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Residuals anger? SAG says check's in the mail.

Fifty years ago, the Screen Actors Guild made a key breakthrough when it obtained the first residuals on feature films sold to TV.

SAG struck for seven weeks, halting eight major productions including Elizabeth Taylor's "Butterfield 8," Jack Lemmon's "The Wackiest Ship in the Army" and Marilyn Monroe's "Let's Make Love." Studios agreed to pay residuals for movies produced after the date of the agreement, and paid $2.25 million to start the pension and health fund as compensation for movies produced before 1960.

SAG's first residuals had come without a strike in 1952 when it worked out a deal for TV reruns. Six decades later, the results have become staggering, with residuals generating approximately $800 million a year for reruns of movies, TV shows and commercials.

While SAG receives more than $2 million a day in residuals on behalf of the actors it represents, the payments get a relatively scant amount of attention. That's likely to change in the coming weeks and months due to several developments:

* SAG and AFTRA reached a tentative deal last month with the Alliance of Motion Picture & Television Producers on the primetime-feature contract without notable improvements in residual rates. The unions sent out the contract for ratification on Dec. 10.

* SAG's in the midst of trying to address longstanding member complaints about the lag time in delivering residuals checks, currently at almost seven weeks (48 days).

* SAG still has $17 million in unclaimed residuals as part of $83 million in funds held in trust for members, which include so-called foreign levies. SAG's handling of those funds is part of a 2007 class-action lawsuit filed by Ken Osmond that received a preliminary court approval Sept. 20.

* SAG announced Dec. 12 that an unnamed manager at the guild had been dismissed for alleged embezzlement and that it was continuing an investigation into the potential misappropriation but had not yet contacted law enforcement. A source close to the situation indicated the exec worked in the Residuals, Estates and Trusts department and that between $200,000 and $250,000 had been lost--and that a second employee had been dismissed due to violations, unrelated to the alleged theft, that were uncovered during the course of the investigation.

For middle-class actors who sometimes go years between jobs, residuals are crucial to making ends meet. But with SAG processing 2 million residual checks per year, the sheer volume of the payments means that actors often don't receive the checks for months at a time.

That number does not include the residual checks for commercials, which the ad industry deposits through payroll companies such as Talent Partners. SAG activist Brian Hamilton, who operates the SAG Actor website, says the difference in delivery times is profound.

"The commercials residual checks fly in, but the checks from TV work always take a long time," Hamilton says. "The turnaround on one of my recent commercials checks was one day." Delays in delivery can be problematic, since issuers may impose a 60- or 90-day limit on honoring checks. And it's a longstanding problem.

A decade ago, a Towers Perrin consultants report described SAG's operations as "organized chaos."

In 2001, SAG took the extraordinary step of apologizing for the delays. The next year, the guild insisted it was fixing the problem by improving internal computer systems as part of a $4.4 million technology upgrade and expansion to reorganize and fully automate SAG's inner workings.

But in 2006, the delays had become so pervasive that the AFTRA-SAG Federal Credit Union stopped direct deposit of residual checks after doing so for three decades, and blamed the lack of automation at the unions. The process of sending residual checks to members is still not automated.

SAG insists that it's added staff to handle the checks, and that improvements are coming this fall with a new sorting and collating technology. "Some studios' payment processes require us to scan the checks to record critical information as the only alternative to manual input," SAG said in a recent response.

Additionally, SAG's seeing an increase in smaller residual checks for streaming and other new-media platforms.

"That high volume is further complicated by the current largely manual process under which hundreds of boxes of checks from studios and payroll houses are hand-keyed into the system for verification and distribution," the guild said. "Matching performer statements to the received checks also is an important though complex manual effort."

SAG has no specific date yet for fully automating the residuals process, but it promises that a speed-up is coming. It's part of efforts toward operational improvements since national exec director David White came onboard two years ago after the national board fired Doug Allen.

"Residuals processing was identified early on as an area for improvement, and White personally directed a technology solution that will totally transform our residuals processing function," SAG said. "White and SAG staff conducted a study over the course of the past year during which we reviewed the logistics in this area and concluded that a complete overhaul was necessary to automate the overwhelmingly manual process."

SAG said on Dec. 1 that it has installed and is testing new, automated equipment to speed processing--and that the new machines have been nicknamed "Boris and Natasha."

"We are enthusiastic about the early results, and expect to see significantly improved processing times over the next year from these and other changes," the guild said. "This effort is part of a larger review of institutional processes designed to root out and aggressively attack inefficient processes and resource waste throughout the Guild's operations."

SAG hasn't yet released its 2009 earnings report, but signs are that residuals will drop: the SAG health plan recently announced it's tightening eligibility levels by 3% for next year; there was a 10% decline in employer contributions to the health plan in 2008; the health plan hiked premiums at the start of this year.
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Title Annotation:film; Screen Actors Guild
Author:McNary, Dave
Publication:Variety
Geographic Code:1USA
Date:Dec 20, 2010
Words:980
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