Tuesday, September 8, 2009

WGA Reports Plunge in Earnings

By Dave McNary
Guild hit by recession, writer's strike

Hollywood scribes are feeling the double-whammy of the recession and pre-strike stockpiling.
The Writers Guild of America West, in its annual report to members, disclosed that earnings plunged nearly 18% to $801.4 million for the fiscal year ended March 31. Guild-covered earnings had set a record in the previous year at $976.3 million.
"This change from the prior year was attributable to the effects on our industry of the general economic slowdown and to the strike to achieve the 2008 minimum basic agreement, which had accelerated some feature film income into 2007 and reduced the length of the 2007-2008 television season," the guild noted in the report.
The report details that feature scribes have taken the biggest hit because of the ramp up that preceded the 2007 contract wrangling, which included the Nov. 5, 2007-Feb. 12, 2008 work stoppage. The drop in scribe earnings has also significantly hurt the guild's financial fortunes.
The report was sent to the 8,000 WGA West members earlier this summer and recently posted on the guild's website.
The WGA noted the number of writers reporting income declined 9.7% to 4,163. TV employment declined 11.2% to 2,929 slots while earnings for TV scribes declined 3.1% to $437.5 million. Feature film employment declined 14% to 1,716 slots. Film earnings, which had surged 19.5% in the prior fiscal year, declined a whopping 30.7% to $361 million.
The pronounced fall in film earnings wasn't a surprise since the WGA had warned last year that the jump in feature earnings wasn't going to last.
The report for fiscal 2008 confirmed that assessment.
"The pre-strike stockpiling by the studios was a major factor followed by cautious development and a decrease in theatrical film production by the major studios following the expiration of the SAG contract and the subsequent economic slowdown," it said.
On the TV side, where guild-covered earnings are down 4.6% from the record $469.2 million in 2006, the WGA offered a more mixed recap.
"Television declines in the first half of the year can be attributed to the six weeks of the strike which fell in 2008," it said. "For the second half of the year, we found that while WGA series rebounded, the companies responded to the economic downturn by reducing the size of TV series staffs."
The new report also included a sobering picture of the WGA West's financial condition, noting that the guild operated at a $5.1 million deficit including net investment losses of $1.9 million and the costs of staff layoffs. Revenues totaled of $20.9 million and expenses of $26 million.
"The current economic crisis has had a profound global impact, and the WGAW has not escaped it," the membership and finance committee said in its statement at the start of the report. "Despite formidable challenges, we are pleased to report that your Guild remains in excellent financial shape. The guild owns its headquarters with no debt and our investments stand at $12.8 million, including a total of $7.4 million in our Strike and Good & Welfare Funds."
It also noted that its revenues of $22.7 million in dues and fees declined 3.4%, noting "this relatively small decline was due mainly to improved collection of delinquent and underreported dues."
WGA West expenditures had surged 11% in the prior fiscal year to $26.3 million due to the 100-day strike then declined only slightly to $26 million.
"This relatively narrow margin reflected extraordinary expenses related to staff severance costs and maintaining a reserve for estimated uncollectible strike loans," the report said. "The difficult decision to lay off just under 10% of our employees was made in order to balance the fiscal year 2010 budget and to maintain adequate reserves for contract enforcement, jurisdiction expansion, and future negotiations."
The report also includes disclosure of $30.3 million in "funds held in trust for members" including foreign levies, client trust accounts, undeliverable funds and a residuals trust fund. That's up 23% from the $23.8 million figure in the prior year's report but the WGA did not disclose any reasons for the increase, nor did it break out the amount of foreign levies accrued under a system in which the guild collects funds paid under foreign laws to authors of copyrighted works.
The DGA, WGA and SAG have all been sued over their practice of collecting foreign levies for nonmembers, alleging they overstepped their authority by doing so. The DGA settled its action last year; the action against the WGA had been in settlement discussions that fell apart in the spring.
The foreign levies for U.S. creatives began to flow after the U.S. agreement in 1989 to terms of the Berne Convention, which establishes the right of authorship for individuals who create works of art.