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5 Things You Need To Know about Residuals

Residuals Faucet

One of the biggest question marks when trying to ensure profitability on a film or TV project is the residuals payment obligation. The talent guild agreements are filled with nuanced rules that can end up costing an unsuspecting producer or distributor much more than anticipated.

Here are five tips to keep in mind, both when estimating the total cost of your film and when negotiating licensing deals to make sure they’re profitable.

  1. Leaving someone off the cast list results in more than hurt feelings.Improper verification of the residuals cast list (i.e., getting it wrong) can generate claims and additional costs. Here are some common errors in creating the residuals cast list:
    • Omission of SAG- AFTRA Talent
    • Upgraded Extras
    • Talent in re-shoots
    • Stunts and stunt coordinators in second unit
    • Choirs hired in post-production
    • Talent called to loop or re-voice
    • Talent in clips or excerpts from other films or recording used in film
    • Celebrity look-alikes, sports stars, political cameos hired outside normal casting
    • Nude body doubles hired as principals
    • Failure to properly calculate SAG or IATSE residuals proration
    • Failure to recognize special agreements or waivers negotiated at the time of production
  2. The first million is the sweetest. Under all collective bargaining agreements, residuals on the first $1 million reportable receipts from Home Video are payable at lower percentages.  In cases of shared distribution territories, agreements should detail which entity gets the benefit of these lower residual rates. In cases where the agreements do not make this clear, it is to the distributor’s benefit to make the first Home Video reporting.
  3. Watch out for the ol’ PH&W prepay. Advances to star talent are often made prior to production and outside of a payroll service. Consequently, these amounts are sometimes overlooked in preparing the residual cast list and are not credited toward that talent’s Pension Health & Welfare contribution ceilings. This results in overpayment of PH&W on residuals.
  4. Separate payroll services = doubled PH&W contributions. In cases of shared distribution where the responsible parties are using separate payroll services, residual payments made by one party are not likely to be credited by the other against talent PH&W ceilings. This also results in another PH&W overpayment on residuals.
  5. Be an approval-seeker when it comes to setups. When two parties are using separate payroll services, it’s important to coordinate the approval of the residual setup. Making residual payments based on different allocation or proration would be a red flag for an audit.

One of the best things you can do to protect yourself and make your film attractive to distributors is to get your final residuals cast list together while you’re still in production. A residuals payment service can help you assemble the list, and should even be able to forecast the cost of residuals for various release-to markets.

Learn more about Media Services Residual Payments, or request more residuals information here.

SAG-AFTRA Extends Corporate / Non-Broadcast Agreement into 2015

SAG-AFTRASAG-AFTRA has signed off on a one-year extension of two of its pre-merger contracts for corporate, non-broadcast and educational work, the union announced earlier this week. The National Board of Directors ratified the agreement between the union and the Producers Group on October 1 at its meeting in Los Angeles.

The legacy AFTRA and SAG Corporate/Educational and Non-Broadcast Contracts, which were jointly negotiated in April 2011, were set to expire on April 30, 2014. But with negotiations for the TV/Theatrical contract on the horizon, the now-merged union wanted more time to prepare for the talks and allow for more weigh-in from the membership rank and file.

The Corporate/Educational and Non-Broadcast Contracts cover public relations, sales promotion and training films made for initial use to the general public, schools, conventions, seminars, museums, in retail stores and for Internet use. With the extension, the contracts will remain in place as-is through April 2015.

SAG-AFTRA’s Assistant National Executive Director, Contracts Ray Rodriguez said the extra time will give the union the chance to give this contract the full attention it deserves.

“We are hoping to bring a renewed focus to bear on bringing more work under this agreement,” said Rodriguez.

Lee Gluckman Jr., Producers Group President and Chief Negotiator, also had positive things to say.

“We are pleased to be able to maintain stability in the industry and think it will be productive to delay these negotiations a year and allow the parties time to prepare,” said Gluckman.

Details of SAG-AFTRA Ad Pact Released by Hollywood Reporter

Alleged details of the recently negotiated tentative pact between SAG-AFTRA and the advertising industry have been posted by Jonathan Handel of The Hollywood Reporter. Citing a source close to the negotiations, the reported points include a one-time 6% wage increase at the beginning of the 3-year deal, an increase in Pension & Health contributions from 15.5% to 16.8%.

