Main features of the pact

Even as it breathed a sigh of relief, Hollywood must struggle to cope with a maze of problems triggered by strike clouds as a debate commences over the pros and cons of the tentative WGA settlement.

With a writers’ deal virtually in their pocket, networks are frantically hammering out revised schedules. Film studios, meanwhile, are trying to cope with clogged assembly lines knowing that most of their production funding has already been exhausted.

Contingent planning still is dependent on a settlement with the enigmatic Screen Actors Guild, though optimism prevailed on both sides over the weekend that a deal with that union could also be worked out.

“The WGA settlement definitely lifts the general air of doom that has been hanging over Hollywood for the last nine months,” said Matt Roshkow, who writes with partner David Kukoff for film and TV.

But, Kukoff added, “It doesn’t seem to me that the gains we made were substantial, on any level.”

In fact, once the first burst of euphoria dissipated, some disappointment followed as writers tried to dissect the $41 million in gains, which include $29 million for increased minimums.

Screenwriter Tim Herlighy told Daily Variety, “I still don’t know if we won or lost. It’s so complex. Everyone’s going to need more time to see how it’s going to affect them.”

Ratification expected

No one expects the WGA’s members not to ratify the pact. The WGA West board and WGA East Council will meet this week, an informational meeting will be set, and ballots will be mailed out for return by June 4.

“Do I think we deserved more?” asked Mark Verheiden, who penned both “The Mask” and “Timecop” for the bigscreen. “Absolutely. But I’m trying to think positive: I think they got what they could in this environment. I don’t think it’s a tremendous deal, but it’s a good one.”

The deal’s disappointments center on the relatively minor hikes for residuals for video/DVD, foreign TV and Internet coverage, all of which had been rallying cries.

The high points were getting Fox residuals up to network levels; big hikes in made-for-pay cable; and the agreement to form a committee with the Directors Guild of America to draft a code of preferred practices.

“I don’t think it’s a good deal,” one top writer groused. “The writers got nothing on video or DVD. The foreign is minuscule. The one place they achieved some progress was with Fox. But they did buy labor peace for another three years.”

The biggest pain was no gain in videocassette residuals, only slightly eased by the last-minute inclusion of a $5,000 payment for the right to include the screenplay on DVD.

The foreign TV gain, spun as a breakthrough by the guild since it uncaps residuals, provoked grousing since only mega-hits will generate enough sales to trigger the bonus payments. The Internet deal, which includes reuse payments of 1.2% of licensing fees, was viewed as not going far enough.

Frustration over blackout

Some writers were annoyed by the media blackout during the nine weeks of negotiations.

“The was no point in the negotiations to really rally about,” said Nick Falacci, who with his writing partner and wife Cheryl Heuton is working on two MGM scripts.

“A lot of us were in the dark about a lot of issues with respect to what was being sought, and what was being offered. I didn’t get the sense that a lot of writers were demanding these things. Still, I’m not disappointed. I’m relieved. Now’s not the time to strike over these issues.”

Ironically, it’s the expression of widespread relief that has some scribes worried about future talks.

“Charlie’s Angels” co-writer Ryan Rowe said: “I think a lot of writers do have the stomach for a strike — for instance, if they’d tried to roll us back, we’d have all gone out in a minute. But all this expressions of ‘relief’ sends a message that we don’t.”

In short, given the new corporate landscape, the question may not be whether the deal was a good one, but rather, how bad may future deals be? That most studios are now part of vertically integrated multinational congloms had some scribes doubting that anything but incremental gains will be possible in future.

“In future, it’s only going to get harder,” said Rowe. “They don’t see any difference between us and how they’d hammer a machinists union. They’d drill in the Arctic National Wildlife Preserve to find new writers if they thought it’d make any difference.”

Hollywood’s spotlight now shifts back to the Screen Actors Guild.

SAG talks Thursday

Negotiations on a new film-TV contract had been tentatively set to start Thursday, seven weeks ahead of the June 30 expiration, and initial meetings to lay the groundwork for scheduling will take place today.

But the nerve-jangling prospect of back-to-back strikes has been largely blown away now that the scribes have settled.

“I think the WGA’s deal is a very good sign for SAG,” said SAG member Brian Hamilton, who operates a nonpartisan Web site devoted to SAG issues. “I think the media blackout proved very successful because it focused both sides on solutions rather than bringing out ego problems.”

With the writers pact in place, negotiators come to the SAG talks with a clear idea of the parameters of what’s possible in the current climate.

Neither side has disclosed its proposals. And unlike the WGA talks, which were led by writer-producer John Wells and were held at the Writers Guild headquarters in Hollywood, the SAG talks will be staged in Encino at the Alliance of Motion Picture & Television Producers headquarters.

Still, a deal with SAG is by no means a slam dunk.

Boxed in by deal?

“The WGA deal means the negotiations committee is going to feel boxed in when they get to the table,” one SAG source said. “The producers are going to want to use the WGA terms as a template, and there will be some resistance among the more aggressive members of the SAG team.”

