Member Referendum 2005 SAG Basic & TV Agreements and AFTRA Exhibit A

1. Member Referendum 2005 SAG Basic & TV Agreementsand AFTRA Exhibit A

2. This presentation is constructed from several presentations that were shown to the TV/Theatrical Wages and Working Conditions Committee, the Negotiating Committees as well as the Joint Boards of Directors of SAG and AFTRA. They have been updated as new data has been attained and presented here to give you, the voting member, the same information.

3. Why Bargain in the Fall? Too early or not? • Reality of production schedules has changed. • Maximum leverage exists at the moment before producers prepare for a strike (stockpiling and reality) – NOT when they have done so. • Stockpiling causes producers to shorten schedules and compress work opportunities. • Stockpiling creates a void of work after contract resolution – remember the summer and fall of 2001.

4. Key ObjectivesBased on Open Member Caucuses & Committees • Single set of terms for television work at the highest level • Funding of Pension and Healthcare • Single set of terms for Background Actor work at the highest level • Residuals, including DVD, Pay TV, Made for Basic Cable

5. Landscape of American Labor • Anti-labor administration • Last year private-sector workers in unions fell to 7.9 percent from 8.2 percent - lowest since 1900's. • Grocery Workers- No raises --only bonuses. New employees get 25% pay cut. • NHL- Locked out. Imposing Salary Cap- Union proposed a 24% pay cut and was rejected. • Airline Pilots- 15% cut + 30% cut + Terminated pension. • Hotel Workers- Working without a contract.

6. Landscape of Television • Falling network ratings – Average drops to 3.9 in the 03/04 season • Five of the top 10 series in the 2003-04 TV season are reality programs • Digital production of half hour sitcoms pervasive

7. The 2005 Agreement and the 2004 Extension Agreement must be viewed together as representing the achievements of this Bargaining Cycle.

8. Extension Agreement 2.5% -7/1/04 2005 Agreement 3% - 10/1/05 3% 7/1/05 (Bkgrd) 3% - 7/1/06 3% - 7/1/07 The Deal on Minimums

9. Compounding Minimums--$225 million in Actors’ pockets over 4 years 2005 CY means the Contract Year for the 2005 Contract 1, 2, & 3

10. Challenges Facing Benefit Plans • Costs increasing at +11% • Boomer retiree health coverage • Pension plans are dependent on market returns • Over the last 3 years – industry plans have cut benefits, raised deductibles, raised eligibility and implemented employee premiums

11. The Deal includes More Producer Money into the Benefit Plans • 1.5% increase in P&H rate • Extension Agreement +.5% • 2005 Agreement +1% • 1.5% increase in H&R rate, IAP • Theatrical cap increased to $232,000 per picture • Series performer earnings bank for extended coverage • P&H for choreographers

12. Pension & Health Contributions Almost $80 million Over 4 Years 2005 CY means the Contract Year for the 2005 Contract 1, 2, & 3

13. Increased Background ActorJobs in LA Zones • +5 covered jobs per day on feature films • +4 covered jobs per day per episode in TV • +1 Background Actor job gained in the Extension Agreement • +3 Background Actor jobs gained in 2005 Agt • 25,000+ new union jobs in features • 50,000+ new union jobs in television

14. Covered Background ActorsTelevision in the LA Zones Tough negotiations on this issue have yielded nothing for more than a decade for background working in TV -- until this bargaining cycle where we added 4 jobs. NY keeps 25 jobs in TV.

15. Background ActorsTheatrical in the LA Zones Not just TV.We’ve continued to make progress in features as well. Five new feature jobs on each set in this bargaining cycle. NY keeps 85 jobs in features.

16. Improved Safety Rules • Increase Rest Period from 8 to 10 hours for Stunt Coordinators • Better Definition for Dancers’ Hazardous Activity • Work in Tobacco Smoke to the Industry Union Safety Committee

17. Single Set of Television Terms at the Highest Level • The advent of digital production in television and its pervasive adoption opened a contract loophole for producers. • During the late 80’s and 90’s film was the medium used for dramatic television. • But Digital happened and the lower terms applicable to tape were the contract terms applicable to new digital production. • The Extension Agreement began by raising initial compensation and the 2005 agreement makes the SAG and AFTRA agreements equal for Network digital work and addresses residuals for WB/UPN 1 hour programs.

18. Single TV Agreement • AFTRA Exhibit A (Network) = SAG TV • AFTRA Exhibit E (Pay TV) = SAG TV • Overtime at 2x instead of 1.5x • H&R rate = higher P&H rate • Cast credit provisions with penalties • Background Actors under Schedule X – almost a 25% increase in salary rates: $92  $122 • One hour WB/UPN reruns @ higher SAG TV

19. The WB & UPN Terms Paid as day performer $716 per day • 5 lines or less rate (approx. ½ of a day rate) • Overtime @ $30/hour • Rest Period Violation at $15/hour • No caps on Background - rate of $90/day • No Stunt Coordinator coverage • Reruns based on the Network Code Overtime based on contracted rates - $130/hr at scale Rest Period Violations paid at a day’s pay No Bkgrd caps -- rate of $92.25 per day + 16 hr rule Stunt Coordinator coverage 1 hour reruns based on SAG TV

