Tuesday, September 28, 2010

The Hobbit: Wingnut vs Unions (Round 1)

I feel like the current negotiation-by-press release between Peter Jackson/Wingnut Films and the Media, Entertainment and Arts Alliance is worth some closer analysis.

What I thought I'd do is have a look at the bigger blog posts and press releases I can find, and extract facts and negotiating positions from them. Going into this, I don't have a strong opinion about the outcome; I'd say my default attitude is that I think unions are a useful and sometimes necessary counter-balance to the power held by an employer.

I think what I'll do is start with the stuff.co.nz article where I first read about this: Jackson fights to save Hobbit. Here are the first two paragraphs:

Sir Peter Jackson says he is fighting to save The Hobbit films, thousands of jobs and the New Zealand film industry in the face of a threatened actors' boycott orchestrated by an "Australian bully boy" union.

The Media, Entertainment and Arts Alliance (MEAA) says Hollywood stars Sir Ian McKellen, Cate Blanchett and Hugo Weaving support a boycott of the film because actors may be employed on inferior non-union contracts. 
I'll try breaking down the rest of this article into 'verifiable facts',(*) 'opinions' and 'leverage' (for a negotiation).

* Just because a fact is 'verifiable' doesn't mean I've verified it. It just 
means someone's making a claim that could be fact-checked.

  • Jackson said he was a "very proud and loyal member" of three Hollywood unions (verifiable fact)
  • [Jackson is] "not anti-union in the slightest". (opinion)
  • He always honoured actors' union conditions if they were union members (verifiable fact/opinion)
These first three points are presenting Peter Jackson as a reasonable individual to negotiate with.

  • "An Australian bully-boy [is trying] to gain a foothold in this country's film industry. They want greater membership, since they get to increase their bank balance." (opinion)
  • "I feel growing anger at the way this tiny minority is endangering a project that hundreds of people have worked on over the last two years, and the thousands about to be employed for the next four years, [and] the hundreds of millions of Warner Brothers dollars that is about to be spent in our economy." (opinion/leverage)
  • Losing The Hobbit would leave New Zealand "humiliated on the world stage" (opinion/leverage)
  • "Warners would take a financial hit that would cause other studios to steer clear of New Zealand", Jackson said. (leverage)
  • "If The Hobbit goes east [East Europe in fact], look forward to a long, dry, big-budget movie drought in this country. (leverage)
  • "We have done better in recent years with attracting overseas movies  and the Australians would like a greater slice of the pie, which begins with them using The Hobbit to gain control of our film industry." (opinion)
Jackson presents the MEAA's demands as a financial entity muscling in on New Zealand, operating purely for profit and power, and simultaneously trying to ruin the NZ film industry (a long, dry, big-budget movie drought) and 'gain control of our film industry'. These quotes also use quite a bit of emotive language ('anger', 'humiliated', and a general tone of fear).

The interesting thing that struck me about this section was the idea that Warners would be spending hundreds of millions of dollars on this project in New Zealand. The natural question to ask is, "How much would allowing unionised actors to work on the Hobbit cost the production?"

  • The International Federation of Actors, which represents the world's seven major actors unions and actors in 100 countries, has told members not to act in The Hobbit until they get a union contract.(verifiable fact)
  • MEAA national director Simon Whipp said "all performers" were concerned about the lack of standard union contracts for the US$150 million (NZ$204m) two-part Hobbit films.(verifiable fact/opinion/leverage)
  • "We have spoken to all the performers who have been approached, or are rumoured to be involved in, the production and all have expressed strong support [for the boycott]."(leverage)
The article summarises the problems with a lack of union contracts as leading "to concern about whether The Hobbit producers would pay fees contained in a standard union contract, such as payments from DVD sales and video rentals."
  • "Those are the things all of us are concerned about and differentiate New Zealand, from a performer's perspective, from working almost anywhere else in the English-speaking world."(verifiable fact)
Support for Peter Jackson's position comes from South Pacific Pictures chief executive John Barnett

  • Barnett says the Australian union's claims are duplicitous and inaccurate and made by an organisation with no legal standing in New Zealand."The MEAA has been struck off the register (of NZ incorporated societies) for failing to file any reports in the last three years, which is one reason that the production company can't enter into any agreement with it. (verifiable fact)
  • The claim that actors were at the mercy of production companies was a complete misrepresentation as there were absolute guarantees about working conditions which had been in place for the past 15-20 years. (verifiable fact)

Now I'm wondering what the absolute guarantees are that Barnett has mentioned.

