Blueprint 25: What 'Consultation' Actually Costs Directors

Reid MercerTo be continued...

GrantBlueprint is back, and today we're cracking open what might be the most quietly consequential labor deal Hollywood has signed in years.

Speaker 3The Directors Guild grabbed a four-year deal with the studios in twenty-nine days. Twenty-nine! That's faster than most people close on a used car.

GrantAnd, Grant, speed like that usually means one of two things: either everyone got what they wanted or nobody wanted to fight over what they couldn't afford to lose.

Speaker 3In my experience, that's not harmony; that's two sides calculating their next move.

GrantOkay, so get this: Christopher Nolan, yes, that Christopher Nolan, led this negotiation as DGA president, and the three headline issues were jobs, the health plan,

Speaker 4and creative rights.

Grantand an AI,

Speaker 3Wow.

Grantevery one of them lands differently when you read the front print.

Speaker 3The employment numbers alone are a gut punch. TV work for DGA members dropped by 35% in 2024, even while consumers kept spending on entertainment. That gap is going to be the argument all episode.

GrantRight, and then there's the AI language, one sentence in a side letter with a very specific word that we're going to spend real time on. Consultation. What that word obligates studios to do, legally, is a much shorter list than the press release suggests.

Speaker 3The math on the health plan is its own story. Studio contributions up 24.4% over the term,

GrantYeah.

Speaker 3but what members actually pay is still an open tab. The Wrap covered those details.

GrantRight. And the Variety piece confirmed the board voted unanimously to recommend ratification. information. Members vote by June 25th. That number will tell us how the membership actually reads all of this.

Speaker 3So, speed, jobs, AI language that may or may not have teeth, and a health plan with some TBDs buried inside. Let's start at the beginning. Twenty-nine days. Here's what that clock actually tells us.

GrantTwenty-nine days start to finish. The DGA walked into talks on May 11, walked out with a four-year deal on June 9, and beat the contract cliff by three weeks. That's not a negotiation. That's a speed run.

Speaker 3For context, the WGA strike in 2023 ran 148 days.

GrantWow.

Speaker 3Two strikes, five months of chaos, picket lines in the July heat, and the DGA just did it in a month.

GrantA press release before most of Hollywood woke up-that's how Easternherald described it. Quiet-quick-done. Third major guild to settle in the twenty twenty six cycle, behind the WGA and SAG-AFTRA.

Speaker 3All three locking four year deals-that's the AMPTP's whole strategy: Greg Hessinger comes in, resets the table and buys a labor peace through twenty thirty.

GrantAnd Hessinger getting it done with the DGA's Russell Hollander in under a month? A month: that's a different vibe than twenty twenty three." Hollywood Reporter noted he brought experience from both sides of the negotiating table.

Speaker 3Sure; but I push back on calling it smooth just because it was fast. Fast can mean everyone's exhausted and desperate.

GrantOkay, so get this: Deadline reported both the WGA and SAG-AFTRA went into their talks with near insolvent health and pension funds; the DGA's plan lost thirty eight point eight million dollars in twenty twenty four alone. Alone, that's not a negotiation driven by strength.

Speaker 3That's survival math. When your health plan is bleeding, you settle. The question isn't why they moved fast, it's what they left on the table to get out the door.

GrantAnd the nineteen thousand five hundred members voting by June twenty third are asking the same thing.

Speaker 3Because speed isn't credibility, the WGA ratified a ninety percent. People were satisfied. The DGA vote closes in days. We'll see if the membership agrees the deal was worth twenty nine days.

GrantWhat I keep coming back to: all three guilds settled, no strikes, labor peace on paper. But underneath that, TV employment for DGA members dropped thirty five percent in twenty twenty four. Film fell eight to twelve percent the same year. Christopher Nolan called it a "labor disconnect." Spending stays up, jobs evaporate.

Speaker 3So the industry sold more tickets and made fewer shows. And directors got a deal. The question nobody's answered yet is, did the contract actually fix any of that?