If accurate, these numbers are far from official, as the agreement still needs to be approved by the union’s national board of directors at its April 20-21 meeting. At that time, details of the deal will officially be released to the public. Following approval by the board, the new agreement would go to SAG-AFTRA membership for ratification.

See the story in the Reporter here.

SAG-AFTRA Reaches Commercial Pact with Industry

Following over 7 weeks of talks, SAG-AFTRA and the Joint Policy Committee reached a tentative agreement Saturday on terms for successor agreements to the television and radio commercials contracts. The deal is subject to approval by the SAG-AFTRA National Board of Directors later this month, then a ratification vote by the membership.

“These contracts provide our members with the solid foundation they need to sustain their careers and families,” said SAG-AFTRA National Co-President and Negotiating Committee National Chair Roberta Reardon. “I am very grateful to our negotiating committee which came together and worked as one to ensure a strong contract for their sisters and brothers who work in the commercials area.”

“These negotiations have been a positive and productive continuation of our longtime partnership with commercial performers and their representatives,” said Douglas J. Wood, lead negotiator for the Joint Policy Committee which represents ad agencies and national advertisers. “I am pleased to have achieved these important industry gains in key areas and I want to thank my colleague and JPC Counsel Stacy Marcus and the other members of our negotiating team.”

The formal talks, which wrapped up in the early-morning hours of Saturday, April 6 in New York, had begun February 14. Though SAG and AFTRA just merged one year ago, they have traditionally negotiated the commercials agreement side by side.

SAG-AFTRA said no details would be released until the National Board of Directors’ review at their April 20-21 meeting.

David White Named Dual Trustee for SAG-AFTRA’s Still-Separate Benefit Plans

In an apparent effort to streamline the process of merging SAG-AFTRA’s divergent health and retirement plans, the performers union has named national executive director David White to the AFTRA Health & Retirement Funds board of trustees, according to the Hollywood Reporter. Despite the merger of SAG and AFTRA last year, the two plans – SAG’s Pension & Health Plan and AFTRA’s Health & Retirement fund – remain separate entities, affiliated neither with each other nor with SAG-AFTRA. This has been a disappointment to performers who hoped the merger of the unions would likewise bring a merger of the plans; indeed, it was one of the key selling points of the merger. Actors who hope to qualify for benefits still must do so via one fund or the other, rather than an amalgamation of both… making it difficult when their work is spread across film and TV jobs.

In becoming a trustee for the Health & Retirement Fund, White becomes a member of both trustee boards, as he is a sitting member on the board for SAG’s Pension & Health Plan. SAG-AFTRA membership and leaders hope his dual role will help bring the two plans together and put in place the final piece of the merger, which was made official last March.

Read the article from Jonathan Handel at the Hollywood Reporter.

Media Services Releases 3 New Apps for the Production Industry

Showbiz-Labor-Guide-AppMedia Services and Showbiz Software are proud to announce the release of three brand-new mobile apps for iPad and Android tablets. As first reported in the Hollywood Reporter, the production tools were released yesterday in conjunction with the annual Labor Guide Launch Party in Los Angeles, held at the W Hollywood.

The flagship app is the Showbiz Labor Guide, which mirrors the printed edition of the same name, but with easy touchscreen lookup of any wage rate from film and TV union agreements spanning the United States, such as IATSE, Teamsters, SAG-AFTRA, DGA and WGA.

Showbiz-Labor-Guide-App-InteriorThe drill-down menu allows producers and accountants to select region, agreement and occupation code to get wage and hour minimums sorted by schedule (Daily, Weekly, On Call, etc).

The Showbiz Directory app is a standalone mobile database of entertainment industry vendors and crew members in production centers across the country. Media Services eForms is a series of fillable, signable forms for employees working on film, TV and commercial productions. Many of the forms are specific to Media Services’ payroll division: now clients and their crew can fill out start paperwork and send it directly from their tablet devices.

All three apps are currently available in Apple’s App Store; the Labor Guide and Directory can also be found in the Google Play store. The Labor Guide was released with the introductory price of $19.99, while the other two apps are free.

