For the first time in DGA history, the major studios opened their corporate books to allow a thorough study of the economics of the television industry.

The study was the result of the prior round of contract negotiations in 1998 and 1999 between the three Guilds (WGA, SAG/AFTRA and the DGA) and the Alliance of Motion Picture and Television Producers (AMPTP). The study, which was to involve all three Guilds, was intended to help the Guilds prepare for the current round of negotiations, and to help facilitate an agreement by giving both sides at the bargaining table the same baseline data.

The Writers Guild elected not to proceed with the DGA and SAG/AFTRA. The DGA did proceed with the actors' unions, however, and completed the study with great expense and effort.

Actually getting the data from the studios proved to be more difficult than the Guilds had first imagined. The studios had confidentiality concerns and were also concerned about the process--what kind of data they needed to provide, who would see the data--and it took most of 2000 to sort these issues out.

"I was skeptical because I didn't know how much the Alliance was going to cooperate," said director Mel Damski who co-chairs the DGA's Residuals Study Committee with director Hal Cooper. "They put us through the hoops a little before they really cooperated. I won't kid you; it was a chess game for awhile.

"I can see their point about the confidentiality concerns," he added. "But we made it very clear from the beginning that it was going to be blind information. Nobody was going to know which show the data came from and so they were protected. We just needed to know what the general trends were. We weren't trying to identify any specific shows; we just needed to know what the numbers were. It was in their interest as well because they're coming to us saying the face of television has changed, that the economics of television are different and, therefore, it will impact our entire negotiations and the whole subject of residuals. Well, we just can't take that on faith. We need that to be backed up with numbers. Once we got the numbers, then we were able to come up with some very, very creative solutions to the problem."

Once the data started coming in, the Monitor Company, with whom the DGA and SAG had previously worked on the report on runaway production, began analysis. There were changes in personnel at the Monitor Company, and following their initial review it was turned over to another company, GKM, an investment banking research group, to complete the appraisal for review by SAG and the DGA's Residual Study Committee.

The data came from six TV seasons (1992/1993 through 1998/1999), 17 production types (half-hour, one hour, movies for television, etc.) from more than 30,000 productions (approximately 1,064 series). It broke revenues down by source: initial exhibition, whether network primetime, network non-primetime, first-run syndication or otherwise as well as downstream and supplement revenue including home video and theatrical.

The costs were broken down as direct production, distribution fees and costs, participations, etc. Detailed residuals were broken down by guild, window and production type. Also included in the data were production budgets, development costs, direct and indirect overhead and studio reports on trends in domestic broadcast, pay, basic and international television.

"The data were really quite exhaustive," DGA Associate National Executive Director Warren Adler said. "One of the problems of the study process, however, was that the initial concept was to get the data in time for SAG/AFTRA to digest it and have advance negotiations with studios on residuals issues. Our experts had to jam to get the material in useful form for them. It also meant that they didn't get to have an advance negotiation on residuals issues."

In the end, the study's contribution to this year's round of negotiations was distinctly limited by the fact that the WGA concluded its negotiations before SAG and AFTRA got started. The realities of pattern bargaining, and the peculiar dynamics of this year's negotiations, preempted some residuals approaches to which the study might have otherwise led.

Still, part of the quick success of the recent SAG/AFTRA negotiations was due to the actors entering the process with a more focused set of proposals. "One of the useful things about the study was the fact that we were partnered with SAG and AFTRA," Adler explained. "We were able to sit in with them while they developed their proposals and I think that we were able to have some useful input."

Adler felt that there were two major advantages to participating in the study. "First, there is a sense of realism. It's not just understanding what is a good deal; it's also about getting a sense of priorities. The writers went into their negotiations basically saying, 'We want more in every market.' The actors, by virtue of having the study, were able to focus on areas that were really important to them. In addition, the study allowed them to craft proposals that the writers didn't think of. There were some really creative proposals and a lot of the credit for that goes to Ken Ziffren, a leading industry transactional attorney, who was part of the study team."

Other DGA members who served on the Residuals Study Committee were Bruce Bilson, Robert Butler, Linda Day, Len Garner, Rod Holcomb, Lee Shallat-Chemel and Chuck Vinson.

"Our DGA Committee was a very focused group," said DGA Executive in Charge of Residuals Teri Benton. "Because of their diverse expertise in television directing, they were able to provide us with practical insight to complement our statistical analysis. I expect we'll benefit from having this data for our own negotiations, if not in this round, then in years to come."

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