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This post was written by Kathleen C. Quinn, VP, Director Production Services, American Association of Advertising Agencies.

Per the 2009 SAG/AFTRA Commercials Contract, SAG, AFTRA, and the JPC have agreed to conduct an in-depth study of the Gross Ratings Point Talent Compensation Model ("GRP Model").

SAG, AFTRA, and the JPC have selected PricewaterhouseCoopers ("PwC") to conduct this study, which commenced on October 26, 2009. The study is composed of six stages and will last approximately 2 years.

Please see the attached memo from Doug Wood, JPC Lead Negotiator and Counsel, for additional details.

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This continues to be an interesting year for entertainment labor negotiations. New SAG/AFTRA ad industry contracts, SAG’s new television and theatrical contract and studio agreement, an extension of the Non-Broadcast/Industrial and Educational agreement, not to mention infighting and lawsuits. And now there’s a new item – SAG and AFTRA’s separate negotiations with the videogame industry over voiceover work.

The unions, which had been negotiating with the industry separately, appeared to achieve some parity between their deals, and made a joint announcement earlier this month that agreements had been reached. The deals, if ratified, would expire March 30, 2011, and would provide for the following improvements over the current contract (set to expire in December):

• A 3 percent wage hike for SAG (to match AFTRA’s current deal), and another 2.5 percent increase April 1 for both unions
• A 0.5 percent increase in the pension and health contribution rate for SAG members, and an additional 0.2 percent next year for both unions
• The establishment of a $100 liquidated damage for failure to give notice of “vocally stressful” work, and agreement to develop a set of guidelines for conducting vocally stressful work
• A cap of $125,000 on contributions to the AFTRA Health and Retirement and SAG Pension and Health funds for performers paid more than $125,000 by a single producer in a single year for work done on the same game franchise

Both the SAG and AFTRA boards recommended acceptance of the contract, with AFTRA giving the contract “an overwhelming and strong” recommendation. However, SAG’s membership apparently feels differently – SAG members who work the contract voted it down, 73-42. One reason for the rejection was the inclusion of “atmospheric” provisions that would allow employers to use actors to perform up to 20 voices, of up to 300 words each, at the daily base rate, which some members saw as a reduction from current pay levels. 

SAG will now try to bring the video game companies back to the table to negotiate its deal, but the industry’s negotiators may require SAG to sweeten the deal before coming back. As for the AFTRA deal, a vote by AFTRA membership is currently underway.

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Few people are aware that the union collective bargaining agreements that govern the employment of performers and musicians in commercials in traditional and non-traditional media are collectively the largest union agreements in the entertainment business. Under these agreements, advertisers pay union performers and musicians nearly $1 billion a year. In the collective bargaining process, the industry is represented by the ANA/4A's Joint Policy Committee for Broadcast Talent Relations (JPC), while actors in commercials are represented by the Screen Actors Guild (SAG) and the American Federation of Television and Radio Artists (AFTRA), and musicians who perform in commercials are represented by the American Federation of Musicians (AFofM).

In May of 2009, the membership of SAG and AFTRA ratified the new three-year television and radio commercials agreements, which was the culmination of two months of negotiations between the JPC, SAG and AFTRA. As part of the new agreement, the unions and the JPC have agreed to conduct a two-year multi-million dollar pilot project to test a new way to pay performers that represents fair compensation, but also provides advertisers with a measureable return on their investment. The pilot will test the GRP Payment Model developed by Booz & Company in a $1.4 million study previously commissioned by the JPC and the unions.

Negotiations with the AFofM will commence in October 2009.

Advertisers and advertising agencies can become signatories to the SAG, AFTRA and/or AFofM contracts either by authorizing the JPC to represent them in collective bargaining or by directly signing onto those contracts after they are negotiated by the JPC. While the vast majority of major advertisers and advertising agencies are represented by the JPC, this memorandum explains why it’s critically important that responsible advertisers and advertising agencies be a part of the bargaining process through the JPC as opposed to being direct signatories with the unions.

Click here to download the full white paper.

