ANA/4A's JPC Welcomes Talent Unions' Ratification of New Commercials Contract

Advertising Industry Negotiates Modest Wage Hike for Performers,
Gains Agreement to Test New GRP Compensation Model

May 27, 2009 - New York, NY - The ANA / 4A's Joint Policy Committee on Broadcast Talent Union Relations (JPC) enthusiastically welcomed ratification of a new Commercials Contract by rank and file members of the Screen Actors Guild (SAG) and the American Federation of Television and Radio Artists (AFTRA). JPC leadership cited the spirit of collaboration that characterized the union negotiations, which produced a comprehensive new agreement - retroactively effective from April 1, 2009 - that includes a modest wage hike for performers over the next three years and a commitment to conduct a comprehensive pilot study of an entirely new compensation model based on gross rating points.

"Both the advertising industry and the talent unions negotiated in good faith, with the goal of improving our relations with one another," said Douglas Wood, the JPC Chief Negotiator and a partner in the law firm of Reed Smith LLP.  "We came to the table looking for ways to agree rather than disagree."

Over the three years of the contract, wages will increase an average of less than two percent per year, a modest hike that reflects marketers' economic realities and is well within ranges being negotiated in collective bargaining agreements throughout the nation and in the entertainment industry.

The advertising industry also won agreement from the unions to jointly conduct a two-year multi-million dollar pilot study of the GRP Payment Model developed by Booz Allen & Company in a 2007 Study commissioned by the JPC and the unions. This study will provide the industry and the unions with a fully tested and operational system.

"The GRP project is a historic effort by management and labor to create a modernized compensation approach that takes into account the changes in the media landscape, while fostering a fair and efficient compensation scheme," said Wood.  "We believe there will be a compelling case for both sides to adopt the new model when the next Commercials Contract is negotiated in 2011."

Other gains for marketers in the new contract include a cap on Pension and Health contributions, ending a forty-year inequity in the payments made by commercial producers when compared to television and motion picture producers.  The P&H cap will provide substantial savings to the industry over the course of the contract, as will an agreed exemption for CEOs appearing in commercials and liberalization of filming employees at work.

In the public service arena, the unions accepted the industry's view that PSAs could be used in all media covered by the contract and agreed on a standard template for waivers. As part of the new contract, the industry secured a three-year waiver for the Ad Council, allowing it to produce PSAs that directly solicit contributions.

While the industry conceded a minimum rate for commercials made exclusively for the Internet and new media, that provision is not effective until April 1, 2011. Other concessions by the industry related to session fees, Spanish language provisions and payments to extras for travel - all of which were important to the unions but have little impact on advertisers when viewed from a total cost basis.

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CooperKatz & Company