Hollywood peers over the precipice

Industry adding up potential cost of strike

“Here’s the bottom line: Hollywood has never had it so good. That’s why everyone’s getting grabby.”

That’s the analysis of one studio veteran about the state of the industry, circa November 2007, and many would agree with him. Studios and networks claim their margins are shrinking and talent claims it’s not getting a big enough slice of the pie, but the level of prosperity across Hollywood is robust. And that’s the very reason why a succession of wars between management and the talent guilds looms darkly.

No one knows as yet how the first skirmish, with the Writers Guild, will be resolved, but on one point there’s near unanimity: Neither side — management or labor — has exhibited either statesmanship or even marginal lucidity in stating its case. “I’m going to take a backseat for a while,” says the CEO of one major company, and his position reflects that of many of his colleagues.

That sort of attitude has prompted Guild members to believe — and with good reason — that some of the mega-companies actually want a strike. And judging from the angry rhetoric of the WGA, management, in turn, believes that writers are courting confrontation — witness the last-minute missives distributed warning that management is demanding 11th-hour “rollbacks” in pension and health contributions.

Even as the rhetoric gains in intensity, the town is nervously adding up the potential costs of a strike. Says one top-tier writer: “I can visualize it now: It’s the week after Christmas, the bills are piling up, I can’t get my agent on the phone because he’s been fired and I’m thinking, ‘How did this happen?’ ”

Apart from short-term fears, the community also is alarmed about the long-term impact. The scenarios are daunting: The flow of advertising dollars from television to the web will intensify as broadcast TV’s fortunes continue to narrow. Once the strike-inspired upsurge in movie production runs its course, the studios will sharply cut back their production schedules even as they chop away at talent and production deals. The prospective post-summer slowdown will cost jobs at talent agencies and other ancillary businesses.

“We have it real good now, so people don’t realize how bad it can get,” says one veteran director. He notes the keen possibility of a prolonged strike or series of strikes stemming from the lack of unity among the guilds as well as disagreements among the companies.

As Ari Emanuel of Endeavor wrote on his blog, “Going on strike to lose more than you gain is not smart negotiating.” Negotiators for the writers and directors have had little, if any, contact prior to the writers’ strike deadline. Some writers have been unnerved by their guild’s strike rules, including the so-called “script validation program” requiring writers to submit half-finished scripts to their headquarters.

Even as anger continues to fester within the Guild, the CEOs of the major companies make no effort to disguise their internal disputes. “The hard-liners are leading the parade, but they don’t know where they’re leading us to,” confided one CEO.

“I feel like I’m in Berlin at the outbreak of World War II or Beirut before the civil war,” observed one writer. “These have been the best of times. Where did the worst of times suddenly come from?”

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