What Reagan Did for Hollywood

When he was president of the Screen Actors Guild, Ronald Reagan staged a showdown with studio executives—and won the creation of the residual payment system that lives today

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In this March 30, 1947 picture, Lois Maxwell, 20-year-old Canadian-born actress who would star as Miss Moneypenny in 14 James Bond movies, receives her Screen Actors Guild member card from the guild's new president, actor Ronald Reagan. (AP Images)

Tonight, the Motion Picture Association of America will honor the film career of Ronald Reagan with a tribute in Washington, D.C. The participating film studios include Paramount, Disney, 20th Century Fox, Universal, and Warner Brothers. Ironically it was these exact studios (plus MGM and Columbia) who, 51 years earlier, were engaged in a contentious high-stakes negotiation with Ronald Reagan. The outcome of that bitter 1960 showdown altered the economic fortunes of tens of thousands of film actors.

As the country winds down its celebration of the Ronald Reagan Centennial, there seems to be a growing consensus that Reagan was, for better or worse, a significant president. Personally I am convinced that he is vastly underrated, and I have more than seven billion reasons to support my argument, though not a single one of them is related to his eight years as U.S. president. Let me explain.

In the fall of 2000 I was hired to act in the film Legally Blonde. I portrayed a member of the admissions board that voted to admit Elle Woods (Reese Witherspoon) into Harvard Law School. I had four lines and my lone scene took just a few hours to shoot.

Eleven years later, in October 2011, I received a check from the Residuals Department of the Screen Actors Guild for the amount of $48.40. This was just the latest in a series of "Legally Blonde" residual checks that I and the other cast members have regularly received since the film's theatrical release in 2001.

It is now accepted orthodoxy that union film actors get residuals. But it wasn't always that way. For decades, residual payments for actors did not exist; film actors were paid for their work, and that was it. The studio owned the film and could release it again and again, anytime and anywhere, with no thought of further compensation for actors.

There are, of course, many people who worked diligently to secure residuals for film actors. But at the top of the list is President Ronald Reagan. Not the U.S. President, but the union president. Here's what happened.

Back in 1937, Ronald "Dutch" Reagan was a popular baseball radio announcer and local newspaper columnist based in Des Moines, Iowa, when he travelled to California to cover the Chicago Cubs spring training camp. While in Los Angeles, he met a talent agent who arranged a screen test for Warner Brothers. The studio was impressed by Reagan's on-camera presence and offered the 26-year-old a contract at $200 per week. So goodbye sports—hello Hollywood.

Reagan moved to Los Angeles in June of '37, just weeks after the film producers accepted the fledgling Screen Actors Guild (SAG) as the actors' official union. On June 30th he paid his $25 SAG initiation fee and became "a union man." By 1941, Reagan had joined the the SAG board of directors. He soon rose to 3rd Vice President, and was ultimately elected President in 1947.

Just ten years after arriving from Des Moines, Reagan now led the union representing the biggest movie stars in the world. He was subsequently re-elected for five consecutive one-year terms.

During his first tenure as SAG president (1947-1952) Reagan, then a liberal Democrat, was instrumental in securing residuals for television actors when their episodes were re-run. However, motion picture actors were still shut out of residuals and did not receive any compensation when their studio films aired on TV.

As more and more movies were telecast (The Wizard of Oz was first shown on TV in 1956), film actors felt they were being deprived of a significant source of income. With every new contract the issue was tabled until, in 1959, the actors had had enough. They demanded residual payments for future telecasts and retroactive residuals for films shown on TV between 1948 and 1959.

The producers had a short answer: no. In fact, they were desperately looking for ways to cut production costs, not increase them. Between 1946 and 1959, domestic movie attendance plummeted over 65 percent as more and more Americans chose to stay home and watch television. As a result, the movie industry was in a tailspin and hemorrhaging money.

So the producers dug in. Any talk of residuals, past or future, was simply a nonstarter. The producers took a hard line because they knew that if they acquiesced to actors, they would probably have to make similar deals with both screenwriters and directors.

But the actors were firmly committed to their cause and, in the fall of 1959, they voted to return Ronald Reagan to the SAG presidency to spearhead the negotiations.

The talks began in January 1960 with the two sides a great distance apart. The producers refused to even talk about residuals. They put forth a simple and compelling question: Why should any employee be paid more than once for the same job?

Reagan could not get them to budge. He joked that he was simply "trying to negotiate for the right to negotiate."

In February, Reagan upped the ante. He asked the SAG membership for a strike authorization. The actors agreed and a work-stop date was set: Monday, March 7th. The producers were convinced the actors were bluffing. In the 50-year history of Hollywood, there had never been an industry-wide strike.

The producers underestimated the resolve of Reagan and his negotiating team. On March 7th, 1960 the actors did what they said they would: They walked off their respective jobs and production at all the major studios ground to a halt.

In the tense days following the walkout it was the studios, not the ex-sportscaster, who first blinked. Universal Pictures agreed, in principle, to the concept of film residuals. Eventually the other majors (Paramount, Disney, Warner Brothers, MGM, Columbia, and 20th Century Fox) fell in line and finally began negotiating the "non-negotiable" issue.

After five acrimonious weeks of intense back-and-forth, the two sides reached a compromise. It contained three parts:

  1. Actor residuals for all studio films made starting in 1960.
  2. No residuals for any studio films produced before 1948.
  3. In lieu of residuals for films made between 1948 and 1959, the producers agreed to a one-time payout of $2.25 million, a contribution SAG would use as seed money for a new union health insurance plan and a pension plan.

It wasn't everything the actors desired but, on April 18, the SAG membership voted to accept the offer and return to work. The final tally was 6,399 to 259.

The strike was over, but some actors were furious with the deal. Stars like Mickey Rooney, Glenn Ford, and Bob Hope believed SAG could have gained retroactive residuals for all films if Reagan had been tougher and held out longer. They felt Reagan and the SAG board had "screwed" them and derided the compromise as "the great giveaway."

It is true that film actors who worked primarily in the '30s, '40s, and '50s (including, it should be noted, Ronald Reagan) didn't benefit directly from the new residual agreement. But, to label the compromise a giveaway is to miss the brilliance of the deal. By convincing the major studios to accept the concept of paying film residuals, Reagan opened the gates to an expanding revenue stream that continues to benefit thousands and thousands of film actors—and their heirs.

At a meeting of the SAG membership in April of 1960 Reagan said, "I think the benefits down through the years to performers will be greater than all the previous contracts we have negotiated, put together." Reagan's prediction was right on the money.

These days, with the prevalence of cable, DVDs, satellite, Netflix, pay-for-view, rentals, streaming, and downloads, residual payments are now massive. In fact, since SAG first began issuing residual checks, more than $7.4 billion have been distributed directly to actors. Many are middle-class actors like me. Again, this payout is in addition to the original compensation.

Looking back from the vantage point of 2011, the residual agreement seems altruistic, optimistic, and visionary. One might call it Reagan-esque.

And, thanks to Reagan and the strike he engineered in 1960, working actors are also eligible for both health insurance and a pension.

Although I have no home in the Republican Party—I'm pro choice, drug legalization, and gay marriage—I hold a deep appreciation for the leadership and savvy negotiating skills of the seventh president of the Screen Actors Guild, and fellow actor, Ronald Reagan.