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Favored Nations?

By Jonathan Handel

With a writers deal apparently in the offing, now's a time to pause and ask about favored nations. The questions are simple:

First, if the writers gain an improvement over the directors deal, will the directors "retroactively" get the benefit of the writers bargain? Maybe so - they may insist on it (note that their membership hasn't yet been asked to ratify their deal, and might refuse to do so without the retroactive improvements).

Indeed, the directors deal may contain a favored nations clause requiring that they be offered the improvements. ("Favored nations" refers to a clause giving the benefit of any better bargain reached with another party; it's a term from diplomacy, abbreviated from "most favored nations.") The directors deal executive summary that's been released doesn't say mention such a clause, but we've not seen actual contract language.

Note, however, the directors deal is already out to the members for ratification, so the Directors Guild may have no little leverage to insist on getting the benefit of the writers bargain if their contract does not have a favored nations clause. Of course, the idea of directors without leverage is hard to conceive.

Second, if the screen actors later gain an improvement over the writers and directors deals - and they've been hinting that they'll insist on one - will the writers and directors retroactively get the benefit of the actors bargain? The analysis is the same, but applies to both the writers and directors deals.

So, memo to the writers guild negotiators: if you want the best deal you can get, insist on a favored nations clause in your deal.

Full post as published by Digital Media Law on February 04, 2008 (boomark / email).