Bad Deal: Ronald Reagan’s Negotiation of Residuals for the Screen Actors Guild (1960)
Good Deal, Bad Deal

Before he became President, Reagen perpetuated “The Great Giveaway" - giving up the residual rights to pre-1960 films, in perpetuity, for a $2,625,000 payment to establish the Guild’s pension.

What Went Wrong:
Reagan should not have been involved in those negotiations against the studios. The negotiation over residuals was too important, and had consequences far ranging, to leave to someone with a conflict of interest.

Ronald Reagan owed much of his television- and film-career success (and perhaps his start in politics) to his association with MCA. MCA was the talent agency that represented him and, as a television production company, hired him after it appeared that his acting career was over. He may have paid MCA back by his poor job in negotiating on behalf of the Screen Actors Guild (SAG) in resolving its 1960 strike. The impact of that contract still reverberates today.

Reagan liked to present himself as pro-union (without actually being in favor of any of the causes unions espoused) based on his experience as SAG president. Reagan served six one-year terms as Guild president, the last being in 1960. Guild members struck for 42 days over the issue of television residuals.

Residuals are the payments actors (or writers or directors) receive for showings of their work after the initial airing or release. Until 1960, movie actors received nothing for films shown on television. The issue had been a source of dispute since television’s early days, and the actors finally went on strike in 1960 until it was resolved.

The producers’ representatives agreed to a royalty system, but they wanted to pay only on films produced after the date of the agreement. The Guild’s position was that royalties should be paid on films produced after the issue became disputed, in 1948.

The agreement reached, after a 42-day strike, has been referred to as “The Great Giveaway.” Regan agreed to give up the residual rights to pre-1960 films, in perpetuity, for a $2,625,000 payment to establish the Guild’s pension, health, and welfare plan. Even thought the strike-ravaged Guild ratified the contract, it has been denounced ever since as a pittance compared to the residuals actors have given up for films produced during that period. Residuals currently amount to more than $600 million per year.

It may not be coincidental that MCA, in 1959, had purchased Paramount’s film library and was poised to capitalize on the library, now residual-free. This was not the first time Reagan, as Guild president, acted in a way that was at least circumstantially contrary to Guild interests and in favor of MCA.

In 1952, he approved a blanket waiver allowing MCA (then a talent agency) to hire Guild members in its television productions. The opportunity for a conflict of interest, when an agent becomes a client’s employer, is obvious and, until then, the Guild granted exceptions only on a per-project basis.

Although Reagan’s popularity had greatly diminished, MCA hired him on one of its productions, General Electric Theater, for $125,000 per year, and later gave him a 25-percent interest in the production. (His status as producer should have precluded him from serving as president in 1959 and 1960, negotiating against producers for the Guild.)

Reagan’s negotiation of residuals due to television performers for reruns did further and long-lasting damage to SAG clients. TV performers got residuals for the first time, but only for the first six airings. Reagan’s successors did only marginally better on this one; it was not until 1977 that TV performers got perpetual residuals. Still, actors on shows such as Gilligan’s Island, The Beverly Hillbillies, and Leave It to Beaver received nothing from the immense popularity of their shows on local television through the 1970s and on cable and satellite television up to the present time.

Michael Craig

4/4/07

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