New TV pilot deal language putting a squeeze on residuals

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New TV pilot deal language putting a squeeze on residuals

Tue Feb 23, 2010 @ 08:00PM PST

By Matthew Belloni and Nellie Andreeva

“Test deals” are making a lot of people, well, testy this pilot season.

TV studios and broadcast networks are insisting on new talent concessions to shave off-the-top costs like residuals. The test deals, which set the terms of employment for both the pilot and series, are tough for talent reps to negotiate because they must be signed before an actor auditions — when he or she has little leverage to extract concessions.

“The TV studios are getting more aggressive in that area,” a veteran talent agent said.

Several studios now are including non-negotiable language allowing residuals for a first primetime rerun to be considered a “prepayment” of a regular’s series compensation. For instance, an actor who makes $30,000 an episode as a regular on a broadcast series usually might make $2,500-$3,500 more when that episode (depending on its length) is rerun for the first time. Under several new test deals, the residual already would be included in that actor’s salary. 

“Effectively you lose that first primetime rerun,” a veteran talent lawyer grumbled. 

The move comes as budget-conscious broadcast networks and studios are focusing on trimming above-the-line costs, with talent a primary target. Studios argue that fewer shows are rerun in primetime these days, and when it happens, it often is to help build an audience — and thus keep a bubble show on the air.

Foreign residuals also are being targeted. For the past few seasons, many pilot test deals have required that a fixed fee or a percentage of an actor’s compensation be considered a prepayment for future foreign residuals.

In most cases, the portion has been held in the neighborhood of $1,000 of an actor’s per-episode salary. This season, ABC Studios is requiring that 35% of the “applicable minimum salary” — business affairs parlance for scale — be considered prepayment for foreign residuals.

The changes are kosher under guild rules; producers just hadn’t taken full advantage of them until recently.

Indeed, guild sources confirm that under collective bargaining agreements, studios have the right to defer up to 35% of an actor’s minimum compensation as prepayment for future foreign residuals if the actor is making more than guild minimums.

That scale pay is fixed by the unions. For a regular on an AFTRA-scripted series this season, it is $3,495 per episode for drama and $2,906 for comedy. For a SAG series regular, scale is $3,263 an episode for hourlongs and $2,713 for half-hours. Both are for performers guaranteed 13 or more episodes.

Actors and their reps have to be made aware of these terms before choosing to sign on to a pilot. But talent reps counter that in reality, nonstars aren’t given much of a choice: They either sign the test deals that include the new language, or they don’t get in the door to audition.

The “prebuy” practice is not new. Cable networks have been employing it since the dawn of original cable programming. Additionally, the new language in test pacts follows the introduction several years ago of “bifurcated” deals, making a big chunk of the holding fee actors once received for being on a pilot payable only if their services are required beyond June 1, which rarely is the case.

So far, most actors are accepting the new test deals without much clamoring. After all, the financial concessions only hurt if the series finds an audience.

“You don’t see it in the now, and psychologically you don’t feel you miss anything,” a talent agent admitted. “But if the show is successful, it will hit you.”

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The Hollywood Reporter, Esq. blog focuses on how the entertainment and media industries are impacted and influenced by the law. It is edited by Matthew Belloni with contributions from veteran legal reporter Eriq Gardner and others. Before joining The Hollywood Reporter, Belloni was a lawyer at an entertainment litigation firm in Los Angeles. He writes a column for THR devoted to entertainment law. Gardner is a New York-based writer and legal journalist. Send tips or comments to [email protected]

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