SAG-AFTRA and Hollywood Studios Still at Odds Over Higher Residuals for Hit Streaming Shows

SAG-AFTRA leaders painted a sunny picture of their ongoing negotiations in a video released over the weekend, saying the talks have been extremely productive and promising to reach a seminal deal.

But according to multiple sources with knowledge of the dynamic in the negotiating room, the sides remain far apart on a range of key issues. With just a few days left before SAG-AFTRAs current contract expires on Friday, some are privately predicting that talks will be extended beyond the June 30 deadline, though such a move has not formally been broached in the negotiating room with the Alliance of Motion Picture and Television Producers.

Fran Drescher, the SAG-AFTRA president, is leading the unions contract negotiations for the first time along with Duncan Crabtree-Ireland, the unions executive director and chief negotiator. In the room, Drescher has been the more outspoken of the two, arguing that the studios have broken the traditional business model and need to make wholesale changes to the contract.

One of the key stumbling blocks is the issue of a viewership-based streaming residual, which was also on the list of demands from the Writers Guild of America, which has been on strike against AMPTP companies since May 2.

SAG-AFTRA has proposed a bonus on top of the standard residual for the most-watched shows. But the AMPTP has refused to go along with that.

One of the challenges is getting a common metric that would work across all the streaming platforms. Each platform measures views differently, and they also consider that data top-secret.

SAG-AFTRA has proposed using data from Parrot Analytics as the benchmark. Founded a decade ago, the research firm uses a mix of data sources including search queries, fan sites, social media engagement and downloads to estimate the global popularity of shows.

But the studios have been unwilling to peg compensation to third-party estimates, which might not be entirely reliable and could be subject to unannounced changes in the algorithm or to gaming. For instance, actors might be able to profit from driving social media engagement that does not translate to subscriptions or even to viewership.

The Directors Guild of America which typically sets the pattern for residual formulas ratified its contract on June 23, which includes a 76% increase in foreign streaming residuals, but does not account for viewership. Despite vocal opposition expressed by some directors and some joint WGA-DGA members, the DGA contract was ratified by an 87% margin.

Under the current formulas, streaming residual payments for all three guilds are based on a pre-determined compensation formula that declines over time as the TV show or movie ages. Platforms are sorted into subscriber-based tiers, with the higher tiers paying a higher residual. But the payments are the same regardless of the popularity of a show.

Members of SAG-AFTRA and the WGA have argued that streaming residuals are far lower than traditional broadcast residuals, and that maintaining a healthy residual is key to allowing creators to sustain a career. They have also argued that it is essential that writers and performers be allowed to share in the success of shows.

The AMPTP represents more than 300 producers, most of whom just like the talent do not have any access to streaming data. Netflix is also a participant in the talks in its producer capacity, but not as a distributor.

DGA leaders have suggested that it will take widespread adoption of advertising in streaming to generate reliable viewership metrics, though even that might not solve the issue for creators.

SAG-AFTRA has been unwilling to settle for the terms reached by the DGA on other issues as well, including basic increases in minimums. The DGA deals calls for a 5% hike in basic minimum payments in year one of the three-year contract, followed by a 4% increase in year two and 3.5% in year three. SAG-AFTRA is also seeking robust protection on artificial intelligence, including provisions regulating AI training which would go beyond the language obtained by the DGA in its contract.

Before talks began, SAG-AFTRA members voted overwhelmingly for a strike authorization. However, the video released Saturday appeared to send the message that a strike is not imminent.

At this stage in the WGA talks, the union was holding picket-sign making events and sending out strike rules. SAG-AFTRA has not done either of those things.

SAG-AFTRA is also holding an internal election this year, which would ordinarily be hotly contested. However on Monday the two factions, Unite for Strength and Membership First, announced they would both support Drescher as the head of a unity slate. Drescher was elected two years ago as the head of the Unite for Strength faction.

Joely Fisher, a Membership First leader, is the secretary-treasurer. Both candidates were endorsed for another term by both factions.

The goal is to avoid dividing the union internally, which could undermine the guilds position in negotiations.

(Pictured: SAG-AFTRA president Fran Drescher and WGA president Meredith Stiehm)