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Can sides strike a balance?

Back-channel talks begin anew between the key guilds and corporate hierarchs

It was five years ago at this time that Hollywood first realized it was heading down the road to self-immolation.

The looming issues were twofold: The creative community had decided that, with contract talks in progress, digital heaven was beckoning (their timing couldn’t have been worse). The corporate CEO fraternity in turn resolved not just to reject activists’ demands but to put them in their place (a humiliating place).

The upshot, the writers strike of 2007-08, turned out to be one of those rare debacles where both sides lost … big time. The once-cozy craft of writing for film and TV was soon to become a nasty struggle. With ratings tumbling, TV would moult into the bastion of reality programming. The implicit communal bond that once united Hollywood would be shattered.

All this is relevant today as back-channel talks begin anew between the key guilds and corporate hierarchs. And the business of dividing up the pie has grown ever more complex. Those lavish revenues from the new media that were mythical five years ago are now a vivid reality. At the same time neither side wants to replicate the bitter negotiations, or the ideological claptrap, that prompted the great strike with the resulting losses of jobs and income.

The intriguing details of that upheaval are superbly chronicled by Variety’s deputy editor Cynthia Littleton in a new book titled “TV on Strike: Why Hollywood Went to War Over the Internet” (published by Syracuse University Press).

Littleton manages to vividly capture the central characters, and build the complicated storyline, while still explaining the blizzard of proposals and counter-proposals involving residuals, royalties and deferred payouts. She is generally kind to the principals, explaining that their motivations were sincere, if their actions often ill-conceived.

She is also far more moderate than I am in her indictments — to her the strike was more the product of human foibles than nasty misbehavior. I agree with her, but, in retrospect, the behavior on both sides bordered on the irresponsible.

What were the geniuses of the AMPTP thinking when, at the start of talks, they introduced an incendiary proposal to overhaul the entire residual system — and not just for new media (the so-called “recoupment proposal”). Even the fair-minded Littleton called this “a tactical blunder.”

And why did the Writers Guild leaders get so carried away with their own rhetoric that it seemed like they savored a strike? “We are part of a broader struggle for justice between the American middle class and power concentration,” proclaimed David Young, the Guild’s executive director, who has just signed on for a new term.

Amid all this posturing, it remained for some fair-minded attorneys and agents to try to instill reason. Littleton cites the efforts of CAA’s Bryan Lourd in particular in trying bring the sides together. But Lourd was frustrated that the guild had done such limited research in the new media market marketplace that it was ill-equipped to do battle.

What no one knew at the time, of course, was that the Great Recession was at hand and that the only realistic goal was survival.

Five years later, the outlook is radically different. While the big media conglomerates (like most of corporate America) still likes to talk about belt-tightening, revenues are in fact soaring — Time Warner’s profits surged by 50% in the last quarter and even Sony, long struggling with its electronics business, forecast a return to the black thanks to a 30% increase in filmed entertainment. All this is consistent with the results of the 339 members of the S&P 500 whose earnings surged 7.3% in the fourth quarter (but who are still hoarding cash).

Writers and directors are keenly aware of the fact that the majors are unveiling new digital licensing deals almost weekly — Time Warner earned $350 million in so-called SVOD revenue alone last year. Competition is heating up among Netflix, Amazon and Hulu, which is great news for content owners — and also potentially for content creators.

So the stage is set for a new “grand bargain,” provided a modicum of leadership can emerge on both sides. A good start would be to make Cynthia Littleton’s book required reading. Its lessons are sobering.

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