget original shows on which production costs are less than $15,000 per minute, $300,000 per program, or $500,000 per series—whichever is lowest.

*Electronic Sell-Through: It is the paid download of features and TV programming. The agreement more than doubles the electronic sell-through residual for television and increases the feature film residual by 80% over the rate currently paid by the employers.

Specifically, the electronic sell-through residual rates will be 0.70% for television downloads and 0.65% for film downloads, above a certain number of units downloaded. Below that, residuals will be based on formula employers currently pay.

Payments for electronic sell-through will be based on distributor’s gross, which is the amount received by the entity responsible for distributing the film or television program on the Internet. Having distributor’s gross as the residuals basis was a key point in our negotiations.

“The companies are now contractually obligated to give us unfettered access to their deals and data,” the DGA said. “This access is new and unprecedented and creates a transparency that has never existed before. Additionally, if the exhibitor or retailer is part of the producer’s corporate family, we have improved provisions for challenging any suspect transactions.”

*Ad-Supported Streaming: After an initial 17-day window for free promotional streaming of Internet programs, companies must pay 3% of the residual base (about $600 for a network primetime one-hour drama) for 26 weeks of streaming. They can continue to stream for an additional 26-week period by paying an additional 3% -- or a total of $1,200 for one year’s worth of streaming. (During a program's first season, the 17-day window is expanded to 24 days to help build audience.)

*Sunset Provision: Allows both sides to revisit new media when the agreement expires. 

“Our fundamental goal in these negotiations was to protect our interests in the present while laying the groundwork for a future whose outlines are not yet clear,” Cates said. “We knew that gaining jurisdiction over new-media production and winning fair compensation for the reuse of our work on the Internet were the key issues for setting a framework for the future, but we also had to secure real gains for our members in today’s world.” 

The tentative DGA agreement specifies the following: 

*Annual wage increases of 3% for primetime dramatic shows and daytime serials and 3.5% for all other covered programming;

*Outsized increase in director’s compensation on high-budget basic-cable for series in the second and subsequent seasons.

*Annual residual increases of 3% for primetime shows and 3.5% for all other covered programming.

*Specific advances that pertain to members of the director’s team. 

 Details of the new agreement will be submitted to the DGA’s national board for approval at its regularly scheduled meeting on Jan. 26 The DGA’s current contracts expire June 30.