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SAG: When Will There be a Deal?

By Jonathan Handel, Esq.

p class="MsoNormal" style="margin-bottom: 12pt;"Lately, we?ve been lost in a morass of letters from SAG board members, a href="http://digitalmedialaw.blogspot.com/2008/12/sag-over-130-stars-against-strike.html"stars/a and activists ? wandering through a thicket of politics ? reading the a href="http://digitalmedialaw.blogspot.com/2008/12/studios-release-final-offer-to-sag.html"offer/a from the AMPTP (studios)? observing meetings in a href="http://digitalmedialaw.blogspot.com/2008/12/report-from-sag-town-hall-meeting.html"LA/a, a href="http://digitalmedialaw.blogspot.com/2008/12/sag-ny-furious.html"NY/a and LA again ? taking note of a href="http://digitalmedialaw.blogspot.com/2008/12/sag-opposition-grows-to-strike.html"other developments/a ? enjoying a href="http://digitalmedialaw.blogspot.com/2008/12/sag-and-studios-post-prandial-posturing.html"press releases/a ? trying to parse the a href="http://digitalmedialaw.blogspot.com/2008/12/sag-studios-what-are-they-fighting-over.html"issues/a ? and wondering if SAG will strike./p p class="MsoNormal" style="margin-bottom: 12pt;"With all that, it?s easy to overlook the long-term question that should be on everyone?s mind:span style="" /spanwhen will there be a deal?span style="" /spanMy answer:span style="" /spannot until March 1 at the earliest; possibly as late as next fall; and, in the extreme case, SAG might go years without a contract./p p class="MsoNormal" style="margin-bottom: 12pt;"Here?s the analysis, which depends on whether the strike authorization succeeds or fails (a question which I consider too close to call):/p p class="MsoNormal" style="margin-bottom: 12pt;"b style=""Scenario 1:span style="" /spanThe Strike Authorization Fails/b/p p class="MsoNormal" style="margin-bottom: 12pt;"The strike authorization ballots go out Jan. 2 and are due back three weeks later, Jan. 23.span style="" /spanThe national board then meets the next day.span style="" /spanIf the authorization fails, SAG President Alan Rosenberg has told me that the union will have to accept the offer on the table.span style="" /span/p p class="MsoNormal" style="margin-bottom: 12pt;"b style=""The st1:place st="on"Union/st1:place Might Attempt to Negotiateo:p/o:p/b/p p class="MsoNormal" style="margin-bottom: 12pt;"Given how adamant the SAG control group is (key members of Membership First plus National Executive Director Doug Allen), I?m guessing they would go back to the studios, take new media and DVD off the table if they are truly committed to making a deal, and try to make a few improvements to the deal.span style="" /spanWhether or not they succeed, this process would take several weeks, given the a href="http://digitalmedialaw.blogspot.com/2008/11/sag-stalks-towards-strike.html"glacial pace/a at which these negotiations have advanced.span style="" /spanThat takes us to the first week of February at the earliest./p p class="MsoNormal" style="margin-bottom: 12pt;"Then the deal would have to be sent to the members for a vote.span style="" /spanThis is probably also a three week process.span style="" /spanThat takes us to roughly March 1.span style="" /spanThen, if the deal is approved, we will have achieved a deal by March 1.span style="" /spanSo, under this best case scenario, a deal would be done by that date.span style="" /spanBTW, this is well into pilot season, meaning that SAG will lose significant portions of pilot season to AFTRA.span style="" /spanThis die is already cast; SAG has almost certainly already passed the point of no return on this issue./p p class="MsoNormal" style="margin-bottom: 12pt;"What if the deal is not approved?span style="" /spanThen we enter a twilight zone:span style="" /spanno strike and no deal.span style="" /spanSAG would have to go back to management and attempt again to win some concessions, this time arguing that although the union can?t strike, it also can?t agree to the existing deal.span style="" /spanThis form of passive-aggressive leverage actually creates an incentive for the union to have the deal not be approved.span style="" /spanThe way the union might try to obtain this result is to send the deal out with a recommendation for a No vote, as opposed to sending it out without a recommendation (let alone doing so with a positive recommendation, which is unlikely, given the union leadership?s fierce opposition to a deal).span style="" /spanIn any case, if the deal is not approved, things could drag on.span style="" /spanThe negotiations would be hard fought and hence lengthy./p p class="MsoNormal" style="margin-bottom: 12pt;"b style=""How Long Could Things Drag On?o:p/o:p/b/p p class="MsoNormal" style="margin-bottom: 12pt;"Things could then drag on for quite some time.span style="" /spanThe SAG commercials contract expires March 31, and negotiations on this economically important contract will distract staff to some degree from negotiations over the theatrical and television contract.span style="" /spanThis date is unlikely to be extended, since the contract was already extended once (from the end of October), and