Hodge was a longtime union activist and was re-elected last month as president of the local chapter. Rebecca Damon, first VP of the New York local, made the announcement Sunday night on her Facebook page, writing:
“Mike Hodge was a powerful unionist, a remarkable leader, and more than anything, a great friend, colleague, and mentor. He led our local through several challenging years and into the momentous merger. He built on that powerful foundation to bring cohesion and stability to our local and helped build the industry economy on which New York members’ careers now thrive. His vision and leadership made us stronger and justifiably prouder. Alongside the pain of losing Mike, I urge us all to remember his extraordinary achievements on behalf of SAG-AFTRA and Screen Actors Guild before it.
Hodge first won a SAG national board seat in 2001 and was elected New York division president in 2010. Hodge’s acting included recurring work on “Law & Order” and “Fringe,” as well as film, commercial, and stage work, including four Broadway shows.
SAG-AFTRA President Gabrielle Carteris said in a message to board members: “It is with a heavy heart that I tell you of the sudden and unexpected passing of our dear friend and much beloved colleague Mike Hodge,” she wrote to the union’s leaders yesterday evening. “Mike was an incredible advocate for SAG-AFTRA members since he first joined SAG’s New York board back in 2001. Through nearly 16 years of service, we came to know his wit, his generous nature and his insight. Mike had a deep love for the work we do as performers and enjoyed every character he brought to life on stage, television or film. We all relied on his kindness and his vibrant spirit to help guide us as we focused on the union and its members.”
“It is painful to think that the gentle giant whom we so admired and loved is no more, but I personally take comfort in the thought that, as Mike would say, we will see each other again. Please send your thoughts and prayers to his family during this difficult time,” Carteris concluded. “We will provide an address for condolences shortly aOnd I will share information on memorial services and arrangements as soon as that is available.”
Esai Morales is on a mission. He’s running for president of SAG-AFTRA, but more importantly, he says, he’s on a crusade to change the union’s culture. The union’s current leaders, he says, have put their own “petty partisan politics over the needs of the members, and that needs to change.”
Ric Reitz, President Of SAG-AFTRA Atlanta Local, Shared Secrets Of Hiring Actors On The Cheap
And now he’s threatening to file an election complaint against his main opponent – SAG-AFTRA president Gabrielle Carteris – if those “petty politics” continue.
Carteris’ Unite For Strength slate has denigrated Morales’ long service to the guild, calling him “No Show Morales” because his busy work schedule prevented him from attending many local board meetings. “Leaders show up,” they said in a recent tweet.
“I find it distasteful that they impugn my service, using questionable and selective numbers and refusing to talk about the issues, like voter apathy and pension disparity,” he told Deadline in a freewheeling telephone interview from Budapest, where he’s filming the Ron Howard-directed miniseries Mars.
And now his slate is fighting back, putting Carteris on notice that they will file an election fraud complaint with the U.S. Department of Labor if she wins a local board seat in the upcoming election and gives it up so she can be replaced by one of her supporters, as she did two years ago. Ballots from members are due back August 24.
“Unite For Strength is challenging Esai’s attendance record,” Membership First said in a statement. “Both Esai and Gabrielle ran in 2015 for the Los Angeles local board. Both won seats. Esai went to as many board meetings as his work schedule would allow. Gabrielle, on the other hand, simply resigned her seat so that one of her political operatives could then take her place. Thus, Gabrielle never attended one single L.A. board meeting.”
They’re both running again for seats on the L.A. local board, and “If Esai wins his, he promises to keep his seat, and again attend as often as he can,” the statement continued. “If Gabrielle wins, we are putting her on notice. If she again gives away her seat, we will immediately file with the DOL an action that Gabrielle intentionally ran, all the while knowing she was going to resign her seat again to allow for another un-elected Unite For Strength person to sit in the L.A. local boardroom. This must be called what it is: election fraud.”
The union’s rules allow such replacements, but Membership First says it may challenge the legality of the rule.
“Solidarity is something you live, it’s not just something you claim,” Morales told Deadline, charging that Carteris and her slate, which controls the union’s local and national boards of directors, have mistaken uniformity for unity. “How can they be talking about solidarity when they spare no chance to attack us and waste our support when we give it to them, as they did when we voted to support their efforts in the negotiations?”
“We want the union to function as it was designed, to include the democratic involvement of its members and officers,” he said. “Unfortunately, no matter how hard we try, we get no cooperation.”
The ongoing election coincided with the ratification of a new film and TV contract, which was recently approved overwhelmingly by the membership, although only 15% bothered to vote. During negotiations, Morales refrained from politicking so the union could present a united front to management, but was repaid, he said, with name-calling and misrepresentations of his guild service.
“Unite For Strength is desperate because they can’t fight us on the issues,” he said. “They don’t disprove our points, they just say it’s a lie.”