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The Joint Policy Committee recently negotiated new 3-year agreements with SAG and AFTRA covering performers in television and radio commercials. Copies of the Memoranda of Agreement are attached below:

• SAG Television Commercials Contract Memorandum of Agreement
• AFTRA Television Commercials Contract Memorandum of Agreement
• AFTRA Radio Commercials Contract Memorandum of Agreeement

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AFTRA and SAG have extended the provisions of the Late Night Waiver for television commercials through March 31, 2012. The previous payment rates under this waiver have been increased by +4.43%.

A copy of the waiver and new payment rates can be found here. 

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Revised SAG 2009 TV Commercials and AFTRA 2009 RADIO Commercials rate charts are available.

These rate charts have been revised to reflect minor rounding corrections to the previously issued documents. You will also find some additional explanations/clarifications based on questions we have been receiving from members.

The AFTRA TV 2009 Rate Charts are identical to the SAG TV 2009 Rate Charts and will be posted separately. 

• 2009 Radio Recorded Commercials Contract Rate Chart (updated)
• 2009 Radio Wildspot Tables (updated)
• 2009 TV Wildspot Unit Values
• 2009 TV Wildspot Tables (updated)
• 2009 TV Cable Network Unit Values
• 2009 TV Commercials Contract - Main Rates (updated)
• 2009 TV Commercials Contract - Miscellaneous Rates
• 2009 TV Miscellaneous Extras Rates (updated)
• 2009 TV Local Cable Rates
• 2009 TV Spanish Language Wildspot Unit Values

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On June 8 and 9, the JPC and Reed Smith held seminars/webinars on the new agreements with SAG and AFTRA. Click here to review the PowerPoint presentation. Please note the correction on the Extra Allowance from $5.74 to $5.75 for laptops, PDA's and similar devices.

Click here to listen to day two's presentation.

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On April 1, 2009, the advertising industry came to an agreement with the Screen Actors Guild and the American Federation of Television & Radio Artists on a new three year collective bargaining agreement. Reed Smith partner, Douglas Wood, is the advertising industry's lead negotiator in connection with those agreements. The unions ratified the deal on May 21, 2009. We have attached a number of memos that outline the new agreement and provide for answers to frequently asked questions, i.e.:

1.  Executive Summary
2.  FAQs
3.  Notice in Industry re Commercial Services Fee
4.  Memorandum on Commercial Services Fee

We welcome your review and comments.

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Effective April 1, 2009, the JPC negotiated a new three-year collective bargaining agreement with SAG and AFTRA for actors who perform in television and radio commercials.

It has come to our attention that some voice-over agents in Los Angeles continue to demand so-called "LA Scale" for radio commercials, a rate significantly above the scale rates the JPC and AFTRA negotiated in the collective bargaining agreement covering radio commercials. We also understand that “LA Scale” usually goes up immediately after a new contract is agreed upon. It is entirely unclear to us who decides to implement such an increase. It is also unclear whether any agents have collectively agreed to demand LA Scale or to increase it.

The JPC and AFTRA did not agree to LA Scale, nor to any other local premium over the minimum scale fees contained in the AFTRA Radio Commercials Contract. In truth, the advertising industry and AFTRA have never collectively agreed to LA Scale.

While individual agents can demand whatever they wish in negotiations, producers are only obligated to pay no less than the minimums in the collective bargaining agreement. While a producer can certainly agree to pay more, it is not mandated by any collective bargaining agreement. Any perception that LA Scale is a negotiated minimum compensation for productions in Los Angeles is totally false.

Of course, agents and producers are free to negotiate for rates higher than the minimums. But such negotiations must be on an individual basis. As a group, agents cannot agree among themselves to only accept a higher fee, any more than producers can conspire to pay less than the minimums required in the collective bargaining agreement.

Should you encounter any agent claiming that LA Scale is an agreed-upon rate and is required as a matter of right or obligation, please report such statement to me. If you receive anything in writing from agents demanding LA Scale, please forward it to me, subject, of course, to redacting any information you feel is confidential. And regardless of how you deal with the issue, if an agent insists on LA Scale, be sure the agent explains exactly what the agent means by LA Scale and precisely what rate they are demanding for both session and residuals.

If you wish to make such a report or if you have any questions, please contact me at 212 549 0377 or dwood@reedsmith.com.

