Writers, producers reach deal

Pact will require members' endorsement

HOLLYWOOD — With a cliffhanger plot worthy of a summer blockbuster, Hollywood screenwriters and studios this afternoon reached a tentative three-year deal worth $41 million more to writers.

Negotiators at a 4 p.m. news conference at WGA West headquarters said both sides had approved the deal unanimously, capping three weeks of intensive negotiations that had operated under a news blackout. The 11,500 members of the Writers Guild must now ratify the contract for its terms to go into effect. The vote is set for June 4.

A relieved Nick Counter, head of the Alliance of Motion Picture & Television Producers, said, “This has been one of the most difficult negotiations we’ve had in many years because of the complexity of the issues facing our industry.”

Talks had veered to the brink of collapse several times during the last days. “We had to threaten to break off because we really weren’t getting movement from the other side,” said Nick Kazan, a WGA team member.

Kazan predicted that the pact would receive approval from members. “Writers are people of principle so if the contract was unfair, the members would not ratify it,” he said.

Negotiators had confabbed for three days after the expiration of the WGA pact at 12:01 a.m. on May 2, triggering speculation that a deal was imminent and that a devastating strike would be averted. WGA negotiating team member Tom Schulman said a key breakthrough came when producers agreed to expand foreign TV residuals.

Schulman admitted that the economic slowdown had bolstered arguments by companies who were unable to afford pay hikes. “Our position was not as strong as it was last year,” he added.

Kazan said the WGA negotiators were unimpressed by Los Angeles Mayor Richard Riordan’s recent campaign stressing the negative impact of strikes by writers and actors. “We didn’t need Mayor Riordan to tell us that other people’s livelihoods were at stake,” he said.

Although studio execs and WGA negotiators attended the announcement, WGAW prexy John Wells was absent due to the birth of his child on Thursday. Wells emerged as the key figure in the talks due to his aggressive advocacy of contract gains and clout as exec producer of “ER” and “The West Wing.”

WGAW secretary-treasurer Michael Mahern said the new pact had achieved the dual goals of generating economic gains and increased respect for writers.

“People told us it couldn’t be done even if we stayed on strike for a year or more,” he said. “Today, we are announcing an agreement that includes ground-breaking improvements and it has been accomplished without a strike.”

The package includes:

  • a 3.5% hike in base salaries, amounting to $29 million over the three years;

  • an increase in residuals paid by the Fox Network from a current 66% of the rates paid by the Big Three nets to 80% in the first year, 90% in the second and 100% in the contract’s third year;

  • an increase in the residual payments of DVD sales with screenwriters receiving a $5,000 payment per movie in exchange for the right to include the screenplay as part of the DVD. But there is no increase in video residuals;

  • foreign TV residuals were hiked by $1.2 million with the companies agreeing for the first time to an uncapped formula for the first time in three decades;

  • writers will receive 1.2% of the exhibitors’ payment for movies on demand, four times the current payout rate for video revenues. WGA negotiators cited this area as a key gain with digital delivery systems likely to replace conventional renting of videocassettes in coming years;

  • residuals on made-for-pay-TV, such as HBO’s “The Sopranos,” were increased to $4 million over the 3 years from $300,000 in the current contract;

  • made-for-basic cable residuals were hiked by 20% to $850,000 but residuals from programs that are replayed on cable did not receive any increase;

  • Internet jurisdiction on material written directly for the Web, a first for the WGA

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 them $31.2 million over three years.

The writers also dropped their demand for limits on the possessory credit for films, which could mean that the ongoing battle with the Directors Guild of America will continue until the next contract. However, the WGA and producers agreed to work with the DGA to promulgate a code of preferred practices that includes guarantees of access to cast readings, sets, premiers, press junkets and listing on call sheets.

That means the practices are not contractually guaranteed to writers, but Mahern indicated that pressing further on the issue was not worth risking a potential strike.

“The new set of preferred practices should contribute meaningfully to improving writer-director relationships,” said Jack Shea, DGA prexy. Shea called the new guidelines “sensible.”

The tentative deal is likely to receive only modest opposition among WGA members due to the unanimous approval by the negotiating committee. In the meantime, the terms of the expired contract continue to apply.

The settlement announcement lifted much of the gloom that has enveloped Hollywood for the past year due to fears of back-to-back strikes by writers and actors. The producers have a tentative start date of next Thursday for launching film-TV negotiations with SAG and the American Federation of Television & Radio Artists, which face a June 30 contract expiration, but that has not been finalized.

However, preliminary meetings to set the ground rules for those talks are expected to take place as early as Tuesday.

The actors’ unions are seeking hike in minimums and residuals but have not disclosed specifics of their proposal. They gave a brief response to the WGA’s deal on Friday.

“SAG and AFTRA look forward to analyzing the new 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,” the unions said. “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.”

Should the writers ratify the nascent deal, many believe SAG and AFTRA will follow suit. But others warned that a settlement is not a slam dunk, pointing out that the actors showed a surprising militancy during last year’s six-month strike.

WGA leaders promised over the past year that they would be more aggressive at the bargaining table, but a news blackout surrounding the week’s negotiations left Hollywood chasing rumors as to how a final deal would be crafted. Several recent sessions went past midnight and much of the town’s routine business at studios and talent agencies came to a near-standstill as execs and below-the-liners waited for developments.

Optimism surged May 2 when several studio toppers, including DreamWorks’ Jeffrey Katzenberg, CBS’ Leslie Moonves, Fox’s Tom Rothman, Warner’s Alan Horn and U’s Stacey Snider, arrived at the talks. That development began to drown out the pessimism that had drenched Hollywood following the March 1 collapse of talks, which prompted vows from both sides that they would not meet “in the middle” of the $100 million gap between offers.

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