GrantSo the number that I can't stop thinking about, TV employment for DGA members down 35% in 2024, film down 8% to 12%. Those are portfolio manager numbers. That's not a rough patch. Okay, but what's Nolan's actual framing on this? He called it a labor disconnect. Hollywood Reporter had the interview. Consumer spending on entertainment is, in his words, Extremely stable; revenues fine; employment collapsed; so where did the money go? That is the question, and I'd argue this is the natural end of a decade of over ordering. Streamers were buying everything, staffing everything, and now the correction is painful but the math was always going to catch up. I hear that framing. I just, I don't know if correction covers losing a third of your TV jobs in a single year. Here that's not trimming fat, that's removing whole muscle groups. Fair, fair; and you can't blame production flight alone. Freedman and Schiff have been pushing a stackable twenty-five per cent federal rebate, co-authored a bill together,

Speaker 3Yeah.

Grantexactly because the state credits aren't enough when you're competing against UK, Canada, Australia. The DGA actually got studios to commit to sending senior executives to lobby alongside the MPTP and the unions for that federal incentive. That's in the deal itself. Hollywood Reporter flagged it this week. Which is interesting, right? The studios are literally writing the contract language saying, "We'll go lobby Congress for you." That tells you the studios also want production back here. Or they want the optics of wanting it. Could be both. And then there's the Paramount-Warner consolidation sitting over all of this. If that closes, you've got one fewer major at the AMPTP table by the time ratification finishes. Right! and by twenty thirty, when the next negotiation starts, the structure they're bargaining against might look completely different. So the jobs question doesn't get solved in this contract; at best you've bought time for the tax incentive push to work, and lobbied your way toward a structural fix that Congress has to actually deliver. And if Congress doesn't deliver, those employment numbers don't recover. The deal doesn't have a backup plan for that.

Speaker 3Which is why the one contract

Grantturn that actually could move the needle inside these four years,

Reid Mercerthe AI language matters so much more than it looks on paper. Yeah, because if jobs aren't coming back from flight or correction,

Grantthe efficiency gains went somewhere, and AI is the most obvious answer for where. So flip that jobs conversation on its head,

Reid MercerSo flip that jobs conversation on its head, because the one contractual lever that can actually move that needle is a single sentence in the AI side letter, and the word doing all the work is consultation.

GrantRead it to me.

Reid MercerIndieWire published the exact language: Employers may not use generative AI in connection with creative elements without consultation with the director or other DGA-covered employees.

GrantOkay, so what does Consultation actually obligate a studio to do? Listen, that's it?

Reid MercerThat's it. Not comply, not get approval-listen.

GrantWow.

Reid MercerA studio can sit down with a director, hear their objections, note them, then do whatever it was going to do anyway.

GrantI've seen contract language like that in business deals: a clause with no enforcement mechanism isn't protection-it's a disclosure requirement with a fancier name.

Reid MercerAnd some d g a members are saying exactly that publicly. Indiewire published some are calling it "weak and dangerous." Lilly Wachowski said the legalese, and I'm quoting, "has a stink of divisiveness.

GrantStrong words for a tentative agreement.

Reid MercerThe guild's counter is that Section seven two o two of the basic agreement already requires studios to give good faith consideration to a director's advice. And they're framing the AI language as an extension of that existing standard.

GrantRight, but good faith consideration in a contract negotiation is one of those phrases that's fought over for years in arbitration. You don't win on that clause in month one.

Reid MercerAnd the Hollywood Reporter noted the deal also mandates twice yearly meetings between the DGA and studios to discuss AI going forward. Guild leadership is positioning those as ongoing negotiation not It's not static

GrantRight

Reid Mercerprotection.

GrantOkay, I get the logic, but here's my problem with it. On going negotiation only works if the union still has leverage when they sit down. What's the leverage in year three of a four year deal?

