EXTENSION OF THE COMMERCIALS CONTRACTS

EXTENSION OF THE COMMERCIALS CONTRACTS

Los Angeles (August 7, 2006)---It's easy to understand why the Commercials Contracts are regarded as some of the most important agreements that Screen Actors Guild members work under. Covering advertisements that appear on television, radio, the Internet and new media, they generated $750 million in total SAG earnings last year. Now that the Guild and its negotiating partner AFTRA have tentatively agreed to a two-year extension of the Commercials Contracts with the advertising industry, it's imperative that all members understand the highlights of a deal that achieved unanimous support from the SAG-AFTRA joint committee only three days ago in New York.

Some of the key points:

· New Jurisdiction. Along with advertisements that appear on TV, radio and the Internet, the groundbreaking agreement would also cover all commercials that appear in new media-for existing platforms such as cell phones and for future platforms yet to be developed. This should translate into more work opportunities now and in the future.

· More Earnings and Benefits. Actors will receive a 6% increase in basic compensation (and residuals), and the contribution to both unions' Pension & Health plans will go from 14.3% to 14.8%. This translates into an expected total increase of $45 million in SAG scale earnings and P&H contributions. For the first time in 20 years this increase will also apply to all Class A use payments.

· Joint Study. The extension engages a yet-to-be-determined consultant to conduct a joint study that will examine alternative methods to compensate performers for their participation in commercials appearing on television and radio, and especially the Internet and the growing array of new media. "A comprehensive joint study will allow us to determine whether existing pay structures should remain the same or be modified," said SAG Chief Negotiator John McGuire.

· Committee of Performers & Producers. A New Media Committee, comprised of representatives from both the unions and the industry, will be formed. This Committee will be empowered to make adjustments to the agreement to accommodate changing technologies and shifting paradigms within the commercials industry.

· Strategic Compromise. Screen Actors Guild and AFTRA proved they are both willing to work with producers and find new and inventive ways to conduct business—if it benefits performers. "In a rapidly evolving media environment, our agreement demonstrates that performers and advertisers can work together to deal with change and build a stronger partnership that benefits us all," McGuire said.

Example one: The agreement provides advertisers with more flexibility to edit commercials for the Internet and new media. Of course, if advertisers wish to exercise these broader Internet or new media editing rights, for commercials made initially for use on broadcast or cable television, then, in addition to the minimum use payments called for by the contract, they must bargain with the performer regarding the additional compensation to be paid for such editing rights. The extension agreement does not provide for a specific minimum payment as the basis of such bargaining. However, this does not change the fact that performers would receive one payment for Internet use and a separate payment for use on new media platforms.

Example two: Advertisers will receive a one-year waiver, which will allow advertisers to experiment with a shorter eight-week cycle of use in the new media and Internet areas. This shorter cycle of use is paid at the rate of a session fee with full contract payment for use beyond the eight weeks. It is hoped that this shorter cycle will create additional payment opportunities for performers. Additionally, under the previous commercials contract, performers could receive six times scale for ads that moved from broadcast to either new media or Internet areas; however, this new agreement would make it possible for actors to receive seven times scale for product that moves over for the maximum period of use.

· What happens next? The extension agreement must now be ratified by both unions' joint national board and approved by both union memberships through a joint referendum, as well as approved by the boards of both ANA and AAAA. If approved, the contract would be extended through October 29, 2008.