The mood was electric in room 704 of Manhattan's M

The mood was electric in room 704 of Manhattan's Millennium Broadway Hotel on the afternoon of Oct. 23. William Daniels, president of the Screen Actors Guild, sauntered confidently toward the podium. Spontaneous cheers erupted amid the whir of TV news cameras; 100-watt grins illuminated the crowded space, along with the glaring klieg lights. After nearly six months (175 days, to be exact), the moment of truth wasfinally at hand. Daniels, an Emmy-winning actor familiar from his years as Dr. Mark Craig on St. Elsewhere, was starring in one of his most critical roles: keynote speaker at a press conference announcing the end of a strike by the Screen Actors Guild and the American Federation of Television and Radio Artists against the adver tising industry over a major contract dispute. It had been the longest talent walkout in Hollywood history. Flanked by union negotiators, strike coordinators and celebrities such as Richard Dreyfuss, Daniels cut a distinguished figure with a pencil-thin mustache, cardigan sweater and tweed jacket. He praised the "generosity of actors" who had forgone work in the name of union solidarity; he also struck a note of reconciliation with the ad industry. "Now we can get back to lending them our expertise to selling their products," he told an audience composed primarily of union members and their supporters.If only things had been that simple—or that polite.Despite the smiles around the room, much blood had been spilled since May 1. Careers were jeopardized. Millions of production dollars had fled to Canada and overseas. Commercial shoots were hobbled by picketers. Campaigns were delayed and canceled. Celebrities like Elizabeth Hurley and Shaquille O'Neal were blasted for crossing picket lines to shoot spots as the AFL-CIO rallied the cause. Even in this Mr. Smith Goes to Washington moment, the absence of ad industry representatives at the press conference suggested lingering tension. Did anybody really win? While the union celebrated its solidarity, the ad industry rejoiced that production levels hardly suffered. All those involved say they didn't want a strike, but neither side will say it lost. And though they're back to work, both armies are already rattling their swords about future contracts. Months later, it's still difficult to tell which side triumphed. According to union sources, the new three-year deal gives SAG and AFTRA much of what they wanted, including a preservation of the network pay-per-play structure and an increase of more than 100 percent in flat fees for appearances in commercials on cable TV. The contract agrees to pay actors a maximum flat fee of $2,460 in the third year of the contract for unlimited use of ads on cable. Finally, it gives SAG and AFTRA jurisdiction over ads created for the Internet, while leaving the exact rates negotiable."The members I talk to are very pleased because the new contract gives them immediate monetary growth," says Greg Krizman, a Screen Actors Guild spokesperson. "It also protects them into the future about the Internet."Advertisers say they, too, are satisfied. While unable to eliminate pay-per-play on broadcast, the industry did avoid a raise in rates. It also thwarted a pay-per-play structure for cable and a proposed monitoring system adver tisers always deemed economically unfeasible. "The ultimate agreement met the union's goals and came within the industry's budget," says ad industry negotiator Ira Shepard. "I don't think after six months they won substantially more, and I don't think they're ever going to make back the income they lost," adds Saatchi & Saatchi's David Perry, head of the American Association of Advertising Agencies' broadcast production committee. Welcome to the brave new media universe, in which commercial talent and their employers are often at each other's throats. In an ad climate changing faster than the speed of a 56K modem, such troubles only portend more of the same. The industry faces the mounting costs of reaching increasingly fragmented viewerships. While the networks reach more eyeballs than ever, those eyeballs no longer add up to a majority of viewers. And then there is the burgeoning online environment—a vast, uncharted territory that will either slowly augment existing TV audiences or one day zap them into nothingness. The actors, meanwhile, rejuvenated by a proactive leadership and a strike that helped galvanize their ranks, cling deperately to their position, as they see it, as America's most precious resource. As the dust settles, it is clear that the devastating walkout, which cost the Los Angeles area alone an estimated $125 million in production revenue, will be remembered as a turning point in the ad business. Both sides say they are pleased with the outcome, but where that turning point leads is far from clear. "I had a whole lot of problems with the system to begin with," says O. Burtch Drake, president of