WGA wins $ 42 million “self-treatment” arbitration against Netflix

The WGA announced today that it has won a massive “self-negotiated” arbitration against Netflix which, it believes, will lead hundreds of screenwriters of over 100 Netflix movies to receive an additional $ 42 million in unpaid work. WGA West and WGA East say they are now looking for interest in the roughly $ 13.5 million Netflix owes writers in arrears for those delays.

In a message to their members, the corporations said their victory stems from “significant arbitration over Netflix’s underpayment of the writer’s residue for a film. bird box. Netflix said the WGA should accept the non-standard formula the company has negotiated with the DGA and SAG-AFTRA. After the hearing, the arbitrator ruled otherwise: that the rent should have been higher than the total budget of the film. He ordered Netflix to pay the writer a total of $ 850,000 in back wages, plus $ 350,000 in interest.

“As a direct result of this decision,” the WGA added, “216 screenwriters of 139 other Netflix motion pictures receive an additional $ 42 million in unpaid residuals. Guild is now seeking approximately $ 13.5 million in interest. Netflix also owes the scriptwriters these delays.

In 2016, Netflix began producing and distributing films written by members of the Guild. Under the streaming giant’s minimum framework agreement (MBA) with WGA West and WGA East, the initial compensation includes theatrical exposure for the film.

Unions told their members on Thursday:

“When a theater is licensed or distributed in any other market, such as broadcast, television or home video, royalties must be paid on the revenues earned in those markets. A typical residual for an accredited writer is 1.2% of the royalty paid to the producer for the performance rights of that film.

“If the license is between related parties, for example, when Netflix is ​​both the producer and distributor of the film, the MBA requires the company to establish fees based on comparable image transactions with unrelated parties, such as a Sony film. Licensed by Netflix This critical definition, negotiated as part of our 2008 strike resolution, protects against underestimating royalties through self-employment.

Instead of following the MBA definition of related party transactions (which also exists in the DGA and SAG-AFTRA agreements with AMPTP), Netflix has negotiated new agreements with DGA and SAG-AFTRA that allow Netflix to pay for rejections at a price significantly less. . compared to the cost of the film. Netflix then tried to get the WGA to accept this “champion” deal. Since it was clear that the new formula negotiated by the other corporations did not value these “cumulative” fees, the corporation took the dispute to arbitration.

“During the arbitration, Guild demonstrated that when Netflix licensed relatively theatrical films from outside producers, it almost always paid license fees that exceeded its budget. The industry refers to this model as” premium price. ” The union argued that Netflix should apply this pricing model to their films and charge an over-budget fee to pay for the residues. The arbiter agreed, ruling that the fee should be 111% of the film’s total budget.

According to the guild, this arbitration decision has been applied to another 139 Netflix movies. “Including the additional residuals awarded as a result, the 216 screenwriters of these films now receive a total of $ 64 million in residuals, which is $ 20 million more than they would have received under the agreement reached by DGA and SAG-AFTRA. “.

However, the WGA noted that Netflix “has so far refused to pay interest on overdue balances for films other than Bird Box, so the guild is investigating $ 13.5 million in interest still owed to them.”

The WGA said so bird box In arbitration, Netflix “tried to use the decades-old AMPTP strategy of doing shoddy deals with other unions, and then tried to ‘place’ it on the writers.” In this case, Netflix failed because the WGA was willing to fight for what was owed to the writers within the MBA rather than accepting the DGA / SAG-AFTRA model.

“As studios become more involved in their streaming platforms, we need to ensure that writers are properly compensated,” the WGA said. “Netflix, with only a decade of experience employing writers, quickly became one of the worst offenders in the MBA, requiring the guild to devote significant resources to protecting the writers who work for the company.”

The Guild also noted that “the upcoming 2023 MBA negotiations challenge us to address the industry’s push to use the growth of the broadcast model to reduce wages and working conditions for Hollywood talent. We hope that writers and all of Hollywood get a fair share of the value we create together.

The statement to WGA members was signed in “solidarity” by WGA East and WGA West President Meredith Stiemm, Vice President Michele Mulroney, Treasurer Betsy Thomas and all members of their board of directors.