Saturday, January 19, 2008


This from "The Artful Writer" blog. I'm assuming John wouldn't mind being re-posted for my eight readers. Besides, I owe him a script, so at least he can see I've been busy plagiarizing...

John Wells On The DGA Deal

By Craig Mazin

While I continue to study the terms of the deal, I was forwarded a copy of an email John Wells sent to another writer who was interested in his opinion on the deal. John granted me permission to republish his email here. The following is the email, unedited.

Dear Jim,

I think the DGA deal is good. Very good. For writers, for directors, for the future.

Let me run it down:

EST - ELECTRONIC SELL-THRU (download to own)

3.25% of 20% on Theatrical product after the first fifty thousand units are downloaded (first fifty thousand units are paid at the old homevideo/DVD rate).

3.5% of 20% on Television product after the first one hundred thousand units are downloaded (first one hundred thousand units paid at old homevideo/DVD rate).

Our current rate is 1.2% going to 1.8% of 20% in homevideo (Ed. Note: Not exactly. It’s 1.5% going to 1.8% of 20%). This DGA deal doubles our much hated homevideo/DVD. A rate we have tried to improve on for over twenty-two years without success. Twenty-two years. As recently as a few weeks ago the Companies were still saying they would “never, ever” raise this rate. One company exec told me we were “out of our fucking minds” if we thought we would ever get an increase in the DVD rate for EST. This is a huge, historic victory for everyone.


The DGA got jurisdiction over made-for and derivatives. The AMPTP agreed that all “high budget” made-for and derivatives would be DGA covered employment. The Companies are required to make Pension and Health payments for a DGA director and his/her team and to negotiate minimum payments in good faith.

On “low budget” made-for and derivatives, the DGA has jurisdiction if the Company wishes to employ DGA members, with the same requirements to provide Pension and Health and negotiate minimums in good faith.

The definition of high budget is also very encouraging: $15,000.00 per minute, $300,000.00 per episode, or $500,000.00 per series — whichever is lowest. To put this into perspective, QUARTERLIFE, the web series that Herskovitz/Zwick are producing is being made for more than three times this amount and would clearly be covered employment, as would all of the mobisodes and webisodes made for existing shows so far. Another big win for all of us.

Just as an aside, this “high budget - low budget” solution was championed by several members of our WGA negotiating team and it’s great to see it’s the same solution arrived at by the DGA.


A 17 day free promotional window on existing shows. A 24 day window on new shows. As a practical matter, this is actually a two week window (three weeks for new shows) with the Companies allowed to “preview” the show on-line for up to three days prior to it’s initial run for promotional purposes.

After the initial window, the Company would pay $600.00 (for an hour program) for the right to stream each episode for an additional 26 weeks. After the first 26 weeks, the Company would pay an additional $600.00 for 26 more weeks. For a total of one year at $1200.00.

If the Company chooses to leave the episode available for ad-supported streaming after the two 26 week cycles, they would pay 2% of distributor’s gross going forward. Distributor’s gross is the definition we always wanted and they didn’t want to give us.

The $600.00 figure is 3% of the standard residual rate (or 6% of the rate annually) and is tied to the minimums, so as minimums increase each year, the $600.00 will increase right along with it.

This is an extraordinary figure. I’d been pushing a 5% rate per year and assumed it was a real stretch to get that. We got 6%. Unbelievable.

A momentary aside, you’ve asked me before about the AMPTP’s earlier offer in streaming that would “replace a $20, 000.00 residual check with a $225.00 residual check”. A bumper sticker slogan that’s been repeated often in last few months. While this kind of statement is very useful for keeping people fired up on the picket line it doesn’t hold up under even the mildest scrutiny. It’s apples and oranges.

The statement assumes that streaming will replace network reruns, but for most shows, there are no network reruns. And the shows that do get rerun are rerun because their numbers hold up well on rerun and fill slots (Saturday night anyone?) where it’s not economically feasible to stick in original programing.

The total residual load for a network rerun across the three Guilds is approximately $100, 000.00 per hour. No other form of programming (reality/game shows) is that cheap. That’s why the shows get rerun. And for those shows that don’t get rerun, the studios are dependent on syndicated revenues and foreign sales to make a profit on these shows.

The Companies are going to jealously guard the value of our work to make sure they don’t undercut the syndicated and foreign market value of these episodes. I suspect we’ll find the Companies make most shows available online for the initial “free” promotional window and maybe one 26 week period and the episode will disappear online until the episode has been fully exploited in syndication and foreign. Only to “reappear” online as a library piece some years later in the hope of “soaking up” some library “gravy” after we’ve seen our full syndication and foreign residuals paid.


