SAG-AFTRA, Advertisers Square Off on New Commercials Contract

The two sides will open talks Thursday in the first real test of the bargaining power of the newly merged union

While lovers will be exchanging Valentines and candy on Thursday, newly merged SAG-AFTRA and advertising industry negotiators will be testing their relationship for the first time to exchange contract proposals on a new commercials agreement.

Neither the union nor the industry, who will face off in New York, were talking Wednesday on the eve of the talks. The current agreement, which covers an estimated $1 billion in work, will expire on March 31. SAG and AFTRA negotiated an extension in mid-2011 in order to focus their efforts on a merger, which was approved by union members last March.

The talks with the American Association of Advertising Agencies and the Association of National Advertisers will be the first major negotiations for the newly merged Screen Actors Guild and the American Federation of Television and Radio Artists. The two unions bargained jointly on previous commercials contracts, but both sides say the newly united front should smooth the process.

Also read: Contract Time Is Coming: Now, What About That Combined SAG-AFTRA Clout?

Wages and working conditions will be the key issues. The two sides had planned to wrestle with a revamp in the way commercial residuals are calculated, but in November decided to take that off the table until more data could be accumulated.

Key gains for the guilds in the last round of bargaining in 2009 included a payment structure for commercials made for the internet and other new-media platforms and $21 million more in pension and health contributions. The advertisers limited annual salary increases to 2 percent and for the first time, capped employer contributions to the unions' pension and health funds.

While both sides have sounded optimistic that an agreement can be reached, the advertisers' lead negotiator Douglas Wood in December urged the industry to avoid planning production as much as possible between March 31 and June of this year, in case of a work stoppage.

In 2000, SAG and AFTRA staged a six-month strike, largely over whether online advertising would be covered.

The talks beginning Thursday "should hinge on the basic economic issues,” Wood told TheWrap in December, “I don't think there will be anything worth striking over this time around."