Reid MercerThat's the question the vote on June twenty third is really answering, whether members believe consultation grows into something stronger, or whether studios spend the next four years turning it into settled precedent that it doesn't. It doesn't. The math on that is uncomfortable to sit with. And speaking of uncomfortable math, the other line members are scrutinizing is what's about to happen to their health plan contributions once the trustees finish their work. That number is not small.

Speaker 3CHAPTER THIRTEEN

Reid MercerOkay, shifting to the health plan, and this is where things get complicated.

GrantThe RAP reported studio contributions go up 2.25% in year one to 13.5%. Then another half percent in year two to 14%. That's a 24.4% total increase in employer contributions over the term.

Reid MercerTwenty-four percent sounds big,

GrantMm hmm.

Reid Mercerand compared to the WGA situation the DGA's fund was not in crisis. The WGA needed a three hundred and twenty-one million dollar emergency infusion because that fund was nearly insolvent!

GrantRight. Our brand portfolio is on the edge of margin calls. The WGA situation was basically that. The DGA is more like a fund that's been running deficits. Variety noted the health plan lost thirty-eight point eight million dollars in twenty twenty-four alone.

Reid MercerSo not the emergency room, but not healthy either.

GrantNo; and here's what I'd flag from a structuring standpoint: The studio's locked in their obligation now (thirteen-point-five percent in year one, fourteen in year two); those numbers are set.

Reid MercerBut member side costs?

GrantTrustees decide later. The reps said the exact premium increases and out of pocket changes get determined by the health plan trustees after the fact. Members are voting yes before knowing what the

Speaker 4health plan trustees will do.

GrantWhat they'll pay! Studios fix their number, members signed a blank check for theirs. That is the deal's structure, yeah.

Reid MercerVariety confirmed DGA members will face monthly premiums. The WGA comparison is instructive: writers accepted seventy-five dollars a month starting in twenty twenty-seven as part of their rescue package.

GrantDGA members don't know their number yet—could be less, could track similar, Nobodys told them.

Reid MercerTheres one cushion the Guild can redirect up to half a percent of wage increases into the health

Speaker 4plan.

Reid Mercerto the health or pension fund in years two or three, depending on where the fund stands.

GrantThats optionality. Real optionality, actually. A half-point redirect is not nothing if contributions lag behind claims growth.

Reid MercerSo the headline is a twenty-four point four percent employer contribution increase. The footnote is "member premiums TBD." Trustees decide; check back in a few months.

GrantStudios got certainty, members got a promise with asterisks.

Reid MercerAnd on wages, thats the offensive side of the steal, because the DGA came away with something its members havent seen in a generation.

GrantFive percent annual wage increase, year one. Hollywood Reporter called it the highest three-year wage increase in more than thirty years.

Reid MercerThose are numbers worth actually stopping on. Well look at what else they want on offense right after this. Okay, so the offensive wins: five per cent annual wage increase year one; the DGA is calling it the highest three year wage increase in more than thirty years.

GrantReal money for working directors, UPMs, ADs not just a Christopher Nolan's of the world.

Reid MercerRight, right. And the residuals formula tied to the number of international streaming subscribers now, not a flat rate. So as Netflix expands globally... The residuals scale with it.

GrantThat's the piece most people miss. It's not a fixed payout; it's indexed to platform growth. If you're a UPM on a show that goes international, you're riding the upside.

Reid MercerAnd then there's soft prep. Feature directors now get up to five thousand dollars a week, up to ten weeks, once three named crew members are brought on. Screen Daily confirmed it: that's fifty grand for work directors were doing for free.

GrantWork they're always doing, by the way-they just weren't getting paid for it.

Reid MercerExactly, and first ever guaranteed post production pay for TV directors.

GrantWow.

Reid MercerFirst parental leave kicks in year three.

GrantOkay, hold on-those are real new floors, the soft prep and post production provisions aren't symbolic, that's cash for the working class director, the one doing eight episodes of a cable drama, not the prestige film, which is like ninety percent of the membership. So why am I still squinting at the AVoD terms? I knew you'd go there! The DGA got AVoD-ad supported streaming like Tubi, Roku-covered under SVoD

Reid MercerCVOD contract standard, compensation minimums, creative rights, real protections, but only for platforms under 20 million subscribers. And that threshold matters because, because Tubi just crossed 30 million monthly active users, the threshold was already borderline when they negotiated it.

GrantSo a provision designed to protect members from the next wave of ad-supported streaming might not reach the biggest players in that wave.

Reid MercerYou either see it coming or you don't, and my read is that the studios negotiated a ceiling as much as the DGA negotiated a floor.

GrantThat math is going to matter a lot more in four years and when we talk about what that 2030 table actually looks like, that's where this whole deal either holds or cracks. So the AVoD threshold question Grant just raised-that's actually the preview of 2030 in miniature. Language that looks fine today ages badly in four years.

Reid MercerAnd that's the real frame on this whole cycle, isn't it: WGA signed, four years; SAG-AFTRA signed, four years; DGA signed, four years. Every major above the line guild locked until 2030.

GrantThe same year the Paramount-Warner merger probably finishes- She finishes digesting, Grant-you'll have fewer studios at that table, fewer buyers of creative labor.

Reid MercerNolan said it out loud: a merger is going to mean job losses. He was lobbying to lock employment commitments now precisely because the twenty thirty counterparty looks smaller.

GrantThat's the chess move-you set the floor before the board changes.

Reid MercerOkay, but-and this is where I get stuck-the AI tools won't be the same tools either, four years from now. Consultation only terms are the floor that WGA and SAG-AFTRA have to defend or beat.

GrantRight; Indiewire flagged this directly. DGA members themselves called the language weak if studios spend four years normalizing AI-assisted production under consult only rules.

Reid MercerThat word becomes precedent,

GrantHmm.

Reid Mercernot a starting point, a ceiling.

GrantOr a floor, depending on how the next negotiations go.

Reid MercerThat distinction is doing a lot of work for one syllable.

GrantYeah, it really is. Look, the studio's got what they wanted most. Variety reported it straight: 'Labor peace was the AMPTP's top priority all cycle. Three guilds, four years, no strikes.

Reid MercerAnd I get why that's valuable. Production can be planned, slates get greenlit. I've run enough portfolios to know stability has real worth.

GrantBut,"

Reid MercerBut,

Grant:

Reid MercerVariety also noted, the Guild can't even call a strike over any

Speaker 4of these issues.

Reid Mercertake over AI practices until 2030.

GrantWow.

Reid MercerThat's not stability. That's a locked door during the fastest four years of AI development we'll probably ever see.

GrantSo either consultation grows teeth through those twice a year meetings...

Reid MercerOr it just becomes the thing studios point to when someone asks if they're playing fair.

GrantWe consulted, full stop.

Speaker 3Exactly. Full stop, nothing changes. Three guilds settled, the industry stabilized on paper. Whether that paper is worth anything-that's the question sitting on the table until twenty thirty.

Reid MercerAnd by then we'll know if consultation was a reasonable starting point or the year they gave it away.

GrantAll right, that's a wrap on this one. And honestly, this episode had some real friction in it.

Reid MercerYeah, I mean the twenty-nine day close sounds clean until you look at what was driving the urgency.

GrantThat's the episode right there. Speed isn't the same as strength. And you made that point pretty hard when the health fund came up.

Reid MercerSurvival math tends to focus the mind.

GrantRight. It does. And the A.I. side letter, a consultation that legally obligates studios to listen not complete. At Comply, that one's going to age in interesting ways.

Reid MercerFour years is a long time for that language to sit there untested.

GrantThe ratification vote closes June twenty-fifth. Watch that number.

Reid MercerYeah, and the Paramount-Warner consolidation means whoever sits across the table in 2030 may be a very different entity.

GrantWell, if this got your brain moving, email us Blueprint at hey Mato dot com or tag us on social new episodes every Tuesday.

Reid MercerTell a colleague, seriously.

GrantUntil next week.