This article was updated at 11:40 p.m.

Showbiz writers and studios have agreed to negotiate past the expiration of their three-year contract and will resume talks Sunday morning.

Negotiators made the announcement Saturday at about 9 p.m. PDT — three hours before expiration of the contract. No further details were given, in accordance with the four-week-old news blackout.

The move to continue negotiations after the expiration of the contract means that most of its terms will remain in effect for the 12,000 WGA members.

The move was not a surprise. Sources close to the talks — held at the WGA West headquarters in Hollywood — had indicated that both sides would probably not reach a deal before the expiration.

During the 2001 WGA contract talks, the previous agreement was extended three days past the deadline before a deal was reached.

The outlook for this negotiation remains uncertain since the WGA has not asked its members yet for a strike authorization — a process that could be completed as few as three or four days but would likely take at least a week.

Networks want to have the issue resolved before the May 17 upfront meetings with advertisers to present the schedule for the fall season. Should the WGA vote to strike, networks would likely present a schedule dominated by reality programs — which are not under WGA jurisdiction.

Negotiations began April 5 amid assertive statements from both sides regarding tough issues including DVD residuals, jurisdiction over reality TV and health insurance.

WGA leaders insist studios need to boost the two-decade-old formula for video and DVD residuals. Execs contend video/DVD revenues — which totaled $6 billion during the first quarter, up 5% from the 2003 quarter — are essential to studios and networks remaining financially viable amid declining filmmaking profits and softening TV revenue streams from foreign markets and syndication.

The WGA has estimated its members took in $51.5 million last year in residual payments from DVD and video, or an average of a nickel per DVD sold. Writers have been aggravated over the formula since it allows studios to exclude 80% of revenues from residual calculations on most films — an exclusion granted in 1985 because studios asserted at that point that the funds were needed to help videocassette technology succeed in the marketplace.

The question of WGA jurisdiction over reality shows also is likely to be difficult to resolve. Networks insist that since the shows are not scripted, the companies are not required to bargain on the issue; the WGA asserts that since the shows operate from scripted outlines, they should be covered.