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SAG-AFTRA Commercial Contracts Expire April 1st: A Note to Our Brand & Advertising Clients

With the SAG-AFTRA Commercials Contracts for Radio and TV set to expire at midnight on March 31st, we’d like to share a few insights and pieces of advice that we hope will be useful for our brand and agency clients.
Negotiations between the parties (the union and the Joint Policy committee – or JPC) have been underway since mid-February. A one-week pre-planned hiatus ended on the 19th and the parties reconvened on. March 21st Should they be unable to reach a conclusion by March 31st, precedent shows that bargaining in good faith will continue beyond that date. It is likely, however, that any rate increases agreed to in the final deal will be made retroactive to April 1st, 2016.
Thus far, there are no indications that the talks are anything but amicable and solution-oriented.
We would like to re-iterate some bits of advice that we’ve previously shared so that they are top of mind for you at this time:
  • For productions scheduled on or after April 1st, we recommend that you continue to calculate session fees at current rates plus 10%, in anticipation of increases in wages and P&H.
  • Residual estimates that include commercials anticipated to be produced or edited after April 1st should also include that 10% increase for new commercials. It’s hard to say whether 10% will be too much or too little in any given usage category, but it’s a good idea to build some protection into your budgets at this time.
  • Regarding renegotiations for new max use periods, we recommend that you try to settle any of these that you can before March 31st with the aim of securing increases based on 2013 rates. At the very least, we expect that after April 1st agents will be demanding new 2016 terms and rates.
  • For celebrity guarantees — If you’re estimating P&H for new option terms that begin after April 1st, or for new celebrity agreements that begin after that date, we suggest letting your client know that there will likely be an increase in the contribution rate, which is currently set at 16.8%. As a point of reference, in 2013 the contribution rate was increased from 15.5% to 16.8%.
Please bear in mind that we can’t predict what the negotiated outcome will be in any given area of the contracts. The estimates we’ve suggested are intended to provide some guidelines that will help our agency and advertiser partners manage production and residual budgets.