20. 5 Lines or Less Day Performeron a 1 hour WB/UPN show

21. 5 Lines or Less Day Performeron a 1 hour WB/UPN show

22. 5 Lines or Less Day Performeron a 1 hour WB/UPN show

23. Major Role Performeron a 1 hour WB/UPN show

24. Major Role Performeron a 1 hour WB/UPN show

25. Major Role Performeron a 1 hour WB/UPN show

26. So what happened to ½ hour programs and moving WB and UPN to network residuals?The economics, as driven by the WB and UPN ratings, just don’t justify moving to the higher paid residuals… here is the data 

29. The Deal includes Improved Residuals • Pay Television Residuals Increase • WB/UPN digital 1 hours - pay at higher film residual • Network Ceilings Increases • Residuals based on minimums increase • Syndication, Foreign,Theatrical, Network • Foreign Telecasting Thresholds • Tri-Guild Audit Fund to assure proper payment continues

30. The Negotiating Committee confronted the “reality” of Reality Television and its devastating impact on actors working in scripted television.

31. Breakdown of Primetime HoursFall of 2003 vs. Fall of 2004

32. Top 10 Series 2003-04 TV Season

33. Top 10 Series in 18-49 Week of Jan 17 - 23

34. The “Reality”04/05 Season v. 03/04 Season • Comedies lost 5.5 Hours - 11 shows • Dramas lost 4 hours • Projected loss of over 9,000 Union Jobs. • What will replace a failed show on the air

35. Confronting the Reality Challenge

36. Launch • Joined with DGA and WGA to regain the lost scripted hours • Rerun 1st 3 episodes once each within new 2 month window without residuals for the series performers • Successfully argued that day performers and guest stars do not have same immediate economic interest in an individual show’s success.

37. Do Series Performers Lose $10,000 on the Launch? • No – most series performers have one, two or three reruns pre-paid. • If the show fails –they’ve gotten paid • If the show succeeds – they have a series • Is this money that series performers have been receiving? No – no traditional reruns within the first couple of months.

38. Supporting Scripted Programming • P&H contribution for pilots and new 1 hour series will stay at 13.5% for the term of this agreement. • Scripted TV series will be able to be promoted by reusing clips for six consecutive weeks • Clips may be used from one episode into another provided the performer is employed for both episodes

39. Changing Times in TV • Before -- overnight location work meant Guest Stars stayed home -- Now Major Role Performers will work in establishing shots • Before -- episodes shot in sequence and you got paid for the episode in which you worked – Now the episodes are more frequently intermingled and you still get paid for the episodes in which you work.

40. More Changing Times in TV • Before – the TV season started in Sept and your series option got picked up in June --Now HBO shoots year ‘round but your option language is still for one year. • Before – A show was :30 or 1:00 – Now there’s :43 episode of Scrubs and new residuals & benefits structure for supersized episodes

41. But why no DVD? • As of 2000 producers were paying residuals on 62% of their revenue (and that percentage is increasing)—in the early 80’s when they agreed to the existing formula, residuals were paid on only 35% of their revenue. They argue Video is a primary market.Primary market = no residuals. • Producers currently pay residuals on all pictures in DVD-- winners and losers. They argue if pay at all, pay only on winners like Titanic.Loss of income to thousands of actors. • Producers did not give an increase to the WGA or the DGA.

42. 1980 Studio Revenue Subject to Residuals $20 million in theatrical residuals

43. 2000 Studio Revenue Subject to Residuals $195 Million in Theatrical Residuals

44. 2004 Studio Revenue Subject to Residuals $290 Million in Theatrical Residuals * Source NY Times 11/14/04

45. Projected Actors Residuals in Video (DVD & VHS)

46. What about Basic Cable? • Separate negotiation scheduled for early 2005 to deal with Made for Basic Cable • Bargaining notice sent to Universal, Paramount, Warner • Proposal to increase residuals on the table

47. What does a “No” Vote Mean? Starting from Ground Zero • Going back to the table - starting point: • No increase in minimums • No increase in P&H on that table • No increase in residuals on that table • Producer proposal to decrease residuals • Producers prepare for a strike or lockout • Stockpiling • Increased reality programs on the schedule

48. What does a “Yes” vote mean? $200 Million in Actors’ Pockets • Principal performer minimums +$133.4 M • Background actor numbers +$10 M • Background actor minimums +$10.8 M • P&H +1%, on new $, TH cap +$60 M • Network ceilings +2% 7/1/07 +$1M • P&H & IACF on pilots & 1 hrs -1.4M

49. A yes vote also means these benefits for Performers • P&H for Choreographers • P&H Bank for Series Performers • Single Television Agreement • Improvements in hazard activity and increase in hazard money for dancers • Increase from 8 to 10 hour rest period and increases in salary for stunt coordinators • Industry Union Cooperation

50. Vote Yes If you have any other questions, please call the hotline 1-800-217-6121 (9-5 PST)