The performers’ union SAG-AFTRA has finally reached agreement with the AMPTP, the studios’ bargaining group, after a lengthy strike. The union is touting what it says are breakthroughs in many areas. The new provisions are extensive, comprising 129 pages of dense prose. The consequences of some of these provisions will only become clear over time. One of the new provisions already has agents tearing out their hair.

The SAG-AFTRA Agreement permits studios to allocate a portion of a performer’s upfront fee as an advance against residuals. This is still permitted under the new agreement but the payment procedure is changed. Until now, the advance has been included as part of the total episodic fee. The new provision requires advances to be paid separately, either to the union for forwarding to the performer or if the performer consents, by direct deposit to her bank account. For performers earning $75,000 or less per week or per episode, advances are capped at 15% of total compensation.

Performers’ fees are generally paid directly to their agents. The agents then deduct their commissions and those of the manager and lawyer, when applicable, and remit the balance to their client. Although representatives typically do not commission residuals (which are funneled through SAG-AFTRA), they have been commissioning the entire upfront fee payment, including the portion constituting advances against residuals. With advances now paid separately from fees, agents will see an across-the-board reduction of up to 15% in direct commissions from most television clients. Agents could arguably bill for the commissions but few are likely to do so. Apart from the administrative headache, they are concerned that the clients will not be happy to write a commission check for residuals.

The change costs the studios nothing—they would be paying the advance in any case. The union can brag that it put some more money in its members’ pockets. It may also be secretly pleased to tweak the agencies a bit. SAG-AFTRA has not had a franchise agreement with most of the bigger agencies, including WME, CAA and UTA, since 2002. Meanwhile, many performers’ reps, managers and lawyers as well as agents, see themselves as pawns who were sacrificed to get the deal done.

[View source.]