This was written by a LAW PROFESSOR Stephen F. Diamond in silicon valley about the SAG-AFTRA Merger PROBLEMS....read for YOUR Information " I thought of that discussion recently in the wake of the myriad of problems that has suddenly beset the new union that came out of the SAG-AFTRA merger. At first glance these problems do not seem related. But let’s lay them out and see if we can “connect the dots.” First, there was the very unpopular decision to shut down numerous regional offices of the union. Then, second, there was the stunning announcement that the two union leaders who forged the merger – Roberta Reardon of AFTRA and Ken Howard of SAG – are at odds. Howard has declined to endorse Reardon for Executive Vice President of the union in the upcoming end of summer elections after a decision that Howard would campaign for the sole position as President. (The President is elected in union wide elections in July and August via mail ballot while the EVP is elected at the September convention by union delegates.) Howard is apparently making this move despite opposition from Amy Aquino and Richard Masur, stalwart moderate union leaders from the SAG era, who are considered the key architects of the merger itself. Third, there is the revival of Membership First, the union caucus based largely in Los Angeles that was the most fervent opponent of merger with AFTRA, which many of their adherents view with, well, contempt. MF was considered all but dead having failed to mount much of a real campaign to defeat merger (other than a late in the game legal action) and had not even run a slate in the last elections. Now they are back with a vengeance. One of their key and best known leaders, Ed Asner, has put his name to a lawsuit over allegations that the union is mishandling payments collected in Europe on behalf of performers. And a second key figurehead in the group, Martin Sheen, is endorsing the popular Esai Morales for President in a challenge to Howard. Fourth, there is the troubling fact that the hoped for merger of SAG and AFTRA’s health care and pension plans has yet to occur. This was one of the leading arguments for merger because the merger advocates held out the promise that merger would help actors vest in the plans more easily as their credits would count towards only one plan instead of two. Instead of merger, yet another lawsuit has hit the SAG plan over charges that whistleblower Craig Simmons was fired in retaliation for filing a complaint with the Department of Labor. Well, if one thing is clear, the honeymoon is over and the reality is sinking in. And these are just the problems inside the union. The macro picture the union faces in the broader entertainment and media industry is cloudy at best. Even right wing conservatives see a crisis brewing in Hollywood that they think they can exploit. The impact of disappearing DVD revenue and the rise of digital and online production continues to hollow out the production process and that is starting to make actors look more like unionized auto workers facing competition from Japan and China. What ties all this together? Well, the rumbling among union activists across the political spectrum is pointing to some indications that the financial condition of AFTRA, particularly among its locals, has turned out to be far weaker than was thought when merger was approved over a year ago. Well, this is no surprise to repeat players in the merger world. As I explained above, the biggest mistake players in M&A make is to overpay. But of course mergers are a relative rarity to unions and they may have not done their homework in advance of the merger. If the financial problems are real then it could go a long way to explaining the problem the union leadership is now having with the second key step in a successful merger – integration of the two partners. There is always a tendency to overreact in these situations and to think short term, even act in knee jerk fashion. To cut costs without thinking about the overall strategic question. Sure enough, instead of bringing the office shutdown question to the upcoming first convention of the new union, the decision appears to have been made by a small group around the current staff leader of the union, David White. The shutdown has angered many SAG and AFTRA rank and file members who normally would be hostile to Membership First but MF must feel it at least has a chance to make an argument about an alternative strategy – well, for any strategy! – to those erstwhile opponents. Bottom line, the table is set for a knock down fight on multiple fronts – in the courts, in the union’s boardroom, in the caucuses emerging in advance of the late summer union elections and the upcoming convention in the fall. Unfortunately, this is doing very little for the union’s bargaining power with their employers. With major contract negotiations coming up next year, the union will have to find a way through this period quickly. Let’s hope they don’t end up looking like Hewlett Packard! This entry was posted in Vallywood! on June 21, 2013.
Posted on: Mon, 01 Jul 2013 16:00:05 +0000
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