the 4A's. "I just don't think in today's day and age, the basis for the calculation of payments makes a lot of sense." "We had said to them, in prior negotiations when they triedto change the formula, that it would be seen as a strike issue," counters John McGuire, SAG's chief negotiator. How did two communities that have worked together since the beginning of television find themselves so far apart? Why did the strike last six months? What are the lingering effects of the settlement? And where do both sides go from here? Interviews with key parties reveal some surprising answers. Far from suggesting resolution, they indicate an underlying shift in the value of live performances. Things won't get easier from here, but they'll certainly get more dramatic. The relationship between advertisers and actors has always been edgy. Some observers say the seeds of the recent scuffle were sown two decades ago when actors gave up residual payments on cable TV to foster a nascent industry with an understanding that they would be repaid should it eventually flourish. University of Texas professor David Prindle, author of a history of SAG, traces the battle back even farther, to the 1960 strike against movie producers, which helped establish the first residual system for movies shown on TV. "In the end, the guild agreed not to ask for the residuals from 1948 to 1960," says Prindle. "The older actors are still bitter about that." This round's call to arms came four years ago when a group of actors met in an L.A. casting office and lamented their need to do ever more commercials to earn the same wage. They went for coffee at Art's Delicatessen, an old actors' haunt in Studio City, and decided to form the Performers Alliance, an activist offshoot of SAG. The alliance's official mission was to "revitalize the leadership of the Screen Actors Guild and to restore its effectiveness through the active participation and influence of its working members."It was the Performers Alliance, whose founding ranks included veteran spot actress Ruth Peebles, that spurred the search for new union leadership. Their first task was to oust Richard Masur, SAG's then-president, who was seen to have failed to garner a satisfactory wage increase three years earlier. "Masur, in the last contractual negotiations, brought us back just a hair over a 7 percent raise over three years," says Gordon Drake, a SAG strike coordinator and Peebles' husband. Drake recalls getting a call from his wife, then a member of SAG's negotiating committee, after a meeting in New York in which negotiators got only half the increase they requested on a particular point due to a miscommunication over minimum percentages. "She was in tears," he recalls. "I said, 'You guys need a Web site.' " Within months, the group built a database of 12,000 members' e-mail addresses. It also suggested a new candidate for president: Bill Daniels. Though he had little knowledge of the contract's fine points, Daniels had what the upstarts were looking for: name recognition and a willingness to listen. "I was originally called to throw some names into the hopper," Daniels says with a chuckle. "Rather impulsively I said, 'Well, how about me?' "Daniels swept into office in November 1999, along with a board full of Performance Alliance members. In an oft-quoted statement, he labeled the previous regime "pussycats" and swore to take a stronger stand in negotiations. Ad industry representatives heard this as a battle cry and were prepared to fight. Ironically, industry representatives say their discontent was also rooted in the contract of 1997. "There was a feeling that the contract was still very much wedded to concepts that were originally negotiated in 1950, and that we were approaching a new age," says Shepard, who served as counsel to the Joint Policy Committee of the 4A's and the Association of National Advertisers. Indeed. In 1950, there were basically only three TV choices: NBC, ABC and CBS. As late as the mid-1970s, those three networks delivered more than 80 percent of the American TV audience. Each ad play was hugely valuable. Today, six networks control less than half the total viewership; the rest is divided between scores of cable channels. "The value of each play is diminished," says Shepard. In recent years, advertisers have grown obsessed with the proliferation of cable channels and the waning power of the networks. Talent, not surprisingly, takes a jaundiced view of such claims. "Total viewership is down, but it's still the only way to reach masses of people," says AFTRA president Shelby Scott. "They still spend a lot of money buying that time. If it wasn't worth it, they wouldn't be buying it." In the first half of 2000, U.S. ad expenditures rose 14.7 percent to $47.7 billion, according to Competitive Media Reporting, with the bulk going to place TV spots. Actors point out that their fees account for less than 2 percent of the total cost. By union estimates, performers