At this point, I think it'd be a good idea to find the MEAA's original press release at scoop.co.nz. The press release itself is simply advising members of international actors guilds not to accept work on The Hobbit, which it categorises as a non-union production. The press release links to a 'Hobbit Factsheet', which links to a series of letters written to Wingnut and then to MGM and New Line.

The first letter,'Re: ENGAGEMENT OF PERFORMERS ON THE HOBBIT', contains the following points:

  • For some time it has been a concern for performers around the world that our colleagues working in New Zealand are not being engaged on union negotiated agreements. (opinion)
The letter goes on to state:

Recently, The International Federation of Actors (FIA) became aware that the production of “The Hobbit” intends to hire performers under non-union contracts.
For this reason FIA, at its most recent meeting, unanimously passed the following motion:
“Resolved, that the International Federation of Actors urges each of its affiliates to adopt instructions to their members that no member of any FIA affiliate will agree to act in the theatrical feature film “The Hobbit” until such time as the producer has entered into a collective bargaining agreement with the Media Entertainment & Arts Alliance for production in New Zealand providing for satisfactory terms and conditions for all performers employed on the production”.
FIA therefore encourages you to meet immediately with representatives of the Media Entertainment and Arts Alliance in order to reach an agreement covering all performers engaged on this production.

Given the bluntness with which this position is stated, I can see why Jackson might have reacted by categorising the MEAA's approach as bullying.

The second letter restates the position:
We would encourage you to meet with representatives of the Media Entertainment & Arts
Alliance (MEAA) as soon as possible. In the interim we are advising our members to refuse to sign contracts for this production until they receive confirmation from us that a satisfactory resolution has been reached with MEAA. (leverage)
The MEAA's 'Hobbit Factsheet' summarises the position since the letters were sent:

  • The producers, through their lawyers, have refused to negotiate with the union. (verifiable fact)
  • The producers claim it would be unlawful (and a breach of New Zealand competition laws) for the
    producer to enter into an agreement with the union covering the engagement of performers on the
    production. (verifiable fact)
  • The Alliance has obtained legal advice that there are a variety of lawful means which could be used to
    establish the minimum wages, working conditions and residuals for performers on the production.(verifiable fact)
This difference of opinion - whether it's legal for the union and the producer to enter into an agreement - seems like something that's either (a) easy and obvious to resolve, or (b) liable to end up working its way up to the Court of Appeal over the course of three to four years before a judgment is issued.

  • The producers have indicated that, notwithstanding the request to meet and discuss the terms of
    engagement of performers on the production, they intend to make imminent offers to performers. (verifiable fact)
  • In addition, they have now advised that they propose to pay some performers “residuals” on the
    production. These residuals are significantly less than the Alliance’s usual agreements in every respect.
    The producers have offered 2% of distributors gross receipts to commence for exploitations 2 years after the first US theatrical release of the film. However, it is unclear on what they would be based (for
    example what about sales which occur before the 2 years relating to use after the two year period), how these residuals would be divided between the performers and how they would be enforceable.
    It is not clear which performers may be offered this arrangement. (verifiable fact/opinion)
  • Under all Alliance agreements all performers are entitled to share in residual payments and there is no
    uncertainty about how each performer’s share is calculated or about enforceability. (verifiable fact/opinion)
  • The producers have advised they do not intend to negotiate with the union. Consequently the usual
    provisions of the New Zealand contract would apply. These include a provision which permit the
    producer to terminate the contract at any time without obligation to pay out the performer’s contract.
    This provision could also be used to justify non-payment of any residual obligation which may have been agreed above (even after the performer has performed all their work on the film and even if the
    performer’s work is used in the film). This clause alone makes the residual offer above meaningless. (verifiable fact/leverage)
To summarise (hopefully reasonable accurately), the MEAA says that Wingnut are about to start contracting actors, offering them residuals (" a payment made to the performer in a creative work for subsequent screenings of the work") that are at less-than-standard rates. The New Zealand contracts (*) can be terminated at any point, even after the performer's finished filming and their performance is included in the finished product; the termination of that contract means the producers don't have any obligation to pay residuals.

* It's unclear (but I'm assuming that) the contracts referred to in
the final bullet-point are the ones intended for just New Zealand 
actors, rather that for every actor (New Zealand and international).

If that's accurate, it seems like a hell of a loophole to have in your contract. Even if you assume the company you're working for will act completely in good faith and not screw you over, it still seems like an avoidable risk.