This has not been widely reported, but the DGA was able to get the Companies to reconfirm the 2001 Internet Side-letter. What does the 2001 Internet Side-letter say? Well, in 2001 we were able to get the Companies to agree that all rentals occurring over the Internet would be paid at 1.2% of 100%. The recent announcement of the Itunes deal and the Netflix deal will clearly fall under the 2001 Side-letter and be paid at this much higher rate (four times or more the current average homevideo/DVD rate). As would any Internet “On Demand” models that emerge. This is very important. We had assumed that the Companies would make a run at getting the online rental rate down to whatever their eventual EST rate would be. The DGA made sure that didn’t happen.

This may become our most important rate as the Internet market matures. The Companies have made it clear that they would much prefer nurturing an online rental market rather than an EST market. Why? The EST market is going to cannibalize their highly profitable DVD market. An online rental market will supplement it. This is another big win for all of us.


Also largely unreported is the DGA’s new language on financial reporting and auditing of these new markets. In an unprecedented move, the Companies negotiated with the DGA to allow the DGA full access to all of their un-redacted financial records and contracts in new media during the term of this new deal. This has never happened before. It will allow the DGA to analyze whether the terms of this new deal are working and if the revenues are being properly reported. This is another extraordinary aspect of this deal and a cause for celebration.

That’s it. The headlines. And because of pattern bargaining in our industry, we’ll get all of it in our contract.

While the DGA richly deserves our thanks and appreciation for negotiating a terrific deal that will serve as a template for all three creative Guilds, none of this would have been possible without the blood, sweat and sacrifice of WGA members during this very effective strike. The Companies made a deal they didn’t want to make because of our resolve. They clearly understood how important these issues were for our members and stepped up to resolve them.

Our Negotiating Committee has numerous issues that are specific to writers that must still be resolved with the AMPTP: the term of our next contract, pension and health issues, separated rights on new media, and jurisdiction for material written for derivatives that will not be filmed (show blogs, web-only stories, etc). But this is a historic deal. We’ve won. The strike was necessary to win it and I can only assume our Negotiating Committee will be sitting down with the AMPTP by early next week to resolve these last, final issues.

It’s a very good day for all of us.


Wednesday, January 16, 2008


Two more letters forwarded to me by my Shield buddy. My comments following --


From WGA member Bob Elisberg in the Huffington Post, January 15, 2008 : In the beginning was the word - yet the word most heard these days in Hollywood is not about the beginning at all, but the end. What is the "endgame" to stop the strike? Ultimately, that's the only thing that matters. And with the AMPTP corporations negotiating instead with a guild not on strike, there's just one endgame people are most-wondering about - Are the AMPTP corporations willing to scuttle the 2007 TV season, drop the pilot season, lose the 2008 TV season, wipe their slates of all movies for the next two years and put a nuclear missile-laser on the moon to blackmail the world's governments? (This latter seems far-fetched.) Certainly, scuttling is possible. Indeed, it would be a powerful endgame strategy that would rock the Writers Guild of America. Only one thing argues against it. It makes absolutely no sense. For this Scorched Earth endgame to work, it means - 1) the AMPTP corporations would throw away countless billions in income and ad revenues. 2) TV networks would risk losing their audience to the Internet, Xbox, books, CDs and sex. 3) Movie studios would cut their distribution pipeline to theaters. And 4) the CEOs would forego their $25 million bonuses. Add one other reason that my friend Mark Evanier notes. 5) The AMPTP would be willing to have writers, actors and even directors on strike at the same time, creating their worst nightmare when all contracts are up for re-negotiation simultaneously in 2011. All this to avoid paying a tiny percentage of something they say is not worth anything. It makes no realistic sense. Zero. The Wall Street firm Bear Sterns has said the impact of what the WGA is asking for is "negligible." Importantly, for this AMPTP endgame to work, actors would end up on strike, directors likely, too, all crews would be out of work, all production staffs, most corporate employees let go, the L.A. economy would be in a shambles and the AMPTP corporations would crash into a heap of dusty plaster and torn gaffer tape. It would he horrific for everyone. But it would be the death knell for the Hollywood corporations. Remember: for the most part, the AMPTP corporations don't actually make any product, they finance independent contractors. Writers, actors, directors can create their work for anyone. Venture capitalists, Internet companies, European film studios. Empty movie theaters will be desperate for product, whoever distributes it. Stream webseries on New Media. Sell original movies and series direct-to-DVD. So, it makes no sense for the AMPTP corporations to have this as their endgame. That doesn't mean it won't happen. But - the CEOs understand reality. They know they'll keep making billions with a fair contract. But not with Scorched Earth. So, that means perhaps there's another possible endgame. Like: drop scary hints that the AMPTP may Wipe Out All Humanity, which gets some people flibberty-gibberty. Wait to see how solid the WGA support stays. Negotiate instead with the Directors Guild. Make a really mediocre offer and get them to cave early like they always do. And then hope writers and actors will break into dissension and fold like a wet suit of dominos. (Hey, I'm on strike, metaphors get mixed.) Except there's a massive risk to the AMPTP in this endgame of mediocrity, too. First, WGA members are deeply solid, fighting for their Guild's future and therefore their livelihoods. Second, whatever the DGA board negotiates, 1,400 directors are also members of the Writers Guild, and not guaranteed to vote for what they perceive is a bad deal for themselves as writers. Third, the DGA spent $2 million studying New Media and could balk if the deal is too lousy, even by DGA standards. They've figured out the Internet is real. Fourth, if the DGA membership rejects the really mediocre offer and the strike continues, TV networks will end up paying billions in ad "give-backs". And finally, a really mediocre deal would not set any pattern for long-striking writers, who'd reject it. Which would later get rejected by actors. Which gets the AMPTP corporations right back to that nonsensical Scorched Earth Theory. This means that of all the possible endgames for the AMPTP, only two make sense: 1) Eliminate the terrible risk of a long DGA negotiation blowing up in your face, and settle with the WGA by the end of February. 2) Make a good offer to the DGA, to show you can negotiate with "reasonable" people, because no one can negotiate with those "crazy" writers (unless you're David Letterman, United Artists, The Weinstein Company, MRC and Spyglass Entertainment...) - which is perfectly fine for writers. They've said they'll happily take a good deal wherever it comes from, especially after setting the groundwork for one. None of this is a prediction. It's only a look at the possibilities and what makes sense. And what doesn't. But the DGA negotiating committee does have a history of caving to lousy deals, just to make a deal. And the AMPTP corporations will choose to do whatever in the world they fricking want. They've walked away from the table. Twice. Amidst an industry shutdown, they're negotiating with a guild that isn't striking. When they want to sit back down and negotiate a good offer and reasonable settlement with the Guild that's actually on strike, they will. In the meantime, the writers are busy calling venture capitalists...