are paid about $11 a day for unlimited use of cable spots. "We felt, and still feel, that any time an actor's performance is used, he should be paid, no matter how little," Daniels says. Ad industry reps say it is a matter of economics. Avatar Kramer, executive producer at Publicis & Hal Riney in San Francisco, argues that unreasonable rate hikes for performers would force him to scale down his production teams, reducing the quality of the spots. Critics of the unions also point out that commercials differ from TV programs and movies in that the number of plays they get is not directly attributable to the actors' performance. In most cases, it has more to do with a campaign's budget and sales effectiveness than any Oscar-caliber star turn. These competing views lay at the core of the clash. "We were never able to convince the unions that we were providing some real economic benefit to the majority of their membership," says ANA president Dan Jaffe. "Instead, they opted for what is basically a lottery system." SAG's Krizman bristles at such rhetoric. He compares actors' acceptance of flat payments in cable's early days to the concessions the United Auto Workers made to Chrysler in the early 1980s to foster a foundering business. "In other industries, when times got better, those unions were rewarded," Krizman says. "If business is as good as it's ever been, why don't you want actors to share in the wealth which they obviously helped create through their performances? What is the logic of that?" Jim Bracchitta, a New York actor with dark looks and an average build, was on the front lines of the conflict. He has made made frequent appearances on TV (Law & Order) and on Broadway (Gypsy, Over the River and Through the Woods), but has made a living primarily from TV and radio ads. Doing commercials for Bell Atlantic, AT&T, Sonic Burgers, American Airlines and "all the beers you can imagine" has allowed Bracchitta to pursue less lucrative interests, such as a summer playwrights' workshop he co-founded on Cape Cod. Wedged behind a corner table at Eureka Joe's, a hip coffee bar in Manhattan's Flatiron District, the New York University graduate—dressed in jeans, white sneakers and a plaid work shirt—describes his daily existence. On a good day, he attends five or six auditions for commercials. Like other actors, Bracchitta takes personal offense at what he perceives as the ad industry's patronizing tone. "Actors live in a lottery system. We signed up for it years ago," he says. "Each time I go in and put myself up against anybody out there. Come on, let's compete for the chance at the big win."Of the 135,000 members of SAG and AFTRA, which negotiate commercial jurisdiction in tandem, 80-90 percent are unemployed at any given time. Of the 98,000 members of the actor's guild, only 8 percent make more than $15,000 a year; 80 percent collect less than $5,000 annually. Between the two unions, fewer than 10,000 make a full-time living as performers. Bracchitta is among them, which is one reason he sat on the SAG negotiating team. Workaday actors weren't just fighting for a new contract, he argues; they were fighting for respect. "There's no way to really tell people that we're professionals, that we do this for a living, that it's bread and butter for a lot of people," he says. In the months leading up to the strike, communicating that fact to a disinterested public was one of many hurdles facing the unions. Another was SAG's internecine decision-making bureaucracy. The guild has a staggering 104 members on its national board, compared to the maximum of 40 at most corporations. By January 2000, the industry and the unions had both posted proposals on their Web sites, but from the beginning it was clear that SAG—which had not had a major strike since 1988—was ill-prepared for a sustained labor action. For one, it lacked a sufficient reserve fund to help members survive an extended period without work. It set aside a mere $2 million to assist strikers, which months later was supplemented by six-figure contributions from stars such as Helen Hunt, Harrison Ford, Eddie Murphy and Nicholas Cage. On Feb. 14, Shepard and John McGuinn, representing the ad industry (whose core team also included JoAnn Kessler of Grey Advertising and Kathleen Quinn, the 4A's vice president of production services), had their first official meeting with McGuire and Mathis Dunn, negotiators for SAG and AFTRA, respectively, at the Sheraton Hotel in New York. The talks quickly eroded. "At the end of the first session, the industry clearly indicated that they were not prepared to move off their Class A rollbacks," says Dunn. "And our committee clearly indicated we were not prepared to move off pay-per-play." In early March, the unions initiated a strike referendum. The results were indisputable: 93 percent of respondents expressed support for the committee's position. After a mid-March recess, the first order of business was