WGA seeking DVD TV revenues
Mon Feb 9, 7:00 PM ET

DAVE McNARY

HOLLYWOOD (Variety) --- Underlining its commitment to press for improved DVD residuals, the Writers Guild of America West has asked members to take note of the soaring popularity of DVD sales for hit TV shows.

"TV series and DVDs are each other’s newest best friends," wrote WGA West assistant exec director Charles Slocum in the latest member newsletter. "Industry estimates range up to $10 billion per year for TV programs being released on DVDs. If the overall revenue for DVDs weren’t so notable, the trend toward releasing television programs on DVDs would be getting more coverage."

The WGA has placed DVDs and health care as its top priorities at upcoming negotiations with studios and networks. The companies have indicated they’re not likely to be swayed by arguments that the formula for determining residuals --- in place for two decades --- should be altered.

The WGA, which faces a May 2 expiration, is expected to begin negotiations within the next several weeks on a new contract.

SAG and AFTRA began negotiating last week and are expected to reach a deal as early as this week on a one-year extension of their contract, which expires June 30. The actors have asked the companies to adjust the DVD residuals formula upwards but have placed higher priority on adjusting the rates for TV shows shot on digital.

Slocum noted in his article that the release of TV programs to DVD seems ill-fated, since TV shows are even more fully exploited on broadcast and cable TV than feature films.

"But the same factors that make films collectible on DVD apply equally to television," he said. "Cassettes were something that mothers bought for kids but otherwise were rented. DVDs are something that men want to collect."

The exec also pointed out that TV Guide recently announced plans for DVD releases of classic TV series under its brand name, including entire series and compilation sets.

Series that have already seen DVD releases include "24," "Abbott & Costello," "Babylon 5," "Buffy the Vampire Slayer," "Friends," "Gilligan’s Island," "MASH," "Profiler," "The Red Skelton (news) Show," "Resurrection Blvd.," "Saved by the Bell" and "The Sopranos."

Studios and nets are likely to argue that their costs have continued to escalate sharply and that DVDs are essential to recouping costs; that future profitability of DVDs could vanish, given the already massive pirating of the discs; and that if the WGA’s contract is adjusted upward, the studios probably will have to adjust the DGA and SAG contracts as well.

The WGA has already claimed its members received only $18 million in residuals from the $11 billion in DVD sales in 2002.

The writers are stuck with uncommonly small residuals amid the current DVD bonanza, because the payout is based on a formula unchanged since it was set in 1985. Under the WGA’s contract, which expires May 2, about a nickel per DVD sold goes to the credited writers.

The rate --- set at 0.3% of wholesale revenue on the first $5 million, then 0.36% after that --- is far below the standard WGA residual rate of 1.2% of revenue. And unlike its other residual agreements, video/DVD revenue is based on producers’ gross receipts rather than distributors’ gross, enabling distrib costs to be subtracted to further lower the amount subject to residuals.

The WGA struck for two weeks over the issue in 1985 but settled under pressure from members who feared a repeat of the three-month 1981 strike. At that point, the guild accepted the same formula that had been worked out the year before by the DGA, which allowed studios to exclude 80% of revenue in order to give those studios a chance to recoup their investment on the fledgling videocassette technology.

"The dramatic rollback in video residuals in 1985 has long been identified as a feature film issue, but now, more than ever, it is a television issue, too," Slocum said.