September 18th, 2008

Product Integration: A Tangled Issue

By Andrew Salomon
Inside Branded Entertainment

In addition to being an Emmy-nominated actor, Will Arnett is the voice of GMC trucks, so it seemed a logical fit when he was hired to play the voice of KITT, the talking car, when Knight Rider, an NBC series from the 1980s, was being overhauled late last year. A two-hour television movie would air in February and, if successful, a new version of the series would premiere in the fall.

Shortly after completing his work, Arnett was replaced by Val Kilmer, weeks before the movie aired. Why? KITT, which was a Pontiac Firebird Trans Am in the 1980s, when William Daniels provided the voice and David Hasselhoff was behind the wheel, is now a Ford Mustang, part of a sponsorship deal with NBC Universal. Arnett, it seems, couldn’t be the voice of two competing car companies.

NBC has since turned Knight Rider into a series, scheduled to premiere Sept. 24. If the show is a hit, Arnett could miss out on millions of dollars in salary and residuals. His has become a prominent example of the pitfalls actors can face in an era of increased product integration.

As of press time, representatives for Arnett had not responded to Back Stage’s requests seeking comment, but the actor issued a statement to Variety in February: “I was very excited at the prospect of playing the part of KITT in the new Knight Rider movie. However, because of a long relationship with General Motors as the voice of GMC Trucks, I had to respectfully withdraw from the project.”

To be sure, the former Arrested Development star is not exactly hurting for work—according to the Internet Movie Database, Arnett has no fewer than eight upcoming projects—and the Knight Rider situation is highly unusual for an actor, if not unique. But there was no up-front guarantee that Arnett would make up the lost income, just as there can be no assurance that something similar won’t happen to another actor in the future. That is why the Screen Actors Guild has pushed for new rules on product integration, one of the dozen or so outstanding issues between the union and producers in their long-stalled negotiations on a new television and film contract.

According to research by PQ Media, advertisers spent $2.9 billion in 2007 on product placement in movies and TV shows, a 33.7 percent increase from the year before. For 2008, PQ Media projects the number to hit $3.6 billion, a 24 percent increase.

It is likely that product placement and integration will continue to rise at double-digit rates, because the number of homes with digital video recorders, which allow viewers to zoom past commercials, is growing at triple-digit rates. Leichtman Research Group found that 2 percent of U.S. households had a DVR in 2003; by 2007 the figure had increased to 20 percent, and by 2011 Leichtman projects it will be about 50 percent. That’s an average yearly increase of 300 percent. Video-on-demand services have also curtailed the effectiveness of the traditional 30-second spot.

Many of the product placement and integration deals come in the reality genre, where SAG has no jurisdiction. According to the Nielsen Co., which owns Back Stage, the top 10 programs in product placement in 2007 were all reality shows. For the first quarter of 2008, only one scripted show, One Tree Hill, cracked the top 10. Still, the practice is prevalent enough in dramatic programming for SAG to press for changes.

Pamm Fair, the guild’s deputy national executive director, told Back Stage recently SAG has no significant objections to product placement, which simply involves placing products on set. The union does, however, have issues with product integration, in which actors are told to speak lines of dialogue that mention or extol a particular brand. “Actors feel it compromises the integrity of the performance,” Fair said, “when they’re asked to integrate dialogue into a story line about a product that otherwise wouldn’t be mentioned.”

According to its contract proposals, the guild wants actors to be notified of product integration deals in advance of production, to have the right to consent or refuse to speak dialogue in support of a product, and to be paid extra if they do. SAG has also requested a study of the practice.

In what it has termed its final offer to the guild, the Alliance of Motion Picture and Television Producers rejected each of those demands. Jesse Hiestand, spokesman for the AMPTP, told Back Stage in a written statement: “SAG’s proposal on product integration is completely unworkable because it would allow an actor to hold up production and demand to be paid twice for the same work. The demands of SAG’s negotiators threaten to reduce an important source of revenue that helps narrow the widening gap between license fees and production costs.”

There have been no talks since the TV and film contract expired June 30, and no new talks are scheduled. SAG formally rejected the AMPTP’s offer in July, and actors continue to work under the terms of the expired agreement.

The American Federation of Television and Radio Artists, which has jurisdiction in both reality and dramatic programming, tried to get its members the right of notification during talks last spring on a new contract covering prime-time scripted shows on broadcast television, but AFTRA abandoned the effort to concentrate on other issues.

Kent McCord, SAG’s 1st national vice president, is an ardent critic of product integration, for artistic and financial reasons. The most important argument, he said, is that the fusing of marketing and programming could do significant damage to actors’ collective bottom line. “There’s an $800 million contract that sits out there that puts that amount of money in actors’ pockets,” he said, referring to the commercials contract. “That potentially could be cannibalized to the tune of tens of millions of dollars.”

A source close to producers disputed that contention, however, because it is “predicated on the assumption that there will be fewer commercials…. [Advertisers] still believe in the power of the mass reach.” Nevertheless, the source said product integration income is “an important source of revenue” to help defray rising production costs.

If there aren’t fewer commercials being made, then why is the money from product integration such an important source of revenue? Fair agreed that it is important income, and neither she nor SAG begrudges producers making it. “We get it as a business model, and we understand that it’s money flowing into our employers—that’s not bad,” she said. “It’s just the way it’s being done and compromising the performance.”

On the whole, Fair said, the guild is seeking some system of checks and balances by which actors are not forced into a situation such as Arnett’s, where an actor has to choose between his or her commercial and dramatic obligations. More troubling, she said, is when the actor doing the product endorsement doesn’t have a position as solid as Arnett’s.

“Many times it’s someone in a featured or supporting role doing it,” Fair said, “and many times it’s because the other actors refused. If you have a series regular really digging in, they’re going to have a lot more success in rebuffing the whole thing. The person that’s brought in to guest-star is not going to have a whole lot of leverage to say no.”

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