the JPC (representatives of the advertisers and advertising agencies) has said it will not agree to another extension.span style="" /spanAlso, this contract is being negotiated jointly with AFTRA (the process is actually going well so far), who would probably balk at an extension.span style="" /spanOf course, an extension is always a possibility despite these factors./p p class="MsoNormal" style="margin-bottom: 12pt;"In any case, if a deal is not made by sometime in June, then we enter another danger zone:span style="" /spanthe run-up to September?s SAG board elections.span style="" /spanNominating petitions are due in late a href="http://digitalmedialaw.blogspot.com/2008/07/sag-challenge-slate-to-oppose.html"July/a and campaigning lasts until balloting closes in late September (assuming the schedule is the same as it was this year).span style="" /spanNo one will want to make a deal during this period, for fear of losing electoral standing by being tarred with what the hardliners consider a bad deal.span style="" /span(Indeed, this proved to be a dead period this year.)span style="" /spanThen the new board would probably have to meet before things restart.span style="" /spanThat means that negotiations would not resume until October.span style="" /spanWho knows how long they will last.span style="" /spanWe might not see a deal until well into the fall or even later./p p class="MsoNormal" style="margin-bottom: 12pt;"What happens to SAG if matters go this long?span style="" /spanAgain, who knows; this is a nightmare scenario.span style="" /spanAFTRA will further cement its place in network television, ramping up for the 2010 pilot season (the already-impending 2009 pilot season is itself shaping up to be very AFTRA heavy).span style="" /spanUnion members might start going a href="http://digitalmedialaw.blogspot.com/2007/12/guilds-will-survive.html"fi-core/a.span style="" /spanFractures in the union would deepen, and the union might even tear itself apart.span style="" /spanThe deal might get resubmitted to members, with little or no change.span style="" /spanSome of this would probably depend on whether the September election prove an electoral bonanza for the moderate Unite for Strength faction or not./p p class="MsoNormal" style="margin-bottom: 12pt;"Theoretically, the union might go years without a contract.span style="" /spanAfter all, the contract (called a franchise agreement) between SAG and the talent agents expired in 2002, and has never been renewed.span style="" /spanHowever, the contract with the studios is more critical to the union?s existence.span style="" /spanFailure to achieve a contract over a period of many months might lead AFTRA to seek jurisdiction over digitally shot theatrical movies, despite their present position that they have no intention to do so.span style="" /spanWhether or not that happens, failure to achieve a contract for such a long and indefinite period could effectively break the union.span style="" /spanFor that reason, one has to believe that cooler heads would ultimately prevail./p p class="MsoNormal" style="margin-bottom: 12pt;"b style=""Scenario 2:span style="" /spanThe Strike Authorization Succeeds/b/p p class="MsoNormal" style="margin-bottom: 12pt;"If the strike authorization succeeds, the union will probably attempt to negotiate for a bit with the studios.span style="" /spanThat takes us to at least the first week of February.span style="" /spanIf SAG obtains what it wants from the studios, then we probably would see a deal by March 1 at the earliest, because of the three week voting period described above in ?The Union Might Attempt to Negotiate.?/p p class="MsoNormal" style="margin-bottom: 12pt;"However, the studios are unlikely to agree to SAG?s demands; they?ve been quite firm in their refusal to break the new media template and reward SAG for its obstreperousness?and punish the unions that compromised to make a deal?by giving SAG provisions that were denied to those other unions (DGA, AFTRA, IATSE, as well as WGA).span style="" /spanThat would lead to a strike./p p class="MsoNormal" style="margin-bottom: 12pt;"If the strike is relatively short, say three weeks, then we might see a deal towards the end of April.span style="" /spanThis timeline assumes the following:span style="" /spanthree week strike takes us to March 1; contentious negotiations take four weeks (it could easily be longer) but result in a deal (April 1); and three week authorization vote results in ratification (presumably), by approximately April 22./p p class="MsoNormal" style="margin-bottom: 12pt;"However, I believe that if there is a strike, it will be long and bitter, given how dug in the parties are.span style="" /spanMembership First has staked its future on getting a deal with new media provisions that the studios are equally determined not to accept.span style="" /spanIn addition, Nick Counter, who has been at the AMPTP for a quarter century and is rumored to want to retire, is probably unwilling to leave the organization with a SAG deal undone, or done on terms the studios consider odious.span style="" /spanIn any case, a long strike means there wouldn?t be a deal