Writers blocked

No date set to resume; resids still a sticking point

Film-TV contract talks between Hollywood writers and studios broke down Thursday after six weeks — with no date set for the resumption of negotiations.

While both sides sought to cool fears of a strike after the May 2 contract expiration, negotiators admitted that massive gaps remain on financial issues.

“While the suspension of these talks will not inevitably lead to a strike, we are deeply concerned,” said John Wells, prexy of the Writers Guild of America West. “No one is anxious to strike.”

Nick Counter, prexy of the Alliance of Motion Picture & Television Producers said, “We are so far apart on the economics that there was no way to bridge the gap.”

The collapse of talks will intensify the industry’s fears that the WGA will strike when its contract expires, followed by a work stoppage by the Screen Actors Guild when its contract ends June 30.

Studios and networks have ramped up production over the past year in hopes of riding out such an eventuality.

Wells said the suspension will probably last for several weeks, but he was vague as to when talks would relaunch. Counter said the companies are ready to resume at any time and added that they are prepared to negotiate with SAG at the same time.

SAG expects to be ready to negotiate on behalf of actors in early April but has not yet set a date.

Both sides withheld fiery rhetoric at back-to-back news conferences Thursday but still slammed each other’s proposals, giving a preview of how they will fight the spin war over the next several weeks.

The companies’ news conference, held at Warner Bros. in Burbank, included Warner topper Barry Meyer and Disney prexy Robert Iger.

The WGA’s announcement, 90 minutes later, took place at the WGA West headquarters in Hollywood. Notable attendees besides Wells and Mclean included SAG prexy William Daniels, AFTRA veepee John Connolly and consultant Robert Hadl.

The WGA pointed out that the companies offered no increase in residuals for video/DVD and basic cable; no Internet jurisdiction; a $2.8 million reduction in pension and health benefits; a proposed change in firstrun TV residuals that amounts to a $31 million loss for WGA members; and a refusal to bring Fox Broadcasting residuals up to the level of the Big Three nets.

Wells said that on the foreign residuals front, the producers hadn’t even made documents available so that the two sides could grapple with the numbers.

The AMPTP maintained that its package is “reasonable” given the economic challenges of the entertainment industry and labeled the WGA’s demands “unrealistic given the current economic climate.”

Counter disputed the WGA’s estimate of a $31 million loss under a “double burst” proposal that would give a free second run of a show within 14 days or two free second runs on cable.

“We would do it only on an experimental basis on new series in order to build an audience, so it would be very limited use,” he added.

Counter also defended the refusal to budge on video/DVD, in which 80% of revenues are excluded to account for manufacturing costs, even though the WGA sliced its requested increase in video/DVD from 100% to 25%. He contended that video is part of the companies’ primary market and its revenues are essential for funding movies and TV.

Gap flap

In a troubling sign, negotiators could not agree on how big the financial gap is between proposals.

The AMPTP said its final proposal called for a $30 million overall hike over three years while the WGA asked for $112 million; the WGA said a proposed cut in first-time TV residuals makes the value of the AMPTP package $2.7 million less than the current contract’s value, while it estimates the guild proposal amounts to a $100 million increase.

Negotiators even disagreed on why talks broke off.

The companies flatly said the WGA walked away from the table, while Wells said negotiators had reached a mutual understanding that the writers’ side needed a break to communicate with its members.

“We’ve been in a news blackout with our 12,000 members for the last six weeks,” Wells noted.

The WGA will hold a series of town hall meetings, with the first set for Tuesday night at the Sheraton Universal. Wells said that rank-and-file members have been expressing “overwhelming support” for the WGA’s bargaining positions.

Extending contract

And in a key admission, WGA West exec director John McLean said the WGA could agree to extend its current contract by two months to match the SAG expiration.

Such a move could give the unions more clout at the table, but McLean also stressed that such a scenario is not the main goal at this point. “It is a possibility, but that’s not what we’re planning,” he added.

Rumors of the end of the WGA talks had been percolating over the past week, with the first round lasting far longer than many expected. Many execs and union insiders believe the two sides will not reach a deal until far closer to the May 1 expiration of the current contract.

“We are hoping this is going to be a brief breaking off of negotiations rather than a collapse,” said DreamWorks partner Jeffrey Katzenberg. “They need to go back and consult with their members.”

Katzenberg also said the WGA reps had been “well prepared, thoughtful and articulate” in how they conducted themselves at the table. “I believe these negotiations have been very constructive,” he added.

On the table

The only positive notes of the day came as both sides agreed that their latest proposals would stay on the table and that progress had been made on creative rights issues, which include WGA demands for guaranteed access to sets and elimination of the possessory credit in films.

Wells and Katzenberg said negotiators had achieved considerable progress on that aspect of the talks and expressed optimism that the two sides were near to working out a deal.

In a sign that the creative rights proposals have been less important to members than money issues, the WGA disclosed it had given in on the thorny issue of demanding an end to the possessory credit as in “A Film By…” It proposed instead that no more than 10% of all WGA-covered films carry it and that all directors who have received it continue to do so.

DGA confabs

The WGA also said it has proposed a series of joint seminars with the Directors Guild of America, which had strongly opposed many of the writers’ creative rights proposals, along with regular meetings between the two guilds about the collaborative process.

The DGA did not comment directly, saying only that any proposals “must preserve the integrity of the filmmaking process.” It also said it was “extremely disappointed” that talks had broken off and urged both sides to make “the strongest effort possible” to avert a strike.

Counter refused to speculate as to what impact the suspension of the WGA negotiations would have on starting talks with SAG. He also refused to say whether the companies’ financial proposals to the actors will be similar to those offered to the WGA.

The decision to suspend talks will likely make it harder to negotiate a deal before May 2. Observers had hoped the news blackout on talks was helping negotiators achieve progress, but with this round failing, the situation may degenerate into a spin war.

Provoking a strike?

It also will give ammunition to those pessimists who believe the studios are determined to provoke a strike to end unproductive producer contracts.

“A strike is a great way for the studios to get rid of dead wood,” one agent noted. “Because of that, there’s so little incentive to make a deal right now.”

Furthermore, the end of this round may damage the credibility of Wells, the exec producer of “ER” and “The West Wing” who became WGA West prexy two years ago. Optimism surrounding the talks had been fueled partly because of Wells’ inside knowledge and clout at the table.

“In negotiations, leaders feel that they have to demonstrate that they’re willing to do whatever it takes to back that up, which means going on strike,” one veteran negotiator said. “It’s almost like if you don’t go out, you’re a sellout.”

The first round of talks may have been doomed from the start given the massive gaps between the two sides.

Studio execs accused the WGA in early January of seeking increases that would add $2.4 billion over three years in entertainment union costs; the WGA called that number “hyperinflated” and said the three-year costs for writers, directors and actors would be $725 million.

There had been a brief burst of optimism in early February: Months of gloominess about the labor crisis dissolved slightly as the WGA decided to let the talks go past the initial two-week deadline, indicating some progress had been achieved.

But the WGA also made extensive demands to create new residuals formulas for cable, foreign and video/DVD.

The WGA originally asked for $53 million more in annual residuals, with nearly half of that — $25 million — going to video/DVDs through a doubled rate. The proposed foreign residuals hike was $17 million, and the talks apparently began collapsing late last week on that issue.

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