John Wayne : public companies

The Once and Future Strikes : Hollywood Labor Relations 101

John Wayne — Tue, 08 Jul 2008 01:00:00 GMT

The headlines seem never to end: "Producers make final offer," "Industry Braces for Possible Walkout," "Strike Threatens to Bring Hollywood to a standstill." etc. etc. etc. And for the past year or two right up to this week, the situation looks pretty grim in the "dream factory" here in LA-LA-Land.

And I was thinking …maybe you (who, unlike me, are NOT inside this industry and have only the fan press and TV entertainment nonsense reporting to give you clues) would like to know a little bit more about "Why For?" So here we go:

Though there are unions and guilds (never mind the distinction between 'em. That's next semester, okay?) that cover everything that can be done on or around the set of a movie, there are basically FIVE major ones that we need to pay attention to:

The Director's Guild of America (DGA -- Which covers Directors, Assistant Directors, Unit Production Managers, Associate Directors, Stage Managers, Production Assistants in live TV and Location Managers in the NY area)
The Writer's Guild of America (East and West -- WGAE/WGAW, but basically the same club. The DGA has offices in NYC and L.A. too, but just doesn't distinguish the names of the sub-groups that way)
The Screen Actors Guild (SAG -- ONE of the TWO actors unions -- the much larger one dealing more with filmed and pre-recorded material … sorta)
The American Federation of Television and Radio Artists (AFTRA -- the OTHER actor's union -- smaller, and more about live media, news personalities, variety shows, but often overlapping into SAG territory and often actors belong to BOTH)
The International Alliance of Theatrical and Stage Employees (I.A.T.S.E., or "The IA" as it is known-really an ALLIANCE of all the various craft and "below the line" folks such as camera, lighting, grip, sound, prop, costume, makeup, and other technical people who get the show down on film/tape/bytes etc. etc. etc.

THESE folks have contracts which specify their MINIMUM wages ("stars" and their agents and lawyers can always negotiate MORE, of course,) working conditions, rights, procedures to adjudicate violations, pension and health and welfare plans, safety issues, and a host of other particulars of the workplace. And these contracts are negotiated/updated/reformed every three years -- though not all together. They are staggered over various years so that not EVERYbody is fighting at once - -partially to avoid utter chaos and mostly because while there are FIVE groups above (and sub-negotiations within them-different contracts, for example in the DGA, for filmed entertainment, live and tape, network vs. non-network shows, etc. etc.) they are all talking to ONE entity on the other side of the table which can only meet with them individually.

THAT side of the game is the Alliance Of Motion Picture and Television Producers AKA the AMPTP. (NOT to be confused with its other incarnation as the Motion Picture Association of America --the lobbying group for the producers more like a trade association than a negotiating body but made up of the same major companies, nor with the various Academies that give out Oscars, Emmys etc. etc.)

So … Once upon a time, every three years or so, within a few months or weeks of the expiration of the current contract, the two sides (AMPTP and ONE or more of the various unions/guilds-whoever's contract was up next) would schedule meetings to negotiate a new deal, usually leaving a lot of the old one intact and just updating as needed the things that changes in production techniques necessitated, experiences during the three years that needed clarifying, and, of course, increases in wages and other payments.

Once an agreement is hammered out in a highly sophisticated form of horse trading mostly behind closed doors (I've been there/done that BTW on many occasions), the finished agreement that the union/guild representatives endorse is then presented to the full membership of the body for "ratification" -- a majority membership vote up or down, which, of course, the leaders tell their members they SHOULD endorse and vote up. IF they do not vote yes OR if the negotiation reaches an impasse and there's no deal to approve or disapprove of, the union/guild leaders will, instead, ask their members to vote on a "strike authorization" -- to give them the ultimate card to play in the negotiations -- the threat to shut the industry down.

But here's the problem: IF a studio begins production on a film or TV show close to the date of the end of the contract and IF there is NO agreement or if it looks like there might be a fly in the negotiation ointment, then producers are reticent to START anything because it costs SO much more to STOP in the middle and then have to re-start -- not to mention the much bigger financial cost of simply stopping and NEVER re-starting a movie or show and having to throw away all the funds already spent. Let's remember that the major studios are PUBLIC companies who have to answer to stockholders and regulators and must spend their money prudently … or not spend it if that makes more sense.

