Scribes down the stretch

WGA talks continue on a hopeful note

HOLLYWOOD — Negotiators gave Hollywood a dose of cautious optimism Thursday by announcing their full bargaining committees had agreed to resume Writers Guild of America contract talks at 10 a.m. today.

The 5:30 p.m. PDT announcement Thursday followed pervasive rumors of a breakthrough leading to a deal, but sources cautioned that the situation remained delicate with potential dealbreakers still on the table.

WGA rep Cheryl Rhoden said several special negotiating committees would meet Thursday evening. She stressed that a tentative agreement could not occur until today at the earliest but refused to comment on whether progress has been achieved or whether the producers have presented a final offer.

“We’re continuing to meet,” Rhoden said. “We’re not commenting on any other aspect of the negotiations. It is critical to this stage of negotiations that the discussions remain in the room rather than attempt to negotiate through the media. That tends to bog things down.”

The development came with Hollywood increasingly anxious amid the ongoing news blackout. The WGA, for the second straight day, disputed published reports that a tentative agreement was close and declared that stories in Thursday’s editions of the Los Angeles Daily News and the Chicago Tribune were “incorrect.”

Speculation persisted that a handshake deal had been worked out, but several execs warned that an agreement could elude negotiators or at least require several more days of talks.

And in an indication of just how much of a rollercoaster the discussions have been on, talks apparently broke down Wednesday and only got back on track Thursday morning. Several studio toppers had attended the Thursday morning session, including DreamWorks’ Jeffrey Katzenberg, U’s Stacey Snider and CBS’s Leslie Moonves.

On the outside, buzz about a tentative deal accelerated in the wake of the expiration of the WGA’s contract early Wednesday, followed by appearances by the execs at the talks. One rumor-spreader contended that companies had set mid-day Thursday as a stopping point, but that deadline came and went with no comment from either side.

Volatile stage

Instead, veteran trackers contended Thursday that talks were at such a volatile stage that key issues such as residuals for video/DVD, basic cable and Internet jurisdiction could easily derail a deal. Worries have also emerged that the WGA membership may not ratify an agreement without advances in those categories.

During the first round of negotiations, the companies took a particularly hard line on video/DVD and offered no increase in residuals even though the WGA scaled its proposal back by 75%, seeking only a $19.6 million hike over three years.

The writers contend the 16-year-old video formula is outmoded because it excludes 80% of revenues — a discount originally granted for companies to ensure that the video format would survive.

But CEOs have appeared intractable on the issue, arguing that video revenues are essential to keeping already thin margins from dwindling further. They also have insisted that granting the WGA’s demand — a penny boost to the current 4¢-per-unit payout — would hike their video residuals costs to all entertainment unions by $200 million over three years.

Basic cable residuals were also viewed as a possible stumbling block. Before talks resumed in April, the companies had offered no increase while the WGA sought a $4.2 million hike.

Additionally, reaching a deal may be complicated by the continuing emergence of the Internet as a distribution platform. At recent member meetings, strong sentiment has emerged from the WGA rank-and-file for spelling out residuals for material made available over the Internet.

Thursday’s negotiations started following an 8-hour recess. The bargaining teams had logged back-to-back sessions of 17 and 13 hours.

“We appreciate that not only our members but the entire community is waiting to hear news of these negotiations,” Rhoden said. “And we hope to bring them a successful announcement. It’s important that the focus stay on the talks, even with our own members, and they have been wonderfully patient.”

Thursday’s moves could start to alleviate some of the massive unease that has overwhelmed the industry in recent months due to the prospect of potentially devastating strikes by writers and actors. The Screen Actors Guild, which is tentatively due to start negotiating next week, faces a June 30 expiration but will be much likely to strike if the WGA settles.

Several leading CEOs added to the swing toward optimism Thursday by downplaying the prospect of strikes in Hollywood.

Speaking at a Credit Suisse First Boston confab in Gotham, Barry Diller of USA Networks pointed to pre-strike precautions by studios and networks and declared, “That’s why there won’t be a strike.”

Viacom topper Sumner Redstone added he has moved to a stance of being “cautiously optimistic” about the labor situation, and Disney chief Michael Eisner proclaimed he was “quite optimistic” that a strike won’t hurt Mouse House operations.

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