Current State of Negotiations

The AMPTP has announced publicly that their proposal is worth $130 million over the next three years. While it is unclear where that $130 million would be created, we greet this statement with real interest. If the AMPTP is serious about this figure, the WGA is confident we are close to a deal and hopeful that the companies will respond positively to our sincere movement to partner with them.

To further everyone's understanding of exactly where we are, we have prepared the following report. It explains the economic realities both sides are facing, and compares the WGA's proposal with the companies' proposal.

Our thinking

Most WGA writers earn middle class wages. A typical WGA member makes approximately $62,000 a year if you average earnings over a five-year period. The current WGA proposal has been formulated to ensure that writers keep up with the growth and success of the entertainment industry – an industry whose past, present and future are fueled by the content we create.

The cost of our three-year proposal is $151 million. Here's how that breaks down: $33 million in the first year, $50 million in the second year and $68 million in the third year. This represents a modest 3.9 percent annual increase.

Writers Not Keeping Up

Since 2000, entertainment segment revenue for our employers has grown from $63 billion to $95 billion. That's a robust 51 percent increase. But as they've experienced this tremendous revenue growth, WGA members have actually fallen behind. While entertainment segment revenue has grown at an annual rate of 7 percent over the last 7 years, writers' earnings and residuals have grown only 3.5 percent. That means we are barely keeping up with inflation.

But what does the immediate future promise? A variety of sources suggest that the growth opportunities in new media, coupled with the continued health of the film and television business, will add up to annual industry growth rates as high as 10 percent. And yet, despite this continued growth, the latest AMPTP proposal offers writers a contract with an annual increase of less than 1 percent.

Writers Not Keeping Up

(Source: WGA Analysis of SEC filings and Company Annual Reports)

 

The WGA Offer

We have designed a contract proposal that is fair to writers and easily affordable to the companies. We made major movement towards an agreement by dropping our proposal to improve the DVD formula. This removed $57 million over the life of the contract. The WGA's offer now stands at $151 million for three years. When you look at how this breaks down per studio, you see just how reasonable and affordable this proposal really is.

  • For Sony, this entire deal would cost $1.68 million per year.

  • For Disney it would cost $6.25 million per year.

  • Paramount and CBS would each pay only $4.66 million per year.

  • Warners would pay about $11.2 million per year.

  • Fox would pay about $6.04 million per year.

  • NBC/Universal would pay $7.44 million per year.

  • MGM would pay only $320,000 per year.

  • All the other companies would assume the remaining cost of about $8.3 million per year.

The table below summarizes the costs for the WGA's economic proposals.

 

Working Estimates of the Value of WGA Economic Proposals ($ millions)

As of December 3, 2007

  WGA Positions Assumptions Avg Year Total
1 Minimum Increases $260 million at 3.5% $ 9.42 $28.27
2 Minimums for Non-traditional $1000 x 200, 350, 450 webisodes each year $ 0.33 $ 1.00
3 Made-for-Basic-Cable — apply all mins 100 pgms over 3 years x $5k by existing sigs $ 0.17 $ 0.50
4 Prog fees for all, incl non-trad Assumes not all webisodes/episodes apply $ 0.40 $ 1.20
7 Daytime Serial Breakdowns Growing uncompensated breakdown problem $ 0.60 $ 1.80
8 Reuse of non-traditional 2.5% — comparison to the way AMPTP is paying $29.30 $87.90
9 DVD Was $57 mil., now dropped $ – $ –
11 Made-for-pay TV Residuals based on best data available $ 5.00 $15.00
12c Tri-Guild audit/enforcement Renew $ 0.09 $ 0.27
14 Animation a handful of features–initial comp and residuals $ 0.70 $ 2.10
15 Reality Jurisdiction Assumes 600 writers at $50k at 14.5% p&h $ 4.35 $13.05
16 P&H various trades $ – $ –
18 Showrunner Training funding   $ 0.18 $ 0.53
  Total   $50.54 $151.61

AMPTP Offer

 

On Nov. 29, the AMPTP unveiled their “New Economic Partnership” with a claim that it amounted to $130 million in additional compensation for writers. However, according to our estimates of their contract proposals, their current offer is worth only $32 million over the life of the contract-that's less than a 1 percent annual increase. If you factor in their regressive proposal on “promotional use” (streaming TV shows and feature films in their entirety for free) writers could potentially lose $100 million in income over the course of this contract. So we call on the AMPTP to provide specifics on how this “New Economic Partnership” would truly benefit writers.

In the meantime, here's an analysis of the real costs of the AMPTP's economic proposals.

 

Working Estimates of the Value of AMPTP Economic Proposals ($ millions)

As of December 3, 2007

  AMPTP Positions Assumptions Avg Year Total
1 Minimum Increases $210 mil @ 3.0%, $45 mil @ 2.0%, $5 mil frozen $ 7.23 $21.68
2 Minimums for Non-traditional $700 x 200, 235, 275 webisodes each year $ 0.17 $ 0.50
3 Made-for-Basic-Cable — apply all mins No change $ – $ –
4 Prog fees for all, incl non-trad No change $ – $ –
7 Daytime Serial Breakdowns No change $ – $ –
8 Reuse of non-traditional $250 per epi less 6 wk window/promo (high estimate) $ 4.68 $14.04
Offset/Reuse on Non-traditional Promotional Exclusions $ (1.56) $ (4.67)
9 DVD No change $ – $ –
11 Made-for-pay TV Residuals No change $ – $ –
12c Tri-Guild audit/enforcement Renew $ 0.09 $ 0.27
14 Animation No change $ – $ –
15 Reality Jurisdiction No change $ – $ –
16 P&H various trades $ – $ –
18 Showrunner Training funding   $ 0.18 $ 0.53
  Universal Studios 1948 to 1960 Revise 1960 legal settlement $ (0.07) $ (0.21)
  Compilation Show Rates Decrease current rate by 60% $ (0.08) $ (0.25)
  Sub-Total   $10.62 $31.87
  Promotional Uses Use deemed promo pays no residual (low estimate) $(33.33) $(100.00)
  Total   $(22.71) $(68.13)

 

In conclusion, we are pleased that the companies have stated their willingness to make a three year deal worth upwards of $130 million. While we do not see how their proposal adds up to that number, we do know that our proposal is a serious, reasonable, and affordable attempt to bridge the gap between us. If it doesn't, it will bring into question how serious the companies really are about making a deal.