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November 16, 2007

Legislative Briefing

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Who We Are

The Writers Guild of America, West (WGAW) represents almost 8,000 writers in the motion picture, broadcast, cable, and new media industries in both entertainment and news.

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Who We Are

The typical WGA member makes about $62,000 a year when you average earnings over a five year period.

While the typical working member makes $105,000 in an individual year, 46% earn nothing.

Taking the portion of the members between

writing projects into account, the typical member makes $11,000 in a given year.

Source: WGAW Analysis

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What are Residuals

Residuals are compensation for reuse of WGA written material

Residuals are not a bonus and can constitute 20-50% of a WGA members income

With almost half of the membership not employed as writers each year, residuals help maintain Los Angeles’ creative community

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The AMPTP

The Alliance of Motion Picture & Television Producers represents the major studios including CBS, Fox, NBC Universal, MGM, Paramount Pictures, Sony Pictures Entertainment, Walt Disney and Warner Bros.

In addition, they officially represent several hundred other small producers who have no role in the bargaining sessions.

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The State of Global Entertainment

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Key Entertainment Sectors Are Growing

$0

$50

$100

$150

$200

$250

2002 2003 2004 2005 2006p 2007p 2008p 2009p 2010p 2011p

$US Billions

Television – Broadcast & Cable

Box Office and Home Video/DVD

Total Global Revenues

Projected Compound Annual Growth Rate (CAGR)

2007-11

5.8% per year

4.9% per year

Source: PriceWaterhouseCooper, 2007

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U.S. Film and Home Video/DVD Market: Home Video Growing, Online Growing Faster

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

2002 2003 2004 2005 2006p 2007p 2008p 2009p 2010p 2011p

By Source of Revenue$US Billions

Online Movie Sales

Home Video and DVD Rentals

Box Office

Projected Growth (CAGR) 2007-2011

77.3% per year

4.1% per year

4.2% per year

Overall U.S. Film Market = 4.6% CAGR

Source: PriceWaterhouseCooper, 2007

Home Video and DVD Sales

Online Television Sales

3.8% per year

51.6% per year

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U.S. Television Ad Market: Continued Growth, Boosted By Product Placement

$0

$10

$20

$30

$40

$50

$60

2002 2003 2004 2005 2006p 2007p 2008p 2009p 2010p 2011p

Broadcast

Cable5.3% per year

3.7% per year

Source: PriceWaterhouseCooper, 2007

$US BillionsProjected Growth

(CAGR) 2007-2011

Product Placement17.8% per year

Overall U.S. Film Market = 5.0% CAGR

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The State of Media ConglomeratesMedia Companies Have Taken Advantage of the Positive Economic Environment

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Revenues Are Up…

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5

10

15

20

25

30

35

40

45

Viacom CBS NBC-Uni (GE) News Corp Disney Time Warner

2002 2003 2004 2005 2006

Up 90%

Up 125%Up 9%

Up 68%

Up 35%

Up 20%$US Billions

Source: WGAW Analysis of Company Reports

Annual Revenues of Major Media Conglomerates, 2002 to 2006

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Profits Are Up…

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Viacom CBS NBC_Uni (GE) News Corp Disney Time Warner

2002 2003 2004 2005 2006

Up 75% Up 76%Up 1%Up 109%

Up 130%

$US Millions

Source: WGAW Analysis of Company Reports

Up 39% (2003-2006)

Annual Operating Profits of Major Media Conglomerates, 2002 to 2006

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Entertainment Segments Are Profitable

News Corp Disney NBC-Uni (GE) Time Warner CBS Viacom

Broadcast TV Cable TV All TV Film Consolidated

Operating Profit Margins By Defined Segments for Fiscal Year 2006

Source: WGAW Analysis of Company Reports

18%

10%

25%

19%

26%

18%

27%

7%

18%

40%

3%

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The Executive Point of View“What is clear is that our traditional businesses are

more than healthy.”-Sumner Redstone, Chairman of Viacom and CBS

“We’ve established a healthy base of business, positioning us well for future growth.”

