WGA has not set a date for resumption of talks
The clock is ticking and they’re still pussy-footing.The Writers Guild of America, which faces a May 2 contract expiration, has not yet set a date for the resumption of talks with the producers org AMPTP. The dysfunctional Screen Actors Guild is even less forthcoming as to when it will start its talks, other than saying it won’t be until after the WGA negotiations. There’s also a growing fear that the WGA wants to extend its expiration to match SAG’s on June 30, though both Guilds deny that such a strategy exists. Meanwhile, the phones have stopped ringing for many casting directors, location scouts and even talent agents. Film production will hit a wall in a few weeks and many producers and directors are fretting about so-called force majeure clauses that studios could invoke to get rid of them if a strike or bargaining impasse ensues. If there’s no progress in the WGA talks by mid-May, the TV networks will have no choice but to go ahead with their threat of a “Plan B” fall sked of newsmags, movies and reality shows. Things have gotten so volatile that word of a settlement swept town last week, catching even negotiators off-guard. The rumor turned out to be completely bogus. Making matters even worse, the experienced Brian Walton — the lead negotiator for SAG — has apparently been so whipsawed by the factionalism within the guild that his effectiveness is being called into question. All of this against the backdrop of a worsening economy. As for the negotiations themselves, they will resume amid a less-than-hopeful outlook with both sides proclaiming they won’t “meet in the middle” of the $100 million gap that divides them. Even that figure is in dispute. And even if a deal, or progress toward a deal, is made with the WGA, talks with SAG could fall apart. The 100,000-member strong actors union is increasingly beset by bitter infighting between rival factions within the guild. SAG has not even been able to decide whether it will offer strike waivers to indie producers: Moderates back the idea while hard-liners oppose it, contending that waivers to shoot will undercut the guild’s ability to use the threat of a strike as a negotiating tool. The only recent positive note came from several quarters suggesting a deal between writers and producers can be reached by using the recession as an exit strategy. Said one insider: “Now that both sides have painted themselves into corners with their stridency, it stands to reason they can cut a deal and then blame the economy to sell that deal to their constituents.” That tactic won’t be a slam dunk, since both sides face the PR nightmare of being accused of capitulation. But UCLA economist Tom Lieser, noting that the probability of a recession has been upped to 90%, pointed out that the avalanche of job cuts and stock market meltdowns is genuinely depressing for writers and actors. “Rank-and-file union members have been recognizing the general deterioration in the business climate,” he added. “There really has been a tremendous amount of negative information lately. People are bombarded with it.” As for the companies, a strike carries the risk of further knocking down their stock prices. Analyst Jill Krutick of Salomon Smith Barney said last week the potential strikes and soft ad market had clouded the sector’s near-term outlook, particularly on sales at next month’s upfront advertising market, and could lead to downgrades on earnings estimates for all entertainment companies. “Buyers may negotiate ad rates with options built in depending on the strike outcome,” she said. “Furthermore, we think the major networks may be more inclined to sell much less ad inventory in an effort to hold the line on pricing.” So is there a chance of a deal? The answer is a qualified yes. At this point, negotiators are focused on two particularly difficult areas:
- Video/DVD, where the WGA is seeking a $19.6 million gain and the companies are offering no hike at all. The WGA asked for a 100% increase and have backed down to 25%. Observers expect the companies to hold the line in the lucrative sector but the WGA leadership believes the formula — which excludes 80% of revenues — is unfair and outmoded.
- A “double burst” proposal from the producers for a discount on reruns of shows within 14 days as an experimental way of building audience for newer series. Disney has admitted it is particularly enthusiastic about the idea. The WGA believes the proposal represents a massive rollback of $31.1 million. There are half a dozen other complex issues to be sorted out for a deal to be reached:
- The deal will have to be acceptable to the mega-congloms. Five key players — Warner, Fox, Viacom, Disney and Sony — would pay 64% of the WGA’s proposed $99.7 million in cost increases over three years. Since Sony does not own a network, its exposure will be somewhat less than the other four.
- Foreign TV residuals, where the WGA is seeking a $21.4 million hike and the companies are offering $891,000. Still, the companies have offered to budge from their longtime formula of 35% of applicable minimum gap, which generated a total of $13.8 million in residuals last year.
- Fox TV residuals, where the WGA wants parity with ABC, NBC and CBS at a cost of $5.2 million. The companies have offered a $754,000 hike, representing an increase from the current 67% of the Big Three to 78%.
- Basic cable residuals, where the WGA seeks a $4.1 million hike and the companies have offered no increase.
- Base pay hikes. The WGA is seeking $36.8 million while the companies are offering $26 million at 3% per year.
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