Ad groups on actors strike

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As the Screen Actors Guild/American Federation of Television & Radio Artists strike moves into its fourth week, advertisers and agencies are hopeful of a quick resolution. However, we are determined, if necessary, to tough it out for as long as it takes because we simply cannot agree to terms demanded by the union that will astronomically drive up the costs of commercial production.

The unions' exorbitant demands include: a 350% increase in cable TV residuals (with a new pay-per-use cable residual formula); a 600% increase in pay for TV commercials that move over to the Internet; a 125% increase in commercials made for foreign use; and a 14% minimum rate increase across the board. These demands ignore economic reality.

WIDESPREAD INDUSTRY SOLIDARITY

Our solidarity on this issue is widespread. Every day, advertising agencies and advertisers are continuing to shoot commercials. And very importantly, the vast majority are refusing to sign "interim agreements" with the union.

In fact, at recent forums hosted by our negotiating committee at several sites across the country, hundreds of agency and production company professionals came together to express their unified support and to offer suggestions about continuing commercial production -- conducting business as usual -- throughout the strike period.

For those who may not be close to the issues surrounding this contract dispute, here are the salient points:

* The expired SAG/AFTRA contract is based on the advertising and media world of the 1950s and '60s, when three broadcast networks (ABC, CBS and NBC) delivered nearly 95% of the viewing audience. Today, there are six broadcast networks (ABC, CBS, NBC, Fox, UPN and WB) whose audience share is in the 50% range. Countless cable and satellite channels comprise the remaining, splintered market.

Within this media environment, an advertiser must stitch together a complicated mix of broadcast, cable and satellite programs to reach a national audience. Clearly, the realities of the TV marketplace of the 21st century require a new, equitable approach to talent compensation.

* The expired contract is based on an antiquated "pay per play" method of payment. Actors receive a daily session payment in addition to payment every time a commercial in which they appear airs on one of the broadcast networks. However, when the ad airs on cable or wild spot, they receive a flat fee residual for 13 weeks, regardless of how little or how often the commercial runs.

In a nutshell, the unions want to extend pay-per-play to cable, while the industry has proposed a guaranteed flat-fee arrangement for network broadcasts. We strongly believe that applying the guaranteed flat fee to cable and network TV benefits both the advertisers and the actors. Furthermore, it is the most sensible, verifiable and executable approach to talent payment in an era of tremendous media fragmentation.

We came to the bargaining table with an offer that would be quickly embraced by virtually any other industry. For the first time ever, we offered an upfront, guaranteed residual of $4,200 for one day's work for a scale performer -- no matter how much or how little a commercial is aired on the networks and cable for a period of 13 weeks.

This offer includes:

* A 4.4% increase in daily session fees;

* A 6.2% increase in extra performer rates;

* A 60% increase in cable residual rates to $1,627;

* A guaranteed residual rate for network commercials of $2,575.

We conceived this offer with great sensitivity to the scale actor and his or her family. However, the union rejected our offer out of hand and demanded unprecedented increases in virtually every category of the contract. These demands are completely out of line with what other unions are receiving throughout the country.

UNIONS ACTING UNFAIRLY

Moreover, the unions are not playing fair.

They have publicly threatened both union and non-union members who work during the strike with exclusion from SAG/AFTRA membership and work in the industry when in fact these actors have a right to work if they choose without threats to their careers or livelihood.

They have used unlawful demands as part of their reasons for striking; that is, that commercials contracts be expanded to include those shot in Canada and Mexico, as well as those made solely for the Internet. Such demands are outside the purview of the original contract and therefore do not constitute legal reasons for striking.

They have offered "interim agreements" to agencies that include conditions that were never raised at the collective bargaining table.

They have issued a drumbeat of inaccurate and misleading statements.

The industry has filed charges against the union on these issues and provided the National Labor Relations Board with strong evidence of these violations.

REJECTION OF INTERIM AGREEMENTS

Such divisive tactics are harmful to all. We especially caution advertisers and their agencies about signing "interim agreements." They represent quick fixes with long-term adverse price tags. What may seem like a solution for one commercial is, in reality, a pact that binds an agency, all of its clients and all commercials produced during the strike -- and perhaps beyond -- to the unreasonable union demands our industry cannot accept.

So, despite the inconvenience, we will continue to shoot commercials -- and continue to engage in business as usual -- with the knowledge that the members of the Association of National Advertisers and American Association of Advertising Agencies stand behind us in negotiating a fair and sensible contract that reflects the needs and realities of the 21st century.

Mr. Sarsen is president of the Association of National Advertisers and Mr. Drake is president of the American Association of Advertising Agencies.

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