1 November 16, 2007 Legislative Briefing

2 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.

3 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

4 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

5 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.

6 The State of Global Entertainment

7 Key Entertainment Sectors Are Growing $US Billions Television – Broadcast & Cable Box Office and Home Video/DVD Total Global Revenues Projected Compound Annual Growth Rate (CAGR) % per year 4.9% per year Source: PriceWaterhouseCooper, 2007

8 U.S. Film and Home Video/DVD Market: Home Video Growing, Online Growing Faster By Source of Revenue $US Billions Online Movie Sales Home Video and DVD Rentals Box Office Projected Growth (CAGR) % 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

9 U.S. Television Ad Market: Continued Growth, Boosted By Product Placement Broadcast Cable 5.3% per year 3.7% per year Source: PriceWaterhouseCooper, 2007 $US Billions Projected Growth (CAGR) Product Placement 17.8% per year Overall U.S. Film Market = 5.0% CAGR

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

11 Revenues Are Up… 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

12 Profits Are Up… Up 75% Up 76%Up 1% Up 109% Up 130% $US Millions Source: WGAW Analysis of Company Reports Up 39% ( ) Annual Operating Profits of Major Media Conglomerates, 2002 to 2006

13 Entertainment Segments Are Profitable 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%

14 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

15 New Distribution Routes Offer New Opportunities for Faster Revenue Growth

16 Internet Ad Market Is Growing On Top of Strong Traditional Ad Market $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)

17 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

18 Hollywood Content Monetizes More Easily Than User-Generated Content Online 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

19 NBC Says: More Distribution Routes Boost Revenue

20 New Media: A Significant Driver of Revenue Growth for All Companies Company2006 Estimated New Media Revenues 2007 Estimated New Media Revenues Projected Compound Annual New Media Revenue Growth CBS$200 Million“Hundreds of millions” 28.2% Disney$500 Million$700 Million33.2% NBC$400 Million$1 BillionUnknown Time Warner$300 MillionUnknown36.9% Viacom$150 Million$500 Million46.5% News Corp$400 Million$1 Billion48.4% Source: Company Reports and Goldman Sachs

21 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.”

22 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

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

24 A Shrinking Share of a Growing Pie Total writers’ earningsUp 20% Total entertainment segment revenueUp 51% Writers are not keeping up Source: WGAW Analysis From 2000 to 2006

25 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

26 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.

27 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