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Hollywood Labor Fight Looms as Money for Benefits Wanes


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http://www.nytimes.com/2011/11/28/business/media/hollywood-labor-fight-looms-as-money-for-benefits-wanes.html?_r=1&pagewanted=all

Hollywood Labor Fight Looms as Money for Benefits Wanes

By Michael Cieply

Published: November 27, 2011

LOS ANGELES -- Bitter disputes over health and pension payments to union

members have created plenty of drama in states and cities this year. But

do not look for a movie about it -- Hollywood will be too busy dealing

with a labor crisis of its own.

After three relatively peaceful years, the entertainment industry is

bracing for a showdown next spring. At issue is an enormous projected

shortfall in financing for some of the most jealously guarded perks in

show business, the heavily gilded health and pension plans.

No one is talking of a strike yet. In fact, no one with official

standing is talking publicly. Leaders of the industry's craft and

blue-collar unions and officials of the Alliance of Motion Picture and

Television Producers, which represents the studios and other production

companies, have all declined to discuss what will happen when several

contracts expire July 31.

But in town hall meetings over the last two months, union leaders have

told members that weak industry economics, a tough investment climate

and, above all, sharp increases in health care outlays are expected to

create a $500 million shortfall by 2015.

"We're going to be asking for money, lots of it," Matthew Loeb, the

president of the International Alliance of Theatrical Stage Employees

(I.A.T.S.E.), told a gathering at the union's Local 80 here in late

September. His union represents about 50,000 set designers, makeup

artists, grips and other film workers.

To put things in perspective, the contract that in 2008 settled a

three-month strike by Hollywood's writers was estimated to include total

pay and benefits increases of less than a third that amount over three

years. A subsequent, hard-fought three-year deal with the Screen Actors

Guild, with about 120,000 members, cost the companies only about $250

million. One person involved with the pension and health plans, who

spoke on condition of anonymity because of the delicacy of the

situation, called the looming half-billion dollar shortfall

"staggering."

The workers represented under the stage employees' contracts have been

known more for making deals than picking fights. In years past, the

union might have been at the bargaining table a year before the contract

deadline; this time talks may not start until spring. The last

full-blown craft strikes occurred more than a half-century ago, and

involved a different configuration of unions; Hollywood's Teamsters, the

other major union headed for a 2012 showdown, have not staged a major

strike since 1988.

But the current situation is volatile, partly because the Teamsters and

some allied unions who share health and pension plans with I.A.T.S.E.

aligned the expiration of their contracts with those of the larger

theatrical workers alliance by shortening their last contract cycle to

two years.

This time, those unions are expected to bargain jointly on health and

pension issues. A walkout would instantly stop film and television

production in the Los Angeles area, and would affect production in New

York and elsewhere, because editors, camera crews and some others are

represented on a national basis.

Hollywood's guilds largely resolved their health and pension problems,

at least for now, in several agreements over the last year or two. But

the craft workers and other film laborers got caught in a whipsaw that

involved the financial markets, changes to federal health care law, and

some features that are peculiar to the financing and benefit structure

of their plans.

In some ways, Hollywood's blue-collar health plans are more generous

than those covering actors, writers and directors, who are usually

regarded as being higher in the pecking order.

At the gathering in September at Local 80, John Garner, a health care

consultant with Levey, Garner & Isaacs, told I.A.T.S.E. members their

plans matched or exceeded those of the guilds and others in deductibles,

office visit co-pays, member contributions and other measures.

One chart showed that entertainment industry workers pay just $300 as

a median per person deductible for services from a preferred provider

group. But those in the plan covering craft workers and Teamsters pay

no deductible for the same services.

Such generous coverage has come at a cost. The craft workers contribute

their residuals payments from the rebroadcast of films on television and

elsewhere to their benefits plans, while guild members typically receive

the residuals as cash. At the same time, the blue-collar workers for

years have been draining an enormous cash reserve in their own plans --

once enough to finance 30 months of benefits -- to meet outlays that

have increased as the population has aged and more sophisticated

medicine has raised costs.

But what advisers had said was a surplus in the reserve is almost spent.

Investments never quite recovered from the market collapse of 2008.

Hollywood's residuals payments flattened as the DVD boom ended.

Meanwhile, federal health care legislation required plans to cover

children to the age of 26, and eliminated lifetime coverage maximums.

It added up to what David Wescoe, the executive administrative director

for the health and pension plans for the craft and blue-collar unions,

told union members was "a very dicey picture for the next three-year

cycle."

Speaking at Local 80, he put the pension financing shortage at $190

million. Increased health expenses, he said, would require an additional

$180 million to stay even with current benefits. About $75 million would

be needed to keep the reserves at a safe level of six to eight months.

And falling contributions, if industry economics remain soft, will also

hurt.

To some extent, the size of the shortfall may be affected by the

decisions of the Supreme Court, which will hear oral arguments on a

challenge to the federal health care plan in March. "It's in their

hands," read the legend of a photo of the justices in Mr. Wescoe's

presentation in September.