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The JPC and the unions have agreed on the new rate charts. Remember that while you can now pay under those rates, should the new Contract not be ratified by the unions (expected within a month), you will have to seek refunds. If you prefer, you can pay under the old rates and issue a retroactive payment once the formal approval of the new Contract is accomplished. Retroactive payments must be received by the performers no later than June 15, 2009.

• 2009 AFTRA Radio Recorded Commercials Contract Schedule of Minimum Fees
• 2009 TV Wildspot Unit Values
• 2009 TV Cable Network Unit Values
• 2009 TV Commercials Contract - Main Rates
• 2009 TV Commercials Contract - Miscellaneous Rates
• 2009 TV Local Cable Rates
• 2009 TV Spanish Language Wildspot Unit Values

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Q: What timetable now applies to implementing the new Contract?

The new Contract began April 1, 2009, but is not officially approved until the SAG and AFTRA Boards and members vote favorably on its ratification. The union voting process should be completed by May 15, 2009. Since the new Contract was unanimously approved by the SAG and AFTRA negotiating committees, it is virtually assured that it will be ratified by the union Boards and members. But nothing is certain, so there are two options:

• Continue to operate under the current contract and make retroactive payments of the new rates once the union Boards and members ratify the new Contract
• Pay the new rates (the unions have issued new rate charts), and run the risk that the new Contract will not be ratified and refunds might be required. Since getting refunds for overpayments from actors is very difficult, the risk associated with paying the new rates may outweigh the benefits of avoiding additional accounting. Each company needs to make that determination on an individual basis.

Q: How long until the deal is ratified by the unions’ Boards and members?

The new Contract was unanimously approved by the Commercials Committees of both unions. It will now go to each of the union Boards for approval, and will then be sent out to the union members for a vote on ratification. This entire process should be completed by May 15.

Q: Until the new rates are published, how should I pay actors?

It is probably better to pay under the old rates until the new ones are all agreed upon. Then you will be able to make retroactive payments to actors. The proposed new rates will be published shortly, but will not be official until the unions’ Boards and members ratify the new Contract. While you can pay under the new rates prior to ratification, you then take the risk of seeking reimbursement should the unions’ Boards or members fail to ratify the new Contract.

Q: Which commercials are subject to the new rates and new Contract provisions?

The new rates, terms and provisions apply to the following:

• All original commercials produced on or after April 1, 2009
• All new or additional versions of commercials originally produced under prior contracts for commercials that are integrated on or after April 1, 2009 under the Integrating of Commercials into Different Commercials  provisions
• All versions of commercials that are edited and aired after April 1, 2009, other than as expressly permitted under the Editing of Commercials provisions

Any terms, rates or conditions of current performer contracts that are more favorable to the performer than those under the new Contract remain in effect, although we are not immediately aware of any such provisions.

Q: Can I still freely bargain for made-for-Internet or made-for-New-Media commercials, and set any rate I can get the actor to agree to?

Yes. The minimums will not apply until April 1, 2011. So you can continue to freely bargain until that time. Even when the minimums are established, your right to freely bargain on editing remains.

Q: What happens now with the eight-week cycle for the Internet and New Media?

The eight-week cycle is now a permanent part of the new Contract. You can run consecutive eight-week cycles as well. Nor do you need to ask an actor if you can use his or her spot for an eight-week cycle if they have not objected to Internet use. With regard to rates, the one-year moveover rate is now 3.5 session fees, and the eight-week cycle is now 1.33 session fees.

Q: Will the JPC be conducting any seminars to explain the new Contract?

Yes. We’ll have a schedule for seminars out in a few weeks.

Q: Where can I get more information?

Information will be forthcoming as it develops. For the next few weeks, you need to be patient as documents are finalized and rates are set. The SAG and AFTRA approval process will also take us through to May 15. But I’ll try to keep everyone posted on my JPC Blog at the ANA website, as well as here on the Adlaw by Request blog. In the meantime, please feel free to email me at dwood@reedsmith.com or call me at 212 549 0377.

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Yahoo! News: Feds sue Dish Network over do not call complaints

The nation's second-largest satellite TV provider — Dish Network — is being sued by the government for alleged violations of the national Do Not Call Registry.

NY Times: 8 Hours a Day Spent on Screens, Study Finds

IN a world with grocery store television screens, digitally delivered movie libraries and cellphone video clips, the average American is exposed to 61 minutes of TV ads and promotions a day.

Adage: Georgia-Pacific Sues P&G for False Advertising by Bounty

Claims that New Paper Towels are Thicker are False, Says Marketer

Brawny paper-towel marketer Georgia-Pacific Corp. is suing Procter & Gamble Co. for falsely advertising "25% thicker quilts" on its Bounty towels.

Reuters: EU threatens action to defend Web users' privacy

Some Internet companies are abusing consumers' personal data and this cannot be allowed to continue, a top European Union official will warn the industry on Tuesday.

Mediaweek: SAG, AFTRA Reach Commercials Contract

SAG and the American Federation of Television and Radio Artists said early Wednesday that they have reached a tentative new three-year commercials contract.

Reuters: House votes to grant FDA authority over tobacco

A measure giving the Food and Drug Administration power to regulate the manufacturing and marketing of cigarettes cleared the U.S. House of Representatives on Thursday.

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As you are all aware, we're approaching the "midnight hour" in our negotiations. While both sides have made major progress and I remain cautiously optimistic, the next couple of days will be critical to reaching a new agreement. In the meantime, there is no reason to believe that there will be any immediate disruption in commercial production even if we don't come to a final agreement before midnight, March 31. Both sides continue to have open and productive negotiations.

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Yesterday, you may have read reports in the trades that SAG and AFTRA had prepared a strike authorization letter to send to their members and that talks were not going well. As reported by the unions, the release of the draft letter was unauthorized. In a joint statement from SAG and AFTRA, the unions stated, “We are making every effort to negotiate a fair contract and remain optimistic that we will bring these talks to a successful conclusion. Today, there was an unauthorized distribution of a draft strike authorization letter. This is one of many contingency documents that we prepare in the course of any negotiations, particularly as we approach the expiration of a contract. Our members understand that this is a normal part of the bargaining process. We will continue to bargain in good faith with the industry in an effort to get a deal.”

As I reported earlier, the rumors that things are “grim”, as one reporter opined, could not be further from the truth. Both sides continue to negotiate in good faith with every intention of avoiding labor disruption. While there are serious issues on the table, those who are bargaining for both the unions and the industry continue to build on the positive relationship the two sides have developed since first embarking on the joint study on performer compensation the two sides commissioned from Booz & Company in 2006.

Nor is the JPC concerned that the unions may be drafting potential notices to their members. Doing so, as the unions reported, is a normal part of the process and no different than the JPC’s preparation of draft notices to authorizers should developments require alternative planning.

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The Joint Policy Committee on Broadcast Talent Relations (JPC) is the multi-employer bargaining group that negotiates the collective bargaining agreements with the Screen Actors Guild and the American Federation of Television and Radio Artists that govern the employment of actors who perform in television and radio commercials.  In its role, the JPC represents the interests of advertisers and advertising agencies throughout the United States.  SAG and AFTRA represent the interests of the actors.

The JPC invites you to take part in a very important on-line survey that will assist the JPC in determining which provisions in the current collective bargaining agreements are of concern to the people who work with and under the agreements day-to-day.  It is the JPC's hope that there will be widespread participation in the survey across all aspects of commercial production, from casting to trafficking.  And if you're an actor, the JPC welcomes your participation as well.  This is the first time the JPC has sought such information, so everyone's participation is extremely valuable.

Any personal information provided by you in completing the survey will be held in strict confidence, and will not be disclosed to any third parties or used for any purpose other than compiling the data.  Nor will you be personally identified in any communications with third parties with any answers you provide.  And at any time, you can decide not to complete the survey or can request that the JPC remove any personally identifying information you've provided.

The entire survey takes about one to one-and-a-half hours to complete, but it can be done in sections.  That makes it easier to complete at your leisure.

If you'd like to participate, the JPC needs your full name, email address, and, where applicable, your company's name.  Simply send an email to Ms. Leah March at lmarch@reedsmith.com with the requested information.  Leah will then send you an individual invitation. 

The JPC greatly appreciates your participation. If there are others who you feel should participate, please ask them to provide their full name and email address to Leah March (lmarch@reedsmith.com) so Leah can send them a formal invitation.

Thank you in advance for your consideration.

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