That's why (a) what's known as a "de facto" strike happens often -- production slows to a crawl or stops weeks before the contract deadline as a self-protection technique by the studios, and (b) why there's a lot of pressure to make a deal and, in recent years, to go negotiate much EARLIER than the last minute to make sure no such slow-down or stoppage happens so that nobody adds the insult of less income under the OLD contract to the injury of a strike instead of a new contract. We have seen some guilds go into "early negotiations" in recent years as much as 6 months or more prior to the contract's official termination deadline.

Remember, please, that strikes in Hollywood affect more than the many hundreds of thousands of us who work in the industry. Movie and TV folks are mostly freelance workers -- they are not on an annual or steady salary. When the show is shooting or working, so are they. When it isn't, they are not. And when NONE are working? Well, strikes-de facto or actual-- also affect our local shops, our dry cleaners, our mortgage bankers, our school tuition payments, and every other ripple-through in the local economy of this "company town" for the movie and TV biz that is Los Angeles.

The losses of recent strikes to the overall economy here have been measured in BILLIONS, not mere millions. And that includes the direct added expenses of starting things up again once everyone comes to their senses. The effects can last for YEARS -- especially for those who, in prior strikes, had mortgages foreclosed on, businesses that serve the industry fail, or even bankruptcies and divorces and other life-changing tragedies happen because a usually thriving industry lost its way and fell apart.

So what's going on right now? Simple: Even though all the unions and guilds go to negotiate in different years, there's usually an overall "issue" that's the "hot topic" of any particular period, and what usually happens is that ONE of the major unions makes a deal to solve that issue first and that becomes what's known as a "pattern of negotiations" that the other groups tend to follow. Because -- in most cases -- it makes no sense for the producers to give a lot MORE in the same area to one group over another. We also negotiate that SHOULD another Guild somehow get a better deal on an issue, everyone else will move up to match that level, too.

Rightly or wrongly, the issue at hand this time around has been "New Media" and the residuals paid on DVD's, pay-per-views, and all the other means of delivery such as streaming video, etc. etc. Many of the unions say the studios are making big bucks on these things and thus the percentage they share should go up. The studios, of course, say "Not so fast. We have higher expenses and we make a lot of flops that devour the hits. And besides, we take the risk by backing the shows. And we just plain think that the current percentage is fine & dandy." There are good and bad arguments on both sides. Lots and lots of them. Way too many to go into here. Trust me.

But, as it happens, the DGA made a deal on this (and everything else) and DGA members approved their contract. And after a pretty nasty & costly strike a few months ago that you certainly will remember from the headlines, so did the WGA. And now that its contract year has arrived, AFTRA has made their own deal. And SAG has been in negotiations on its contract over these same issues and ... Oops ! SAG has NOT agreed to the same basic "pattern" as everyone else. SAG's contract has in fact actually just expired a few days ago on June 30 without reaching a new agreement to replace it. But SAG has NOT asked its members to authorize a strike … yet.

BUT … approximately 40,000 members of AFTRA, who currently have their ballots in hand to APPROVE their negotiated agreement (and must do so by today, July 8th when the ballots will be counted and the results revealed) are ALSO members of SAG (which has well over 100,000 members). And that's where it has gotten really sticky.

You see, as a way of strengthening their bargaining position to get a BETTER deal (they think) the SAG leadership has asked its members who are ALSO members of AFTRA to vote "NO!" on the AFTRA contract. Even though the AFTRA leaders have asked their members to vote "YES!" and endorse the deal they negotiated in good faith with the producers. THIS has caused a HUGE battle amongst the actors with famous folks taking opposite sides, placing ads in the trade papers, giving speeches and press conferences, and generally going nutso (another highly technical labor relations term -- I'd love to explain, but this is already too long … So take your best shot and guess).

