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DGA Board Approves Contract Boosting Streaming Residuals

Variety logo Variety 12/29/2016 Dave McNary
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Leaders of the Directors Guild of America have approved unanimously a tentative three-year successor deal on the master contract for directors with what’s touted as a major gain in streaming residuals.

The DGA made the announcement Thursday. The national board’s approval of the deal triggers a ratification vote by its membership, which numbers more than 16,000.

The guild and the Alliance of Motion Picture and Television Producers had announced the agreement on Dec. 23, but provided no details. Negotiations had lasted nearly three weeks after starting Dec. 5. Both sides had adhered to a news blackout since Nov. 17.

The DGA did not disclose the deadline for voting or when it would announce the results of the ratification vote. The AMPTP, which serves as the negotiating arm for production companies, had no comment.

“This excellent deal is the result of more than a year of research and preparation, and weeks of tough negotiations led by our Negotiations Co-Chairs Michael Apted and Thomas Schlamme, and our intrepid chief negotiator, National Executive Director Jay Roth,” said DGA President Paris Barclay in a statement Thursdsay.

“Our 70-member strong Negotiations Committee and professional DGA staff set specific goals and worked together for months to help make this contract a reality. When it comes to our major gain, SVOD, our approach can best be summed up by the famous words of hockey great Wayne Gretzky: ‘Skate to where the puck is going. Not where it has been.’ Protecting our future is the goal of all our negotiations, and the end result is a stellar contract with substantial gains.”

The DGA said residuals for dramatic programs made for High Budget Subscription Video on Demand (SVOD) were a major focal point of the negotiations. Those provisions cover such services as Netflix, Amazon and Hulu.

The DGA said Thursday the provision on streaming more than triples residuals for members working on original content in the highest subscriber tier, while also allowing new and emerging entrants to the market the opportunity to grow as they develop their services. The guild also said the deal establishes residuals payments for related foreign SVOD services; significantly increases the residuals for high budget feature-length projects; and establishes a share of the Made for High Budget SVOD residual for Unit Production Managers and Assistant Directors.

“Much like in 1981 with Pay TV, this is a groundbreaking, important deal – with SVOD now moving toward converging with the subscriber-based Pay TV formula established by the DGA,” said Schlamme. “In the future we’ll look back and give thanks for the flag that the DGA planted in 2008 establishing jurisdiction in New Media. And thanks to the foresight and wisdom of Jay and our Negotiations Chair predecessor Gil Cates, conditions allowing the medium to experiment and flourish were set in the nascence of the platform, and are now bearing fruit.”
The DGA reached a deal that contained jurisdiction in new media in January, 2008, while the Writers Guild of America was in the midst of a rancorous strike against the AMPTP. The WGA ended the strike a few weeks later with similar new media provisions in its successor deal.
Apted said Thursday that the DGA’s revised residuals provisions represents a three-fold gain from the current deal.
“Whereas three years of reuse of original content on a high-subscriber SVOD platform would yield less than $15,000 in our current formula, that same three years of reuse more than triples to $50,000 under this new contract,” he said. That’s a real, measurable, and meaningful increase that goes a long way toward addressing how people make and consume television content these days.”
The new deal also includes wage increases of 2.5% in the first year of the agreement and 3% in the second and third years of the agreement as well as an “outsized” wage gain for directors employed on one-hour basic cable programs.

The DGA also said that employer contribution rate to the pension plan will permanently increase by one-half percent (.5%) in the first year of the agreement from 5.5% to 6%. The DGA will also have the right to allocate up to .5% of the negotiated increases in salary rates in the second and third years of the agreement to either the Directors Guild of America-Producer Pension Plan or the Directors Guild of America-Producer Health Plan.

“After intense preparation, and a tough negotiation centered on complex issues, what we have achieved in High Budget SVOD, together with significant pension and compensation gains, is historic in terms of setting the tracks deeper and wider for all our guild’s members,” said Roth. “We began laying the groundwork nearly a decade ago as the course of the industry began to shift – technologically and globally – and today we’ve taken a huge leap forward in realizing that vision. I am proud of the work accomplished to protect the future through this forward-looking contract.”

Additionally, the DGA said the new deal contains a provision aimed at curbing the practice of “gifting” limited first-time directing opportunities to individuals who are not serious about a career in directing. It obtained a provision requiring all first-time dramatic TV directors who do not have prior directing experience – or who have not completed or enrolled in a studio-sponsored TV director development program – to attend an orientation program provided by the DGA before their employment begins.

The DGA tapped secretary-treasurer Apted and third VP Schlamme in February as co-chairs of its negotiating committee for the successor deal to the master contract. The guild’s current three-year deal with AMPTP expires on June 30, 2017.

The approval by the DGA board is expected to trigger AMPTP negotiations with SAG-AFTRA and the Writers Guild of America.

SAG-AFTRA’s current master contract with the AMPTP also expires on June 30, 2017, while the Writers Guild of America’s deal will expire on May 1, 2017. The WGA usually goes into negotiations after the DGA and SAG-AFTRA have completed their deals but neither union has addressed the issue of timing.

SAG-AFTRA has completed its required “wages and working conditions” meetings between members and the negotiating committee to craft a contract proposal. The WGA announced on Dec. 1 that Billy Ray, Chip Johannessen and Chris Keyser would head its negotiating committee.

In the 2013-14 round of negotiations, the DGA led off the negotiations and announced that its members had ratified its deal in early January of 2014 — six months before the contract expired.

That contract provided for wage increases of 2.5% the first year, and 3% for the second and third years; a 0.5% increase in the pension plan, with the DGA able to divert that increase to wages in the first year if it chose; residuals also increased 2.5% the first year, and went up 3% in the second and third years except for network primetime, which increased by 2% each year.

The pact also included for the first time specific wages, terms, and conditions for “high-budget” original and derivative dramatic new media productions made for SVOD.

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