until next fall at the earliest, or perhaps much later.span style="" /spanSee ?How Long Could Things Drag On?? above.span style="" /span/p p class="MsoNormal" style="margin-bottom: 12pt;"Whether the deal gets done in the fall, or even at all, depends on whether Membership First maintains effective control of the union, as they continue to have now, despite the moderates having won a narrow majority on the SAG national board.span style="" /spanIf MF holds or gains seats, they will probably continue the strike.span style="" /spanIf the moderates win solid control, they might at a href="http://digitalmedialaw.blogspot.com/2008/09/what-happens-if-challengers-win-control.html"long last/a fire the National Executive Director, dissolve the negotiating committee, and end the strike./p p class="MsoNormal" style="margin-bottom: 12pt;"b style=""A Couple Other Noteso:p/o:p/b/p p class="MsoNormal" style="margin-bottom: 12pt;"1.span style="" /spanWhat if the union changes the NED and negotiating committee at some earlier point in the process; would that shorten any individual timeline?span style="" /spanNo, because it will take time to ramp up if these changes are made.span style="" /spanA new chief negotiator would have to be appointed, and even if he or she is an existing guild staffer, there?s some ramp up time involved, even if short.span style="" /spanAlso, the national board would have to meet, dissolve the negotiating committee, and appoint a substitute negotiating committee, or more likely, a task force composed of some members of the board itself.span style="" /spanThis would take time too.span style="" /spanSo, these changes might result in a shorter option being pursued, but no such changes would result in a process before March 1./p p class="MsoNormal" style="margin-bottom: 12pt;"2.span style="" /spanThe basic cable contract is up for negotiation at some point this year; I?m not sure when.span style="" /spanThis too will distract staff and further delay matters, if the negotiations take place.span style="" /spanIt?s more likely though that these would be deferred until after the main theatrical and television contract is negotiated./p p class="MsoNormal" style="margin-bottom: 12pt;"3.span style="" /spanThree months ago, I a href="http://digitalmedialaw.blogspot.com/2008/09/when-will-there-be-contract.html"predicted/a no deal until January or February at the earliest.span style="" /spanThe schedule has obviously slipped./p p class="MsoNormal" style="margin-bottom: 12pt;"b style=""Conclusion/b/p p class="MsoNormal" style="margin-bottom: 12pt;"A deal can?t be achieved before roughly March 1 at the earliest.span style="" /spanIf there?s a strike, we may be looking at next fall before there?s a deal.span style="" /spanIn a nightmare scenario, all bets are off.span style="" /spanPeople will go fi-core, cross picket lines, and fracture the union, while the studios resume theatrical and television production with fi-core SAG members and AFTRA members (perhaps even theatrically)./p p class="MsoNormal" style="margin-bottom: 12pt;"In short, the union leadership is playing with fire by seeking a strike authorization.span style="" /spanMembers have already been burned with respect to the upcoming pilot season, as well as by loss to date of 3.5% fee increases.span style="" /spanThe leadership is risking permanent loss of those increases and loss of a a href="http://digitalmedialaw.blogspot.com/2008/12/sag-studios-what-are-they-fighting-over.html"synchronized expiration date/a in 2011 with the Writers Guild and AFTRA.span style="" /spanIn the extreme case, the current SAG leadership?s actions may end up breaking the union./pdiv class="feedflare" a href="http://feeds.feedburner.com/~f/DigitalMediaLaw?a=CN0uO"img src="http://feeds.feedburner.com/~f/DigitalMediaLaw?i=CN0uO" border="0"/img/a a href="http://feeds.feedburner.com/~f/DigitalMediaLaw?a=bVCKO"img src="http://feeds.feedburner.com/~f/DigitalMediaLaw?i=bVCKO" border="0"/img/a a href="http://feeds.feedburner.com/~f/DigitalMediaLaw?a=4W4sO"img src="http://feeds.feedburner.com/~f/DigitalMediaLaw?i=4W4sO" border="0"/img/a a href="http://feeds.feedburner.com/~f/DigitalMediaLaw?a=SPfYo"img src="http://feeds.feedburner.com/~f/DigitalMediaLaw?i=SPfYo" border="0"/img/a a href="http://feeds.feedburner.com/~f/DigitalMediaLaw?a=TaLYo"img src="http://feeds.feedburner.com/~f/DigitalMediaLaw?i=TaLYo" border="0"/img/a a href="http://feeds.feedburner.com/~f/DigitalMediaLaw?a=mmgoO"img src="http://feeds.feedburner.com/~f/DigitalMediaLaw?i=mmgoO" border="0"/img/a a href="http://feeds.feedburner.com/~f/DigitalMediaLaw?a=5oS5O"img src="http://feeds.feedburner.com/~f/DigitalMediaLaw?i=5oS5O" border="0"/img/a a href="http://feeds.feedburner.com/~f/DigitalMediaLaw?a=tgAIo"img src="http://feeds.feedburner.com/~f/DigitalMediaLaw?i=tgAIo" border="0"/img/a a href="http://feeds.feedburner.com/~f/DigitalMediaLaw?a=3boXO"img src="http://feeds.feedburner.com/~f/DigitalMediaLaw?i=3boXO" border="0"/img/a /divimg src="http://feeds.feedburner.com/~r/DigitalMediaLaw/~4/489506512" height="1" width="1"/

Full post as published by Digital Media Law on December 19, 2008 (boomark / email).