Breakthrough raises deal hopes

Appropriately enough for Super Bowl weekend, the WGA and the studios were driving toward the end zone, looking to lock in a strike-ending deal as early as this week.

The Writers Guild of America and studio brass made a breakthrough on the key issue of Internet streaming in a lengthy Friday session — generating cautious optimism that an end to the 3-month-old writers strike may soon be at hand.

“It’s not a done deal, by any means,” said a well-placed insider. “But Friday was a good day.”

The terms of streaming are said to be slightly different from those in the Directors Guild of America agreement but agreeable to both sides.

Over the weekend, lawyers and other reps for the WGA and Alliance of Motion Picture & Television Producers were exchanging draft proposals for contract language.

The WGA West’s board of directors and the WGA’s negotiating committee will get updates today on the status of the weekend’s talks at separate meetings that had been previously scheduled.

WGA West and East prexies Patric Verrone and Michael Winship sent an email to members Sunday flatly denying that a deal was in place. The guild toppers urged members to resume picketing Monday and to “disregard rumors” about the specific terms of the deal.

Nonetheless, it’s the first sign of significant movement after weeks of stalemate. The pressure of the calendar undoubtedly weighed heavily in the room on Friday. Top TV execs have viewed Feb. 15 as the drop-dead date for salvaging any of the remaining TV season and for pilot season. In film, early March has been seen as the cutoff date for avoiding major disruptions to 2009 release skeds; an end to the strike would permit script tweaking on a number of pics involving pay-or-play deals for top stars that will come due regardless of whether the strike continues.

Once the two sides have the key portions of a draft contract in hand, it will be brought to the WGA’s 17-member negotiating committee. If they recommend it, the WGA West board of directors and WGA East council will vote on the pact, which would then be sent to the guild’s 10,500 members for a ratification vote.

Although nobody was ready to break out the champagne on Sunday, it seemed clear that after Friday’s sesh, the scribes and studios had breached their major “philosophical” differences, and now it was down to hashing out the details on paper. Insiders were reluctant to speculate on a timetable for these next steps, cautioning that even a seemingly small dispute could derail the process at any moment.

Sources on both sides were quick to praise the diplomatic contributions of lawyer Alan Wertheimer, partner in top showbiz firm Jackoway Tyerman, Wertheimer, Austen, Mandelbaum, Morris & Klein, who was retained by the WGA to help hash out a definition for the “distributor’s gross” term that is key to the contract’s compensation formulas.

The big question looming is how the WGA West board will react to a pact that includes compromises on the new-media compensation terms that the guild sought at the start of contract talks in July.

Several of the board’s members are hardliners who have been openly critical of the compensation terms to which the DGA agreed last month. The DGA deal has been the template for the WGA’s latest round of informal talks with studio brass, which began two weeks ago, more than a month after the last round of formal talks between the WGA and AMPTP broke down.

It’s understood that the WGA and AMPTP have agreed that in the interest of time, the sides will not reconvene in “formal” bargaining sessions but will continue on in the small-group setting that yielded Friday’s progress. Insiders said Friday’s lengthy meeting was rocky at the outset, but with both sides acknowledging the high stakes involved in the strike that began Nov. 5, the tone shifted quickly with compromises offered by both sides.

The WGA has demonstrated remarkable solidarity during the course of the work stoppage, but the completion of the DGA deal stirred significant divisions among WGA members in recent weeks about whether the scribes should embrace terms of the directors’ deal.

Moderates within the WGA camp were known to be getting restless given that a deal template was on the table for the WGA. Yet others who count themselves as moderates speculated Sunday that the harsh rhetoric from hardliners may have spurred Friday’s compromises, as studio execs realized that at least some in the WGA had the stomach to continue the strike.

On the flip side, WGA leaders are under extreme pressure to be able to claim a victory in the talks that would justify the strike. But there is also widespread sentiment in the industry that the WGA strike helped pave the way for the DGA to achieve the gains made in its contract.

In attendance at Friday’s session were News Corp. prexy Peter Chernin and Walt Disney Co. CEO Robert Iger, who have repped their counterparts at other majors in the informal talks; WGA negotiating committee head John Bowman, WGA West exec director David Young and Verrone; and attorney Wertheimer.

Verrone, whose stance and public statements about the talks have raised hackles among studio brass, is said to have stayed out of the meetings and conversations that were held earlier in the week, but one source said he contributed significantly to Friday’s discussions. Also in the room was AMPTP prexy Nick Counter, who has been frequently bashed at WGA rallies and on picket lines for what scribes view as his hardline approach to negotiations.

The specifics of the understanding the sides reached on Web streaming were still unclear on Sunday, as both WGA and AMPTP camps adhered to the terms of the news blackout imposed for the duration for the informal talks. Web streaming has been a flashpoint because scribes have not been receiving any coin for such reuse of existing programming, even as ad-supported streaming of complete episodes has become commonplace on the websites of major nets during the past two years.

Insiders said studio brass recognized that the terms of the Web-streaming deal cut by the DGA — which calls for helmers to receive a flat fee for the first year (about $1,200 for a seg of an hourlong drama), and 2% of the distributor’s gross after that — was still a barrier to making peace with the WGA.

The sides were said to have come up with an “innovative” solution that addressed the WGA’s compensation concerns as well as the fear that any deal entered into this time around, while the new-media biz is still in its formative stage, would set a precedent for compensation formulas that the studios would refuse to revisit — the scenario that scribes feel they’ve been locked into for more than 20 years on the homevid residual front.

But industry sources said the WGA’s streaming deal still included a combination of a flat fee for the first year (excluding a two- to three-week window of free usage for promotional purposes) followed by a percentage of distributor’s gross. Like the DGA agreement, the WGA’s new-media deal points are expected to include a sunset provision at the end of the three-year term of the contract.

The WGA was also said to have secured a “separated rights” agreement for new media that will ensure scribes who create original works for new media will be compensated and retain certain rights should the property be used for a film, TV, theatrical production or other medium.

On the issue of paid downloads, the WGA’s proposed pact is said to be identical to the DGA deal, which more than doubles the residual payments from the old homevid formula for titles that sell more than 100,000 units. And on the issue of new-media jurisdiction, the terms also are said to mirror the DGA agreement, giving the guild jurisdiction over projects with budgets of more than $15,000 per minute, $300,000 per program or $500,000 per series, whichever is lowest.

Even as talk of a settlement ramped up, the WGA separately reached interim deals with four additional independent companies, GreeneStreet Films, Killer Films, Open City Films and This is that. Deals were said to be similar to other pacts reached earlier with 13 other film and TV production entities.

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