HBO, Showtime, Cinemax, and Starz are all examples of Pay TV: television services which rely on a subscription fee in order to be watched.  Pay TV will continue to rerun up to ten exhibition days for one year FOR FREE.

Pay TV is worth $110 million in annual residuals to SAG-AFTRA members.  There has been a decades-old problem in how these residuals are allocated.

Under our current formula, the overwhelming amount of residuals distributed goes to the stars of the show, leaving day players, singers, and dancers with crumbs. The current residual formula used, “Time and Salary Units,”* is a 50-year-old, unfair method of distributing residuals.

For approximately the past 20 years, we have successfully replaced “Time and Salary Units” with the more equitable “Ratable Distribution Formula,” a.k.a. “The 3-2-1 Formula,”* on many of our other distribution platforms, for example, when a show moves from NBC over to basic cable. This “3-2-1 Formula,” in place for the past two decades, is a more fair distribution of our residuals.

We proposed that The Studios change over to our more equitable “3-2-1 Formula” for Pay TV, a change that would have cost the studios nothing, just spreading the money more equitably amongst our performers.

*Definition: “Time Salary Units”:  This is a very detailed, complicated residual formula based on how long you work and how much you are paid. The problem is that the disparity can be up to a 45 times difference with 22 slices of the residual pie for the series regular, while only .4 slices go to the day player.

*Definition: “3-2-1 Formula”:  3 slices of the residual pie go to series regulars, 2 slices of the residual pie go to the weekly and three-day players, and 1 slice of the residual pie go to the day players.

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