Morales opposed the new contract, arguing the negotiating team didn’t fight hard enough for bigger gains. And when it came time to poll the members, he and his supporters on the board asked to include a minority report to express their reservations. That, however, was shot down. “We tried to get a debate about having a minority report on the contract and Gabrielle ruled it out of order,” he said.
“We really want to come together,” he said. “We tried everything we could in the last two years to work with them. And even though they have the votes on the board, we offered unanimity going into the negotiations, but got nothing in return but obfuscation and mischaracterization.”
One of the biggest problems at the guild, he said, is the imbalance of power wielded by the staff, which is led by national executive director David White. This imbalance, he said, has made the guild less democratic and transparent. This can be seen most easily, he said, in the way staff pensions are calculated and the way the pensions of working actors are determined.
Pensions for the highest SAG earners are capped at $96,000 a year, even after working 40 years or more in the industry. But the highest earning staffers can retire on $210,000 a year after only 20 years of service – twice what superstars like Tom Cruise and Meryl Streep can get, even though they’re covered by the same pension plan as the staffers. A big part of the reason for this is that the accrual rate, on which pensions are calculated, is much higher for staff than for members. Morales wants that changed.
“We love the staff,” he said. “What we don’t want is a situation where people enrich themselves at the expense of the members.” Compounding the imbalance, he said, is the fact that four of the 18 union seats on the SAG Pension Plan are held by staffers, even though they’re vastly outnumbered by the union’s 160,000 members.
“We have only respect for our staff and the jobs they do,” Membership First said in a statement. “However, the secret disparity that exists between our pension and our staff’s pension is unacceptable.”
In 2004, when the staffers were moved into the SAG Pension Plan, the board was led to believe that staff benefits would be calculated the same as the members’. But when the plan lost nearly 25% of its assets as a result of the 2008 economic meltdown, the Plan’s trustees were forced to cut the pension accrual rate nearly in half – from 3.5% to 2%. “Except an exception was made to create an ‘Elite Group’ that would stay at 3.5%,” the statement says. “That “Elite Group” was our SAG staff. Since January 1, 2010, our SAG-AFTRA staff, who are paid with our dues money, still accrue at 3.5%, while we the members languish at 2%.”
Even better for staffers, when they reach 20 years of service and are 55 or older, they can take full retiree benefits, under what’s called “The Rule of 75,” which allows them to qualify for a pension in a completely different and better way than the members do.
Under this Rule of 75, the staff’s pension becomes 70% of the average of their last five years’ salary, regardless of their accrual rate. This also allows for something called “pension spiking,” which inflates their salary to include overtime and other wage compensation.
“The staff’s pension benefits far exceed those of ours, the members,” the statement says. “The staff’s annual pension cap is $210,000, verses our annual cap of $96,000 for SAG members — $108,000 for AFTRA members.”
Despite the merger of SAG and AFTRA in 2012, there are still two separate pension plans, and it’s almost impossible for performers to receive the maximum AFTRA pension. Today, the most that even the highest-paid performer can accrue under the AFTRA Plan is $2,000 a year, so if he or she works for 50 years, they’d only receive a pension of $100,000 a year.
And the Rule of 75 makes staffers eligible for full pension benefits at the age of 55, compared to SAG and AFTRA members, who can’t retire with full pensions until they reach the age of 65. SAG members take a 30% reduction of benefits at 55, while AFTRA members take a 60% reduction at age 55. And to receive a maximum pension, the SAG pensioner also has to vest 35 years, while staff can fully vest after only 20 years.
“This has nothing to do with attacking the staff,” Morales said. “We are attacking the innate unfairness. We can’t support that kind of inequity.”
All this may seem very deep in the weeds, but Morales says he and his Membership First platform aims to bring this kind of attention to detail and transparency to all things involving the members’ interests, including all future negotiations.
The American Federation of Musicians’ beleaguered $2 billion pension plan, which had a $122 million shortfall last year, has been hit with a class-action lawsuit that claims its trustees have made a series of risky investments that have endangered the pensions of thousands of musicians. The suit, filed in the U.S. District Court in Manhattan, seeks the appointment of an independent fiduciary to administer the plan and the management of its investments.
Like many multi-employer pension plans, the AFM plan was hit hard by the recession and market downturn of 2008. But the musicians’ plan was hit harder than most, losing 40% of its value in 18 months. A lawsuit filed by musicians Andrew Snitzer and Paul Livant in New York District Court claims that the plan’s trustees and investment committee tried to make up for this staggering loss by investing in questionable stocks.
“With the fund in critical status resulting from bad investment decisions,” the 66-page suit claims (read it here), “defendants chased recovery of lost investment returns by repeatedly gambling on the hope of high investment returns from the highest risk asset classes, in breach of their fiduciary duties under the Employee Retirement Income Security Act. Defendants failed to prudently invest hundreds of millions of dollars of fund assets and monitor and manage risk tolerance and exposure in the stressed financial circumstances facing the fund.”
