Saturday, November 22, 2008

Actors' Strike: Yes or No, How Would You Vote?

One has to give Screen Actors Guild (SAG) President Alan Rosenberg credit for a certain "put one foot in front of the other" tenaciousness. In fact, his march forward in the face of internal partisan challenges within his own union and from the rest of the union movement and tough external opposition is not dissimilar to the Obama campaign. Just keep explaining until your constituency “gets it.”

In a fortuitous confluence of events, Thursday Rosenberg was able to bring to the bargaining table a copy of a Writers Guild of America (WGA) request for arbitration about the very subject Rosenberg has been arguing. The WGA just now discovered they screwed up (again) when eight months ago they signed an agreement with the Alliance of Motion Picture & Television Producers (AMPTP) following the Directors Guild of America settlement. As Rosenberg kept pointing out, the DGA/WGA contract provisions for new media residuals were flawed.

It’s easy to understand what’s happening. If you buy on a DVD a movie released prior to February 13, 2008, the screen writers get paid pursuant to the 2008 contract. If you buy the same movie as a download, the screen writers do not get paid. Apparently, this is the formula that applies to the director (and to the actors under the AFTRA contract), and it’s the formula AMPTP wants SAG to accept.

New media issues are where Rosenberg drew a line in the sand and started his long march towards a strike vote.

It is not complicated at all. If a pre-2008 movie or television show owned by General Electric Corporation (all the NBC Universal related studios) or News Corp (all the Fox related studios) in 2010 is being purchased mostly as an on line download, the corporation gets the money that historically would go to writers, directors, and actors. It’s a big and unjustified win for GE and News Corp.

In one news report we see the following:

“WGA West board member John Bowman, who headed the guild's negotiating committee, said the contract with the companies on electronic sell-through covers feature films produced after July 1, 1971, and TV programs produced after 1977.

"’The companies have reneged on this agreement and are taking the position that only programs produced after Feb. 13, 2008, are covered by the new provision,’ he added. ‘This may be their deal with the DGA, but that was never our agreement. Every proposal we made during negotiations made clear our position that library product was covered, and the AMPTP never objected to that position. The guild will not allow this to stand.’"

It has been hard to understand the overall situation as an industry outsider. I try to understand it based upon my experience with the media conglomerates as a buyer of electronic music media. So far, in our household we’ve been screwed out of the licenses for about 150 tracks of music during the period the conglomerates showed total disregard for the rights of their paying music customers. In the end, of course, they lost and unlicensed mp3 downloads are the norm. It was hard for them to sue the thousands and thousands customers who told them that their contract (license) sucked and proceeded to share music. But I’m still out about 150 licenses I paid for and certainly Sony doesn’t care.

Unfortunately, those who actually create the art, be it in music or movies or TV shows, are not in a position to protect their financial interest except through contracts with the conglomerates. And the last time, the writers and actors felt they got screwed in their contract provisions for DVD revenue.

This time around the writers, who went out on strike trying to protect their interests, were again screwed by AMPTP. But they were also screwed by their fellow workers and themselves. I guess that is because some members of these “guilds” don’t like to think of themselves as belonging to a union, so the writers and apparently a lot of actors don’t get the fact that the directors are not workers, they’re middle management who have a whole different set of interests and frequently do not depend on “union scale” set in the guild contract.

When, in the middle of the writers strike, the DGA started negotiations early and settled on a contract, the DGA - “middle management” - essentially sold out the creative workers and caused unprecedented pressure on the WGA to settle.

The rank and file of the Hollywood union movement failed to back the writers. After being out of work for several months and under pressure from some GE subsidiary for payments on debt, they wanted the writers to settle with GE so GE could make a lot more money on the backs of the workers.

While SAG members did walk around on sidewalks with picket signs supporting the writers, many still continued to work finishing movies and episodes of TV shows that had already been written. Yep, real solidarity there.

And there was really little Rosenberg could do as his own members owed money to GE Capital and they weren’t about to risk anything more than they absolutely had too. No “workers of the world unite” spirit there.

Now, of course, we’ll see what happens. This WGA dispute reminds one of the United Auto Workers situation in Detroit. It’s older writers and actors whose income depends on the residuals for films and TV series released before 2008. Just like it’s the UAW retirees who are frequently characterized as the burden on the U.S. auto industry.

If we could just dump these stupid unions and euthanize everyone over 55, our country wouldn’t be a drag on the international corporations. And the rest of us could watch movies and TV in total happiness.

Gee Rosenberg, as the writers struggled last year, the directors “got it”, the Teamsters and other trade union members “got it”, and finally the writers “got it” along with the AFTRA actors. Why don’t you “get it”? Even the majority of SAG members want to be reduced to WalMart class compensation. Or do they? We’ll see.

The rest of you. How would you vote regarding a strike authorization?

Wednesday, November 19, 2008

The K-Mart of Television Signal Providers

A recent lengthy commentary in The Hollywood Reporter is perpetuating an impression created by financial analysts regarding Dish Network, the satellite TV signal provider.

