If you’re a producer, advertiser or keep up with industry news, you likely heard that a few months ago, SAG-AFTRA and the Joint Policy Committee (JPC) came to an agreement on a new Commercials Contract—and even though it’s good news for actors, it means even more costs for advertisers. 

It goes without saying that the digital age has affected life in innumerable ways. Naturally, its effects have spilled over to the entertainment industry. In fact, SAG-AFTRA and the JPC restructured its Commercials Contract to reflect these shifts. 

The new contract will be in effect for the next three years. You can review the complete contract changes here, but for the purpose of this post, here’s what producers really need to know:

1. Contracts

• The Traditional Commercials Contract is effective April 1, 2022 and expires December 31, 2022.
• The New Structure Commercials Contract is effective June 1, 2022 and expires March 31, 2025.
• The Audio Commercials Contract is effective April 1, 2022 and expires on March 31, 2025.

2. Highlights

• There is a 10% increase in rates for session fees under the New Structure Contract.
• There is a 10% increase in session AND use fees under the Traditional Contract.
• The Maximum Period of Use now starts from the earlier of first use of the commercial or 13 weeks following the last production day.
• The Pension & Health contribution rate increased from 19% to 20.5% with a reduced rate of 19.25% for all JPC authorizers.
• Under the New Structure, Digital Use has been divided into three categories:
   – Traditional Digital
   – Streaming Platforms
   – Gaming Platforms/Virtual Worlds/Augmented Reality/ Emerging Platforms
• Under the New Structure, the following categories now have the option of selecting 4-week, 13-week or 1-year cycles for a flat rate: Cable, Wild Spot, Dealer, Spanish Language Program, Traditional Digital, Streaming Platforms, and a new category, All Other North American.
• Theatrical/Industrial exhibition fee covers worldwide use
• There are 4 types of edits under the New Structure that do not create new commercials: Shorter/Longer Versions, Permitted Edits, Paid Edits, and Addressable Edits. This is a significant improvement for advertisers.

If you produce projects with SAG-AFTRA union members, we encourage you to read the entire Contract updates here. And while the Commercials Contract changes do signify production-cost increases for producers, we have some good news. We’ve uncovered ways to reduce those costs throughout your production, and we want to share them with you.

Consult with a Signatory. Your first step should be to set up a consultation with a SAG-AFTRA Commercial Signatory. And when we say “first step,” we mean it. Do this in the earliest stages of the creative process to ensure your talent budget includes all necessary fees, including any residual compensation.

Consider New Editing Rules. Take into consideration the new editing rules (shorter/longer versions, permitted changes, paid edits, and addressable edits) when developing scripts to maximize the number of commercials that can be created without having to pay additional use fees. 

Leverage Multi-Service Allocation Guidelines. Structure Celebrity or Influencer Agreements so they include both SAG-covered and non-SAG-covered services to take advantage of the Multi-Service Allocation Guidelines and ultimately reduce the amount of pension and health that gets reported and paid to SAG-AFTRA Pension & Health Plans. 

As a leading third-party union signatory, we’d be delighted to help you with any questions you may have around the new SAG-AFTRA Commercials Contract. Connect with us today to set up a free consultation.