SAG-AFTRA and the studios were cut $480 million in broadcast pay

Talks broke down last week between the major studios and SAG-AFTRA, with the studios saying the gap between the two sides was “too large” to continue productive negotiations.

Until they can bridge the gap, SAG-AFTRA will remain on strike and the entertainment industry will remain closed.

So, how big is this gap?

About $480 million annually.

That’s the difference between what SAG-AFTRA wants in the new remaining broadcast format — $500 million — and what the Alliance of Motion Picture and Television Producers is currently willing to pay — $20 million.

The two sides disagree on other issues as well, including artificial intelligence and increases in minimum rates. But it was the huge gap in the flow of waste that led to the collapse of the talks.

Union leaders said they expected to continue negotiating, and were surprised when AMPTP walked away from the table. But according to AMPTP, the union has issued an ultimatum, demanding that the studios agree to its “indefensible” proposal to levy a tax on every subscriber or the strike will continue.

The flow of waste has been central to the writers’ and actors’ strikes.

The WGA won a bonus for the most-watched live shows. The WGA has managed to establish a principle that successful shows on streaming should pay more. But to do so, she was willing to accept a relatively small sum of money — about $5 million a year at first, according to sources. (The WGA did not respond to a request for comment.)

SAG-AFTRA aims much higher. The guild proposed that each streaming platform pay 57 cents per subscriber annually. The amount amounts to less than a stamp per subscriber — a first-class stamp that now costs 66 cents — or $500 million a year across all platforms, said Duncan Crabtree-Ireland, the union’s chief negotiator.

This money will go into a jointly managed fund. The fund’s trustees distribute it to the actors whose projects appear on the platforms. According to the union, the money is supposed to be allocated based on the viewership of each show.

SAG-AFTRA ignored a previous proposal that relied on Parrot Analytics, a third-party data provider, to assign a value to each of the offers. Instead, the trustees will use the platforms’ viewing data, which the platforms have already agreed to provide to the WGA.

The trustees will also have to decide how to divide the remainder among each show’s staff. Under current structures, the remaining amounts are paid on either a “time and salary units” basis or an “assessable distribution formula,” known as the “3-2-1” formula. Either way, series regulars get more than guest stars, who get more than daytime players.

Meanwhile, the AMPTP is submitting the same proposal approved by the WGA. Under the WGA contract, which was ratified two weeks ago by a 99% vote, successful writers are shown a 50% bonus on their fixed remainder. Shows will be eligible if their local views reach the equivalent of 20% of their local subscriber base within 90 days.

About a quarter of shows destined for streaming will receive the bonus, according to data the studios shared with the WGA.

According to Netflix co-CEO Ted Sarandos, enforcing this requirement on actors would cost four to five times as much. SAG-AFTRA said it understood the show would pay studios about $20 million annually.

When the WGA made its deal last month, there was some speculation that SAG-AFTRA was going to be folded into the process and would accept something similar. This did not turn out to be the case.

Negotiations with SAG-AFTRA resumed on October 2. Fran Drescher, the union’s president, continued to push for a 2% revenue share, saying it would “change the world” for actors.

Facing resistance from studio CEOs, the union agreed to cut its proposal in half, to 1%. But CEOs continued to make clear that they would not accept a revenue share of any percentage.

That’s when, last Wednesday, SAG-AFTRA came back with its proposal for a 57-cent-per-subscriber formula, which was intended to generate money equivalent to the 1% revenue share. In its pitch to the studios, the figure was presented as $1 per year, leading the studios to conclude that the guild wanted $800 million per year. But the union says its proposal cuts up to 57 cents to account for programs like news and sports that the union does not cover.

This seemed to the studios like a different version of the same idea that they repeatedly rejected, and that the conversations were not productive.

Studios have estimated that its July 11 offering is worth more than $1 billion to actors over three years, most of it in the form of higher minimum prices.

VIP+ Webinar Replay: Hollywood on Strike – What’s Next?