AI, Compensation Concerns Threaten To Derail SAG-AFTRA Talks (Exclusive)

Saturday's meeting between the union and the studios marks a turning point

I have been reporting in this newsletter for several weeks that the issue of AI was likely to be one of the biggest stumbling blocks in negotiations between SAG-AFTRA and AMPTP. For instance, from Thursday's newsletter:

I've heard from the union side that while the compensation issue is flexible (and both sides seem to be closer on that one), AI is seen as an existential threat. "If we get this wrong, we won't be able to come back next time and unwind it," one source told me tonight. "Everyone understands how important this is and there is a strong feeling that this is our red line."

Union negotiators had been waiting for a formal studio response to their last proposals on compensation and the issues surrounding AI. The two sides had been informally talking for the past couple of days and met virtually on Saturday in a call that included SAG-AFTRA and AMPTP negotiators as well as executives from Warner Bros. Discovery, Netflix, Amazon, Disney, Sony, NBCUniversal and Paramount.

I think it's fair to say the hour-ish meeting did not as hoped.

SAG-AFTRA has just released a statement to members regarding Saturday's talks:

Dear SAG-AFTRA Members,

We received an offer today from the AMPTP, which they characterized as their "Last, Best, and Final Offer." We are reviewing it and considering our response within the context of the critical issues addressed in our proposals. 

As always, unless it comes from your union, please do not believe any outside sources or rumors.

With gratitude and in solidarity,

Your TV/Theatrical Negotiating Committee 

The use of the phrase "Last, Best, and Final Offer" is significant, because, in collective bargaining negotiations, that term is generally used when one side presents what it considers to be its final offer. It's a collection of proposals that is meant to represent the best offer that one side is going to make. It doesn't necessarily mean further negotiations will never happen. But it usually signifies that there will be a pause of some kind as both sides regroup. 

The other reason to use it is in hopes that the opposing side can be pressured into settling. That is particularly the case in a long negotiation such as the current SAG-AFTRA strike. AMPTP negotiators likely assume the extended period of unemployment has put enough financial pressure on striking actors that they will be willing to agree to terms that aren't necessarily what they were hoping for.

That approach is also relevant during the SAG-AFTRA negotiations because the sticking points have ended up falling into two categories: financial and AI. The financial negotiations have been complicated by efforts from the union to not only achieve an increase in base pay but also additional money tied to subscriber fees and/or performance.

According to union sources I have spoken with in recent days, it became clear that the AI issue was going to be the trickiest. For all of the focus on the participation of the "Big Four" CEOs in the negotiating process, some of the other AMPTP members were seen as the biggest opponents of compromising on AI. And it's worth noting that last-minute wrangling over AI nearly derailed the WGA deal with the studios.

Several things about Saturday's meeting have been confirmed by multiple sources on both sides. It was shorter than expected and there wasn't much negotiation involved in the call.

Studio side sources tell me that their offer was presented and details were discussed and then the union was left to "discuss an offer we consider to be ground-breaking and very close to what they (the union) had been proposing." However, I was also told by several sources that the CEOs were not in the meeting to negotiate further over proposals. "This is a fair deal and we believe SAG-AFTRA members should have the opportunity to vote on it," one studio executive messaged me earlier Saturday evening.

But other studio sources also admit that dissension in the ranks of the studios over AI has helped constrain the most recent proposal delivered to the union. "Several of us have a firm line we won't cross," one source told me. "We don't want our hands to be tied in the future because fears of how we might somehow misuse the technology restrains us contractually. We aren't negotiating over perceived fears."

And perhaps that is why the trade stories posted today included descriptions of the offer as including "full AI protections." It's clear the studios are hoping to frame their offer as reasonable, in part hoping that union members more focused on the compensations components will be willing to accept the current AI proposals.

Union sources I spoke with had a very different take on the meeting. The proposal from AMPTP was characterized to me as "falling very short of our expectations, particularly given recent talks." The compensation issues were described as being "closer, but still not there." But the consistent criticism I heard from union sources was that the studio's AI proposal fell "incredibly short" of what SAG-AFTRA negotiators had expected. And reportedly when union representatives asked in Saturday's meeting for clarification on several issues, the studio side quickly exited the call.

The situation as I write this Saturday night is incredibly fluid. Every studio source I've spoken with has insisted this proposal is their "final" offer. However, that opens up the unanswered question of what might happen if the union negotiators reject the latest terms. One top executive I spoke with admitted that the reluctance of several of the more tech-oriented members to move further on AI limited AMPTP's options moving forward. "We don't want to split into separate camps over this, and that won't get this solved if it happens."

It's also not clear where things move forward on the SAG-AFTRA side. Like the AMPTP sources I have spoken with, the union sources stress the need to present a united front. But an offer that is essentially "take it or leave it," puts a lot of pressure on everyone. 

Studio sources tell me they are waiting for a formal response from the union. That response is likely to come soon after a Sunday morning SAG-AFTRA meeting, which reportedly has been called to craft a formal response to the proposal.

And I suppose at this point, all of Hollywood is also waiting for the union's next move. Because that decision will likely determine where negotiations go from here.

ALSO: The Proposed SAG-AFTRA Strike-Breaking Letter You've Never Seen (Exclusive)

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