But even if the court were to overturn the new law, something must give

when the companies and unions meet. "To leave it the way it is today, we

need half a billion dollars," Mr. Loeb said.

That reporter is talking about a presentation that was made at one of the "town hall" meetings that were conducted in LA and others places.

http://www.iatse-intl.org/news/videos-mpi.html

watch it now before they take it down

How do the college students (associations) and teachers (unions) in Ca. ask for lower rates?

They have one day warning strikes well in advance of negotiations to show how strong they are.

Who has sand in their pussy?

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IATSE health fund broke.

According to the NYT the film producers are as healthy as arms manufacturers:

“In 2010, the international box office was up 30 percent over five years, twice the growth in domestic sales. And foreign sales accounted for roughly 70 percent of total receipts, both for the industry at large and for some of the biggest American studio productions like “Avatar.””

And the union health fund does not know where to find the funds to keep operating?

NYT December 5, 2011

Around the World in One Movie: Film Financing’s Global Future

By NICHOLAS KULISH and MICHAEL CIEPLY

POTSDAM, Germany — The German craftsmen on Stage 15 in the Babelsberg studio were hard at work on a recent afternoon building a dystopian Korean slum, the thud of a nail gun and a whiff of sawdust in the air. Next door, Andy and Lana Wachowski, the American-born team behind the “Matrix” movies, were filming black-clad storm troopers from an imagined future for their latest feature, “Cloud Atlas.”

From its truly global parentage to its time-bending story told by three directors using two separate production crews, the movie is unabashedly strange. The narrative, which starts near New Zealand and circles the globe, is bewildering in its complexity, featuring characters in six eras who might share a soul migrating through time. And the project’s primary backers are from China, Korea and Singapore.

But “Cloud Atlas,” in all its glorious confusion, also serves as a guidepost to the future of the film business. Increasingly, sophisticated filmmakers who once relied on American studios for backing are turning to a globe-straddling independent finance system for their most expensive projects.

“Cloud Atlas,” with its $100 million budget and high-wattage cast, including the Academy Award winners Tom Hanks and Halle Berry, was an epic independent film too complicated, too expensive and perhaps too risky for any conventional studio to have backed.

To move forward, the project broke free of national boundaries. The investors from Asia and beyond contributed roughly $35 million, without which the film could not have been made. German subsidies account for $18 million more. In the United States, “Cloud Atlas” will be distributed, probably next fall, by Warner Brothers, which has made only a modest investment to date.

In many ways, the producers are drawing a blueprint for a new era of genuinely international filmmaking.

“We were just looking for a way to get it done,” said Grant Hill, one of the “Cloud Atlas” producers, “but I think there’s the basis for a model there.” He called the final push for financing an “exotic mixture” of deals, adding, “What a studio would have had to pay would have made it impossible.”

The change has been coming for several years. In 2010, the international box office was up 30 percent over five years, twice the growth in domestic sales. And foreign sales accounted for roughly 70 percent of total receipts, both for the industry at large and for some of the biggest American studio productions like “Avatar.”

Meanwhile, the Oscar for best picture, for three consecutive years, has gone to films — “Slumdog Millionaire,” “The Hurt Locker” and “The King’s Speech” — that used globe-spanning financial networks to create stories aimed at global audiences. Movies like these will simply make a stop on American theater screens as they travel around the world.

A peek at the back lot for “Cloud Atlas” testifies to the need for a budget that defies the term “indie.” Behind the yellow shipping containers that are part of the futuristic Korean set is a fine 19th-century sitting room with a rose-lined garden path outside the front door. The interior of an old tall ship shares the soundstage with the exterior of a space-age hovercraft and Styrofoam boulders.

The performers, meanwhile, shift between jarringly different roles. “The biggest change for me as an actor is to have two different film units and two different film crews and to go between the two from one day to the next,” Ms. Berry said in a phone conversation.

She described playing “a Jewish woman in the 1930s” for the third director, Tom Tykwer, then becoming “an old tribal woman” for the Wachowski siblings the next day, and losing track of fellow cast members amid the layers of makeup and costumes.

“Some days I go into the trailer, I’ll be having a conversation — I won’t even know it’s with Hugh Grant until five minutes in,” Ms. Berry said.

The gestation of “Cloud Atlas” is a winding tale of emerging markets and perseverance that breathed life into an unlikely project, which, if successful, will probably provoke more change in the business of filmmaking.

In 2005, while on the London set of “V for Vendetta,” the actress Natalie Portman gave a copy of “Cloud Atlas” to Lana Wachowski (formerly Larry), who became intrigued with the novel’s six obliquely connected stories.

A year later, Lana and her brother Andy surfaced with a screenplay. Mr. Tykwer, a friend of the Wachowskis — the directors declined interview requests — joined in writing the numerous drafts of the script, which were shared with the book’s author, David Mitchell.

