As this issue of the Quarterly goes to press, we have just announced that we are seeking to enter negotiations with the AMPTP in the New Year. At this time we do not know whether the AMPTP will be receptive to the conditions necessary for an early negotiation. Even if they are receptive, we do not know whether we will be able to make a deal that would satisfy us. In the midst of this uncertainty, with negotiations at the front of all our minds, I want to give you my perspective and some context for the key challenges ahead.

We are clearly in the midst of an era of extensive innovation and experimentation in the making and distribution of both new and old entertainment media which has led to great debate and great uncertainty as to where the industry may be headed.

No studio, network, Guild or Internet company has the clear answer to how content will be distributed to consumers in the future—much less have clear business models that show how revenue will be generated and profits made. Change is inevitable and although the path isn’t clear, I can say that the DGA is ready to meet the challenge.

How can I be confident? This is hardly the first time in our negotiations history that our industry has gone through changes. The DGA has dealt with them all and as an Englishman I have a lot of time for what history can show us.

How we first achieved residual payments for feature films is a helpful reminder to put our current situation into context. After WW II, there was great debate in the industry about the potential of television. It wasn’t clear whether it would draw audiences in any large number. Studios questioned whether they should even be in the business of making shows for the new medium and our own Guild, at first, didn’t see this as significant work for our members. In addition, the wisdom was that movies wouldn’t be worth watching on small black and white screens and if, God forbid that did catch on, it would kill off the theatrical business. A depressing dilemma. Well, audiences embraced television and cinema didn’t die, and our industry recalibrated itself.

But here’s the point: like today, there were many unknowns that had to be addressed and it took the Guild fully 12 years to reach the first residuals deal for feature films on television. Over those 12 years, there were many significant changes to the early business models, which were ultimately to influence how the Guild sought and won compensation for the reuse of members’ work.

In the 1980s the onset of Basic Cable needed a new negotiations approach. Both reuse of our members’ work, and more importantly, contracts to cover new original work had to be addressed. With cable budgets far below both network standards and the pay scales of then-current Guild agreements, the Guild was faced with a tough challenge—do we negotiate lower budget agreements in line with the scale of the cable shows or risk letting the work become non-Guild? The Guild chose to organize Basic Cable with flexible agreements, to ensure that the work would go to our members and bring in as many of these new companies as possible into the fold as signatories. Our patience paid off in spades. When the industry matured to the point that it began producing high-budget dramas, we were in a position to improve those agreements. Basic cable production now provides a great amount of employment for us and basic cable residuals are substantial and increasing fast—20 percent a year for the past 10 years.

In neither of these cases did anybody know exactly what the future would hold but the core principles—compensation for use and reuse of our members’ work, flexible and appropriate agreements for each medium, and establishing early jurisdiction, guided the Negotiating Committees’ actions to protect our economic and creative rights. These are but two of many examples from our history demonstrating that with a clear-eyed understanding of our business and an eye to the long view, we have been able consistently to arrive at agreements that encouraged the industry to thrive and us to thrive along with it. And with that history as our compass, I have every hope we will navigate through this current crisis and reach a good deal for our members in new media.

Best,
Michael Apted
President, Directors Guild of America