What You Need to Know About the New SAG-AFTRA Agreement: Residuals

With the 118-day strike finally resolved and a new collective bargaining agreement up for a ratification vote, there is a lot to digest and understand about how things will be moving forward. With that in mind, Casting Networks is producing a series of articles in which we will break down particular parts of the new agreement and discuss how it affects you.

Here, we’ll be focusing on residuals.

It used to be that a middle-class actor could make a very good living showing up a few times a year on broadcast episodic television. The base pay was solid and so were the residuals, especially when shows went into syndication. Without ever being a star, or even a series regular, an actor could carve out a nice life with that kind of work.

However, with the rise of streaming, that came to an end.

It was not sudden, it happened over the course of time. As broadcast television has faded into oblivion and the lion’s share of viewership has shifted to the streaming model, that revenue stream dried up.

Why? A streaming service would either green-light its own show and buy off limited residuals up front or it would not sell the show into any kind of syndication.

It also would buy another network’s show, pay a licensing fee and never have to spend another cent on the show or the actors in it, even if the show became one of the service’s most-watched properties (see Netflix and Suits).

One of the SAG-AFTRA negotiating committee’s greatest challenges was to get the streaming services to agree to bonuses and a distribution fund. They succeeded.

Strap yourself in, because there’s a lot here in this category.

Advance Payment of Residuals

For starters, any contracts entered into on or after the first Sunday 60 days after the union has notified the AMPTP that the agreement has been ratified, an agreement has to be entered into by the performer in a separate rider.

On or after the one-year mark, however, concrete numbers kick in.

The salary above which advance payment of residuals is allowed shall increase to $9,500 (from $8,000) for prime-time reruns of a half-hour show, $12,500 (from $11,000) for prime-time reruns of a one-hour or longer show and $11,000 (from $9,500) for other residuals. If a performer has been paid through direct deposit, that can also be used for this purpose.

A side note about advanced residuals: not more than 15% of a performer’s guaranteed compensation may be treated as an advance of residuals performers for performers guaranteed less than $75,000 per week or per episode.

Residuals for High-budget Subscription Video on Demand (SVOD)

The cap on residuals has been raised by 2.5% and grandfathering has been eliminated.

Residuals for foreign shows will be calculated based on foreign subscribers, rather than in the previous model, which was 35% of each year’s domestic residual, with the same ceilings applicable as with domestic exhibitions, but with certain foreign subscriber factors.

Specifically, 47% for fewer than 20 million foreign subscribers; 60% for 20 million to 45 million foreign subscribers; 75% for more than 45 million but fewer than 75 million foreign subscribers; and 90 percent for 75 million or more foreign subscribers.

New contracts will no longer credit 35% of scale towards any further compensation if the project is at the tier 2 budget level or the initial release SVOD service has fewer than 20 million domestic subscribers.

Starting July 1, 2024, the 20 percent and 40 percent domestic subscriber factors are also eliminated, making 65% the lowest domestic subscriber factor.

Total compensation for high-budget SVOD programs entered under the 2023 Codified Basic Television Agreement will also rise incrementally, and perhaps most importantly, we finally have…

Data Transparency

From now on, producers will provide the total number of hours streamed on both their related/affiliated SVOD service in the United States and Canada during the preceding quarter, and, to the extent the information is available, foreign hours streamed as well.

Promotional and Limited Theatrical Runs

Instead of the first three episodes that might have a promotional run on Network or Linear TV, the residuals now can be utilized for any three episodes, up to a maximum of 25% of the episodes ordered, of network television series (ABC, CBS, FOX, NBC) or The CW or MyNetworkTV.

With limited theatrical exhibition, gross receipts residuals are allowed for high-budget SVOD pictures 66 minutes or more in length. The distributor’s foreign gross thresholds increase by 3% for TV films that have not been released to foreign television.

New Media and Network

The network prime-time reruns ceilings and other residuals formulas not mentioned above remain the same as in 2020, while new media inspections will now be conducted on an annual basis, rather than semi-annually, and on 30 days’ notice instead of 10.

As noted above, there’s a lot to digest, but the short version is that residuals are going to increase with new transparency from the streamers. Considering that streamers previously had no interest in transparency of any kind, this also means more clarity.

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