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2018 Contract Talk

Below you will find factual explanations as to why I, as Local 700’s National Executive Director, and our Officers and Board of Directors are unanimously recommending a vote against ratification of the tentative new Basic Agreement. This has been compiled in response to questions we have received from our membership over the course of the last few days. The memorandum of agreement is not yet finalized, so the below points are based on my own negotiation notes.

The Local 700 leadership wants you to fully understand the deal points. There were some improvements made in these negotiations, but we grossly underachieved in the areas of greatest importance.

Cathy Repola
National Executive Director

(Updated: 8/6/2018)

New Media Residuals - Comparison

Comparison of the DGA/WGA New Media Residuals versus the IA's newly proposed formula (an analysis of what SAG-AFTRA achieved was not utilized in preparation for these negotiations).

The other Guilds existing residual formulas are structured very differently than those already paid on behalf of IA members, so the below is not a detailed analysis, but rather broad-strokes.

The DGA and WGA negotiated a new foreign markets residual. Residual compensation reuse is computed by a “Base Amount” (dependent upon budget/type of production, etc.) multiplied by a “Tabled Percentage” (year of reuse; for example, Season 1, Season 2, etc.) multiplied by “Subscriber Factor.” 

Base Amount x Tabled % x Subscriber Factor

The above-referenced new formula is for high-budget SVODs (Streaming Video on Demand):

• An additional 35% of the domestic residual is paid for each of the first and second years. The percent declines gradually for the years afterwards.
• 90-day free streaming window
• The platform must have 45 million or more subscribers

If the foreign license is for 15% or less of the available foreign market — or less than 45 million subscribers — then producer pays 1.2% of the allocated producer’s gross.

The already-existing IA new media residuals are triggered for products streamed on new media as a secondary market, with free streaming windows, budgeting and licensing structures. A new residual patterned after the DGA and WGA for foreign reuse of high-budget SVODs was proposed by the IA when negotiations commenced in May.

The IA did not achieve any reuse residuals for foreign distribution and instead agreed to the below:

Streaming live-action features with budgets of $30 million or more will pay a 5.4% contribution rate of straight time earnings of the IATSE crew provided the following stipulations are met:

• 96 minutes or more in length when distributed theatrically 
• There is an admission fee charged to view it theatrically

Streaming animated features with budgets of $45 million or more will pay a 3.6% contribution rate of straight time earnings of the IATSE crew provided the following stipulations are met:

• 96 minutes or more in length when distributed theatrically 

Both apply to SVOD services with 1 million or more domestic subscribers with license agreements entered into after January 1, 2019.

New Media Residuals - Effects

It is uncertain if this new stream agreed to by the IA will generate sufficient income to result in adequately offsetting the declining Post ‘60s and flattening traditional supplemental markets.

It will be some sort of increase in residuals, but attempting to estimate its value is guesswork. On the other hand, increasing the hourly pension contribution rate is something you can calculate and rely on because it is quantifiable.

The future funding of the Plans is based on actuarial assumptions. There are three components to the assumptions we use for our future projections:

  1. Hourly contributions - This is the number of hours (transferred to dollar amounts) we can assume will be contributed. We agreed during these negotiations to increase the assumptions from 87.5 million to 92.5 million. This allows you to assume additional money coming in. There were over 96 million hours last year, but better to be conservative.

  2. Supplemental markets income – This includes the already existing new media residuals and the traditional secondary markets (sale of features on DVDs) but not the newly negotiated residuals. The assumptions were increased from $275 million to $325 million. Just over $340 million was contributed last year.

  3. Return on investments – The Plans have assumed a rate of return of 8%, amortized over a 20-year period. This has not been reached for many years. It was lowered last year to 7.5%, and the amortization period was changed to 15 years. It is unlikely 7.5% will be achieved adding further burden on the funding of the Plans.

There is an obligation to fund the pension first by meeting our minimum funding requirement; any shortfall beyond that would be to the health plan. That should be avoided at all costs. Even though the hourly health contributions are being increased under this new deal (in disproportionate amounts, see below "Health Plan Hourly Contribution Increases"), that was done to prop up the monthly reserves in the active and retiree health plans to allow for the continuation of the 13th and 14th checks for those who retired prior to August 1, 2009 and to avoid other funding triggers related to reserve levels that have negative implications on the health plan. 

Getting successfully through the next three years (the term of this new IA agreement) may be achieved. The IA members deserve more security than that. Addressing the long-term stability should be our Number One priority, leaving us positioned to make improvements in future negotiations.

Health Plan Hourly Contribution Increases

The studios and their affiliated companies will pay an extra $.20 cents per hour in year one, and an additional $.10 in each of the second and third years resulting in a total of $.40 increase beginning the third year of the agreement. All others will pay an additional $.75 per hour each year of the agreement, resulting in a $2.25 increase beginning the third year of the agreement. This applies to both service providers and producing entities. For service providers, this will put them at a competitive disadvantage with their primary competitors – the studios. 

This new financial burden will likely result in loss of available jobs for IA members as most of these signatory companies already have extremely tight profit margins. In addition, it will likely have a negative impact on our organizing drives and the ability to secure both the MPI Plans and much needed wage increases in non-union facilities.

Rest Period/Turnaround

The tentative agreement makes some improvements to turn around, but there are exclusions and limitations put upon it that will not address the core areas where it is most needed. Our goals were to provide sufficient time for sleeping, getting home safely and spending personal/family time between shifts, but this new provision is inadequate on several levels, regardless of the negotiations resulting in 9 hours for Local 700 and 10 for all other locals.

Here is why:

• The exclusion of pilots and first seasons of episodic series.
• The exclusion of features and long-form television, except in instances in which employees have worked two consecutive 14-hour days.
• The exclusion of all IA On Call classifications.
• A penalty that is the equivalent to one straight time hour of pay for an invaded 9th hour (10 for production) will not act as a deterrent, which is what these types
of penalties are intended to do. (This leaves in place the current 8-hour structure for Local 700 in LA and the 10 hours in NY).

Ratification Vote - Clarification

As soon as the Memorandum of Agreements (Local and Basic) are completed, the ballots will be sent out with an explanation and recommendation from the IA President. It will also include a letter from Local 700's leadership urging a vote against ratification. The IA President will indicate that a vote against ratification is a vote to strike. If a majority of the electoral votes are cast against ratification, that does not necessarily mean we go back to the table. The IA President will decide upon the strategy if that were to occur. If the majority vote in favor of ratification, the new agreement will be implemented and it will apply across the board.

Additional Information

Why Local 700 Says No to the Tentative Agreement (Click here)


The Local 700 Officers and Board of Directors on Saturday, July 28, 2018
unanimously voted to recommend a vote against ratification of the
2018 tentative IATSE Basic Agreement.