SAG’s Hold Out Value


Making sense of the current stand-off between the Producers and SAG is a challenge. There would seem to be no good way out and certainly no way back for the Guild.  The AMPTP has said that it has put its last, best and final offer on the table.  And in case anyone doubted their assertion they let it be known that if SAG does not take the deal on the table its value could actually deteriorate.  AMPTP VP Carole Lombardini, apparently the designated “bad cop” on the Producers’ team, stated:

“It is no secret that we are in a deteriorating economy…Our companies are not immune from the effects of this economic slowdown. It is very possible that, as a result of changing economic conditions, we will have to reevaluate the offer we have on the table.”
She insisted there would no new money put into the deal and so that appears to rule out any increase in DVD residuals or movement on new media jurisdictions, though it would seem to leave open the possibility of progress on product placement, force majeur and clip consent.
SAG, on the other hand, insists that they did not reject the final offer of the Producers but just put on the table a counter-offer. As any first semester law student can tell you, of course, to make a counter-proposal is, in fact, a rejection of the original offer. 
But, of course, SAG is playing a PR war here and if the Producers attempt to declare an impasse in negotiations (in order to impose their final offer’s terms unilaterally) SAG wants to be able to defend against it at the NLRB.
Unfortunately, even if SAG moves towards the AMPTP there can still be an impasse declared if the facts indicate that the possibility of reaching agreement has been exhausted.
It is as if there are two construction crews building a bridge or digging a tunnel from two opposite points – if one crew thinks the other is not making sufficient progress, they can walk away without a penalty. 
One can see how difficult it might be for the NLRB to determine who is right in such circumstances and to surrender control over bargaining to a government agency is not likely in anyone’s interest at this stage.
So what can be done? 
The problem for the Guild is that its members do not want to strike.  In effect, they already did strike when they went out in support of the WGA for more than 100 days. The deal the WGA got was not popular with the WGA membership but there was a clear realization that it was the best they could get without a very different strategy.  The approval of the AFTRA deal confirmed that SAG’s members, too, do not think it is worth it to strike again to get more in this round of bargaining.
SAG’s Membership First leadership disagrees with the broader SAG membership so we are in the unusual situation where the leadership of a union wants more when the membership says “enough already.”  
There remain two possibilities: SAG’s leaders can begin a serious and intense education/discussion campaign with its members to explain why they need to push for more including the need to consider a strike.  If the members believe the argument and trust that the leadership can execute on the strategy, it might work.  The problem is that the anti-AFTRA ratification campaign was an attempt to do this indirectly and it did not work.
That leaves the “hold out” option. 
In corporate law there is a well known phenomenon: the value of being a hold out.  At some key decision making points in a corporation a group of shareholders or bond holders whose votes are required to make a decision (perhaps because of a super majority provision) realize that they can extract a bribe or windfall out of the corporation’s majority in order to gain their acquiescence.
In a sense, the Membership First leadership of SAG now controls that hold out option.  They control the bargaining team and union governance structure. Short of impeachment of the leadership, highly unlikely at this point, the MF group can sit back and thumb their nose at the Producers until they make some kind of concession that is enough to reach a deal.
The problem for MF with this approach is that it is not without its price.  In the corporate context hold outs usually emerge in so-called “end periods” when the hold out will be paid off and then go away.  If the Producers thought they could just pay off the hold out group and be rid of them they probably would, but MF shows no signs of going away any time soon no matter how disastrous the strategic shortsightedness of their “go it alone” culture.
Thus, the Producers are looking for a way to blast the hold that MF has on the bargaining with threats to actually cut back on the last, best and final offer. And that explains the stories now emerging about what actually transpired in the SAG-AMPTP meeting on Thursday afternoon.