United States: SAG-AFTRA Shifts To A New Residual Program: An Overview Of The New Residuals In The 2014 SAG-AFTRA TV/Theatrical Contracts

On August 22, 2014, SAG-AFTRA members approved new three-year TV/Theatrical contracts negotiated between the union and AMPTP. As the first negotiated agreement since the historical SAG-AFTRA merger, the new contracts provide advances in subscription ad-supported on-demand viewing (SVOD) coverage and new residual payments for on-demand viewing that are more attuned to the evolving landscape of the television industry.

Old Residual Agreements

Under the old residual payment formula, the residual payment structure restricted the number of reruns cable companies and digital networks licensed to include within their programming. For instance, under the old SAG-AFTRA basic agreements, cable companies and digital networks paid a fixed fee structure and license fees negotiated between the studios and cable companies. For network prime time dramatic programs, cable companies had to pay generally 6% of the gross receipts in perpetu­ity, which also included health and retirement contributions. SAG residuals were calculated for television shows in syndication using varying percentages of the minimum rate of compensation for the actor based upon the number of reruns. For the first rerun, above-the-line actors were paid 40% of their minimum compensation rates, 30% for the second rerun, 25% for the third through sixth reruns, 15% for the seventh through tenth reruns, 10% for the eleventh through twelfth reruns, and 5% for the thirteenth rerun and thereafter. These additional compensation payments on top of the licensed fee structures were presum­ably one of the reasons why cable companies and digital networks licensed classic game shows and classic television comedies in order to minimize their costs in content programming.

However, the old residual payments and the tra­ditional business model of licensing shows to cable networks were threatened as the shift to digital and new media landscapes posed new challenges. The para­digmatic shift to new media viewing of television pro­gramming (e.g., Netflix, Amazon, Hulu), has resulted in fragmented viewership and a threat to cable companies whose business model is based primarily upon syndicat­ed reruns of popular broadcast television shows? Broad­casting networks struggle to maintain strong viewership to increase their revenue streams through advertising sales as consumers enjoy more "binge" watching of their favorite television shows through online media. It has become more difficult to produce a successful television show that will attract viewers during the prime time slots, as fewer shows continue after the first season. Since 2006, on average only 35% of shows were renewed for a second season. In 2013 alone, only 29% of television shows were renewed for a second season. An increase in cancelled shows has resulted in fewer shows entering the syndication market to attract licensing deals with cable companies. The net effect means fewer opportunities for above-the-line actors to receive residual payments for the exploitation of their performances in supplemental markets.

New Residual Agreements

The newly approved SAG-AFTRA TV/theatrical contracts, however, enable actors as principal performers to collect more residual payments. The new agreements replace the additional fixed-fee structure with residuals based upon a percentage of the rerun licensing deal. This payment structure allows for more cable companies and digital networks to license more affordable content. Yet the new agreements also enable actors to capitalize on the wave of new media productions and licensing deals for online viewing of television programming. The agree­ments now include new residual payments for SVOD and shorter free streaming window periods from 17 days to seven days to allow actors to collect more residual payments.

Basing the new residual payment formulas upon a percentage of the licensing deal versus the fixed-fee pay­ment structure will lucratively benefit actors, particularly in the SVOD realm, as the rerun exhibition windows in supplemental markets are shorter. In its recent annual re­port, Netflix disclosed that in the 2013 year, spending for streaming content online jumped up 30%, reaching $7.3 billion. Licensing deals between CBS and VOD/SVOD services like Amazon Hulu for shows such as Under the Dome and Extant, to be shown four days after an episode's initial run, satiate online subscription service companies' demand to provide content to consumers, while generat­ing more opportunities for actors to collect higher residual payments in the performance of their works.

Although it is premature to determine what overall benefits will result from the new residual payments for actors who are qualified for residuals in television shows, the new SAG-AFTRA TV/theatrical contracts are better aligned with the shifting landscape in viewing television shows across multiple media platforms than ever before.

Reprinted with permission from: Entertainment, Arts and Sports Law Journal, Fall/Winter 2014, Vol. 25, No. 3, published by the New York State Bar Association, One Elk Street, Albany, NY 12207.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions