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WGA Prepares for DVD Residual Fight

Feb 23, 2004  •  Post A Comment

With the actors guild’s decision last week to extend its current agreement, the Writers Guild of America is preparing for a solo battle with Hollywood producers over its contract, which is set to expire May 2.
No date has been announced for the commencement of negotiations, but sparks are already flying as the WGA has taken its premier issue-DVD residuals-to its members and the press in hopes of generating understanding of and support for its cause.
“The profit margin on DVDs is 66 percent,” said Cheryl Rhoden, WGA West’s assistant executive director. “For every $300 dollars of sales, they make $200 in profit. And of that, the writer receives $1.”
The position has received overwhelming support from guild members, with 96 percent recently voting to affirm the WGA’s “pattern of demands” for the talks.
The home-video residual formula, however, has been essentially unchanged for decades, and few expect the Alliance of Motion Picture and Television Producers to give up ground easily.
“Nobody is going to negotiate the DVD issue standing out there all by itself,” one industry insider said. “When writers talk about how profitable DVDs are, they have to talk about how nonprofitable movies are. It’s a low-margin business, and the costs of DVDs are going up.”
The insider noted that studios have to produce extras for DVDs and market them like event films while still selling them at increasingly consumer-friendly prices. “We’re not crying poverty,” the source said, “but it is cutting our profitability.”
When told of the comments, one WGA source shot back: “It’s a `low-margin business’? Tell that to Wall Street.”
Though the WGA released a statement of support for the Screen Actors Guild and American Federation of Television and Radio Artists’ decision to delay their negotiations, the threat of an actors strike could have been a great benefit for tackling DVD issue.
The actor guild’s contract was set to expire June 30. The extension deal will go to a vote before SAG and AFTRA members within the next 30 days. Key provisions include a 2.5 percent minimum salary hike, a provision to allow SAG and AFTRA to jointly negotiate for future contracts and expanded guild coverage of performers in digitally produced programs on UPN and The WB.
“This agreement keeps actors working and makes significant gains in areas that matter most to our membership: equal pay for equal work, a raise in pay, a strengthened health plan, network salaries for WB and UPN actors and broader coverage for background performers,” said SAG President Melissa Gilbert.
As for writers, so far there has been no evidence of producers ordering extra scripts in advance or stockpiling material in expectation of a strike.
At least, not yet.
“We’ve done a great deal of research into the current status of the industry, its business plan, and we will look at all the issues,” Ms. Rhoden said. “We look forward to commencing negotiations.”