Netflix Must Pay Writers Residuals of $42 million

Fox Rothschild LLP

Fox Rothschild LLP

The Writers Guild has scored a $42 million arbitration award against Netflixfor unpaid residuals.

The arbitration involved the Sandra Bullock feature Bird Box. The picture was released for a brief theatrical run before moving to the streaming service. The Guild asserted that this triggered theatrical residuals under the WGA Agreement. Under this formula, the writer gets paid 1.2% of the producer’s gross receipts from licensing the picture to another medium, including a streaming service.

Bird Box was both produced and distributed by Netflix so the license fee for streaming rights to the film was not the result of arms-length negotiations but an internal accounting attribution. In such cases, the WGA requires that the imputed fee be set at market rates for comparable films. The arbitrator determined that this fee should be 111% of the film’s budget. This cost-plus formula is consistent with the approach the WGA has taken for other Netflix movies.

Applying this formula, the arbitrator awarded the writer $850,000 in residuals plus $350,000 interest for late payment. Based on this award, 216 writers on 139 other Netflix films will receive an aggregate $42 million over what was already paid, according to the WGA. The Guild is also claiming a right to $13.5 million in interest. Netflix has resisted this additional payment, and the Guild has commenced a new arbitration to collect it.

This could all be a harbinger of a tense 2023, when the WGA Agreement comes up for renewal along with the DGA and SAG-AFTRA basic agreements. Up to now, the directors and performers have cut a break for Netflix on residuals. Netflix tried to apply a similar favorable formula to the Bird Box writer, without success. The WGA has a history of breaking ranks with the other two above-the-line unions. They are clearly signaling now that they intend to pursue significant improvements in terms for streaming exhibitions.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Fox Rothschild LLP | Attorney Advertising

Written by:

Fox Rothschild LLP

Fox Rothschild LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.