TV’s Changes Strain Dealings Between Actors, Ad Industry

Actors and the advertising industry are speeding toward a head-on collision next week as they struggle to cope with the dramatic changes reshaping the television business.

The Screen Actors Guild is on the verge of the first commercials strike in 12 years, principally over one thorny issue: Should an actor get paid more money the more times an ad runs on both network and cable TV, as the unions want? Or should the actor receive a flat fee for both, as the ad industry wants? Right now, actors receive residuals when a network commercial airs, but a flat fee for ads on cable.

“They’re asking for a rollback of a formula that’s been in place for 40 years . . . at a time of record profits,” said Screen Actors Guild President William Daniels. “The actors’ fee is less than 2% of the actual commercial budgets.”

Ira Shepard, labor counsel to the committee negotiating on behalf of advertisers, said, “The system was designed at a time when we had three networks with basically 95% of the public viewership. Both sides have failed to deal with the changes realistically. Now the day of reckoning is here.”

That day is May 1, and it’s unclear exactly what impact will be felt.

As with members of Hollywood’s other talent guilds, actors are nearly unanimous in the belief that they have failed to share in the spoils that have come with the huge growth in cable. But despite years of trying, actors have been unable to muster the kind of clout in negotiations needed to change how they are paid for ads on cable.

In previous negotiations, including in 1988 when actors walked out over the cable issue for three weeks, cable was still viewed as something of a stepchild to network television, with ratings that were often minuscule by comparison. That was before the huge growth of audiences for such channels as CNN, Nickelodeon, MTV and ESPN and the proliferation of new channels such as Cartoon Network and MSNBC.

“In the beginning the guild tried to make every concession to what the cable people were telling them was an infant industry,” Daniels said. “They are obviously not an infant industry anymore.”

Likewise, the ad industry doesn’t like how it pays actors in commercials that run on networks, in part because of the changes cable has brought. The fragmenting of network audiences caused by the growth of cable, as well as newer networks such as Fox and the WB, means that ads must run a lot more to reach the same audience.

Shepard of the ad industry argues that the industry’s proposal more than makes up for ending the system of paying when an ad runs on a network by boosting the amount actors would make for one day’s work to $4,200, including the basic amount they get for the workday and the amount they also receive for the commercial during its first 13 weeks of use on network and cable.

SAG calls the ad industry’s numbers distorted, arguing that ending the pay-per-use for commercials on network TV amounts to a rollback. In a booming economy, they argue, the ad industry wants to lay the blame of commercial costs unfairly on the actors.

The ad industry, represented by the Assn. of National Advertisers and the American Assn. of Advertising Agencies, vows that it will continue to shoot ads using nonunion actors or union members who cross the picket lines. The industry tried to do that in 1988, but it never got far because the strike ended shortly after it started.

Actors, represented by the Screen Actors Guild and the American Federation of Television and Radio Artists, believe that they can cripple production and that the quality of any commercials the industry shoots will be unacceptable to advertisers.

The union isn’t tipping its hand on its tactics. But if the past is a guide, they will target one major advertiser, as actors did when they took aim at General Motors in 1988.

The unions are hoping that companies wanting to introduce new products or Internet firms that are spending lavishly to market themselves will put pressure on the advertisers to settle.