In a surprisingly rapid conclusion to recently resumed negotiations, Hollywood’s below-the-line unions have reached a “tentative agreement” with the major studios on a new three-year Basic Agreement, Matthew Loeb, the president of the International Alliance of Theatrical and Stage Employees (IATSE), announced on Friday. If ratified by the 20,000 members of 15 guilds representing cinematographers, art directors and other behind-the-camera crafts, the new West Coast IATSE pact goes into effect on Aug. 1.
“Our goals going into these negotiations have been met,” said Loeb. He added that “the health and pension benefits that we have worked so hard for over the years have been protected and will not be reduced.” In addition, annual wage increases of 2% were part of the pact.
The biggest hurdle when the talks began in early March was how to bridge a yawning shortfall in health and pension benefits estimated at between $400 and $500 million for over the three years stretching to mid-2015. It was largely overcome by a 20% increase in contributions to the Health Plan by the big film and television production companies.
“We understand how important health and pension benefits are to Hollywood crew members and their families and the risk posed by the projected shortfall in funding those benefits,” the Alliance of Motion Picture & Television Producers (AMPTP), representing the studios, declared in a separate announcement. “We worked diligently with IATSE to resolve the funding crisis and keep these plans financially sound and a vital resource for participants.”
The Hollywood Teamsters Union, Local 399, was also part of the deal. The Teamsters and the IA negotiated together for the first time in a strategy to leverage their bargaining power.
The agreement represents a feather in the cap for Loeb who had promised that he would take a hard line in the talks. The International president recently reassured members that IATSE wasn’t about to cave in but would “hold the line” once talks resumed. This was the second Basic Agreement negotiated by Loeb, who assumed the IA presidency on July 31, 2008. He succeeded Tom Short who had led the organization for 14 years. Loeb was re-elected to a four-year term at the quadrennial IATSE convention in August 2009.
Unlike the last round, which came in the wake of the financial crisis of late 2008 that devastated the U.S. and global economy, the studios in this negotiation were hard-pressed to poormouth their financial circumstances. Most of the entertainment conglomerates have seen their stock price appreciate considerably. CBS was the poster-boy with its share price appreciating by some 40% over the last 12 months. Its 2011 profits totaled $1.3 billion, nearly double the previous year’s results. And, in a telling coincidence, CBS announced on Friday that CEO Les Moonves was compensated to the tune of $69.9 million in 2011.
In return for the studios kicking in most of the money needed to bring the Motion Picture Industry Pension & Health Plans into better balance, IATSE made some concessions. For one, it agreed to an expansion of the “studio zone” in line with other industry unions and guilds. The widening of the nearby studio zone will extend basic wages paid to a larger area, before higher rates kick in.
The following statement was released by IATSE president Matthew D. Loeb to IA members this afternoon:
Dear Brothers and Sisters,
I am pleased to announce that the IATSE has reached a tentative agreement with the Producers represented by the AMPTP for a successor Basic Agreement.
Our goals going into these negotiations have been met. We were successful in maintaining the pensions of our retirees. We achieved wage increases in each year of the agreement of 2%. The health and pension benefits that we have worked so hard for over the years have been protected and will not be reduced. As you are aware, our benefit plans faced a staggering shortfall that threatened the stability of our pension and health plans. We have closed that shortfall with an impact on the participants that is as minimal as possible. The MPIPHP will continue to provide the best health benefits in the industry with no premium for you, the member. For participants with one dependent the premium will be $25 per month and for those participants with 2 or more dependents in the MPIPHP the premium will be $50 per month, payable quarterly. The employers have agreed to a $1 per hour increase to the Health Plan contribution which is a 20% increase over the current hourly contribution rate of $5 per hour.
In exchange for closing the deficit of over $400 million and annual wage increases of 2% in each year, we agreed to an expansion of the Studio Zone consistent with other industry unions and guilds. Productions made for home video will be budget based and we agreed to confirm our long standing practice of promoting basic cable TV production in Los Angeles. We also agreed to re-allocate thirty and one-half cents per hour from the Individual Account Plan to the Active Health Plan in order to help stabilize that plan during this national health care crisis. Moneys have been moved from health to IAP in the past and it was necessary to do this to rebalance contributions since the health plan is now suffering.
These negotiations lasted over three weeks and broke off once, due to disagreement on the premium structure. The second round of negotiations has resulted in a fair deal that will provide employment stability, protect our health and pension plans and provide for wage increases in a fragile economy. The Bargaining Committee consisted of the committees of each of the West Coast Studio Local Unions, Officers and Representatives of the IA, attorneys, and pension and healthcare experts. The committee was unanimous in its support for this tentative agreement. I would like to thank each of them for their commitment to act on your behalf in participating in these negotiations.
More specific details of the agreement will be forthcoming and as soon as specific contract language is drafted this agreement will be sent to the members for ratification.
IATSE International President