Negotiators for the WGA and Hollywood studios left the bargaining table Sunday evening with more cautious optimism about the prospect of avoiding a strike than when they sat down earlier in the day.

Sources on both sides said there was enough incremental movement on key issues during Sunday’s sessions to foster hope that the sides can come close enough to terms today to avert the start of a strike on Tuesday. The WGA’s current master contract with the Alliance of Motion Picture and Television Producers expires at midnight PT tonight. 

The sides are scheduled to meet today at AMPTP headquarters in Sherman Oaks around 11 a.m. PT. Although there were positive signs on Sunday, one source cautioned that today will nonetheless be an arduous day of negotiations. The studios are awaiting the WGA’s response to new proposals made on Sunday.

The most significant progress made on Sunday surrounded funding for the guild’s over-taxed health insurance plan. The studios are said to have significantly raised their offer of a lump-sum influx of nearly $90 million, up from the previous offer of around $60 million. The sides also are said to have met in the middle on the amount of savings that WGA administrators would seek from the plan in exchange for the payment. That number is said to have settled at around $6 million-$7 million over the three-year term of the master contract, up from the $3 million offered by the WGA but down from the $10 million initially sought by the studios.

The sides have also made progress on the “span” issue regarding the compensation formula and work terms for writers working on short-order series, those that run less than the broadcast standard of 22-24 episodes per season. The AMPTP has slowly but surely sweetened the offer on the span issue in an effort to assure writers that they recognize the financial pressure on working writers with industry’s shift toward shows that run 6-13 episodes per season.

Sources close to the situation cautioned that there are still some outstanding points on the span question, such as the timing of when writers would qualify for extra compensation. But observers also believe that there’s enough of an offer on the table that would make it hard for span to become a hot-button strike issue at this point.

The WGA’s push for parity in script fees across broadcast TV (the highest-paid venue), pay and basic cable and streaming, and for gains in new media residual structures remain thorny issues. Sources indicate the studios are proposing a gradual elimination of historic discounts for cable and streaming, but not all in one year as sought by the guild. Again, industry observers doubt whether these gradations of compensation are the kind of lightning rods that would drive working WGA members to hit the streets with picket signs.

The CEOs of the major studios have been keeping close tabs on the talks as the deadline approaches. By multiple accounts, Hollywood leaders have worked to build consensus on their response to the WGA’s contract demands and to find places to give in order to avoid the disruption of a strike. The CEOs are mindful of the leadership vacuum a decade ago that led AMPTP negotiators to back the WGA into a corner, paving the way for the 100-day walkout that shuttered film and TV production from November 2007-February 2008.

Sources said CEOs and senior managers of the largest TV and film divisions are expected to hold separate conference calls this morning to discuss the state of the talks.