Film production has largely stopped because the contract between the Screen Actors Guild and the Alliance of Motion Picture and Television Producers has expired.
One of the main sticking points is residual fees for new media.
The Screen Actors Guild contract expired overnight. The old contract is in effect and the union has not scheduled a vote to go on strike or taken other official steps toward a complete work stoppage. However, the industry has already begun to suffer from the two groups' failure to come to an agreement.
Most movie productions wrapped up in June; producers had planned to do so before the SAG contract expired so they could avert disruptions. Few productions are currently under way, and scheduling is largely on hold pending an agreement between the two sides.
So, while there is no official strike, few in the industry are working right now and few have a clear idea when they will return to work. One industry insider said movie crews aren't likely to return to work until August.
"Our industry is now in a de facto strike, with film production virtually shut down and television production now seriously threatened," the AMPTP said in a statement.
And it's not just actors, writers, makeup artists, and other creative types who are out of work. Thousands of workers in other unions that support the film industry are suffering. They include caterers, truck drivers, and laborers, among others. In 2006, 42% of California's information industry workers were employed in film and broadcasting.
The temporary slowdown is hurting cities and workers hit by the screenwriters strike, which began in 2007 and bled into February of this year.
A Milken Institute report said the writers' strike played a major role in tipping the state into a recession. The Milken Institute predicted the writers' strike would cost California $2.1 billion in output, 37,000 jobs, and $830 million in retail sales, by the end of this year. Total personal income in California will drop by $3.0 billion because of the work stoppage, according to a Milken report.
The Milken report warned that if the actors go on strike, the impact on the industry could extend through 2009.
California isn't the only locale interested in the outcome. New York City has recently begun to lure film crews back, thanks to tax incentives. Massachusetts has offered incentives so film companies would boost the economy there.
Like their counterparts in the screenwriters' union, representatives of the actors' union want better protection and pay for online clips, streaming video, DVDs, and product integration. They held off on plans for a strike, but this week, AMPTP surprised SAG leaders with a "final offer," adding that they will not accept counteroffers. AMPTP said it resembles agreements signed by other Hollywood unions.
"Our final offer to SAG represents a final hope for avoiding further work stoppages and getting everyone back to work," the AMPTP said in an announcement. "That is our goal, and we hope it is shared by the members of SAG. The economic consequences of a work stoppage would be enormous. If our industry shuts down because of the unwillingness of SAG's Hollywood leadership to make a deal, SAG members will lose $2.5 million each and every day in wages. The other guilds and unions would lose $13.5 million each day in wages, and the California economy will be harmed at the rate of $23 million each and every day."
The group said the offer, worth $250 million, includes "groundbreaking new media rights," but details were not immediately available. A source familiar with the agreement confirmed that it resembles other recent Hollywood union contracts and it includes actors' residuals and re-use fees for new media in most circumstances. The rates are based on complicated formulas that take into account several factors, including how old a show is and whether it was originally produced for television.
The AMPTP's tough stance comes after SAG embarked on an unprecedented campaign to get members of the American Federation of Television and Radio artists to vote against ratifying a similar agreement with the AMPTP.
AFTRA and SAG share members as well as jurisdiction over production.
AFTRA members must submit their ballots on the contract by July 8.
Both sides planned to meet to discuss the offer on Wednesday, but SAG leadership has indicated they are not happy with the terms. The union, however, isn't in the best position, since others in the film industry have approved similar contracts.
"It's a very tough climate in which to make these kinds of arguments," Jonathan Handel, a digital media lawyer with the Los Angeles firm Troy Gould, said during an interview Tuesday. "SAG is the caboose."
And, regardless of how AFTRA members vote and whether SAG strikes, movie production is likely on hold until August, Handel said.