Directors Guild, Studios in Tentative Agreement

LOS ANGELES, January 18: The Directors Guild of America
(DGA) has reached a tentative agreement with the Alliance of Motion Picture and
Television Producers (AMPTP) on the terms of a new 3-year contract, which
includes wage increases and residuals for new-media use.

“Two words describe this agreement—groundbreaking and
substantial,” said Gil Cates, the chair of the DGA’s Negotiations Committee.
“The gains in this contract for directors and their teams are
extraordinary—and there are no rollbacks of any kind.”

The agreement comes after just one week of formal
negotiations, which followed months of informal discussions and nearly two
years of preparation and research by guild staff and consultants. “This was a
very difficult negotiation that required real give and take on both sides,”
said DGA’s president, Michael
Apted. “Nonetheless, we managed to produce an agreement that
enshrines the two fundamental principles we regard as absolutely crucial to any
employment and compensation agreement in this digital age: First, jurisdiction
is essential. Without secure jurisdiction over new-media production—both
derivative and original—compensation formulas are meaningless. Second,
the Internet is not free. We must receive fair compensation for the use and
reuse of our work on the Internet, whether it was originally created for other
media platforms or expressly for online distribution.”

The new agreement ensures that programming produced for the
Internet (both original and derivative) will be directed by DGA members and
their teams. The only exceptions are low-budget original shows on which
production costs are less than $15,000 per minute, $300,000 per program, or
$500,000 per series—whichever is lowest.

In addition, the deal more than doubles the Electronic
Sell-Through (EST) residual for television and increases the feature film
residual by 80 percent. The EST residual rates will be 0.70 percent for
television downloads and 0.65 percent for film downloads, above a certain
number of units downloaded. Below that, residuals will be based on the formula
employers currently pay. Payments for EST will be based on the amount received
by the entity responsible for distributing the film or television program on
the Internet.

Moreover, after an initial 17-day window for free
promotional streaming of Internet programs, companies must pay 3 percent of the
residual base (approximately $600 for network prime time 1-hour drama) for 26
weeks of streaming. They can continue to stream for an additional 26-week
period by paying an additional 3 percent—or a total of $1,200 for one
year’s worth of streaming.

The agreement allows both sides to revisit new media when
the agreement expires.

“Our fundamental goal in these negotiations was to protect
our interests in the present while laying the groundwork for a future whose
outlines are not yet clear,” said Cates. “We knew that gaining jurisdiction
over new-media production and winning fair compensation for the reuse of our
work on the Internet were the key issues for setting a framework for the
future, but we also had to secure real gains for our members in today’s world.”

The agreement also grants annual wage increases of 3 percent
for prime-time dramatic shows and daytime serials and 3.5 percent for all other
covered programming, as well as annual residual increases of 3 percent for
prime-time shows and 3.5 percent for all other covered programming.

Details of the new agreement will be submitted to the
Guild’s National Board for approval on January 26. If approved, the deal goes
into effect when the current contract ends June 30.

The Writers Guild of America, which is still on strike, has
said that it will carefully analyze the DGA agreement, adding: “Now that those
negotiations are completed, the AMPTP must return to the process of bargaining
with the WGA. We hope that the DGA’s tentative agreement will be a step forward
in our effort to negotiate an agreement that is in the best interests of all
writers.”

—By Mansha Daswani