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Hollywood's Double Whammy: SAG's Big Election and DreamWorks' New Deal

Postelection, Postpoll, Whither SAG?

Last Thursday, after a very public, bitter and often delusional campaign — during which one angry Web site referred to me as Tricky Stinke — voting members of the Screen Actors Guild filled 23 of the 69 National Board seats open for election this year. And to think that during the WGA strike, I complained that the writers were whiny. But the actors are fucking nuts. And mean. Don’t ever repeat to me that late-night talk-show phrase, “We were like a family on the set.”

This campaign has been like an extreme cage match. From the Hollywood division, an equal number of candidates from the Membership First and Unite For Strength slates — five to five — won places on the National Board. The winners showed that this was a celebrity contest. For Membership First (MF), JoBeth Williams, Scott Bakula, Lainie Kazan, Keith Carradine and Joely Fisher won three-year terms. For Unite For Strength (U4S), Amy Brenneman, Adam Arkin, Ken Howard, Pamela Reed and Kate Walsh also won three-year terms. The 11th elected National Board member from the Hollywood division was Morgan Fairchild, who ran as an Independent and also won a three-year term. It’s expected that she will vote with U4S, which endorsed her candidacy.

(In case you’ve been blissfully unaware of SAG’s infighting, let me explain: Membership First consists of president Alan Rosenberg and most of the current Hollywood division leadership. They hate their smaller, low-cost, evil stepsister union AFTRA, and want nothing to do with it — U4S sees MF as hos and AFTRA as bros.)

Before the election, the makeup of the SAG National Board from the Hollywood division used to be 32 MF members, plus Fairchild. After the election, it’s 27 MF members, five U4S members and one Independent.

Inside the New York division, little has changed: It’s always been overwhelmingly anti-MF. But that doesn’t mean that the five newly elected full SAG National Board members with three-year terms will vote 100 percent with U4S because many of the NYD candidates campaigned on a different slate (labeled USAN, or Restore Respect). Finally, seven SAG National Board members were elected from the Regional Branch divisions and, again, it’s unclear how many will vote 100 percent of the time with U4S. But most agree with U4S that the SAG-AFTRA cage fight must stop now.

“We offered members a clear choice in this election — end the fighting with AFTRA and instead partner with them to create a stronger union for performers,” said Unite for Strength leader Ned Vaughn. “The results in this unusually high turnout election leave no doubt that is what the members want. We look forward to working with all of our colleagues on the board to move SAG in this new direction.”

But to get their way, they must count on all the new National Board members from the NY division and the Regional Branch divisions voting 100 percent of the time with the U4S from the Hollywood division, which would then give the pro-AFTRA forces a razor-thin majority on the guild’s governing body. But those are big ifs.

Would this affect SAG’s current contract negotiations with AMPTP? I don’t see how, especially considering July’s unanimous board endorsement of SAG’s position on New Media jurisdiction. Nor does it affect the makeup of SAG’s negotiating committee.

“The election changes nothing,” one MF’er told me. “The employers are still going to deal with the same people across the table.”

However, U4S supporters claimed during the campaign that they could influence the SAG National Board to change the makeup of the negotiating committee. But to do so would require changing the guild’s constitution, and that can’t be done without a two-thirds vote, which neither MF nor U4S has. Of course, the national board could disband SAG’s bargaining group and take over themselves. But that would mean 73 people (including President Rosenberg and Secretary-Treasurer Connie Stevens) in the talks — which seems unwieldly and therefore impractical. So if each division gets to choose new members on the board, then the Hollywood division would still have the numbers majority because it’s based on earnings and demographics.

As Membership First’s Anne-Marie Johnson points out: “Membership First still retains control of the Hollywood division board and still controls the vote on the negotiating committee. Membership First still holds firm on what we believe are issues that are imperative for our members of the Screen Actors Guild. Those issues are: holding firm on force majeure; holding firm on jurisidiction from dollar one in New Media; holding firm on residuals for product made for New Media; and holding firm on product integration. And we look forward to the new national board members realizing (once they’ve actually spent time in a boardroom) that what we are fighting for is the right thing for the Screen Actors Guild.”