extending the existing contract, which expired March 31, for two additional weeks. It would be the last point the two parties agreed on. "We thought the advertising proposal to end the residual system was a stalking horse," says one SAG member close to the negotiations. "We felt it would always come off the table at the end. When they held onto it down to the wire, it was clear things were going to break down." On April 14, the industry made its last and best offer, which included a flat payment for network, a 15 percent increase in cable residuals and a refusal to establish terms for spots made for the Internet. Soon after, the unions announced their response: a full-scale strike in two weeks. "It was a no-brainer," says Bracchitta.Still, it was a painful decision. The actors were walking out on jobs that were hard to come by and running the risk of dropping below the minimum work rates necessary to qualify for health benefits and pensions. They were also in danger of disproving their basic argument—that they were indispensable. But they remained adamant. "If you're creative, you should be compensated in a way that allows for your creativity," says Bracchitta. "That's what our contracts are all about." On May 1, the strike lurched forward with a whimper, then a bang. Industry sources say the two weeks before the strike gave advertisers a precious advantage—time to stockpile spots. Further, rumors mounted about union dissent, particularly between SAG's New York chapter, whose members toil in the watchful shadows of Madison Avenue, and its more zealous L.A. group. AFTRA, which primarily represents radio performers, also had reservations about tinkering with what one union official describes as "one of the best labor contracts in the world." "The issue for us," says the official, "was whether or not we wanted to strike over the pay-per-play concept in and of itself." Still, says Krizman, "I think [the industry] underestimated us. I think they overestimated the chaos of the union at that time."The unions did appear strong on the first day of the strike, a Monday, when about 2,000 members of SAG and AFTRA rallied at the La Brea Tar Pits Park in L.A. and marched on Wilshire Blvd., picketing the offices of McCann-Erickson and J. Walter Thompson. In New York, 250 strikers gathered in Bryant Park; others marched in San Francisco and Chicago. Admittedly, their task was difficult. Factory workers can picket the factory, but commercial shoots happen everywhere. Some actors formed outreach squads to educate nonunion performers who were approached to do commercials. Others joined what were termed "special operations," or on-site action task forces, designed to track down nonunion productions. Strikers also relied on leads from publicly filed film permits and anonymous tips. "We got complaints from the Union Square green market in New York that casting directors were videotaping farmers and asking them if they wanted to be in a commercial," says one task-force leader. "Those aren't people who would traditionally know anything about an actors' strike." In the early weeks, the unions won key skirmishes, at least on the public-relations front. The celebrities who appeared at rallies—Susan Sarandon, Tim Robbins, Elliot Gould, Frances Fisher, Jerry Orbach, Ron Perlman, Brenda Vacarro, former SAG president Ed Asner and many others—garnered plenty of press. At first, actors even convinced most of their peers to preserve the picket lines. Golfer Tiger Woods refused to shoot a Nike ad the day after the strike started (though he did jet to Canada in July for a Buick shoot), and baseball star Nomar Garciaparra canceled an appearance in a Dunkin Donuts spot. Performers also used their creative talents to obstruct shoots. In L.A., a one-legged stuntman posed as a Vietnam vet to gain entrance to a commercial set and purloin a copy of the shooting schedule. A nonunion production in Dallas was cancelled due to strikers wielding a bubble machine. In Maryland, a shot of a train for an ad was ruined when picketers convinced the conductor to paste strike posters in the train's windows. To disrupt a shoot at L.A.'s Griffith Park, one actor sprinkled the grass with 100 pounds of birdseed. When crew members arrived, they found flocks of birds and their droppings. Meanwhile, tactical missteps left advertisers and agencies looking insensitive. In late May, production company RSA USA placed an ad in the trade title Shoot picturing the shriveled breasts of an elderly African woman with the words, "In South Africa, this is what SAG means." In another highly publicized incident, strikers uncovered a "paint-down" at a Ford shoot in California, where a white stunt driver in dark makeup was used in lieu of a black one. Such tasteless acts meant tangible benefits for the actors. The Ford incident eventually led the automaker to agree not to shoot nonunion commercials for the strike's duration. "Throughout the strike we uncovered permits