SOME say this "sabotage the AFTRA deal if you're also in SAG" plan is the only way to pressure the studios to offer SAG and AFTRA both a better deal that will benefit everyone when it becomes the "new" pattern. Others say that for AFTRA to have negotiated in good faith and then have SAG butt in and meddle in their vote and basically tell the producers they didn't MEAN it when they negotiated would not only weaken everyone but give the producers a really good reason to say "a pox on both your houses" and hold out for WORSE terms for the actors in both guilds.

So … Last week, the studios gave SAG a basic ultimatum -- "This is the last, best deal we will offer you. Take it or go on strike." And SAG has said "Well, gosh, we aren't ready to strike just yet or even ask our members to approve one -- We just want to see how the AFTRA vote comes out." And meanwhile, as all three groups fight and offer brickbats in the industry media, and as the DGA and WGA and IA wait to see what happens …

Just about everyone is NOT working because, as I explained, NOBODY wants to start up a show only to have it shut down by a strike. And EVERYbody is still hurting from the very recent WGA strike that shut the town down for months only a little while ago, killed the last TV season, and cost everyone in and out of the industry billions of dollars. Which, they fear, might all happen again. Soon.

SO…the possible results are that either

(A) AFTRA ratifies their contract and SAG realizes it can't do better and takes the deal and THEIR members ratify too and we all go back to work, or ...

(B) SAG succeeds in torpedoing the AFTRA deal and then one or both of these unions authorize a strike and the town shuts down which ...

(C) won't look a whole lot different than the defacto strike now happening due to the producers' shutting things down to cut their losses but will be a whole lot angrier and nastier and potentially could lead to ...

(D) producers saying "Screw you guys -- we'll hire NON-union actors and the big stars will walk away from you because they like their big paychecks more than they sympathize with a union of 100,000 waiters and shoe clerks who once upon a time got an acting job but have nothing to lose by striking and making everyone else in the business lose their butts."

Yep. It could get that ugly out here. So stay tuned and we'll see.

I know this was long. But at least now you have some context for what the usually-inept news media will be telling you about what's going on at places like Sony and Paramount and Fox and Warner Bros and Universal and … oh yeah, DISNEY right now. Namely, a whole lotta nothing and a whole lotta name-calling and a whole lot of anger and tension and fear.

Ain't showbiz glamorous? You bet it is. And while the outcome as I write this is truly unknown, at least, I hope, you have some basic background to filter the sometimes incomplete news reportage through ... Because, as a JHM reader, you now know a little better the answers to the famous question: "Why For?"

Questions? Ask.

DISCLAIMER: This is a SHORT and BROAD BRUSH STROKE portrait of a VERY complex subject. The Secretary will disavow all knowledge of my actions. Your mileage may vary. Do not remove tag under penalty of law. Etc. Etc. Etc.

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The trend in retail, Disney or otherwise

John Wayne — Wed, 16 Apr 2008 01:00:00 GMT

In recent articles here on JHM, there’s been quite a bit of discussion about the fact that the Walt Disney Company has agreed to repurchase 100% ownership of its Disney Stores and that -- as part of the re-acquisition and repositioning of the once-strong retail division -- they are going to be closing 100 or more stores throughout the chain. We’ve also seen discussion here about worries about declines in in-park merchandise-per-guest spending and talked about shut-downs of venues for entertainment and retail at Pleasure Island.

Since the talk about Disney issues sometimes happens here, inevitably, in a semi-vacuum and since we tend to think of WDW and the other parks as “worlds” apart, I thought a look at the retail universe in general might shed some light on larger trends that are affecting Disney. Both to explain the current moves and to show that this is not specific to this company or these locations.

In the past several months many household name companies in various aspects of retail have either gone bankrupt, announced plans to do so, or announced the closure of many of their stores in an effort to reduce costs and eliminate slower-performing outlets. A large part of this, of course, is because these are public companies and must report to stockholders and show analysts growth numbers. Whereas, in the old days of privately held retail chains, the public airing of dirty financial linen wasn’t quite as much of a concern.

