Guilds Slam ABC Over Digital Dollars

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A war of words broke out late Monday between the guilds and ABC over residuals for digital downloads, one of the issues that many think could lead the guilds to push for work stoppages in 2007 and 2008, when current contracts expire.

The guilds say they are upset that ABC intends to pay residuals for digital downloads based on the residual model for home video, which awards residuals at a much lower rate than the Pay TV model.

It was formulated in the 1980's, which the guilds argue was before the home video market exploded and when marketing and distribution costs were significantly higher, making the model obsolete.

Screen Actors Guild President Alan Rosenberg issued the following statement:

"In violation of our collective bargaining agreements, ABC recently began selling Lost and Desperate Housewives for digital download to iPods without first bargaining with the Screen Actors Guild," he said.

"Today, ABC advised the Guild that it intends to pay residuals to performers based on the videocassette formula, a formula that does not apply to this new platform.

"ABC's actions are flatly inconsistent with our collective bargaining agreements and with labor law obligations, and fail to fairly compensate performers for the use of their work and images. SAG will pursue arbitration against ABC, or any company, which disregards their contractual commitments or attempts to deny our members just compensation."

The heads of both the west and east branches of the Writers Guild of America (WGA) echoed the sentiment in statements of their own.

"ABC's unilateral decision to pay digital-download residuals at thehome video rate is a violation of our contract and an insult to our hard-working members. It is unacceptable, and we will aggressively pursue all legal options at our disposal," said WGA West President Patric Verrone.

"The members of our guilds demand the companies pay what they are contractually obligated to pay, and not a paltry residual rate based on an irrelevant home video formula from the age of Betamax," said WGA East President Chris Albers.

ABC issued the following statement in response.

"We have great respect for the Guilds and the contribution of their members. The only question here is what the existing Guild agreements provide.

"We believe that the residual for sales and permanent downloads of programs to the iPod is covered by the home video residual formula.

"If the Guilds have a different point of view, they have the right to challenge the Company's determination before a neutral arbitrator.  In the end, this is simply a dispute over how to interpret a provision under agreements that provide the means for resolving that dispute."

Many believe the residuals for downloads issue will be one of the hot button issues that could lead to strikes beginning when the current Writers Guild of America deal expires in 2007.

The issue of payment for branded integrations is another that has been trumpeted by the guilds, including a recent protest outside an industry event in Beverly Hills.

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