 

So what could the anti-MF ranks do after they take office on September 23? Get rid of national executive director and chief negiotiator Doug Allen, who if anything is overqualified to run SAG’s bargaining with the Big Media moguls after years of leading the NFL players against the even bigger, even badder team owners. Firing him would be beyond stupid and only benefit the Hollywood employers’ divide-and-conquer strategy.

I just hope MF and U4S can unite about trying to get a new, richer contract. Because SAG has to start speaking with one voice again. Otherwise, it will be forgotten that, on September 17, the balance of power vis-a-vis employer-labor shifted. Suddenly SAG found itself with tremendous contract leverage, and Big Media, not so much.

A post-card poll of SAG members showed 87.27 percent support for its negotiating team continuing to bargain for a better contract with the the CEOs and refusing to accept the last June 30 offer. This now becomes a huge problem for the studios and networks, whose labor lawyers making up the Association of Motion Picture and Television Producers have been arguing for months that SAG’s leaders pressing for richer New Media terms were acting against the wishes of the membership. Now it’s clear that AMPTP was only deluding itself that there was some groundswell of SAG actors who would approve the lower-cost AFTRA-like version of the contract currently on the negotiating table — if only it were offered to them. So SAG called the employers’ bluff and post-card-polled its members.

Immediately, AMPTP complained about the way the poll was conducted and criticized the results as a “fraud.” Talk about sour grapes. Because the 10 percent response rate via post cards sent to all eligible SAG members is objectively considered large for that kind of sampling (and only 15 to 25 percent of the membership vote in the elections themselves). Basically, the employers were hoisted by their own petard.

Look, AMPTP’s divide-and-conquer strategy almost worked. It did manage for months to take the biggest, strongest and (to the employers) scariest Hollywood guild and almost reduce this proud pedigree to a cowering cur. But that was then, and this is now.

This is a wake-up call for the intransigent but disengaged moguls to either send AMPTP formally back to the bargaining table with a more conciliatory attitude (because the talks between both sides have never stopped, and I have proof ... ), or to take over the negotiations themselves like they did to end the writers strike.

“If they don’t realize that, then they really do have their heads in the sand,” one SAG leader told me this afternoon. “We wanted to use this tool to make sure the CEOs get re-engaged, roll up their sleeves and work with us to get the heavy lifting done.”

 

DreamWorks Divorces and Remarries in a Day

I was the first to report that the long-hyped DreamWorks-Reliance deal was already done, save for some issues surrounding the debt financing, which had to be wrapped up. On September 19, the papers were faxed and signed. (“The world is in financial collapse, and we just got $1.2 billion,” one insider exulted.) Immediately after, DreamWorks informed its owner, Paramount, that it now was in partnership with the big Indian entertainment giant Reliance Anil Dhirubhai Ambani Group, owned by one of the world’s richest men, 49-year-old Anil Ambani. Then Paramount shocked DreamWorks by giving it the bum’s rush and waiving certain provisions from the original deal to clear the way for the studio started by Steven Spielberg, David Geffen and Jeffrey Katzenberg to leave “without delay.” I’m told that Geffen didn’t even have a chance to resign from Paramount: Instead, he found out he is free to leave along with Spielberg, DreamWorks Studios co-chairman and CEO Stacey Snider, 150 other DreamWorks employees and producers Ben Stiller, Walter Parkes and Laurie MacDonald, Ivan Reitman and Tom Pollock, Nina Jacobson and Sam Mendes.

Thus ends one of Hollywood’s most dysfunctional and therefore entertaining relationships — one that soured almost from the first day of the sale of DreamWorks to Paramount in 2006. I can sum it up like this: Buyer Paramount turned out to be a bully; buyee DreamWorks refused to be anybody’s bitch (but were also pains in the asses themselves).

Now the two studios may bicker over the 200 active projects they have together. (But ill will was mitigated when Paramount’s parent company, Viacom, offered Spielberg and Peter Jackson 100 percent financing for the duo’s family movie Tintin trilogy, as I reported exclusively.)

