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David Poland

By David Poland poland@moviecitynews.com

STRIKE! (oh oh oh oh oh oh) What Is It Good For?

The mostly-unlikely-to-occur Writers Guild Strike that is being threatened is a blurry mess. If you read media reports about what is happening and why it is happening, you get a parade of takes so varied that a showrunner would scream at a writer to find the damned idea they are writing about for 22 minutes, 42 minutes, or we’re-streaming-so-we-don’t-really-care-how-long-it-goes.

We know that:
• WGA Health are is running at a deficit. WGA wants more money and AMPTP wants Trumpcare.
• Episodic TV is shooting fewer and fewer episodes and wanting the same commitment from writers as they used to get for 24 a year for a lot less money.
• The streaming residual deal, made a decade ago, sucks.

The core problem is, WGA, like DGA (which never strikes… except for four hours once.. because they are not built to need these fights), is still negotiating like it’s the old days. Incremental improvement.

If you think the television business changed between the 1988 strike and the 2008 strike, you can’t even imagine how much it has changed in the years since then. There was a massive revenue spike from DVD sales going into the 2008 negotiation that the WGA had been pushed out of in earlier negotiations. That was the core of the fight going into the negotiations in 1988. Then, it was taken off the table because it had already been negotiated.

Residuals on series originating on network TV are, currently, 5% of WGA minimum for 6 months of streaming on whatever SVOD or MVPD platform on which you are airing. That means (using the highest level of minimums):

$2600 a year for a sitcom episode
$3800 a year for an hour-long

On the other hand, in the old television universe, where reruns were the norm, a writer gets paid $14,000 for a sitcom rerun and $25,000 for an hour-long rerun. (To be clear, that is the actual minimum pay for network reruns today.)

For the compensation for a single network rerun to be as low as the compensation for a year on Netflix, Hulu or the like, a broadcast network would have to rerun an episode seven times.

There are many variations. For instance, if you write a show for a SVOD/MVPD, it includes a year on the “network” (Netflix/Hulu/Amazon/etc) and then, in subsequent years, a writer gets paid a percentage of the “applicable network prime time residual base”… 30% in Years 2 & 3, 25% in Year 4, and downward until, after 12 years, it locks in at 1.5% a year.

The point is that the WGA is getting platformed to real injury.

I get why it seems like this union is in a lofty position when, for instance, they complain about paying more than they currently pay for better health insurance than I have (full disclosure – I’m a former WGAw member)… perhaps rising from $600 a year to as much as $5000 a year for their families, while I am paying $14,000 a year for my family. But this is one of the perks of being a working writer in Hollywood. The same people also have a lack of job security and all kinds of other vulnerabilities. In this case, the issue is that the structure of how a mid-level screenwriter made a living has changed dramatically.

When you achieve status in an industry where the working salary is, say, $250,000 a year and the working salary suddenly drops to, say, $175,000 a year, yeah, you are going to survive. But it is a major cut to your life. It isn’t like you make $25,000 a year and it gets cut to $15,000. But if your family earns $100,000 a year and that gets cut to $75,000… still a major event in your lives.

And as the WGA has pointed out, ad nauseum, the companies they are employed by are doing well, thanks. This isn’t a greedy employee trying to bleed a struggling boss.

In any case, when the WGA went out on strike in November 2007, they left, however unintentionally, the SAG hanging out to dry. The SAG members who were fighting against what came to pass (including the AFTRA merger) saw that the middle class of actors would be squeezed by the end of network reruns that were a significant part of an actor’s revenue stream. WGA ended their strike, took the perceived win (buying the con there was no money in streaming and that they would renegotiate later, followed in less than a year by the first $100 million a year deals for big production companies to stream). SAG took the horns.

A decade later, here we are, discussing how the WGA middle class is being squeezed by the end of network reruns as we knew them.

But it’s bigger than that now, really.

When the entire television industry has changed so dramatically, what is the point of building on old contracts as though the same goals are being achieved?

This is probably about to be adjusted, but in the last contract, the distinction for the bigger SVOD/MVPD businesses was 15 million or more subscribers. That means only Amazon Prime and Netflix. (Hulu is almost there.) But they have, respectively, 65 million and 53 million domestic subscribers. It is just silly that they are paying no residuals in the first year a show runs on their services (it’s included in the original writing payment). Similarly silly to a network show paying less than $5000 an episode for a year of streaming. (Yes, individually bought episodes – on iTunes, for instance – pay more. 1.2% of “distributor’s gross”)

It’s really time to take a look at how television (the primary issue in this threatened strike) is made, how it airs, and how shows make money. The will always be a ton of variables, negotiated by the most successful for themselves. But the 2007 negotiation and this negotiation feel like WGA leadership is fighting for benefits to make up for the lack of logical, foundational benefits.

The weight of this would hang on writers, too. Some who currently benefit from being successful on broadcast networks would make less money. But overall, writers would do better. Change is uncomfortable.

The WGA Basic Agreement is complicated. But I am looking at the broad strokes. The nitty-gritty details always seem to be worked out okay.

Historically, the production fees for television writers and the distribution were connected financially. Writers took the chance that if the show didn’t succeed, they would only be paid for the work done to get through production and (most likely) one airing. But if the show succeeded on network TV or even cable, the “residuals” would be quite significant… in many ways (while re-running on network air), as though a writer was getting a bigger payment for that work.

This still exists. But the percentage of television series and thus, writers, operating under this conceit has shrunk massively. That is why WGA writers (and Health/Pension) feel under attack. A big chunk of revenue has vanished, even as more shows are made and aired.