that were falsely filed," claims one coordinator, citing a permit for a Dr. Pepper ad that claimed it was actually a TV series. As advertisers resorted to drastic measures, the unions also drummed up political support. In New York, the city council agreed to deny access to nonunion productions on city property and required daily permits to be filed—giving strikers a chance to stage a picket line. "The case made was that we have a constitutional right to picket in front of our workplace," says Bracchitta. "But in order to that, we need to know where our workplace is." Negotiations, meanwhile, ground to a halt. On May 29, a federal mediator, John Muir, brought both sides together at the World Trade Center in Manhattan. They were strongly encouraged to reconsider their positions, but neither side was willing to budge. "We didn't even meet face-to-face," says Shepard.Two months passed before Muir was able to coax another face-off, on July 20 at the Crowne Plaza Hotel in New York. This time the unions' full negotiating team was intent on cutting a deal, says SAG's Krizman, "but not a deal that includes Class A rollbacks." Industry negotiators called their bluff. "We thought they had taken a step backward," says Shepard. "They came up with a pay-per-play plan for even small channels." After three days, the strike was still on. By mid-summer, most large agencies were scrambling to book shoots away from major urban centers, as well as internationally. Sites in Canada, Australia, South Africa and Europe were scouted. "We had to continue to execute work for our clients," says Kramer of Publicis & Hal Riney. "The talent agents we used in Canada were inundated. You couldn't shoot in Vancouver, and it was so busy we barely got hotel rooms in Toronto."Tina Petridis, owner of Industry Films, a Toronto production shop that regularly works with American directors and agencies, says her firm's roadhouse work nearly tripled. "I have mixed feelings about it, because we were really maxed out," she says. "The flip side is that agencies that came up here to shoot who perhaps never shot here before said, 'Wow, we got really great production, and we saved a lot of money.' "While agencies survived with guerrilla tactics, U.S. production houses were forced to tighten their belts. For smaller firms, the effects were sometimes crippling. Don Faller, executive producer at Notorious Films, a New York music video company that was attempting to start a commercial business before the strike, says the operation was shuttered almost immediately. "We only made one commercial, under an interim agreement," he says. Even worse, he adds, many directors fled to greener pastures, which often meant taking on inferior out-of-town projects without experienced production staffs and crew. Though producers, by and large, seemed sympathetic to the actors' plight, some questioned the perceived benefits of the new contract. "Right now, the quality of commercial work is improving dramatically around the world," Faller says. "It seems like a bad time for American agencies to be raising prices."Some advertisers acquiesced. Ricoh signed an interim pact with the unions for a $48 million campaign starring Dennis Miller. Radio Shack brokered a deal to use Teri Hatcher and Howie Long. But as the summer wore on, it became evident that, despite the occasional victory, the union action had not brought big business to its knees. Far from it. In L.A. alone, 1,102 days of commercial work were booked between May 1 and Aug. 1, according to the Entertainment Industry Development Corp. Figures from the ANA and the 4A's show advertisers finished 2,010 spots in August, up from 1,725 in July. Industry groups estimated the August numbers were at least 80 percent of those from August 1999. In comparison, actors' fees sunk to $161,743 in August, compared to $5.7 million in August 1999, according to the ANA and 4A's data. Nonunion performers earned $3.8 million in July, versus just $243,623 in July 1999. Particularly debilitating was the unions' inability to stem the flow of ads produced for the Olympic Games in September. The actors, though, said the issue was quality, not quantity, and pointed to the number of text-driven commercials that sidestepped the need for actors. When the going really got tough, they charged the industry with trying to disband their ranks. Union officials say advertisers' refusal to call off their full-force attack on network residuals until September amounted to a standoff. "They went after the soft underbelly of our contract," says Bracchitta. Adds Krizman: "It's hard to negotiate when you're hitting a brick wall." Industry sources confirm that some antipathy was directed at the unions, but in the end, advertisers' competitive instincts kicked in. Could badly stumbling Verizon do without the rich voiceovers of James Earl Jones? Where was Volvo without Donald Sutherland's mellifluous tones? Also unavailable as long as the strike continued