DGA Deal On New Contract Changes Dynamics For WGA, But Won’t End Strike – Analysis

The Directors Guild’s tentative agreement with the studios for a new film and TV contract, reached late last night, eliminated the prospect of an unprecedented WGA, DGA and SAG-AFTRA three-guild strike which would’ve paralyzed the film and TV industry. It also likely won’t bring the labor peace the studios and streamers are looking for. But it brings even more attention to the WGA, whose strike is in its second month.

Amid chatter that directors were close to an agreement, WGA leaders on Friday vowed to keep fighting whether the DGA made a deal or not. As Chris Keyser, co-chair of the WGA negotiating committee, said, “Any deal that puts this town back to work runs straight through the WGA, and there is no way around us.”

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Even so, the new DGA deal goes a long way toward achieving many of the gains sought by the WGA in terms of wages, foreign streaming residuals, and artificial intelligence, adding pressure on the WGA to take the same deal on those issues in what’s known as “pattern bargaining.”

The DGA deal, however, does not address one of the WGA’s core issues: staffing mandates for writers on episodic TV shows, which the Alliance of Motion Picture and Television Producers has called a “quota” that is “incompatible with the creative nature of our industry.” The DGA has long had mandatory staffing provisions for various below-the-line members of the director’s team, including unit production managers, assistant directors and associate directors.

So how far does the DGA deal move the needle closer to what the WGA is asking for? Not close enough to end the strike, no doubt. But close enough to warrant a return to the bargaining table, using the DGA deal as a new starting point.

The WGA and the AMPTP both say they’re willing to resume bargaining, although that’s now complicated by the fact that SAG-AFTRA is scheduled to begin its own contract talks with the AMPTP on Wednesday.

Before the WGA’s negotiations with the AMPTP broke off on May 1, the two sides had reached tentative agreements on several issues, including script fees for staff writers; improvements in the guild’s span provisions – which offer protection against the erosion of over-scale pay for writer-producers on short-order series – and an easing of burdensome options and exclusivity provisions that hold staff writers long-term without pay.

The two sides were very far apart on money issues. The WGA wants to see pay and benefits increased by $429 million over three years, but says that the studios only offered $86 million.

The new DGA deal offers a template for a deal with the WGA on minimum pay raises.

In its deal, the DGA got annual pay raises of 5%-4%-3.5% over the life of the contract.  That’s 13% compounded over three years. The DGA also got an additional 0.5% to fund a new parental leave benefit. The WGA won paid parental leave in 2020.

The WGA had been asking for 6%-5%-5% pay increases, which is 16.87% compounded over three years. According to the WGA, the AMPTP’s last offer was 4%-3%-2%, which is 9.26% compounded over three years.

See the WGA’s proposals here:

The DGA wage hike is almost exactly halfway between what the WGA was asking for and what the AMPTP’s last offer was, and that’s probably very close to what the WGA will eventually get. When talks broke off with the WGA on May 1, the AMPTP said that “The first-year general wage increase currently on the table is the highest first-year increase offered to the WGA in more than 25 years. In addition, the companies have offered to create an entirely new category of rates that will establish a new and higher floor for mid-level writers’ compensation.”

With respect to the use of artificial intelligence in filmmaking, which is a key issue for all the guilds, the DGA says it won a “groundbreaking agreement confirming that AI is not a person and that generative AI cannot replace the duties performed by members.”

This too could be the template for an eventual deal with both the WGA and SAG-AFTRA. In its last proposal, the WGA says it sought to “regulate use of artificial intelligence on minimum basic agreement-covered projects. AI can’t write or rewrite literary material; can’t be used as source material; and MBA-covered material can’t be used to train AI.”

The WGA said the AMPTP “rejected our proposal. Countered by offering annual meetings to discuss advancements in technology,” although the AMPTP’s deal with the DGA appears to be in the same ballpark as what the WGA wants.

The AMPTP has said that “AI-generated material would not be eligible for writing credit,” while noting that “we’re creative companies and we value the work of creatives. The best stories are original, insightful and often come from people’s own experiences. AI raises hard, important creative and legal questions for everyone. For example, writers want to be able to use this technology as part of their creative process, without changing how credits are determined, which is complicated given AI material can’t be copyrighted. So it’s something that requires a lot more discussion, which we’ve committed to doing. Also, it’s important to note that the current WGA Agreement already defines a ‘writer’ to exclude any ‘corporate or impersonal purveyor’ of literary material, meaning that only a ‘person’ can be considered a writer and enjoy the terms and conditions of the Basic Agreement.”

The DGA also made major gains in global streaming residuals, saying that it got “a 76% increase in foreign residuals for the largest platforms so that residuals for a one-hour episode will now be roughly $90,000 for the first three exhibition years.” This, it said, is based on a “new residual structure to pay foreign residuals.”

The WGA had proposed a new high-budget streaming video on demand residuals formula based on streaming services’ foreign subscriber counts. The AMPTP has said that “The WGA’s proposal on foreign streaming residuals represents a 200% increase over current rates and treats foreign subscribers the same as domestic subscribers. However, subscription fees vary from country to country, and in many countries, the subscription fee is substantially less than it is in the U.S. Nevertheless, the companies have recognized the importance of foreign streaming and have offered to increase the residual. These improvements apply to all types of streaming programs, including all feature-length streaming programs.”

The DGA hasn’t yet specified what its new foreign streaming residuals formula entails, but it will almost certainly be the template for the WGA and SAG-AFTRA, as it’s unlikely that the companies will use one formula for directors, and another for writers and actors.

The DGA deal, however, doesn’t apply to some of the WGA’s other outstanding issues, which affect writers only. According to the WGA, the AMPTP “rejected” its proposals and “refused to make a counter” offer on those issues, which in addition to minimum staffing include full pension and health benefits for members of writing teams and duration of employment, in which the WGA is seeking a guarantee of at least 10 consecutive weeks of work for staff writers on pre-greenlit rooms, and at least three weeks per episode on post-greenlit rooms.

And the resolution of those issues may well determine how much longer the writers’ strike lasts.

During the last writers’ strike back in 2008, the DGA made a deal with the AMPTP on the 73rd day of the work stoppage. The main issue was residuals from what is now known as streaming. A few weeks later, the WGA agreed to similar terms, ending its walkout after 100 days.

This time around, the DGA made its deal on the 33rd day of the WGA strike, but the WGA says the companies’ “divide and conquer” strategy won’t work. Meanwhile, AMPTP is expected to focus its attention to SAG-AFTRA next, kicking off negotiations with actors Wednesday.

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