POTENTIAL DRAFT LETTER FROM UNIONS RE: STRIKE AUTHORIZATION…

IF PROGRESS IS NOT MADE, THEY WILL SEEK A STRIKE AUTHORIZATION

VOTE FROM MEMBERS.

2009 COMMERCIALS CONTRACTS

Strike Authorization Ballot

To All Members of Screen Actors Guild and AFTRA:

Your AFTRA and SAG Presidents, Joint Board of Directors and Joint Negotiating
Committee urge you to read this vital report, VOTE YES and mail your ballot today
authorizing your Joint Board of Directors to call a strike in the field of television and
radio commercials ONLY IF IT BECOMES ABSOLUTELY NECESSARY to achieve
fair and equitable successor agreements.

PLEASE NOTE that these negotiations cover all AFTRA and SAG principal and extra
performers employed in English and Spanish television and radio commercials.
Employment in the following contract areas IS NOT affected by these negotiations:
theatrical films, television and radio programs, news, industrial/educational and non-
broadcast productions, sound recordings, music videos, interactive programs/video games
and entertainment programs made for the Internet or New Media.

In today’s economy, SAG and AFTRA members need strong contracts more than ever.
The industry is proposing major rollbacks that include:

• Significant changes to the compensation model

• A “pilot study” that tests ONLY the industry’s preferred compensation model
without an equal study of the unions’ preferred compensation model

• Debilitating reductions in contributions to our P&H and H&R plans

Since February 23, your joint AFTRA/SAG negotiating team has been bargaining in New
York City with the Joint Policy Committee (JPC) of the American Association of
Advertising Agencies (AAAA) and the Association of National Advertisers (ANA) for
new, three-year contracts covering the terms of your employment in television and radio
commercials. From the first day of the negotiations, it has been our intention to reach an
agreement acceptable to both sides. The issues at stake in these negotiations are critically
important and require that we bring our full bargaining power to the table by passing this
referendum to authorize a strike in the field of television and radio commercials.

In 2006, the Industry invoked language in the Commercials Contracts that required the
Unions to explore alternate methods of compensation for principal performers in
commercials. This led to a seven month, $1.3 million study by the consulting firm of
Booz Allen Hamilton (now called Booz & Co.) commissioned jointly by the Industry and
the Unions. Booz & Co. recommended a number of alternative methods of compensation
including an “Adjusting Tiers” proposal that the Unions favor and a Gross Ratings Points
(GRP) proposal favored by the Industry. Booz & Co. also made recommendations
regarding the Internet and New Media, including the elimination of free bargaining,
which is favored by the unions.

Your joint negotiating team has sought to continue the cooperative approach to this
process that the Unions have exhibited from the very beginning. The JPC, however, has
insisted that the only compensation model open to further exploration is the GRP model –
the industry’s favored option. The Industry has also proposed an accelerated timetable for
a “pilot study” to test their GRP proposal. At the conclusion of this study, our ability to
agree to implementation of the new system would be taken away from us and placed in
the hands of a third party consultant.

While your joint negotiating team believes it is important to be open minded about the
possibilities for adapting our contracts to changing times, we strongly feel that any
changes to our basic compensation structure must be pursued with care and deliberation.
Further, any changes should only considered after full and unfettered analysis by the
unions of the results of a pilot study that evaluates BOTH the Industry’s favored option
and ours. We also believe it is important to act on Booz & Co.’s recommendation to
eliminate free bargaining and establish minimums for commercials made for the Internet
and New Media—a subject the Industry has not addressed.

At the same time, the Industry has demanded debilitating rollbacks in contributions to our
P&H and H&R plans. By once again proposing a “cap” on contributions, the Industry
threatens to eliminate tens of millions of dollars in contributions from our Plans, just as
the Plans are suffering through the fallout of the current recession. The Industry also
seeks to change the way contributions are made on multiservice contracts, which could
even further reduce contributions to the Plans.
The AFTRA and SAG commercials contracts provide an important and often critical
source of income to thousands of our members across the country. The national
commercials contracts set rates and benefits for national commercials and ad campaigns
in the major markets and across the country. The SAG and AFTRA commercials
contracts support more of our members and their families than almost any other contract.

Your joint negotiating team is fully aware of the economic realities we are facing today
and the challenges of negotiating in such an environment. However, rollbacks of this
magnitude have such negative consequences that they must be met with determination
and conviction from our members.

Your joint negotiating team will continue to fight for a fair contract and we hope to
achieve such a contract without a work stoppage. Management must know, however, that
you the members of AFTRA and SAG stand firm and united in your resolve to obtain
equitable commercials contracts that do not decimate or negatively affect either of our
Health or Pension Plans.

Your YES vote on the enclosed strike authorization ballot is necessary to send a strong
message of clarity, strength and solidarity to management.