The Stage

Residuals deal replaces royalties in digital broadcasting revolution

Published Wednesday 19 May 2004 at 11:00 by Joanna Taylor

Exclusive: The digital revolution has rendered Equity’s royalties agreement with broadcasters untenable, prompting the union to renegotiate a residuals arrangement, assistant general secretary Andy Prodger has revealed.

In a new agreement with ITV, residuals - repeat payments based on a percentage of an actor’s original fee - will apply when programmes are showcased on UK cable and digital channels. The principle has also been agreed with the independent producer’s union Pact.

The news will come as a shock to Equity members who recall the bitter internal battle in 1996 when the union leadership successfully argued the residuals system should not apply to repeat fees for programmes sold to the so-called ‘secondary market’. In its place was introduced a royalties agreement based on a percentage of the programme sale price.

Prodger claimed the change was not a retrograde move but rather a response to the unforeseen growth of digital channels such as BBC3, BBC4 and ITV2. He added that ultimately the union wanted to see residuals applied to repeats on all channels when analogue television is finally replaced by digital. The government predicts this will happen by 2010.

Said Prodger: “Obviously it is a huge step, going from the current position to one where all payments are based on residuals, but broadcasters have always been incredibly reluctant to pay residuals for the secondary market and this first step is a massive breakthrough.”

Equity’s change of policy was prompted by what it sees as an abuse of the current royalties scheme by the BBC in particular. This was highlighted by the screening of The Alan Clark Diaries, which premiered on BBC4 last year.

A mass of publicity surrounded the launch of the series, prompting unprecedented purchases of Freeview boxes so viewers could receive the programme. It also attracted the channel’s highest audience so far but actors were paid the equivalent of a digital repeat fee.

An inside source said: “The BBC is selling its digital services on the basis that viewers can watch dramas, etc there first but they are still paying our members a fee that is appropriate to a repeat in that market.”

The Corporation is said to be livid that both ITV and Pact have agreed to the new proposals. Equity is hoping the BBC will be compelled to toe the line when its agreement comes up for renewal in July this year. Regardless of the outcome, the Corporation will be directly affected because, when commissioning programmes from independent producers, it will be working under Pact’s agreement with Equity. Thus a residual payment plan for performers will apply.

Under current arrangements, the total cast payment for transmission of a programme on a cable or digital channel is a royalty based on 17% of the sales price. Equity argued that this would encourage pay to view cable and satellite channels such as UK Gold to buy British programmes for repeat on their channels, instead of airing cheaper foreign imports which would cause members to lose out completely.

This proposal proved unpopular with Equity members, who argued royalties would give the programme-seller total control. A show could be sold for less than the market price - as a loss leader, as part of a package, or as part of a ‘sweetheart’ deal where programmes are swapped with no money changing hands.

Many regarded a residual arrangement based on a percentage of their original fee as more reliable but eventually accepted the introduction of royalties as part of a package which offered other benefits, such as an improved pension scheme. It was not envisaged in the nineties that the BBC and ITV would have their own dedicated digital stations, available without subscription and used to showcase programmes.