But because of the way the language was conceived in the contract, the new formula concerns independent producers and not studio films. As outlined in the 40-page agreement between AMPTP and IATSE, the new provision applies the share of mixed residues to motion Picture License Agreements that offer a minimum guarantee or non-refundable advance in exchange for theatre distribution rights and distribution rights in at least one other residual market (i.e. home television, pay TV , free-to-air television). , electronic sales and streaming. The new 4.5 per cent package may seem like a good deal for producers compared to previous rates of 5.4 per cent or more. But the fact that the formula now includes theatrical revenues, which were previously applied at a zero rate, represents an increased effort and a significant change that will affect all licensing agreements concluded since August 1, when the new contract came into effect. The contract is the employment contract between the major film and television producers and IATSE. The main provisions of the 2015-2018 core agreement include annual increases in wages and pensions, as well as no reductions or increased costs for health plan participants. Substantial improvements in working conditions for new media productions are also an essential element of the agreement. It is not surprising that the remaining allowances are tainted by appeals for sentencing and differences of opinion, which leads to costly audits. The three-year contract, IATSE, the union representing the film crew and the Alliance of Motion Picture and Television Producers, revises the residual formula in a way that should not be relevant to the major studios, but which could have a significant impact on independent producers who were not represented at the negotiating table but who must live with the consequences of the agreement.
“The new contract represents significant benefits and continued security for the well-being and livelihoods of the members it covers,” said Matthew D. Loeb, President of IATSE International. Like everything that happens in the rest of the world, it is complicated, but as the next round of negotiations on the line will begin in about a year, the indies will surely wonder if, this time, IATSE has established a model that will increase their costs – and with no room at the negotiating table, if there is anything they can do there. High theatrical allocations mean equivalent mixing rates that would be much lower than the 4.5% of the new IATSE agreement. A simple example: if you assign 50 per cent of the MG to the theatre (which gives a zero contribution to the total) and 50 per cent to television (which gives a residual contribution of 50 per cent of 5.4 per cent or 2.7 per cent), the rest is 2.7 per cent of the MG. One way or another, you come up with numbers that are well below 4.5%. That`s how indies like it, but this new 4.5 percent formula is now binding on them, or at least for those who use IATSE crews in the area covered by the core agreement – typically 13 Western countries, including California. AMPTP, which negotiates on behalf of major studios, declined to comment on the impact of the new contract. The new provision aims to save money for the IATSE pension and health fund by reducing the need for costly examinations and not resulting in new costs for studios on the other side of the bargaining table. But independent producers and small businesses that did not participate in the negotiations are concerned about the change and their representatives are concerned. “While independents have advocated for unions to introduce a simplified formula for residues,” Prewitt told THR, “the lack of consultation indicates that the joint rate agreed by the union and the majors may not come into contact with the actual experience of independents in the current international market.” The guild of America, often known to producers, is also not a labour organization.