were Richard Dreyfuss (American Honda), Edward Hermann (Dodge) and Sela Ward (Sprint). "SAG and AFTRA are the place where the best actors in the world belong, whether they're American citizens or foreign actors," says Saatchi & Saatchi's Perry. "That's the advantage of working with them. You've got enormous choice and you've got an enormous quality of professionalism." On Sept. 10, Hollywood's top TV talent strutted its finery at the 52nd annual Emmy Awards. Calista Flockhart donned a red chiffon number by Feretti. Jennifer Aniston sported a Prada strapless gown. But far more stunning than the outfits were the accessories worn by many actors: gold lapel ribbons handed out by the unions. "The public probably didn't notice them," says Krizman, "but the industry knew what they meant." In the walkout's fifth month, the unions were still standing strong. The week after the Emmys, Kevin Bacon and Paul Newman joined other actors at a rally in New York. In L.A., Tom Hanks told a crowd of 1,000 that "actors are the best bargain in the advertising business."On Sept. 18, the sides reconvened at New York's Crowne Plaza for another week of talks. For the first time, the actors agreed to back off pay-per-play on cable. The advertisers responded by agreeing to preserve it for network ads. With the holidays looming, all saw the urgency of coming to terms. The industry had succeeded in keeping production going, but the conditions were hardly ideal. "The optimum situation is when you have the choice of all actors," says ANA's Jaffe. "The majority of the industry was never out to do in the union," adds Shepard. "We simply felt strongly about the changes we wanted." The unions became more open to some of those changes when network residuals were no longer in danger. "We softened our position because we got an indication that they were willing to take the rollback off the table," says Krizman. "Both parties made significant modifications," says SAG's John McGuire. "The surprising thing is that the deal didn't get done."After so many months of wrangling about network and cable—largely matters of the past—discussions had finally reached the future: the Internet. Again, neither side was prepared to back off. The actors demanded jurisdiction over online ads; the industry wanted to wait and see. Once more, the end seemed impossibly distant. On Oct. 10, the performers, on advice from their Teamster supporters, instituted a boycott of Procter & Gamble brands, including Tide, Crest and Ivory. Bill Daniels believes the action made a real difference. A group of actors were invited to Cincinnati, where they met with P&G chairman John Pepper. "The company was very concerned that we were doing this boycott," says Daniels. "They felt it was very unfair." Asked to respond, a P&G spokeswoman declined comment.Industry representatives say the threat of a boycott had little or no effect. "Even Teamster boycotts, with a million members or more, have never really been successful," says Shepard.When negotiators finally reconvened on Oct. 19, the tone of discussions had softened. Over the next four days, details were hashed out. Pay-per-play would remain in place on network spots. Performers would receive a flat fee of $1,390 in the first year of the new contract, $1,706 in the second and $2,460, in the third—more than twice the current amount. The unions gained jurisdiction on cable, but not the right to set rates. Advertisers say the new contract puts them exactly where they want to be—looking to the future with a diminishing view of the past. The unions can also rightly claim victory by having extended their influence into the new century. As far as cable goes, "We couldn't address the structure, we addressed it financially," says Bracchitta. "We just got the dough, and I think it was enough dough to make a difference to our average on-camera performer."Oddly, what stands out most about the new contract is not what has changed but what has remained the same. Actors and advertisers still depend on each other. A new payment structure was not implemented, and the old one wasn't abolished. The Internet was staked out, but its boundaries are still fuzzy. "If I take a still photo and animate it on a Web site, is that under SAG's jurisdiction?" wonders one ad producer. Some in the industry have suggested a residual structure tied to production budgets or TV-show ratings that would more accurately reflect the value of an actor's performance. Some even argue that computer animation will reduce the demand for live performances.Both union and ad industry representatives know little of what the future will bring. "There are so many changes happening, no one really has a very good grasp at this point as to what is going to make the most sense for contract structures," says John McGuire. Burtch Drake grimly agrees: "Three years from now, we're probably going to back in the same soup."

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