So if you had a wide-open, not-prenegotiated field, how would you address the changes?

Change the definition of the windows.

There is, literally, more detailed information available about what is watched and how many TVs are watching than ever before. Very little is publicly shared. They all know how many TVs are tuning in.

But we still live in a world where “residual” payments are defined by the bias of the 110 domestic household market made up almost completely of cable and satellite subscribers… even though we know that most cable/satellite subscribers consume content on only a sliver of their available channels.

Flip side, Netflix has 50 million domestic subscribers and they get a free year without residuals of any kind on their in-house shows… even though we generally assume that many of their shows have more viewers than many network shows.

Somewhere in the middle, there is a fair answer.

It should not matter, in terms of payment to union members of all stripes, what kind of delivery system on which a show lands. This is already true… but it is going to be truer every year. This is the future.

If you really wanted a fair system for TV, every outlet in every delivery system would be given a ranking every year, based on the size of their overall audience (via some formula that would engender fairness), and the level of their residuals would be adjusted annually. With success, an outlet would pay more in residuals. In failure, less.

Give the networks an annual payment option also. Stop offering financial encouragements them to push reruns to streaming. I’m not saying to give them reruns for free. But what if the networks and every other outlet with more than 50 million “subscribers” paid minimum-and-a-half for that first year of re-runs, whether they were showings on the network or streaming and always accessible? 15 million to 49.9 million subs might pay minimum in that first year. 5 million to 14.9m, 3/4 of the minimum. Etc.

I am not offering this as the perfect numbers, but an idea about how we think of outlets and the attached residual payments.

The issue of a TV episode as a unique event vs the idea of an episode as one of a constantly-accessible group (a season or multiple seasons) is head-spinning in terms of what is fair. Payment should not be directly connected to the number of TVs playing a show, as that would open a dangerous can of worms. Netfilx, as you know, doesn’t want to tell anyone specific numbers, ever. But how does one handle a massive library of available titles, like Netflix’s, fairly to Netflix and the union members? Perhaps another idea would be that there are tiers within the Netflix (as the example) library, defined by Netflix and subject to highly confidential audit. One rate for series with fewer than 100k views a month, another from 100k – 1 million, etc.

This would cost the successful streamers and cable outlets more in residuals and, probably, take some of the burden off of the “broadcast” networks for paying writers. But the real goal would be to spread the greatest cost to those who are having the most success and to leave room for smaller enterprise and, indeed, failure.

I’m not saying that I have The Answers. One look at the 687-page WGA Minimum Basic Agreement and you know there are a ton of variables. But I do know that continuing to build on what exists as though nothing has changed is not a good choice. Reconfiguration should be done not under that threat of strike, but in the years between, with a serious effort on both sides to consider overall numbers as well as modern content delivery.

I haven’t addressed Health and Pension for a couple of reasons. First, the money that gets paid into those funds is not driven by reruns. Second, I don’t believe the deficits are an issue that is a contribution percentage issue, but an overall revenue issue. The most likely way to solve one is to solve the other.

I don’t believe that it is AMPTP’s position to tell WGA or any union how to handle their members’ healthcare, I do think that part of WGA’s problem is that it is facing the same demographic issues of the rest of the healthcare world, and they probably need to be less generous to membership for the next decade or two. But this is an issue that calls for conversation and people can take positions on other side reasonably. The current system of how money flows through WGA members, less so.

I don’t think a strike is needed because I don’t think there is enough to win (or lose) at this point. The can is likely to get kicked down the road with or without a strike.

The system needs a radical rethink. And the negotiators, on both sides, seem to be seeing this all still on the level of how much money is moving this way or that in total, not really as a series of thousands of individual deals.

Soylent Green is people, people.

2 Responses to “STRIKE! (oh oh oh oh oh oh) What Is It Good For?”

  1. Triple Option says:

    Thanks for the write up! I had no idea the writers were getting zero residuals for streams in the first year. I hope their upfront money is really good. I also heard the number of episodes produced each season is a big concern. Scaling back from 13-10. But the writers are still beholden to the network for the same length of time. I would think it would be more advantageous financially all around to produce more as amortized costs would be broken down over a longer period??

    I was kinda confused by a couple of things you wrote. First you said, “If you really wanted a fair system for TV, every outlet in every delivery system would be given a ranking every year, based on the size of their overall audience (via some formula that would engender fairness), and the level of their residuals would be adjusted annually. With success, an outlet would pay more in residuals. In failure, less.” So, NBC.COM or Netflix would pay more than Crackle, is this correct?

    But then you wrote “Payment should not be directly connected to the number of TVs playing a show, as that would open a dangerous can of worms.” What would you do instead? It seems like you’re saying have the network or platform entity pay based on viewership size but then don’t pay out based on an individual show’s viewership? Wouldn’t that be contradictory? Would you suggest a general share of the pot? I was a bit lost on that.

    You mentioned essentially that no real decision is going to be made at this point, presumably because no one really knows what the future model will be. I wonder if the AMPTP wouldn’t hope for a new model to emerge from this. Like, from the 1988 strike came the explosion of reality tv. From the last TV actors strike came the v.o, over non-principal talent not uttering a word. I just feel like if not by definition in the CBA, someone’s waiting on a court decision to define what TV or internet use is and from that point how a network or platform provider tries to label something will change and we’ll have a whole new set of terminology with limited contributions being paid out. Yet, subscriptions and profits will continue to rise.

  2. leahnz says:

    i’m so relieved that triple-op has seen this

    “from the 1988 strike came the explosion of reality tv”

    ha yerp, thanks writers!

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