New Media Rights Contested In Movie Studios 'Final Offer' - InformationWeek

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7/9/2008
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New Media Rights Contested In Movie Studios 'Final Offer'

An entertainment and technology lawyer says the actors' contract disputes over new media reflect a "civil war" between tech and entertainment interests in California.

The Screen Actors Guild is in a tough position as it prepares to make a statement on film studios' final offer for a contract that the union has already indicated does not give actors enough money for new media.

The American Federation of Television and Radio Artists announced this week that its members approved a separate but similar contract with the Alliance of Motion Picture and Television Producers. SAG had tried to get that union to vote down the contract in order to gain more leverage and show that its members who belong to both unions do not support the work agreement. Instead, the approval strengthened the studios' argument that the contract is reasonable.

The AMPTP issued a statement saying its member studios hope the agreement "demonstrates to SAG's Hollywood leadership that there is support for the new economic relationships we have built with writers, directors and actors -- and not much support for a strike, whether de facto or real."

That may be the case, but the contract did not pass by an overwhelming majority. Just over 62% of the union's members voted in favor, while just over 37% voted against it. The last AFTRA contract vote was approved by 93%. Jonathan Handel, an attorney with Troy Gould whose practice sits at the intersection of technology and entertainment, said the margin shows that SAG's assault was somewhat effective. He predicted that SAG would be emboldened by its "partial victory" and likely to resist compromise.

The studios said their final offer would give actors more than $250 million in additional compensation and "important new media rights," the details are unclear and complicated. Handel said the AFTRA contract devotes 40 to 45 pages to new media, which is complicated by the many distribution models and options for content made available on the Internet.

In a recent conference hosted by Wachovia equity researchers, Handel explained that the formulas change depending on whether the content is produced for film or television, then made available on the Web or whether it's created for the Internet. Formulas change based on whether viewers pay for downloads or watch free, ad-supported streaming clips, whether content is based on an existing or old show, whether it's prime time, and the list goes on.

While actors and studios haggle over those details and others, movie production has ground almost to a complete halt and the Los Angeles area entertainment sector is suffering. Handel quoted Los Angeles Economist figures saying that the writers' strike cost 5,700 Los Angeles-area entertainment jobs, as measured from May 2006 to May 2007, and about $24 million a day.

In addition to hurting a state that depends on entertainment, driving, and real estate, the issue highlight's a north-south divide over new media, entertainment, and the Internet, Handel said.

"There’s really a civil war in California between northern and southern on this issue," he said. "And as a result, when you try to look at this and ask what’s really happening, what’s happening is that a heavily unionized industry is attempting to compete with non-unionized industries -- the technology industry in particular -- and also just user generated content."

It could also highlight divisions within SAG, which needs approval from 75% of its members for a strike. Even if the actors do not strike, the Hollywood movie machine isn't likely to be up and running again before August, Handel said.

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