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Guilds Veto ABC/Disney Proposed Rates for Digital Downloads
The Writers Guild East and west, the Screen Actors Guild and the
Directors Guild of America responded swiftly to ABC's announcement that
it would use the discounted home video rate to pay residuals for iPod
In a joint statement WGA East and west
affirmed their plans to pursue legal action for the violation of the
MBA. The guilds believe that a more applicable formula would be that of
pay TV, which pays a 1.2% residual rate out of 100% of revenue.
members of our guilds demand the Companies pay what they are
contractually obligated to pay," said WGAE President Chris Albers. "Not
a paltry residual rate based on an irrelevant home-video formula from
the age of Betamax."
"ABC's unilateral decision to pay
digitaldownload residuals at the home-video rate is a violation of our
contract and an insult to our hard-working members," added Patric M.
Verrone, WGAw president. "It is unacceptable, and we will aggressively
pursue all legal options at our disposal."
SAG too has pledged
legal action and is planning to file an arbitration against ABC for
introducing digital downloads without first bargaining with the union
and for seeking to use a residual formula crafted more than 20 years
ago to address the emerging videocassette business. That formula allows
studios to retain 80% of revenue to cover manufacturing, marketing and
other costs while paying SAG residuals out of the remaining 20%.
ABC advised the guild that it intends to pay residuals to performers
based on the video-cassette formula — a formula that does not apply to
this new platform," SAG president Alan Rosenberg said. "ABC's actions
are flatly inconsistent with our collective- bargaining agreements and
with labor law obligations and fail to fairly compensate performers for
the use of their work and images."
The DGA has also said it plans
to pursue legal action over this application of the home video formula.
"Such payments are not consistent with the DGA's collectivebargaining
agreement, and we will be filing claims against ABC and any other
company that pays residuals on video iPod downloads according to the
home video formula," DGA president Michael Apted said.
The Walt Disney Co. reiterated its position that the iPod downloads should be covered under the home video residual formula.
the guilds have a different point of view, they have the right to
challenge the company's determination before a neutral arbitrator. In
the end, this is simply a dispute over how to interpret a provision
under agreements that provide the means for resolving that dispute,"
Disney said in a statement.
The issue began simmering in October
2005 when Apple Computer introduced the video iPod and offered
consumers the ability to buy episodes of Lost, Desperate Housewives and
other ABC shows through the iTunes store for $1.99.
AFTRA, SAG and DGA responded immediately, issuing a joint statement
saying that they had "not yet heard from the responsible employers of
our members" and looked forward to discussing the formula.
and other programmers have followed ABC's example, selling episodes
through iTunes. However, since ABC was the first to offer content in
this new medium it is also the first to owe residuals.
Meanwhile, other shows have been made available to watch or own through Google and mobile phone companies.