Striking an attitude

Studios take hard line, say WGA deal would bankrupt them

HOLLYWOOD — There’ll be no “meeting in the middle.”

That was the basic message from studios Thursday as they tossed cold water on a possible accommodation to resolve the threatened Writers Guild of America strike.

If anything, the battle gathered intensity as both sides continued their strident numbers game. Management said the writers’ proposal would cost them a “catastrophic” $1.6 billion over three years. The WGA put the figure at $450 million.

A trio of toppers — Disney’s Robert Iger, DreamWorks’ Jeffrey Katzenberg, Warner’s Barry Meyer — said the extrapolated cost of WGA’s demands would bankrupt them.

“We can’t put ourselves out of business,” Katzenberg declared during a 90-minute briefing at ABC headquarters in Burbank.

The same trio had taken a similar tack in January when they announced that the initial WGA demands, spread out to all union actors, directors, musicians and below-the-line craftspeople, would amount to $2.4 billion over three years. At that point, the WGA asserted the correct figure was $725 million.

On Thursday, the execs said the WGA’s seemingly minimal demand for a single penny more per video/DVD — a 25% hike from the current payout — would lead to a $200 million outlay over three years for all the unions. Studios have refused to change the current WGA residuals formula of 4¢ per unit.

The CEOs, speaking publicly for the first time since their March 1 news conference on the day negotiations collapsed, kept up a drumbeat of frosty proclamations, blasting WGA leaders for ignoring the economy’s recent move into recession.

Iger, who characterized the companies’ proposal as “nothing radical,” tweaked guild negotiators for basing their strategy on last year’s optimistic outlook.

“They had the wind of a strong economy at their back,” said Iger of the WGA proposals. “You have to wonder what’s in their minds. They are being completely unrealistic.”

But Charles Slocum, WGA West’s director of strategic planning, said the CEOs are overplaying the impact on showbiz from a possible recession.

“The general economy’s performance does not reflect the health of the entertainment industry,” he added, noting that video revenues soared 20% last year.

In the most troubling development for those hoping that the strike will be averted, the CEOs asserted that it’s the writers — not the companies — that must do most of the backtracking from their current offer for a deal to be reached.

Katzenberg labeled speculation that the two sides will meet halfway as “ill-informed” and “a nonstarter” and insisted the studios and nets have no intention of splitting the current gap in proposals — $111.5 million (company estimate) or $102.4 million (WGA estimate) — to reach a deal.

“We could not meet in the middle and have an acceptable deal,” Katzenberg said, echoing comments made two weeks ago by WGAW prexy John Wells and WGAW exec director John McLean.

The execs cited Wall Street calculations that film profits have dwindled from 11% to 2% of revenues during the past decade. Meyer also took issue with comments that the gap between the two sides amounts to far less than what studios spend on a summer tentpole movie, contending that profits on such pics are dangerously thin because so many different markets must be tapped.

“There’s no such thing as ancillary revenues any more; it’s all primary revenue,” he added. “We need many more markets and exposures to recover costs.”

Although the CEO comments may represent mere posturing, there was no mention made of possible compromises. The hard line statements also come with no new negotiations set and will deepen fears of back-to-back strikes by the WGA after its May 2 contract expiration and by the Screen Actors Guild when its contract ends June 30.

“We are scared, and anyone who says they’re not is not being honest,” Katzenberg said. “Given the seeming freefall of the economy, our timing could not be worse.”

Warning of job losses

Iger also warned that the WGA’s failure to reach a deal will lead to job losses among its members as nets greenlight more reality-based shows not covered by the guild during the upfront season in May for the fall schedule. Once scripted-show slots are allocated to nonscripted programs, Iger noted, chances are good the slots won’t ever revert to WGA coverage.

The CEOs attempted to paint WGA members as already well paid by asserting that the average working writer took home $203,744 last year, with pension and health benefits included. But WGA spokeswoman Cheryl Rhoden disputed the figure and pointed out that last year’s median compensation — reflecting the midpoint of all working WGA members — was $84,000.

The CEOs also launched an assault on the WGA’s math, declaring that the guild is seeking $227.4 million, not the $99.7 million it claims. They blamed the discrepancy on the failure of the refusal of the WGA to fully cost out the impact of gains in minimum compensation.

New numbers

The execs also claimed that taking those gains into account means they are offering the WGA a hike of $115.9 million and not the $30 million they advertised on March 1. Nick Counter, prexy of the Alliance of Motion Picture & Television Producers, was unapologetic Thursday about announcing an $86 million hike in the alleged value of the company proposal, asserting the AMPTP’s new figures could only be calculated after the WGA disclosed details of its proposal.

But Slocum said the new AMPTP numbers are wrong because of faulty assumptions. He contended that year-to-year hikes in minimums have no historical relationship to changes in total WGA compensation.

“Nothing they have said makes me want to change our numbers,” Slocum added.

Counter also said the only communication between the AMPTP and the WGA since March 1 has been to deliver foreign residuals data.

The execs also hit the WGA’s March 1 disclosure of the guild’s proposals to regulate the possessory credit on films, a move that is strongly opposed by the Directors Guild of America. The resulting publicity will make it more difficult to reach a deal on the WGA’s creative rights proposals, the CEOs said, but they still lauded both guilds for their work in the contentious area.

And in a counterpoint to the hostile tenor of many of their comments, the execs also insisted a deal can be hammered out in the next six weeks.

“We will make a deal — it’s an absolute given,” Katzenberg said. “The sooner we get there, the better.”

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