ABC's decision Monday to use the discounted, home video rate to pay residuals for iPod digital downloads has angered Hollywood's above-the-line unions and sets the stage for a legal showdown. SAG pledged to file an arbitration against ABC for introducing digital downloads without first bargaining with the union and for seeking to use a residual formula that was crafted more than 20 years ago to address the emerging videocassette business. "Today, ABC advised the guild that it intends to pay residuals to performers based on the videocassette formula -- a formula that does not apply to this new platform," SAG president Alan Rosenberg said.

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