Next up, I'll have a look at the left and right wing analyses of this from The Standard and Kiwiblog. I'll also check through Peter Jackson's actual press release to see if there's any further nuance that the Dominion Post/Stuff article missed out, and through the CTU's press release.


Repton said...

"Consequently the usual provisions of the New Zealand contract would apply. These include a provision which permit the producer to terminate the contract at any time without obligation to pay out the performer’s contract."

Are they talking about the 90 day law here?

Svend said...

I did read some interesting conflicting numbers -- John Barnett claiming that the union represented less than 80 people in NZ:


I've seen a bunch of other news reports saying "80% of 800 kiwi actors", but when I first saw the 800 figure, the word used was "entertainers"... which is a bit different. There would be little downside to wanting to play hardball with a project that you're not going to be employed by anyway, and the possible upside would be having a much stronger organization behind you for the gigs you do want; so I'd be curious about the breakdown of film actors vs others.

Dammit, I wish I could find the page that used the phrase "entertainers", because I thought that it was interesting. But no joy. :(

Svend said...

Here's an interesting pro-union article refuting PJ's claim:


Unfortunately the statement, "No claim has been made suggesting The Hobbit is non union" in the second response is hard to sustain when the SAG member alert is titled "SAG Member Alert On The Non-Union Production 'The Hobbit'":


Which makes me cautious about the rest of the article...

Anonymous said...

When they talk about the New Zealand contract they are talking about the situation where people that would usually be employees covered by employment law (minimum wage, right to challenge dismissal etc) are hired as "independent contractors".

Independent contractors are considered to be one-person businesses engaged in a contract with the producers. the relationship is similar to that you might have with a plumber you call in to fix a leak - you're not the employer, rather you get a quote for the whole job and then they do it for that price and if you're not happy with the job you break the contract.

This means the employment relationship is considered to be a contract that falls under the commerce act rather than under employment law.

This may be a suitable circumstance for hiring a plumber (in which both parties have similar negotiating power when the contract is created, such as you and your plumber) but there is no way an individual film worker has the ability to negotiate a fair contract with a multi-million dollar producer in that the cost of losing the contract for the worker is significantly greater than the cost of not hiring that individual worker is to the producer (the former risks losing their livelihood the other only risks having to find another contractor).

As such many film workers in the small NZ film market end up working contracts that would be below legal minimum standards if they were deemed employment agreements but don't have employment law to protect them.

A union draws together the negotiating power of individual workers (and, in this case, international stars) to provide a balance to the power of the producers in order to achieve a more balanced outcome in the form of a collective agreement. In short, the union members' risk is still the loss of their livelyhood but so too is the producers as there are no other "contractors" to do the work.

What we are seeing here is Peter Jackson and other film producers trying to stop this collective process because it threatens their monopoly on bargaining power.

It should be noted that Jackson pays union rates to international members of the Screen Actors Guild. This is simply because the collective negotiating power of SAG is considerably greater than his negotiating power. Which is to say if he took SAG on he would never get work in Hollywood again.

While this may seem a cynical reduction of the issue it is the reality of doing business in a liberalised labour market such as New Zealand's.

Anonymous said...

I guess the question is; if pushed further, will Warner take the film to Eastern Europe as threatened - if so, and I doubt it'd be the only such production to do so to avoid union contracts.

Is some Warner $$ better than none? Or is integrity and standardised (fair) wages worth more than the Warner $$ on offer?

My reading suggests that NZ isn't the only place to have had a film industry flourish, then wilt, as people start expecting sindustry-standard wages.

Anonymous said...

Thanks Steve for the analysis. It's been hard to get behind the rhetoric in the mainstream media. i like the way you've split the verifiable fact from the opinion and leverage statements.

It seems to me that there is a lot of talking past each other, and through the media. I'm a little fascinated by the role of MEAA, and if they were invited into the fray or invited themselves? I presume there are other, NZ unions, that would provide coverage of the workers.

The comment above about NZ law is also interesting. Even before the recent shift to the right, 'entertainers' have been allowed to work as 'independent contractors'. There is a well established body of NZ contractual law around determining whether a worker is an employee or an independent contractor. And it hasn't changed much for some time.

If you have a contract with a plumber (for example) you can only cancel the contract, and not pay, for non-performance. The plumber can still take you to court for non-payment and have to defend his or her performance. Of course that is an expensive and time-consuming remedy.