• by March 16, 2006

The advertising industry is looking for a high-powered consultant with experience in labor relations to help it negotiate its next contract with the unions representing actors who appear in radio and TV commercials.

The negotiations are set to begin this summer, and their outcome is important to the ad industry. A job action by actors--like the six-month strike that occurred in 2000--could stymie agency production efforts, as well as planning and buying operations.

On Wednesday, the ad industry issued a "Request for Qualifications," seeking "an independent consultant to develop alternate methods to compensate actors for their participation in commercials that appear on television and radio as well as in the growing array of new media."

The move signaled a marked departure from preparations for previous negotiations, which were usually handled solely by representatives from the unions on one side of the bargaining table and attorneys acting on behalf of clients and agencies on the other.

The current three-year contract with the Screen Actors Guild and the American Federation of Television and Radio Artists expires on October 29, and negotiations are scheduled to begin in August.

The RFQ was issued by the Joint Policy Committee on Broadcast Talent Union Relations (JPC), which represents the ad industry in all SAG-AFTRA contract negotiations. The JPC consists of members of the Association of National Advertisers and the American Association of Advertising Agencies.

Douglas Wood, an attorney serving as the JPC's lead negotiator, said a third party is needed to help both sides develop an equitable solution to the issues on compensation that are expected to surface in negotiations.

"To be honest, I don't think either side has an unbiased look at this," said Wood. "This is extremely complicated, and there is a natural bias on each side. The idea is to get fresh thinking from people who can come in with an understanding of the industry but don't have a vested interest in either side." Wood stressed that while the consultant's recommendations will be offered for consideration in the bargaining process, they will not be binding.

The key role for the consultant will be to develop new, creative proposals for compensating actors that are less complex than current rules, and will reflect current trends in media diversification.

"The payment structures in the current collective bargaining agreements ... were originally developed to meet the needs and problems of the early 1950s," said Wood. "As different means of broadcasting were developed, new payment streams were added on to the contract, creating enormous administrative complexity, distortions in the allocation of compensation, and the potential for out-of-control costs."

He said the new contract, which will also extend for three years, must address compensation issues for emerging media--and acknowledge that advertisers are running commercials on iPods, cell phones, and Web sites, and that many ads are being customized to reach narrow, niche audiences.

"Continued reliance on an outmoded compensation structure will lead to out-of-control costs and administrative burdens on the one hand, and failure to account for all uses of a commercial on the other," Wood said.

Payments for Internet commercials were one of the issues, among a wide array of others, addressed in 2000 when the unions went on strike for almost six months before a settlement was reached in October.

During the strike, the number of commercials produced by U.S. agencies declined by about 15 percent, according to unofficial estimates. The strike forced producers and directors to shoot spots outside the U.S. and hire less experienced talent. They were also unable to use many well-known celebrity endorsers, most of whom are union members.

Wood said that candidates for the consultant's job should respond to the RFQ by the end of this month, and that he was keeping an open mind regarding who might get the job. "It could be one of the big consulting companies, or it could be someone from a university," he said.

SAG issued the following statement after the RFQ was issued by the JPC: "The joint SAG and AFTRA negotiating committee is meeting soon, and among the issues we need to consider is the employer's interest in a joint study. The commercials contract is certainly complex. That is largely because of the needs of an industry that advertises within a complex and sophisticated structure that includes an array of new media. Notwithstanding that complexity, the truth is that talent costs are generally less than two percent of the industry's media costs. So it goes without saying that we share the industry's commitment to ensuring that actors are fairly compensated."

Although the SAG statement did not address the issue of hiring a consultant, Wood said the union had been notified about the plan to issue the RFQ, and that union leaders were open to the idea.

"We told them about our intent to do this in December," Wood said. "Then in January we invited them to participate, but they haven't come to a decision yet. We hope they will participate. At this point it's only a request, so there's time for everyone to get involved."

Wood said he was optimistic that both sides would agree to hire a consultant and keep an open mind about forthcoming recommendations.

"Everyone realizes this is a mutual challenge, and it doesn't make sense to back ourselves into two separate corners," he said.