The Writers Guild of Canada and the cftpa’s industrial relations committee are embroiled in a dispute as to whether minimum guarantees and distribution advances fall under the Independent Production Agreement’s definition of producers receipts.

Writers are issued a royalty calculated on 4% of producers receipts, less distribution fees/expenses and production fees paid for writing services. The wgc says that by failing to include minimum guarantees as producers receipts (which ran anywhere from $8 million to $22 million in a recent audit), producers are shortchanging writers out of thousands of dollars in royalties.

The issue was brought before a joint standing committee, which was unable to come to a majority decision, so an arbitrator has been assigned to deal with the case this November. The wgc and cftpa are also in the midst of collective bargaining to renew the ipa and this issue is sure to be a stumbling block.

‘The bottom line is we are not backing down,’ says wgc president Maureen Parker.

The wgc became aware of the issue after conducting audits on four large production companies, where it found that two of the producers were excluding distribution advances and minimum guarantees paid to them by distributors from the ‘Statements of Producers Receipts.’

The wgc is commencing audits on another four production companies and plans to file grievances against any producers who have not included minimum guarantees or distribution advances in their reports.

The wgc asserts that when a producer gives distribution rights to a distributor and receives a distribution advance or minimum guarantee, this payment is part of the producer’s revenue and it should be reported as such. According to the wgc, distribution advances and minimum guarantees fall under the ipa’s definition of producers receipts as ‘the sum of all monies from the first dollar derived by the producer from the exploitation of the program.’

According to the wgc, some of the producers audited say that they only have to report money that the distributor eventually earns back against the guarantee. This requires waiting until a program goes into profit.

‘Clearly we take different views,’ says cftpa vp of industrial relations Ray Stringer, but he will not comment further while the cftpa and wgc are in negotiations.

A cftpa memo circulated internally to its members states that following the logic of the wgc would mean that a project funded only with minimum guarantees, which is common, especially in the case of feature films, would have to include the full production budget as producers receipts in its first report – even if the production was a complete bomb and worldwide receipts were minimal.

The cftpa memo states that the ipa provides that ‘reasonable and verified distribution fees and expenses are deductible when calculating producers receipts. Since there are no distribution fees and expenses on minimum guarantees, these were not meant to be included.’

The cftpa memo says this was clarified in the last round of actra negotiations when it was recognized that minimum guarantees are not considered distributors’ gross revenue.

The wgc, however, disputes this, saying in the current Performer ipa, actra does not exclude the distribution advance from revenue. The guild argues that the distributor is permitted to defer the amount of the minimum guarantee until receipts from sales are received, at which time the full amount of the advance is counted as gross revenue on which the royalty is calculated. The wgc says it has confirmed this with senior staff at actra.