SAG comes into the negotiations with a 13-member team headed by Tom LaGrua, respected within the guild for his low-key manner. He is viewed as a good example of a working actor who can make the key SAG arguments about the need to reverse the earnings erosion faced by mid-level thesps on TV work.

Although the American Federation of Television & Radio Artists also comes into the negotiations with a 13-member team, it will play a far smaller role since virtually all the work under the contract is SAG-covered. Many of the 135,000 actors repped by SAG and AFTRA are members of both unions. SAG will come to the table with the producers with a smaller club than had been expected a few months ago. The union’s clout has been reduced not only by the WGA settlement but also by the slowing economy and internal discord within its ranks.

SAG will face tremendous pressure within and without to follow the WGA’s lead, particularly since the actors will be seeking similar gains in residuals.

But SAG issues differ considerably in key areas such as erosion of wages, diversity, runaway production and coverage of the contract on foreign shoots.

Not much prep work

SAG’s contract campaign so far has been cursory — recaps of the issues, stressing the need for improvements in minimums and residuals and statements from prexy William Daniels and chief negotiator Brian Walton that SAG does not want a strike.

With less than eight weeks before contract expiration, SAG has not yet scheduled a single event to prep members for the negotiations.

By contrast, the WGA was holding its first series of membership meetings to explain the need for extensively revamping its contract well over a year ago. On Friday, SAG and AFTRA retained their cautious posture.

“SAG and AFTRA look forward to analyzing the new WGA deal in detail to see if it will be helpful in finding a way to address the specific needs of actors in our upcoming negotiations. SAG and AFTRA will have no further comment on the WGA deal until our analysis of it is completed.

“If the AMPTP and the networks are prepared — as they have assured us they are — to address the unique needs of actors, we are confident we can emulate this significant accomplishment of reaching an agreement without a work stoppage.”

Reps of SAG and AFTRA attended every WGA negotiating session since talks began in January, and their joint national boards recently approved the contract demands without disclosing details other than saying it was “streamlined” by comparison to other recent proposals.

Waivers, publicity issues

In the meantime, Hollywood will have to keep waiting for SAG to rule on a pair of unsettled questions –whether the guild will grant strike waivers to low-budget films, and whether guild members will still be allowed to engage in publicity and promotion work if a strike is called.

Daniels, who sits on the negotiating committee, declared last month he favors granting waivers on a case-by-case basis to low-budget films but stressed that the decision is up to the committee.

The SAG negotiations will begin with the overhang of last year’s bitter strike against advertisers. That work stoppage saw the ad industry low-ball SAG with a demand for elimination of residuals for network TV ads — a stance that provoked a combative response from SAG.

The involvement of high-profile celebrities in that strike could be seen as a warning shot to the AMPTP that SAG should not be trifled with in the film-TV contract negotiations.

The success of the commercials strike remains under debate as actors saw ad earnings drop by $100 million last year to $530 million.

Some contend the strike was unnecessary while others insist SAG had no choice.

(Josef Adalian, Claude Brodesser and Charles Lyons contributed to this report.)

Main features of the Writers Guild’s tentative deal

  • 3.5% hike in base salaries, amounting to $29 million over three years.
  • Increase in residuals paid by the Fox Network from current 66% of rates paid by Big Three nets to 80% in the first year, 90% in second year and 100% in third year.
  • Increase in residual payments for sales of DVDs, with screenwriters receiving a mandatory $5,000 payment per movie in exchange for the right to include the screenplay as part of the DVD. The payment, expected to add $1 million during the contract, will be triggered 30 days after the credit arbitration.
  • No increase in video residuals.
  • An increase in foreign TV residuals by $1.2 million through 1.2% bonuses, triggered by foreign program fees meeting targets.
  • Writers will receive 1.2% of the exhibitors’ payment for movies on demand, including library films pro-duced since July 1971.
  • An increase in residuals on made-for-pay-TV, such as HBO’s “The Sopranos,” which will rise to $4 million over the three years from $300,000 in the current contract.
  • An increase in made-for-basic cable residuals of 20% to $850,000; there was no increase for network programs that are replayed on basic cable.
  • The companies agreed, for the first time, to provide pension and health benefits for work produced directly for the Internet. The companies also agreed to pay 1.2% of a program’s licensing fee for reuse on the Internet.
  • The studios agreed to drop their demand for a “double burst” discount on second airings of TV programs within a 14-day window. The WGA had said that the proposal would have cost it $31 million over three years.
  • The writers dropped their demand for limits on the possessory credit for films; however, the WGA and producers agreed to work with the Directors Guild of America to promul-gate a code of preferred practices that includes guarantees of access to cast readings, sets, premieres, press junkets and listing on call sheets.
  • The WGA agreed to a reduction in residual rates for syndicated pro-gramming that has not met specified distribution thresholds.