But the effect this will have on, for one example, the commercial real estate business and the look of malls across the USA will be profound. Consider the players you will not be seeing or will be seeing much less of on the retail landscape to get an idea of just how big this downsizing trend has become:

BANKRUPT: Sharper Image and Levitz furniture are the biggest of eight major chains to file during the past few months. Bombay, once a darling in the furniture business with huge sales figures and 360 stores and over 3600 employees, has filed and been liquidated, with only 20 employees left to close down the 38-year-old retailer. Linens ‘n Things is expected to file shortly, and they’ve got 500 stores in 47 states. Now of course some bankruptcies are the “The End” title card in the movie of the company’s life, such as Sharper Image which is definitely going out of business and liquidating not only its remaining stocks but also store fixtures and appliances across the country.

Others are about reorganization and temporary respite from creditor demands and look forward to a leaner, meaner return to the wars someday in the future…they hope. Among the companies taking this route recently are Wickes Furniture, the longtime catalog company Lilian Vernon, Fortunoff housewares, and Harvey Electronics. Whether these companies will actually re-emerge from bankruptcy is, of course, still in doubt.

But bankruptcies have ripple effects in other arenas. For example, when Sharper Image, which had a huge catalog and mail-order online business as well as its stores, went bust, it left United Parcel Service holding the bag on $6.6 million worth of unpaid shipping bills. Domain, a furniture retailer, left its shipper, On Time Express, unpaid for only $30,000, but for the small 90-employee company in Tempe, Arizona, it might as well have been millions.

By the way, when firms go bankrupt, it isn’t just their creditors, landlords, and big-time customers who get burned. Don’t expect to get any value out of any unused gift cards or certificates you got last Christmas that have been burning a hole in your pocket since then if the store they’re drawn on goes under. You’re last in line to get paid, and very unlikely to see any value at all.

DOWNSIZING: Disney is, again, not alone in closing many stores and leaving lots of malls with holes in their hallways. Foot Locker says it will close 140 stores this year, Ann Taylor plans to close 117, and Zales jewelers will shut down 100 more. Charming Shoppes, the parent company of Lane Bryant and Fashion bug, will close at least 150 stores, Wilson’s Leather will dump 158 of its lowest-performing locations, and Pacific Sunwear will see the sun set on a subsidiary chain it had been operating called Demo.

Other big companies are cutting back on expansion plans and, in the process, are sure to close losing locations too. J.C. Penney, Lowe’s, and Office Depot have announced slow-downs in expansion, with Office Depot in particular reducing a planned 150 store openings to 75. Overall, the International Council of Shopping Centers trade organization says they will see 5,770 store closings in 2008, up from 4,603 in 2007 for a rise of just over 25%.

And remember most all of these decisions have already been announced which means they are based on economic statistics that are already being eclipsed by the current figures you see on TV every day. What will those inspire managers to do in the next year forward? We’ll all see. The March numbers for sales in stores that have been open at least a year were what looks like a tiny fall of half of one percent…but that is the worst number for that stat in 13 years.

So … when Disney closes down its Disney Stores and shutters venues at the parks and surrounding them, they’re not really doing something so very remarkable unless you think that the pixie dust of “Disney Magic” grants immunity from the ebb and flow of economic times.

Will there be boom times again? Surely. Will new and more innovative and, perhaps, more cost-effective retail chains still undreamed of become the household names of tomorrow’s malls? Sure thing. And will Disney, which sells, after all, the EXPERIENCE of shopping at its parks just as much as it sells the merchandise bought, become just as innovative as we all have come to expect to survive and thrive in this brave new world of changing retail realities? I suspect they will, don’t you?

But for some sectors, some products, and some kinds of retailing, between online competition where no “bricks and mortar” and their accompanying employee, insurance, utility and rent expenses are concerned, some kinds of things we used to shop for in stores may just vaporize from the physical retail scene. Look what’s happened to music and video as downloading replaced retail and long-time companies such as Tower Records just plain gave up the retail ghost.

But what do YOU think? Will malls, stores, and on-property Disney shopping change forever, or will the old trends come back with better times instead? And what will all those displaced retail employees do to earn a living…and afford their next trips to Walt Disney World?

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