In the fall of 2006 the advertising industry's $2.5 billion three-year contracts with the talent unions Screen Actors Guild (SAG) and the American Federation of Television and Radio Artists (AFTRA) expired. A great deal is at stake in the renegotiations as a result of the immense changes that have taken place in the marketing landscape. The present contract is largely the same as it was 50-plus years ago, when three television networks were the dominant means for national advertisers to reach consumer audiences and radio was purely local.
While the media landscape is fragmenting into many more vehicles, advertisers, in aggregate, are not spending more money or reaching larger consumer audiences. They are spreading their marketing efforts across the numerous media channels. Today broadcast television is rivaled by hundreds of cable channels plus the emergence of a host of new consumer-controlled media/devices, such as iPods, cell phones, TiVo, VOD, and IPTV. As advertiser-supported content develops for these new formats, the talent payment implications are enormous.
Consequently, a payment model that continues to compensate actors at historical levels for their appearances in television commercials--many of which the consumer can now delete--plus compensates talent incrementally for appearances in each new electronic form, will rapidly erode the economic viability of the advertising industry. For this reason, we must reinvent the way talent is compensated, and we must do so in renegotiating the 2006 contract.
Through the efforts of the Joint Policy Committee (the multi-employer bargaining organization that represents ANA member in the negotiations with the unions), we were able to avoid a strike and entered into an extension of the current agreement with the unions through October 2008. In the interim, the JPC and the unions have agree to conduct a joint study to determine how to revamp the current compensation model to assure a logical nexus between payments make to actors who perform in commercials and a measurable return on investment critical in today's business environment. This agreement is unprecedented in the labor movement. Never before has management and labor agreed to revamp the basic compensation model at a time when both sides are strong. We remain hopeful that this new collaborative approach will result in much needed improvements over the current model.