“After two years of hard work, we were still about 30 percent short” of the necessary money, Mr. Hill said. “At that point you go home unless you can come up with something new, not part of the traditional model.”

Rather than giving up, the producers translated the screenplay into more than half a dozen Asian languages and found that the film’s treatment of reincarnation resonated with potential investors in the East.

“The theme of the story is rebirth, and it comes straight from the basic ideal of Buddhism,” said Michelle Park, chief executive of the Bloomage Company, a Korean film distributor. Ms. Park describes her company’s investment as “unusually high” by Korean standards.

Money came from the Singapore container ship magnate Tony Teo; the Hong Kong film distributor the Media Asia Group, which made what its chief executive, John Chong, called the company’s “largest ever investment in a Western production”; and Dreams of the Dragon, a Beijing film company that had not previously invested in a major film. One of its owners, Wilson Qiu, in an e-mail, cited his “fascination with the source material.”

Others also claim pride of authorship. “From our perspective, ‘Cloud Atlas’ is a German film,” said Christine Berg, project manager for the German Federal Film Fund. Not only are the country’s subsidies substantial, but Mr. Tykwer, who achieved fame with his Berlin film, “Run Lola Run,” is in charge of the second crew.

One advantage of having disparate financing, said Peter J. Dekom, a veteran entertainment lawyer, is that it gives filmmakers greater creative freedom. “The more investors you have, the less control you feel from any one investor,” he said.

The idea of shooting on parallel tracks, with the Wachowskis directing one unit and Mr. Tykwer the other, grew from a realization that the stars were more likely to work for a steep discount if the shoot could be finished in half the time. Actors also play different roles in different time periods, keeping them busy and, on certain days, turning stars into extras.

“It’s sort of like guerrilla filmmaking in a way,” Ms. Berry said. “Even though there seems like there’s a lot of money, it’s not opulent. All the money’s going into the screen.”

Still, such an unusual project presents hurdles in capturing a mainstream audience.

The Wachowskis brought in about $1.5 billion at the worldwide box office for Warner Brothers with the Matrix series. But their “Speed Racer,” also for Warner, was a high-budget flop in 2008. This time, Warner agreed to distribute the film in the United States but was not a large contributor to its production budget.

“To have taken the whole movie, given the expense, would have been a very risky proposition for us,” said Warner’s top film executive, Jeff Robinov. Whether it was smart business to jump in only part way, Mr. Robinov said, “I can’t tell you until we’ve seen more.”

The Wachowskis are notorious for their secrecy, but they showed six minutes of footage at the American Film Market in Santa Monica last month.

“It looks phantasmagorical,” said Victor Loewy, a seasoned international film distributor who bid on the United Kingdom rights after watching the clip. “It’s so unlike anything I’ve seen in 40 years in this business.”

Nicholas Kulish reported from Potsdam and Michael Cieply from Los Angeles.

http://www.nytimes.com/2011/12/06/business/media/around-world-in-one-movie-film-financings-global-future.html?_r=1&pagewanted=print

or http://nyti.ms/tkSn0V

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Its not just about our health plan its about the size of the slice of the pie.

I think its safe to assume Corporate income and profits of the entertainment industry are way up for the last 50 years.

Why should they not pay the same percentage of income in health costs they are used to? I doubt if health costs are increasing faster than hollywoods corp. Income and profits. How can we judge this without a smart research department run by the unions?

the unions are missing real numbers of corp finance.

Robert Reich suggested that unions have representation on corporate boards so they can get real numbers. I was shocked it sounded like SOCIALISM.

But all over central Europe corp boards are 1/3 investors, 1/3 employees, 1/3 management.

And they have functioning stock markets, not socialism.

They make gadgets they sell, not just crap that is consumed.

They have functioning health plans for all.

Yea some borrow more then they should and get the whole into a pickle. But the 1% are just not as greedy.

w.

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Its not just about our health plan its about the size of the slice of the pie.

I think its safe to assume Corporate income and profits of the entertainment industry are way up for the last 50 years.

Why should they not pay the same percentage of income in health costs they are used to? I doubt if health costs are increasing faster than hollywoods corp. Income and profits. How can we judge this without a smart research department run by the unions?

the unions are missing real numbers of corp finance.

Robert Reich suggested that unions have representation on corporate boards so they can get real numbers. I was shocked it sounded like SOCIALISM.

But all over central Europe corp boards are 1/3 investors, 1/3 employees, 1/3 management.

And they have functioning stock markets, not socialism.

They make gadgets they sell, not just crap that is consumed.

They have functioning health plans for all.

Yea some borrow more then they should and get the whole into a pickle. But the 1% are just not as greedy.

w.

The producers see an opportunity to screw the union members because of the world economic situation and lack of those members to participate in THEIR union. At least go to the meetings.

J.D.

For the third year in a row, the combined income of the "Big Six" was in excess of $50,000,000,000.................

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