As strike looms, WGA talks begin on film, TV

With Hollywood worried sick about back-to-back strikes this spring and summer, the Writers Guild of America launches two weeks of negotiations today with studios and networks over a new film-TV contract.

Talks, to be held at WGA West headquarters, will be watched most closely for indications of whether the two sides can bridge the massive gulf in their positions without a work stoppage. The first few days are likely to be devoted largely to presentation of proposals.

In a move underscoring the importance that the studios and nets attach to the talks, a delegation of CEOs will attend today’s session along with the usual negotiating team of labor relations execs. The CEOs plan to make a half-hour presentation at the opening of the confab.

The CEOs have already agreed to the WGA’s request that the negotiations be held at union headquarters rather at the usual location at the Encino headquarters of the Alliance of Motion Picture & Television Producers.

The WGA has imposed a two-week limit on the talks with the condition that should a deal not be reached in that period, no more negotiating would take place until a month before the May 2 contract expiration. Should the guild strike, most observers believe the Screen Actors Guild and the American Federation of Television & Radio Artists will be likely to bring the hammer down with a walkout when their film-TV contract expires July 1.

The 14 major studios and nets, repped by their labor relations chiefs, have contended that placing a deadline for this round of talks may doom them. But the WGA contends that such an argument is nonsense.

“As your chief negotiator, I believe the two-week time limitation is more than ample for the companies to reach agreement if they are serious,” WGA West executive director John McLean said in the latest issue of the “Negotiations Alert” newsletter sent to members. “The time for arguing through press releases should be over.”

The WGA will come to the table with a proposal drawn from a 42-item “pattern of demands” that 89% of voting members approved last fall. Though the union has not released its specific proposal, its yearlong campaign cry has centered on improvements in residuals and nonfinancial “creative rights” issues such as elimination of the possessory credit, payment of writers during principal photography and guaranteed access to sets.

“Simply stated, and to paraphrase the great Paddy Chayefsky, writers are not going to take it anymore,” McLean wrote. “We simply seek to begin to change a culture that has evolved to the point where the writer is too often marginalized.”

Profits squeezed?

On the financial side, studios and nets will likely argue that rising costs of production and marketing, plus audience fragmentation, have squeezed profit margins. They will also contend that the aggregate pay of writers has risen significantly as the overall industry expands, mostly courtesy of new revenue streams.

If a deal is to be reached, both sides must hammer out accords in these crucial battlegrounds:

  • Video and DVD payments, currently at 1.85% of revenue but with only 20% of total revenues included in that calculation. The WGA argues that the 1985 agreement, under which it agreed to exclude 80% of revenues, is outmoded. Insiders expect studios to fight hard against giving in on the WGA’s demand to double the rate, since video is a massive profit center. WGA-estimated cost increase: $25 million annually.

  • Foreign TV residuals, currently at a one-time payout of 35% of minimum fee. WGA contends that the formula dates back to when the foreign market was in its infancy and thus has become outmoded. WGA-estimated cost increase: $17.5 million annually.

  • Cable residuals, currently at 2% of license fee. Writers say they held off seeking better fees to allow the mega-congloms to develop the cable industry; they also contend the studios and nets are not receiving fair-market value when they sell shows to their own cable channels. WGA-estimated yearly cost increases: $4.3 million for basic cable; $3 million for made-for-pay TV; $1.5 million for made-for-basic cable.

  • Fox Network residuals, currently at 66% of those for ABC, CBS and NBC. The WGA wants the net to pay full freight, but Fox will undoubtedly contend its viewership still lags the Big 3. WGA-estimated yearly cost increase: $1.4 million.

  • The Internet, currently negotiated on a case-by-case basis on made-for-the-Web programs. In recent months, the Screen Actors Guild and the Directors Guild of America obtained jurisdiction over advertising made for the Internet.

  • Creative rights, which do not carry a pricetag. The DGA has contended that the proposals are economically irresponsible, which the WGA denies; the studios have argued that the WGA and the DGA need to settle these issues on their own, which the WGA calls an evasion of responsibility.

“Writers respect their director colleagues, but they are not their employers,” McLean said. “The companies and networks are writers’ employers, and they have the legal and moral obligation to negotiate the issues with us in good-faith collective bargaining.”

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