According to the lawsuit, “Defendants invested approximately $243.5 million of the fund’s assets over the period since 2010 in high-risk, high-cost international emerging markets equities, gambling on outsized growth in international emerging markets’ economies and coincident investment returns consistent with returns in the previous decade. Defendants further gambled on the investment managers they hired to outguess the market and produce better returns for their excessively high costs and fees. As the investment lost market value, defendants chased recovery of the lost returns with further fund assets. Defendants knew, or should have known, this continuing and increasingly risky gamble exposed the fund to imprudent and excessive risk when the fund’s returns were vital to recovery.”
The suit claims that the trustees tried to recoup losses by investing ever greater percentages of the fund’s assets in risky emerging markets equities. “Defendants knew the average pension plan had 4.5% of total assets invested in emerging markets equities,” it alleges. “Defendants approved a policy to invest up to 5% of total Fund assets in emerging markets equities, and then, following negative returns, more than doubled the high risk investment to 11%, only to again double-down and increase the fund’s investment to an extraordinary 15% of fund assets. Defendants’ process of chasing recovery of lost returns with increasingly risky asset allocations, in an attempt to meet or beat the actuarial return assumption, was imprudent and resulted in substantial injury to the fund. Like a gambler chasing his losses, defendants did so despite the high-risk nature of the asset class, substantial and continuing declines in the market value of the investment, increased uncertainty concerning volatility and growth prospects in emerging markets, substantial underperformance by the managers, substantial underperformance of the fund versus its peers, and the mounting substantially negative impact of the investment on the fund’s returns.”
In December, the trustees told participants that the fund “has now been in critical status for six years and is projected to remain so for the foreseeable future…We currently have a plan that incorporates reasonable measures available under the law to address our situation. At this time, we are reliant on the fund’s investment performance and to a much lesser extent employer contributions.”
A primetime residuals freeze in the new DGA and WGA deals gets little attention, as does a slowdown in syndication residuals.
As talks between SAG-AFTRA and the Alliance of Motion Picture and Television Producers continue in advance of a June 30 contract expiration, one thing isn’t in doubt: broadcast television residuals, once the most lucrative form of reuse payment for talent, will continue their slow fade.
In large part, that’s due to changing business realities: There are fewer network primetime reruns in an era of Hulu catch-up viewing; fewer broadcast syndication outlets in a world of five broadcast networks; and fewer opportunities for cable syndication as cable networks increasingly turn to original scripted or unscripted content in order to establish strong brand identities that will survive unbundling and cord cutting.
But an analysis by The Hollywood Reporter shows another factor also at work: the union contracts — including the recent Directors Guild and Writers Guild deals — have tweaked the formulas in unreported ways that have downsized residuals for broadcast product, delivering a double whammy to actors, writers and directors who once depended on especially hefty broadcast residuals.
At the same time, though, negotiators have focused on new digital forms of distributions, with the DGA introducing enhanced residuals in 2014 for product made for streaming sites such as Netflix. Those residuals were further increased in the DGA’s most recent deal, ratified earlier this year. And because of a phenomenon known as “pattern bargaining,” the other two above-the-line unions did or will obtain similar provisions.
Those Netflix residuals aren’t as lucrative as the broadcast formulas, but neither is the value of any single piece of content, in an era where users pay about $10 per month for unlimited access to an enormous streaming library.
For a macro view, take a look at WGA West figures — the only ones available — for different types of residuals. In 2015, that union’s new media residuals for television and new media product totaled about $25 million, while network primetime residuals were $19 million, domestic syndication was $36 million and basic cable syndication $29 million. A decade earlier, in 2005, there was no new media revenue, and the broadcast figures were $23 million, $31 million and $22 million. But adjusted for inflation, those figures in 2017 dollars are $29 million, $39 million and $28 million.
That means that primetime broadcast residuals declined by about one-third in real dollars over the last decade, while residuals from off-network syndication declined about 10 percent and cable syndication ended flat (after having peaked earlier in the decade, it turns out).
What the Contracts Say
For the micro view, THR peeled back the covers of the nearly impenetrable union agreements, which run to hundreds of pages of ifs, thens and whereases that date back decades in many cases.
A musty bookshelf and not so musty hard drive and website disgorged some older agreements that make for a useful comparison with the most recent deals.
Start with the WGA. A network primetime rerun of a network primetime episode yields the writer an additional payment equal to 100 percent of a “residual base” that is around one-half (for half-hour programs) to two-thirds (for one-hours) of the scale minimum for such work, but that rough approximation conceals a significant decline: the precise proportions have been on a downward trend, from 56 percent (half-hour) and 69 percent (one-hour) in 2010 to 50 percent and 62 percent in 2019, under the terms of the deal the WGA reached last month. (In contrast, 1988 and 2001 figures were lower than 2010’s, indicating a previous upward trend.)
The DGA has seen a similar drop-off over that period, with residuals at 54 percent (half-hour) and 60 percent of scale wages in 2010 declining to 48 percent and 53 percent in 2016.
To be clear, the minimums themselves — and thus the residuals — have increased over time, generally at a rate slightly ahead of inflation. But the residual has declined in relative terms, when compared with the scale wage rates. And that’s exacerbated the decreases caused by changing viewing and distribution patterns.
SAG’s, and now SAG-AFTRA’s, formula works differently from the WGA’s and DGA’s. The actor gets a residual equal to what he or she was paid upfront for the work, even if it was above the scale rate, but it’s subject to a ceiling that caps the residual. There are separate ceilings for half-hour and one-hour shows, even though the day and weekly scale rates for such work are the same.
Back in 1989, the ceilings were 127 percent (half-hour) and 199 percent (one-hour) of the weekly rate, meaning that the residual could significantly exceed the weekly scale amount. But the figures have been dropping and, THR estimates, will be at 76 percent and 108 percent, respectively, by 2019, assuming the SAG-AFTRA deal now being negotiated ends up similar to the DGA’s.
What’s happening? The 2010-16 decline is due to the fact that network primetime residuals were frozen for three years in 2011, as THRexclusively reported and were subjected to a three-year slowdown starting in 2014, during which they increased at a slower rate than wage scales. The post-2017 decline is due to the fact that the recent DGA and WGA deals once again freeze primetime residuals, a fact that neither union highlighted publicly.
What about syndication residuals? For the first time, the WGA in its recent deal has decoupled these residuals from salary minimums, and over the next three years they will increase at a slower rate than scale wages. The DGA rates were already decoupled from scale wages, and will likewise be subject to a slowdown.
SAG-AFTRA syndication residuals are based on scale, and whether they will slow down, too — which would require decoupling them from scale — is unknown at this point. No doubt that topic is on the table in the bargaining room at the AMPTP’s Sherman Oaks headquarters.
But this much is clear: As viewers migrate to video on demand platforms like Netflix and Hulu, and even broadcast networks develop digital alternatives like CBS All Access, broadcast residuals will continue to fade, perhaps ultimately to black.
With only six days to go before film and TV writers could launch their second strike in a decade, labor and management still strongly disagree over the impact of the last strike – a troubling sign that could indicate the two sides aren’t seeing eye-to-eye about the WGA’s willingness to strike again this time.
WGA West VP David Goodman, an ex officio member of the guild’s negotiating committee, has said that “our greatest recent success is the 2007-08 strike.” It’s an opinion shared by many, if not all, of the guild’s leaders, because that 100-day walkout won jurisdiction over shows made for new media like Netflix and Amazon that are now flourishing in the era of Peak TV.
The AMPTP arrived at that $287 million figure by dividing the total wages of film and TV writers in the year before the last strike began – more than $1 billion – by 365 (the number of days in a year) and multiplying that by 100 (the number of days the strike of 2007-2008 lasted): $1 billion ÷ 365 x 100 = $287 million.
However, that calculation fails to recognize that writers saw a major spike in earnings in the months leading up to the last strike as producers rushed to get scripts finished before the strike deadline. According to the WGA West’s annual reports, writers earned nearly $75 million more in the strike year of 2007 than they did in 2006 – largely because of the speed-up. At more than $986 million, earnings in 2007 were, at that time, the highest ever recorded for WGA West members.
The next year saw a major drop-off in earnings – down $146 million from 2007 to $840 million, the lowest since 2002. But when that $146 million decline is offset by the prior year’s $75 million, the immediate loss to guild members was only $71 million – not $287 million.
After that, earnings hit another record high in 2009, coming in at nearly $956 million. Earnings hit the $1 billion mark in 2010, and have stayed above that ever since.
After the last strike was settled and a new contract was ratified, then-WGA West president Patric Verrone said the new contract “ensures that guild members will be fairly compensated for the content they create for the Internet, and it also covers the reuse on new media platforms of the work they have done in film since 1971 and in TV since 1977. That’s a huge body of work that will continue to generate revenue for our members for many years to come as it is distributed electronically.”
Indeed, writers’ residuals from the reuse of traditional films and television shows exhibited on new media platforms now account for more than $39 million a year, and it’s been going up every year: by more than 1000% for films since 2010 and by nearly 900% for TV shows. Add to that the tens of millions writers make each year from shows made for new media, and it’s clear the immediate losses sustained in the last strike have been more than offset by the gains since.
The two sides continue negotiating today on a new film/TV contract. The current agreement expires May 1 at midnight PT.