The Joint Policy Committee, LLC (“JPC”) reached an agreement with the Screen Actors Guild-American Federation of Television and Radio Artists (“SAG-AFTRA”) on the 2019 Commercials Contract and Audio Commercials Contract on April 2, 2019. The deal, led by Reed Smith partner and Chief Negotiator, Stacy Marcus, now moves into its next stages and will be voted on by members of SAG-AFTRA after being unanimously approved by SAG-AFTRA’s National Board. The memoranda including more information released by The JPC is available here.

The key goals of the 2019 negotiations, set to be accomplished during the new 3-year term of April 1, 2019 – March 31, 2022, are 1) innovation; 2) leveling the playing field between signatories and non-signatories; and 3) simplification. Click here to read more on our client alert summarizing the most significant changes made to the Commercials Contract (the “Contract”) to achieve these goals.

Innovation

  • The contract includes a new, simplified “Alternate Compensation Structure” (ACS) available to signatory advertisers and signatory advertising agencies on June 1, 2019.
    1. “Full Bundle” (Upfront Plus) option:
      • Session fee plus flat use fee for one year of use.
      • Includes up to 10 Class A uses and unlimited use in all other media.
    2. “Made For Digital and OTT Bundle” (Digital Upfront) option:
      • Session fee plus flat use fee for one year of use.
      • Unlimited use on Internet, new media, and over-the-top (OTT) platforms.
    3. “A la Carte” (Upfront Flex) option:
      • Session fee plus guarantee.
      • As with celebrity agreements, use is credited against the guarantee.
      • Flat rates for each 13-week cycle of use based on five consolidated media silos.
      • Class A uses may be credited or purchased for $100 per use.
    4. Signatory advertisers and signatory agencies who elect the ACS, will also have extended and more flexible editing rights. There are three categories of edits: 1) permitted edits (free); 2) paid edits (flat fee payment based on session fee with no additional residuals beyond the base spot); and 3) addressable edits.
    5. These new ACS benefits will be significantly more flexible and cost effective than the prior contract.
  • SAG-AFTRA recognized Association of National Advertisers’ (“ANA”) #SeeHer initiative and agreed to work together with the JPC on joint events and other opportunities.

Leveling the playing field

  • The new ACS is limited to signatory advertisers and signatory advertising agencies.
  • The contract includes a new waiver whereby SAG-AFTRA will agree to consider requests from JPC authorizers for a waiver from the contract in the event of a hardship (for example, potential loss of advertiser business by an authorizer agency).
  • The social media waiver now includes use on YouTube.
  • Maintained the low budget digital waiver.
  • There is now a four-year statute of limitations.

Simplification

  • Editing rules under the main contract were simplified in three key areas.
  • OTT platforms, such as Hulu, are considered Internet use under the contract.
  • The $1,000,000 cap is now calculated after the application of the initial allocation guideline for covered and non-covered services and prior to any 80 percent/20 percent or 90 percent/10 percent split between the SAG-Producers Pension Plan and AFTRA Retirement Fund. This will result in a real monetary savings for all producers.
  • The new contract also clarifies several other P&H issues, including contributions for b-roll and behind-the-scenes footage, charitable contributions, and rate escalation concerns.

In exchange for the transformational agreements described above, the parties agreed to a 6 percent wage increase (1 percent lower than the increase in 2016), and a total P&H rate of 19 percent (18.5 percent for JPC authorizers – the lowest increase in more than a decade). Additional low dollar value agreements are outlined in more detail in the full MOAs and the JPC’s summary document, available here.