LOS ANGELES (AdAge.com) -- The two actors unions said they have reached a tentative three-year deal with advertisers, effective today and running until March 31, 2012.
The new ad deal calls for an immediate 5.1% increase in minimum payments to actors in the first year of the pact but then would freeze actors' wages for the next two years. Effectively, that translates into an average annual increase of 1.7% over the life of the contract.
But in an increasingly sour economy, Hollywood's unions may feel any immediate sweetener offered by advertisers is better than none. A report released today by the U.S. Commerce Department showed that core inflation, which excludes food and fuel, climbed 1.8% in February alone; a near-term raise would be welcomed by many working actors.
It comes with a trade-off, though. A newly revised global ad-spending forecast from WPP's Group M pointed to more bad news over the horizon. Besides predicting that U.S. ad spending would fall 4.3% this year, it forecast another 6.8% drop in ad spending in 2010, when actors in commercials will receive no pay increase at all.
Wage increase was uncertain
Securing raises of any kind was hardly guaranteed. The gains of the Screen Actors Guild's landmark 2000 commercials negotiation, when advertisers hiked cable pay rates 140% after actors went on the longest strike in SAG's history, are a distant memory.
Moreover, hard-liners at SAG have made a mess of contract negotiations with Hollywood's TV and film studios. The union's TV and theatrical contract expired in June, while its basic-cable and video-game pacts expired at the start of the year, and neither has been renewed.
Given those other contract challenges, it was in the unions' best interests to approve a commercials contract worth more than $900 million, said Doug Wood, the chief negotiator for the Joint Policy Committee of the Association of National Advertisers and the American Association of Advertising Agencies.
"They have other labor problems with the film studios," he said, "so I doubt they have the appetite to get into it with us."
A SAG spokesman declined to comment for the record, and a call to a spokesman for the American Federation of Television and Radio Artists was not immediately returned.
Payment for online commercials
The actors unions did manage to secure a minimum payment structure for commercials "made for and moved over" the internet -- just not anytime soon.
In 2006, both advertisers and actors agreed to extend the commercials contract for two years and paid Booz Allen Hamilton $1.4 million to independently study advertising in new media and compensation of actors.
Mr. Wood told Advertising Age that a minimum session fee (for showing up on the set) of $567.10 had finally been set for actors appearing in online commercials, but under the terms of the new deal, it would not take effect until April 1, 2011.
If the commercials deal is ratified, actors will have to continue to haggle directly with advertisers to set their minimum fees for commercials that appear solely on the internet for two more years.
But when the changeover does take effect, according to a statement released by SAG, actors will be paid 1.3 times the minimum session fee during the first eight weeks an internet commercial appears online, otherwise known as residuals, and 3.5 times the minimum session fee when an internet-only commercial appears online for a year.
The deal still must be approved by the boards of both unions, and then ratified by a majority of each of their memberships.