In conjunction with the rollout, Media Services and Showbiz Software raffled off three iPads to attendees of last night’s launch party, where several hundred were in attendance. The New York launch party is slated for December 6 at Chelsea Manor. Register for it here.

Beijing Treaty Could Be Boon for Performers Worldwide

The diplomatic conference to finalize a new international treaty for performers was successfully concluded Tuesday as negotiators from the World Intellectual Property Organization’s member states signed the Beijing Treaty on Audiovisual Performances. The treaty was named in recognition of the city that hosted the final round of negotiations, a poignant location given the fact that China had long been viewed as a copyright scofflaw by the greater IP community.

WIPO Director General Francis Gurry (Credit: Yuan Wenming)

The treaty itself is designed to give audiovisual performers the same kinds of copyright protections other artists enjoy worldwide, including not only possible participation in revenue streams, but also so-called “moral” rights: how and when the performers’ images are used and for what purpose, as well as the right to be clearly identified whenever practical. The document brings to a conclusion 12 years of negotiations.

Though talks began in the late 1990’s, the process broke down over disputes between producers and actors regarding the transfer of rights to audiovisual performances. A compromise was finally reached by SAG-AFTRA and the Motion Picture Association, paving the way for the treaty to move ahead.

“The conclusion of the Beijing Treaty is an important milestone toward closing the gap in the international rights system for audiovisual performers and reflects the collaborative nature of the multilateral process,” said WIPO director general Francis Gurry. “The international copyright framework will no longer discriminate against one set of performers.”

The International Federation of Actors (FIA), a non-governmental organization representing performers’ unions from over 70 countries, was instrumental in negotiating the treaty. SAG-AFTRA, which had representatives among the FIA delegates, applauded the treaty, saying it would extend important economic and moral rights to actors and other audiovisual performers.

“Actors and other audiovisual performers have long needed the crucial protections of this treaty, and now we can finally have them,” said co-presidents Ken Howard and Roberta Reardon in a statement.

The treaty must now be ratified by some 30 eligible parties, including countries and certain intergovernmental organizations. The process could take up to a year to finalize. Performers from around the world, including American Meryl Streep, Brazilian Sonia Braga, Chinese Mei Baojiu and Spanish actors Javier Bardem and Antonio Banderas – appealed for adoption of the treaty.

“With new rights to proper compensation for the use of our work and control over the use of our images and likenesses, actors will have important tools to protect themselves around the world,” said the statement from SAG-AFTRA. “This rising tide can lift the boats of all actors worldwide.”

Video: Actors on Beijing Treaty

SAG-AFTRA Hangs Its Shingle

SAG-AFTRA Nat’l Exec Director David White displays the merged union’s new banner.

The newly merged performer’s union now known as SAG-AFTRA has officially hung its banner in the membership lobby of 5757 Wilshire Blvd. A week ago, the votes were in from the memberships of both SAG and AFTRA, overwhelmingly approving a merger that created the new entity. SAG members voted 82 percent in favor, while AFTRA members approved it with an 86 percent majority, easily exceeding the 60 percent threshold needed for both unions’ membership for passage.

The merger became effective immediately, bringing under a single union banner more than 150,000 actors, announcers, broadcasters journalists, dancers, DJs, news writers, news editors, program hosts, puppeteers, recording artists, singers, stunt performers, voiceover artists and other media professionals.

“With this historic vote, members of both unions have affirmed one of the most basic principles of unionism: Together we are stronger,” said SAG-AFTRA national co-president Ken Howard. “This merger, the result of months – really years – of planning, brings together the best elements of both unions and positions us well to thrive in the changing 21st-century media landscape.”

“The merger of these two unions is a huge victory for our members, and it is a monumental achievement for the labor movement,” said SAG-AFTRA national co-president Roberta Reardon. “I invite all members, locally and nationally, to join with us in building a successor union worthy of AFTRA and SAG.”

As SAG president, Howard had been working with then AFTRA president Reardon on a merger plan since July 2010. The two leaders toured the nation to listen to the membership and facilitate discussion on establishing a common vision for a merged union. Last June, elected SAG and AFTRA leaders formed the Group for One Union and created work groups to break out the specifics of how the new entity would be organized.

Questions still remain about future governance and how the still-separate pension and health plans will be consolidated. But for now, the banner is hung, and SAG-AFTRA sets sail into the future.

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