-Bob Iger, CEO of Disney

“All four networks have a very great story to tell this year…. The business is extremely healthy.”

-Leslie Moonves, CEO of CBS

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New Distribution Routes Offer New Opportunities for Faster Revenue Growth

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Internet Ad Market Is Growing On Top of Strong Traditional Ad Market

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10

20

30

40

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2002 2003 2004 2005 2006p 2007p 2008p 2009p 2010p 2011p

$US Billions

Total TV Ads

All Internet Advertising

5.0% per year

16.1% per year

Source: PriceWaterhouseCooper, 2007

Comparison of Television and Total Internet Advertising Markets in the U.S.

Projected Growth (CAGR) 2007-2011

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The Opportunity of New Media

New forms of distribution are additive Non-traditional distribution routes do not cannibalize Rather they help reach more viewers

The “business model” is to be on all feasible platforms New media is not an afterthought of development All appropriate platforms are considered from the beginning of

the development process

Convergence is here, but infrastructure not without problems Variety of consumer electronics now offer jump from internet to

television Infrastructure, bandwidth, etc. may still challenge quality viewing

of internet content

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Hollywood Content Monetizes More Easily Than User-Generated ContentOnline Video Advertising Market

Expected to Reach $3 Billion by 2010

Hollywood Film and TV Studios Expected to Capture 75% of That Market

Source: eMarketer, March 2007

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NBC Says: More Distribution Routes Boost Revenue

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New Media: A Significant Driver of Revenue Growth for All CompaniesCompany 2006 Estimated New

Media Revenues2007 Estimated New

Media RevenuesProjected Compound

Annual New Media Revenue Growth

2007-10

CBS $200 Million “Hundreds of millions”

28.2%

Disney $500 Million $700 Million 33.2%

NBC $400 Million $1 Billion Unknown

Time Warner $300 Million Unknown 36.9%

Viacom $150 Million $500 Million 46.5%

News Corp $400 Million $1 Billion 48.4%

Source: Company Reports and Goldman Sachs

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Nick Counter, AMPTP says: “It’s on the edge of experimentation and innovation, so we’re

going to have to work our way through it with the guilds once both sides know and understand what the business model is. It’s nascent now, and we don’t know if it’s going to replace other markets or enhance other markets.”

“My concern is that these uses are so new and the economic models are so unknown that it would be a mistake to try to work out a formula at this point.”

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The Execs on New Media…

“Everything we have seen -- everything we have seen says that the new media and all these things that we are doing are going to be

additive to it. It's not going to be fragmented. It's only going to add.”

-Leslie Moonves, CEO of CBS

“We are open to our content being everywhere as long as we get paid appropriately for it. And we are looking at every possible

combination thereof.” -Leslie Moonves, CEO of CBS

“The opportunity is now in terms of creating great content and then moving it to the consumer in many more ways.”

-Bob Iger, CEO of Disney

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Where Does Talent Fit In?WGA writers have not kept up with the industry’s growth

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A Shrinking Share of a Growing Pie

Total writers’ earnings Up 20%

Total entertainment segment revenue Up 51%

Writers are not keeping up

Source: WGAW Analysis

From 2000 to 2006

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What We Are Asking For

Fair compensation for reuse of WGA written material through Internet streaming and downloads

Jurisdictional coverage of writing for new media platforms and so-called “reality television”

Language on fair market values, auditing and expedited arbitration to help the WGA properly enforce its contract

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What We Are Asking For

Our Proposal are Fair and Reasonable

The total cost of the WGA proposals currently on the table is $142 million over the three-year term of the contract. 

This is a minor increase to the total $1.2 billion the industry spends on writers each year, but is vital for the individual writers involved.    

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Public Support for the WGA According to a recent poll by Pepperdine

University’s Graziadio School of Business

Management, 63% of Americans are in support of the striking writers

Only 4% of Americans support the studios