The Netflix-Disney Legal Squeeze

Fran Drescher
Photo: Rich Fury/Getty Images
Eriq Gardner
August 8, 2022

Once upon a time in TV land, there were just a handful of networks, and the programming calendar was intently, and inescapably, seasonal. There was a time for pilots and premieres, and a month for finales. Summer was summer, a sacrosanct time when everybody did reruns. And sweeps weeks? I’m not sure how to explain that anachronism. Of course, today is very different—less predictable, much more chaotic. Shows come and go, and while the programming slate is sometimes foretold at some comic book convention, more likely you’re unexpectedly discovering whether your favorite show is getting renewed or canceled while mindlessly scrolling Twitter.

In many ways, this is an absolutely marvelous time for episodic content, but the streaming landscape does put stress on those working to create television. If you listen to the guilds, particularly SAG-AFTRA, the streamers aren’t particularly good at making decisions nor sharing calendars in any sort of expeditious fashion.  Actors sometimes sit on their hands waiting to find out like the rest of us whether their shows are getting picked up. In the meantime, they’re not taking that new role on that other show. Or they can’t block off enough conflict-free time to do a movie.

After a decade of growing increasingly frustrated, SAG-AFTRA could be on the verge of achieving a breakthrough. It’s a remarkable squeeze play that’s happening partly because California’s politics have drifted leftwards and the legislature is more receptive to union priorities. But lobbying for policy reform is only part of this play. There’s also a furious negotiation happening behind closed doors. And, as evidenced by a deal with Netflix last week, SAG-AFTRA is gaining ground. We may even begin to see a semblance of seasonality again. Or we may witness a hefty new lawsuit that could steer Hollywood’s future.

Back in February, I wrote about what was then called the FAIR Act, an update on an old California law limiting the maximum contractual term for one’s personal services to seven years. Under this new bill, it would become very difficult to hire an independent contractor on an exclusive basis—potentially preventing Netflix from locking down Shonda Rhimes, for example. What’s more, the bill placed a 12-month time limit on the exercise of contractual options.

Since then, that bill has morphed into AB 437. Out went a component devoted to the delivery of music services, and the language was tightened so it became very clear that the legislation would apply to the work of actors and no one else (sorry, Shonda). The bill will likely pass out of the appropriations committee soon—SAG-AFTRA president Fran Drescher recently met with a key lawmaker to ensure that—and head to the full Senate floor by the end of the month. Meanwhile, studios are hopping mad. Charles Rivken, the chairman and C.E.O. of the Motion Picture Association, recently wrote a guest column for Variety that opens by warning that AB 437 could bring the Golden Age of movie and TV content to a “crashing halt” if producers don’t have incredible flexibility when dealing with complex production schedules.

Nevertheless, Netflix—a member of the MPA, but a streamer that bargains working conditions with the guilds separately from other Hollywood producers—came to a tentative agreement last week with SAG-AFTRA. This deal will likely be approved by SAG-AFTRA’s board today. In it, Netflix agrees to a host of changes, including giving most of its series regulars (those making up to $70,000 for each hourly episode or $65,000 for each half hour) at least a three-month conflict-free window after each season where they can take performance work without clearing it with Netflix first. In other words, these actors get something that’s typically reserved for superstars—an enforceable hiatus.

What’s more, series regulars now have the right to guest star on other shows and miniseries during the downtime in the shooting of their Netflix shows—and to do so for other streamers like HBO Max or Disney+. (Previously, Netflix would reserve the ability to veto such work.) Finally, on top of the other provisions in this new collective bargaining agreement (residuals for stunt performers, adding Juneteenth as a holiday, capping vocally stressful voice-over work at sessions lasting no more than two hours, etc.), Netflix has agreed to limit the amount of time to 18 months when contractual options for an actor’s services can be exercised, and if Netflix takes the maximum allowed time in deciding whether to renew a show for an additional season, actors get bonus payments (up to the equivalent of payment for four additional episodes).

That’s a huge win for SAG-AFTRA, which is now attempting to get other Hollywood producers to agree to something similar. Even though the actors’ C.B.A. with the Alliance of Motion Picture and Television Producers (AMPTP) won’t expire until the middle of last year, I hear that negotiations have opened up specifically on the topic of exclusivity and options.

So here’s the squeeze play: Hollywood’s studios are being told to do what Netflix just did, or face the California legislature’s wrath. Either AMPTP agrees, or AB 437 passes.

Hollywood producers would like it if AB 437 at least had language making clear that collective bargaining would take precedence over the state law so that this new legislation might act as a ceiling rather than a floor on the rights of actors to work for multiple employers, but right now, it seems, unions have the ears of California lawmakers, and the studios don’t.

And if AMPTP—whose membership includes Disney, Warner Bros., Universal, Paramount, and Sony—refuses to bend, that might not be the end of the story. As hinted in policy memos to California lawmakers, these studios could bring a lawsuit that argues that contractual exclusivity is the domain of collective bargaining, and AB 437’s attempt to tip the outcome is preempted by federal labor laws.