Netflix hit by $42m charge in WGA arbitration case over unpaid residuals

Bird Box

Netflix has lost a $42m arbitration case brought against it by The Writers Guild of America (WGA) over unpaid residuals.

The WGA had entered arbitration in regards to the 2018 hit film Bird Box, with a third-party arbitrator finding that the streamer had underpaid residuals on the film. As a result, screenwriter Eric Heisserer has been awarded $850,000 in residuals, with an additional $350,000 in interest.

While the ruling was initially about Bird Box, the arbitrator ruled that writers for Netflix originals should be paid the same licencing fees that it pays for third-party titles.

In an email to members, the Writers Guild of America East wrote: “As a direct result of this ruling, 216 writers on 139 other Netflix theatrical films are receiving an additional $42m in unpaid residuals. The Guild is now pursuing approximately $13.5m in interest Netflix also owes writers for late payment of these residuals.”

Another major Netflix original cited in the email is the star-studded action film Red Notice, whose writers will receive $2.78m (versus the originally proposed $850,000).

Netflix started utilising WGA talent in 2016, but its collective bargaining agreement only covers theatrical runs. Instead of paying residuals based on revenues earned in international markets as is the WGA’s standard, Netflix wanted the Guild to accept a similar deal to the DGA and SAG-AFTRA, which allowed the streamer to residuals on less than the cost of the film.

The WGA, however, refused this offer, and took the dispute to arbitration – ultimately prevailing late last week.

The email added: “The upcoming 2023 MBA negotiation challenges us to address the industry’s rush to use the growth of the streaming model to depress pay and working conditions for Hollywood talent. It is our hope that writers and all Hollywood labor will receive their fair share of the value we together create.”