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“Studios should not be allowed to undervalue their products in sweetheart deals with their own parent company and cost creative talent and crewmembers their rightful share in residuals and contributions to health and welfare funds,” said Senator Sheila Kuehl.

“This bill is good public policy because it ends a long-standing Hollywood accounting technique that has cost the talent community, both above and below the line. We thank the Senate Judiciary Committee for their affirmative vote, and we will continue our efforts to help this reasonable bill become law,” said Patric M. Verrone, president of the Writers Guild of America, West.

Since the major media networks in the United States have come to own many cable channels, the practice of selling TV series or movies for less than the fair market value of the content has become more and more prevalent. In many cases, the product is sold or licensed from one entity to another entity within the same parent company. This creates a problem for actors, writers, and performers who rely on the amount of a sale of material for their residuals - payments made to the creators or performers of a work for showings or screenings after an initial use. Other union members in the entertainment industry, including the Teamsters, also rely on the amount of a sale price to determine contributions to their health and pension funds. Lastly, major profit participants are often short-changed when a movie or television series is sold for less than the fair market value of the content.

In the last few years, there have been many high profile court cases on this issue. Profit participants from TV series, such as The X-Files, Will & Grace, and Home Improvement, among others, have filed suit to prevent the practice of selling television programs from one entity to another for less than fair market value.

Barry Broad, Legislative Director of the California Teamsters Public Affairs Council, commented: “Our members, who are truck drivers, animal trainers, location managers, and casting directors in the film and television industry, depend on residual payments for their health and welfare benefits. If games are being played to avoid paying these hard working men and women their fair share, then the time has come for the Legislature to pass a law that will protect workers in the entertainment industry from such unfair conduct.”

April 9, 2008

To My Fellow Members,
 
With the 2007 negotiation behind us, and writers returning to writing and creating entertainment, I’m pleased to deliver good news in my first post-contract ratification e-mail.
 
As many of you know, the WGAW is one of the sponsors of a very important bill in the California legislature.  The bill, authored by State Senator Sheila Kuehl, is SB 1765, called the “Fair Market Value Bill.”  It is designed to end the tenacious practice among Hollywood conglomerates who resell movies and TV shows among sister subsidiaries and, accordingly, diminish the residuals paid to above-the-line talent, moneys payable to profit participants, and benefits paid into below-the-line pension and health plans.  The bill requires that these sales be valued at a “fair market” rate, as if they had been made as an arms-length transaction.
 
On Tuesday, I was joined by eight of our fellow writers (all of whom had been victimized by this practice in the calculation of their residuals on M*A*S*H) in testifying before the state Senate Judiciary Committee in Sacramento.  Despite an onslaught of opposition from no fewer than a dozen witnesses representing most of the studios and the Motion Pictures Association, the Committee voted by three to one to pass the bill on to the full State Senate where a vote will likely occur in May.  If it passes, the bill will head to the State Assembly for a similar series of votes.
 
This success was an important step, and we are grateful to the support we received from the Teamsters, the California State Labor Federation, and members of SAG, but there is much work to be done to see this process to a positive conclusion.  The studios will be throwing great weight and energies into defeating this bill and we need all the help we can get.  Writers who have worked on TV shows and films that have had residuals or profit participation diminished or eliminated thanks to corporate self-dealing should come forward so that we can “put a face” on this issue and continue to impress upon legislators the need to be involved in making Hollywood accounting accountable.  Anyone with experiences to relate or who want to be involved in supporting our legislative agenda should contact our Director of Government Affairs, John Kosinski at 323-782-4859, or email: John Kosinski.
 
I look forward to writing again soon with more news and ways to capitalize on the unprecedented engagement and activation of our membership.
 
Best,
 
Patric M. Verrone
President, WGAW