It doesn't delve into the problems created by the EchoStar Communications Corporation split this year, or even indicate an awareness of the balance sheet differences between November 2007 EchoStar Communications Corporation and November 2008 Dish Network, differences which are like night and day.

It does identify a truth that should dominate the rest of the analysis of the company. It's "Charlie Ergen's company."

When Charlie was a 30-something, he started EchoStar. When Charlie was 40-something he got EchoStar DBS going.

Charlie will be 56 in March. The now "Old Charlie" still may be a tenacious techie dreamer. Probably he has a really good idea for that 700MHz spectrum Dish Network is on the hook for. But finding what amounts to startup money in 2009 to do anything with that spectrum isn't going to be improbable, it's going to be all but impossible. And I believe Charlie's heart is with the new Echostar, the one that owns Slingbox and makes the ViP receiver/recorder boxes. That Charlie isn't the logical 21st Century mentor of the new Dish Network.

The new Dish Network is a retail service operation. Like WalMart, it demands clever marketing while renegotiating contracts with its suppliers, the various media companies and local channel owners. But that's also where the WalMart analogy completely breaks down. Acquiring those television signals can't be outsourced to producers in third world countries so Dish's prices can be kept low and still maintain a meaningful profit margin. The analogy to WalMart is flawed.

DirecTV and the new Dish Network compete against established cable and telecom companies that offer at least three products: (1) television signals, (2) internet connections, and (3) telephone service.

All these television signal providers are now selling insert advertising. On the other hand, Dish Network's sibling EchoStar designs and sells boxes designed to skip advertising while Dish Network needs to get a cash flow stream going from those ads.

DirecTV has already hedged it's hardware bets by repartnering with TiVo which is run by a former NBC executive and is already working to help advertisers get through to commercial skipping viewers (see this article). DirecTV has a cousin's relationship with media producers and has already put it's toe in the media production market. And in 2007-2008 it committed huge sums to the only real product it has to sell - TV signals - and huge sums to market to new customers during the runup to a major change in it's product from analog SD TV to digital HD TV.

Yes, EchoStar Communications Corporation offered HD early, developing really cool hardware and offering pioneering HD signals from HDNet and VOOM, much like a 20-something techie fiddling in the garage, definitely not like a 50-something marketing veteran laying out a 5-year plan for dominating a market. Then, just as it started losing the HD retail market advantage, EchoStar Communications Corporation split itself in two in what appeared for all intents and purposes to be a maneuver by Charlie to sell it's retail service component, Dish Network, and keep the garage, Echostar. That didn't work because nobody bought Dish Network before the economic meltdown.

In fact today Dish Network superficially looks like the WalMart of television signal providers. But the analysts' analogy is wrong. Dish Network has no real control of the cost of it's product and most certainly has no control over the content in its product. The advantage has gone to its competitor who recognized the truth about its mature product - TV channels. What appeared to be a somewhat expensive contract for a "cable" channel signal was, in fact, all DirecTV had to market. To DirecTV it wasn't foolishly signing too expensive contracts for signals, it was investing in the future, it fit into a logical market plan. Charlie is still holding out for bargain basement prices.

In the meantime, 50-something-Charlie's Echostar decided to make cool DVR boxes for OTA television viewers. These viewers, so far in the 40 years of "cable" channel existence, have had no need for "cable" channels and, apparently, wouldn't spend the money on a TiVo. And irony of ironies, Charlie has Dish Network dealing with the retail problems of these boxes which likely will alienate many who will ultimately switch to a signal provider, most likely an uncomplicated one which would either be cable or telecom company.

The only good advice in that article is this: "So, revisit Dish shares next year. Your Wal-Mart shares have served you better in 2008; those are down only a few bucks in the past six months and up year-to-date."

Yes, let's see what the new Dish Network without the new EchoStar looks like next November. Maybe Old Charlie really does have his finger on the door-to-door retail television signal service market.

Heck, I'm already "invested" heavily just as a customer of this company I think is analogous to the 1999 K-Mart. I'm eagerly awaiting its February "Blue Light Specials" (annual package and pricing changes) and wondering if it will ultimately need its "Sears Holding."

Saturday, November 1, 2008

Rita does rock!

Under normal circumstances, I'm reluctant to recommend 30-minute sitcoms because people's sense of humor differ significantly. But "Rita Rocks" which started last week on Lifetime is a pretty good new family sitcom - some clever lines and good actors. Like all sitcoms at the start, it's a little bit uneven but it is well done.

Lifetime is repeating all six previous episodes next week. If you like family comedy, give it a try. I think you'll like it.

The plot summary:
A woman who is nearing 40 works in a "Bed, Bath and Beyond" type of store starts a garage band with her neighbor, her mail carrier, and her teenage daughter's boyfriend, while her husband picks up some of the chores.

The adult regulars in the cast are familiar faces, including:

Rita (the lead character) - Nicole Sullivan (The King of Queens, Kim Possible, many others)

Patty (the mail carrier) - Tisha Campbell-Martin (My Wife and Kids, many others)

Jay (the husband) - Richard Ruccolo (you'll recognize him)

Owen (the unemployed neighbor) - Ian Gomez (Drew Carey, Jake in Progress, many others)