Commercial Pain.

ONGOING SAG STRIKE HURTS L.A. ECONOMY MORE THAN ACTORS, ADVERTISERS

IT'S not Hollywood performers or Madison Avenue that are the big losers in the four-week-old actor's strike against the advertising community. It's the Los Angeles economy.

So far, commercial production has been cut in half in the city of L.A. and is down about 20 percent in L.A. County since the strike got underway on May 1, according to an estimate by Cody Cluff, president of the Entertainment Industry Development Corp.

Cluff, whose nonprofit group coordinates film permits throughout L.A. County, said the downturn in filming translates to about $1 million a day in decreased economic activity -- or about $30 million so far.

Some 185,000 members of the Screen Actors Guild and the American Federation of Television and Radio Artists have refused to take part in commercial filming until a new contract is signed with producers. The conflict promises to be a long one.

"I don't hold much hope for a quick end to this," Cluff said.

Before the strike, commercial production had been one of the few bright spots in L.A.'s filming community. With TV movies and feature films fleeing L.A. for cheaper locations elsewhere, an increase in commercial filming had been taking up some of the slack.

Last year, there were 6,569 days devoted to commercial production in Los Angeles. up from 6,152 in 1998. For the first quarter of 2000, commercial production reached 2,701 days, up from 2,475 in 1999.

But the impact of the strike is being felt this month. From May 1 through May 22, there were 350 days of commercial production, down from 400 days during the same period in 1999.

Cluff said it is difficult to quantify the slowdown because many commercial producers have become cagey and are listing their commercial shoots as videos or industrial films, to avoid union protests over the producers' use of non-unions actors. Others, according to one insider, are filing permits for multiple shoots -- some of which are fake. That's because strikers use film permit records to decide where to mobilize picketers, and producers are using these fake permits as decoys.

Cluff said the picketers have been most effective in Los Angeles and New York. Both sides have been using the Internet to alert their constituents to new developments in the strike.

"Producers want to stay away from Los Angeles because they don't want to be bothered by the hassles," Cluff said. "Why bother, they say. They'd rather get out of town, and advertisers are willing to pay a little extra so they don't have to deal with SAG/AFTRA issues."

Indeed, there is little sign that commercial production overall has declined -- the producers are just doing it outside L.A. and New York, using non-union talent.

"Everybody (at commercial production companies) is working," said Matt Miller, president of the Association of Independent Commercial Producers. "Los Angeles has slowed down, but producers are very creative people. They are finding places where they are not going to be bothered, whether it is in Colorado Springs or Prague."

Little to lose

John McGuinn, chief negotiator for the advertisers, agreed that commercial production continues unabated. "There has been no economic loss," he maintains.

The principal issue in the strike is residuals from commercial repeats on network and cable television. The advertisers want to pay actors a flat fee for their work on commercials, while the actors want to be paid each time a commercial is shown on cable. Guidelines and fee structures for advertising on the Internet are also at issue.

Advertisers have said that, if they accept the new fee structure demanded by the actors, salaries would double. The unions have countered that the actors should get their fair share of revenues from emerging media like cable and the Internet. Both parties have said they are far apart and don't expect a quick settlement.

"It's bleak," McGuinn said.

"It's zero," said a spokesman for SAG.

Talks between the actors and advertisers collapsed May 14. The two parties have not met since, and as of late last week there were no plans to meet again. The matter is now in the hands of a federal mediator.

One reason the strike is expected to last so long is that neither side can place a severe financial burden on the other. While non-union talent is considered less reliable, it's usually cheaper for producers to use these actors, so they feel no particular urgency to settle. Meanwhile, few commercial actors rely exclusively on commercials to make a living because it's not a reliable source of income, so the actors can get by on other jobs.

Support for strikers

The strike was seen by many industry observers as almost inevitable after the election of William Daniels, the new president of SAG. He and his coalition campaigned on a get-tough policy with the advertising community.

The actors have lined up a broad spectrum of support -- from such entitites as the AFLCIO, the Association of Talent Agents, the National Football League Players Association, the National Basketball Players Association, and the Major League Baseball Players Association. Tiger Woods recently refused to cross a picket line for a Nike commercial, and a spokesman for SAG said Atlanta Hawks basketball star Dikebe Mutombo turned down a six-figure fee to appear in a commercial.

The unions also disclosed that more than 300 production companies have signed an interim agreement with the actors. This means they can continue production without any further disputes with the unions. These companies are paying actors the current scale, but have agreed to give retroactive payments once a new contract agreement is reached -- in other words, they aren't paying residuals for cable spots now, but if the producers agree to do so in the future, they'll pay residuals on the commercials currently being shot.

McGuinn, the negotiator for the ad industry, dismissed these interim agreements, saying none of the major ad agencies have buckled during the strike.