Neither Geffen nor Katzenberg will be part of the reconstituted DreamWorks. Geffen has always said he planned to retire from the movie biz. And Katzenberg has been running the separate public company DreamWorks Animation, whose slate is still distributed by Paramount. So the new company will be the old DreamWorks in name only. Hollywood’s biggest and richest indie, it will be run with complete autonomy by Spielberg and Stacey Snider in 50/50 partnership with India’s $50 billion entertainment conglomerate, which financed the $1.2 billion film company. (Though the official press release calls it a $1.5B deal.) Mumbai-based Reliance ADA Group will invest $500 million equity and provide another $700 million revolving-credit facility through J.P. Morgan Chase toward the new venture, which will produce a slate of about six films a year. So now Geffen has engineered his most fervent wish: to give Spielberg and Snider enough independent financing so they could say “fuck you” to Paramount.

 

Next comes a distribution deal, which is why GE’s Jeffrey Immelt and Universal’s Ron Meyer were dining with Spielberg and Snider last Thursday, and why NBC Universal boss Jeff Zucker spent the better part of that afternoon with Spielberg planning the rebuild of the fire-ravaged Uni back lot. Given how Spielberg sees Universal as his professional home (he’s never moved his offices, even after Paramount bought DreamWorks), I’ve always assumed he’d land there. But I hear Spielberg is concerned GE might decide to sell NBC Universal, especially if the studio is combined with Warner Bros., which would create too much product. Nevertheless, with Immelt and Zucker paying homage to Spielberg, it looks like another done deal to be negotiated by Hollywood superlawyer Skip Brittenham.

The official DreamWorks/Reliance news release was late coming because Paramount jumped the gun with an artfully worded press statement that said basically, “Don’t let our iron studio gates hit you on the way out.” That actually was a relief to DreamWorks, whose principals were worried about even preparing for a transition “because nobody wanted to be in breach of contract.”

After Paramount purchased DreamWorks in 2006, many top DreamWorks execs moved into big jobs at Paramount, like Jim Tharp into head of distribution, and Kelly Avery into prez of home entertainment. They’re expected to stay put. But about 150 people are classified as DreamWorks employees even if they receive Paramount paychecks. Paramount is hoping Spielberg/Snider decide sooner rather than later which employees to take to the new company and get them off the Paramount payroll. “We hope as a practical matter they respond quickly,” a Paramount insider told me.

Same thing goes for the producers and production companies housed at DreamWorks, like Stiller’s Red Hour Films and Reitman/Pollock’s Montecito Picture Company or Parkes/MacDonald.

Paramount estimates that 200 projects are active between the studio and DreamWorks, and believes it owns all of them. However, as I’ve previously reported, friction may arise out of the exact terms of Spielberg’s deal with Paramount. The director-producer has the right to elect to be involved in any project DreamWorks has developed at Paramount. As an ex-Paramount business affairs source once told me, Spielberg’s so-called “Amblin deal” would apply even if he chooses to leave and is no longer under contract. He’d still make 7.5 percent of the gross and 50 percent of the profits to cash break. And if the projects won’t be made, they have to be offered to him in turnaround.

Physically speaking, DreamWorks never moved to the Paramount lot because Spielberg never left the Universal lot. (DreamWorks execs used guest offices inside the different Paramount departments when they had to sit in face-to-face meetings.).

Meanwhile, the unsung hero of the DreamWorks/Reliance pact was Emanuel “Manny” Nuñez, a motion picture 10-percenter at Creative Artists Agency, who’s a pioneer in structuring deals for India-based production entities to invest in U.S. film projects. His role from start to finish (he even arranged for Reliance to approve the final press release) also highlights the increasingly vital nature of a Hollywood agency’s indie division, often referred to as the “packaging” or “financing” department, these days. It’s not only there to help the 10-percenter’s clients get passion projects made, but they increasingly serve as gateways for the ongoing influx of financiers looking to invest in movies.

As a member of CAA’s 16-year-old department, Nuñez is accustomed to finding funding and distribution for individual films and even companies. But this was certainly the biggest indie deal of his career. Months ago, when DreamWorks decided to exit owner Paramount, Nuñez phoned up and said he had “someone who’s interested in putting up money” and arranged the meeting. That “someone” turned out to be Reliance chairman Ambani. And the rest is, well, history.

CAA pockets what insiders tell me is $2.5 million for its part. And Nuñez can expect a fat end-of-year bonus for 2008.


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