I think healthy dissention is critical and should be encouraged within the Guild; however, let's not lose sight of the real goal of achieving a fair and equitable deal in new media. We're not far from entering our fourth month without paychecks and now more than ever it's essential to keep our numbers up on the picket lines and our resolve strong. Whether you agree or not with Patrick and the leadership it's too late to change course. Take it up at the next Guild election. Now it's time to get onboard and use our full weight as a Guild to lean on the AMPTP, advertisers, ongoing productions, etc. I come from a sports background and there have been plenty of times I've disagreed with a coach's strategy but pissing and moaning on the bench or refusing to put forth maximum effort or recruiting teammates to mutiny is just another way of saying I'm right, coach is wrong. And what that smacks of is ego. What it doesn't smack of is making the team better. And unless I'm mistaken, this strike isn't about proving whether the WGA leadership is right or wrong, it's about getting a fair deal for all writers. So let's all stop the semantics and stop keeping score with each other and instead, spend some of the time we're on these boards arguing amongst ourselves, and direct it at the AMPTP.


I agree with Bob's logic. It seems ludicrous for Big Media not to settle facing the loss of billions of dollars. Unfortunately, this strike has not followed any logical progression. As I sometimes question the strategy of our guild, wondering if our strategy is correct, I know at least we have a strategy. I know people have said this before, but I too, have come to realize that perhaps Big Media is not the Evil Empire with a dark agenda trying to crush us, but more a powerful gaggle of splintered agendas and battling egos. The result is the same -- crushing us -- but perhaps we're giving them too much credit. They're like Sybil. How can you have one relationship with multiple personalities?

I admire Kevin's "win one for the gipper" enthusiasm. Yes, we need to stand united in the face of Big Media. But what he calls dissention (I believe he means dissension -- we're writers not spellers), I would label accountability. It's our job as members to question the direction of our guild and our leadership.

I'm a jersey boy, joined the Teamsters Local 641 when I was 17 (grocery warehouse in Elizabeth). Those guys were constantly on their shop steward, questioning his relationship with management, pushing their needs, asking for what they wanted. Making noise. Especially during a strike. They stood united in the face of management, but they were angry rebels, not dutiful soldiers. That's why the union was so powerful. Maybe I can't compare the WGA to the local 641, but I can apply the same member strategy. I've said it before, let's be wolves, not sheep. We can support our union and light a fire under them at the same time.

I'll gladly supply the match.