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Ken Ziffren
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Ken Ziffren, a veteran entertainment attorney who’s served as Los Angeles’ film czar since 2014, is casting skepticism as to whether negotiations between the Writers Guild of America and the Alliance of Motion Picture and Television Producers have progressed. He said that Tuesday’s meeting between the two sides “did not move the ball forward” in a sign that they remain far apart.
“It’s questionable whether the lack of programming for us to view will incent either of the studios or SAG-AFTRA or the WGA to sit down again and keep going,” Ziffren said on Wednesday at an event for media and entertainment lawyers hosted by the Beverly Hills Bar Association.
The AMPTP and WGA met on Tuesday to discuss the counter-offer provided by the studios on Aug. 11, with WGA East leadership traveling to Los Angeles to review the studio proposals. The move suggested that talks have gotten more serious since the Friday sitdown, which served as the first formal return to the negotiating table since the strike was called on May 2. After the meeting, studio sources told The Hollywood Reporter that their takeaway was that a deal wasn’t imminent and that the two sides are still working through issues. The WGA did not send out a post-meeting communication to members.
Ziffren pointed to the agreement the Directors Guild of America secured as a “good deal” and said it should serve as a template to resolve contentious negotiating points relating to artificial intelligence and performance-based residuals.
Less than two months into the writers strike, the Directors Guild quickly came to terms with the AMPTP in an agreement that secured a new residuals formula and an obligation that companies consult members when using generative AI “in connection with creative elements.” Both sides highlighted a new formula for foreign subscription video on-demand (SVOD) residuals that revolves around the number of international subscribers on a given platform. Under the deal, the largest streaming services are obligated to pay $89,415 in residuals for one-hour series for the first three years of use (representing a 76 percent increase in foreign residuals and a 21 percent increase in general).
“That’s where the future is in getting further residuals,” said Ziffren, who’s long worked with the DGA. “The Directors Guild negotiated a one hour series residual for high-priced video series that is double digits better than on a network, either broadcast or cable. That fact has not reached the audience that it should have.”
Ziffren added that he was dubious that the studios would “agree to an add-on of several million or hundreds of millions of dollars in this world by adding some kind of performance base that may or may not relate to their respective revenues.” All of the seven major studios and streamers, with the exception of Netflix, are losing money under the current framework, he said.
Residuals have emerged as a key issue in the strike. For streaming titles, the WGA has asked for viewership-based residuals, on top of existing fixed residuals, to “reward programs with greater viewership,” according to a document issued in April detailing the guild’s offer. The AMPTP refused to make a counter-offer at the time as that would require data transparency, which streamers have adamantly opposed.
More than 100 days into the strike, there’s no clear pathway to resolving the work stoppage. Ziffren criticized how the two sides are approaching negotiations.
“It seems to me that if we can start having each side send a piece of paper on AI — figure three, four pages — of their positions on all the issues, trade those pieces of paper, sit down in a room and talk it through rather than posture, that we’ll get closer to full employment if we do that,” he said.
The WGA has accused the AMPTP of leaking information about meetings to the press despite “blackouts” forbidding either side from doing so.
On the issue of profit participation, specifically new bonus methodology on TV talent deals that allows studios to enjoy unrestricted control over the distribution of their programs, Ziffren said his clients prefer this framework over the old model based on modified adjusted gross receipts (MAGR), or the revenue the studios gets from the series minus distribution fees, expenses and production costs. While profit participation based on MAGR offers the most significant upside, he explained the new model likely leads to higher average payouts.
“Given the reduction of episodes per season — which forgive me is not going to change — it may be better to go for doubles than home runs,” he said.
In 2020, Disney unveiled its so-called series bonus exhibit on deals for subscription offerings, which rewards profit participants with bonus payments for longevity, program rankings, awards like Emmys or Golden Globes and library performance, among other factors. It’s become the norm offered by Disney and Fox.
Amid the strike, CEO pay has also come under the spotlight. Barry Diller, chairman and senior executive of IAC and Expedia Group and former Hollywood studio chief, said in July that top executives and the highest-paid stars should take a 25 percent pay cut to narrow the gap between their salaries and those of people at the lower end of the scale. Asked about the suggestion, Ziffren said, “Barry looks to me like a guy who’s out of the business trying to get back in.” He added, “Each company will decide independently of the others what compensation will be payable to their respective executives.”
Katie Kilkenny contributed to this report.