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How Are Residuals Calculated?
In general, there are two types of residuals calculations: 1) "revenue based," meaning the residual is based on the Company’s receipts, or 2) "fixed"/"run based," meaning the residual payment is a set amount for each exhibition.
Currently, almost all residuals due on made-for-theatrical motion pictures are revenue based. This means the residuals due the writer are based on the revenues received by the Company. The writer is entitled to a percentage of the money the project generated from uses other than any theatrical exploitation. The one non-revenue based residual for made-for-theatrical films is the DVD script publication fee, which is a one-time payment.
With a revenue based residual, your payment will vary depending on how much the Company receives and when the money is received. It is also important to note that licensing terms may vary from project to project as well.
Residuals due for made-for-television projects can be both fixed and revenue based.
Like residuals for theatrical films, a revenue based calculation for made-for-television product pays the credited writer(s) a percentage of the revenues received by the company. Accordingly, your payment will vary depending on how much the Company receives and when it is received. Specific licensing terms vary from project to project.
Fixed residuals are set amounts that do not depend on receipts, but are a percentage of a specific base amount. That base amount, called the "applicable minimum" or the "residual base," is determined by several factors:
- The type of product (e.g., episodic series, comedy/variety, documentary);
- The length of the program;
- The contract period of employment or acquisition;
- Whether the project is high or low budget; and
- The final, Guild-determined, writing credit.
While your initial compensation will vary depending upon the market for which your project is produced, the residual base is a fixed amount that is determined by the length of your project. In most circumstances, the residual base will be the "Other than Network Prime Time Minimum" corresponding to the MBA time period in which you were hired and the length of program you were hired to write. Thus, the residual base will be the Other than Network Prime Time Minimum even for network prime time and Fox prime time programs.
The following example sets forth the residual base for a one-hour dramatic television project for a writer employed for story and a guaranteed teleplay on May 2, 2001, and who receives sole "Written by" credit:
Even though the initial compensation varies depending on the market for which the program is produced, the residual base does not.
Once the residual base is determined, a certain percentage of that base is due for each rerun on free television. Generally, there is no payment upon the first run of a program, only for reruns. With the exception of network prime time reruns on certain kinds of programs, a decreasing percentage of that base is due for each successive rerun.
A residual payment is generated by a rerun in a "trigger city." A trigger city is the city that has aired the program the most times. For example, if your program was rerun three times in Los Angeles and you were paid for those three runs, you would receive no more residuals until the program runs four times in any one market. Thus, when your program reran for the third time in Chicago or the second and third time in Miami, no additional money would be due. When the program reruns for the fourth time in any city, however, the residual payment for the fourth rerun is triggered.