Get ready for a bumpy ride when contract negotiations start next week between the Writers Guild of America and Hollywood producers.
Amid some rather pointed saber-rattling, the two sides officially will begin Monday in their efforts to replace the Writers Guild’s current three-year deal, which expires Oct. 31. And bargaining promises to be particularly rocky this time, given the positions that have just been spelled out.
“The preview of Writers Guild negotiations makes me very pessimistic,” admitted Nick Counter, president of the Alliance of Motion Picture & Television Producers, at a media briefing Wednesday. “I’ve never seen a list of the magnitude that they’ve outlined in their pattern of demands.”
The WGA’s key demands include hammering out compensation for writing for new-media platforms and expanding jurisdiction into reality and animation.
But the Hollywood studios and networks are coming to the table with what they call “a revolutionary idea” as the centerpiece of their demands: junking the entire system of residuals for writers, actors and directors for reuse of movies and TV shows because of the fast-changing revenue landscape as new-media platforms proliferate.
For several months, the companies have been floating the idea of a study to create a revamped system as essential to the industry, only to be brushed off by the WGA and SAG. And after the briefing Wednesday, the WGA immediately declared the idea of rethinking residuals a non-starter, with negotiating committee chief John Bowman accusing the companies of duplicity — crying poverty to the talent guilds while boasting to Wall Street about record profits.
At the briefing at AMPTP headquarters in Encino, three top network execs said they want to ask not just the WGA but also SAG and the DGA to go back to the drawing board for the next three years for joint studies that would create a new profit-based compensation system. The Screen Actors Guild and Directors Guild contracts both expire June 30.
“We’re operating under terms and conditions that were formulated 50 years ago,” Warner Bros. Entertainment chairman-CEO Barry Meyer explained on Wednesday. “We have to look at models that allow our investment to be recaptured. And this is the time to do it because of all the new-media issues.”
Along with Meyer, CBS’ Leslie Moonves and Disney’s Anne Sweeney appeared at the briefing to emphasize the companies’ key goal — persuading the WGA to extend the current deal. That way they can begin to overhaul the entire compensation system for talent, particularly the residuals structure and install profit-based models.
Each exec stressed that the proliferation of new-media outlets is making the current system untenable.
“It’s a time of great experimentation,” declared Moonves, adding that retaining the current residuals system will turn the nets into “dinosaurs.”
“We need complete flexibility,” added Sweeney, the Disney-ABC TV Group president said. “The guild restrictions limit our ability to do what we need to do.”
Moonves stressed that it’s too early to expect mega-congloms to sort out which digital platforms are going to survive and thrive: CBS — and its rivals — have made and will make dozens of deals in the new arena, but current revenues from them are still “minuscule.”
“Our hands can’t be tied,” Moonves added.
Not surprisingly, the WGA was unimpressed. In a statement issued a few hours after the producers’ media briefing, Bowman chided the studios and networks.
“Our proposals will be fair to writers and to the industry,” Bowman said. “What we are seeking over a three-year contract is about what a couple of failed executives get every year in severance packages.”
He also dismissed the notion of a joint study, asserting it’s merely a delaying tactic employed by companies that already have plenty of operational experience that can be used to fairly compensate writers. The WGA’s been irked over companies’ practices in the digital arena — such as asserting that work on new platforms amounts to promotion and doesn’t trigger residuals.
“The companies have made hundreds of deals in the new-media arena over the past year, which proves that they do have viable business models,” Bowman said.
“We don’t need a study,” he emphasized. “We need a fair share for writers of the revenue our work generates. Our members can’t rely on Hollywood accounting. According to studio analysis, ‘The Simpsons’ doesn’t turn a net profit. The companies have lost the right to talk about a profit basis for residuals.”
The possibility of companies’ pushing for a revamp of residuals received its first mention in 2004, when the DGA concluded that such an initiative could be an unintended consequence if it pushed for a hike in DVD residual rates.
The DGA concluded that it wasn’t ready to take that step and then reached its current agreement, with the biggest gains in health and pension contributions; within six months, the WGA and SAG followed suit.
On Wednesday, SAG topper Doug Allen reiterated his guild’s previous stance against a study and a concurrent contract extension.
“We are not interested in extending our agreement,” Allen declared. “We don’t need a study to know that a compensation system based on profit accounting would be inaccurate, unreliable and unfair. Talent can’t be asked to share the profit risk when creative artists have no control over what projects are made or how they are budgeted — particularly for promotion and advertising.”
Counter said Wednesday that he’s uncertain if the demand for a study would prompt a strike by the WGA. “We won’t really know how deeply they’re dug in until Oct. 31,” he added.
But if it comes to that, the producers say they’ll be ready with alternative shows that won’t require guild writers.
“CBS is not going to go blank,” Moonves said. “We will have product on the air, high-quality shows.”
“You shouldn’t,” Sweeney added, “underestimate our resolve.”