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Strike deal: Now
comes the tricky part


The studios have come to terms with the directors

Jan 18, 2008
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On the face of it, judging by the deal reached yesterday between the Hollywood studios and the directors' union, the studio bosses would appear to be easing up on their hard-line stance over new media rights, which has been at the center of the 10-week-old writers strike.

The deal offered to the directors, which is likely to be approved by union members, substantially increases the payout the directors would receive for work that is downloaded or streamed on the internet over what the studios had been offering the writers, and by healthy margins.

That would suggest a deal might soon be struck with the Writers Guild of America. As things work in Hollywood, the first deal becomes the template for other labor deals, and the other unions step in line.

But that's not what's at work here. And it does not follow that a deal with writers will come anytime soon.

The studios are not easing up in any regard. More likely their aim is to force the WGA into a squeeze play that could well split the union members from the leadership. Or that appears to be the intent of the studio's negotiating arm, the Alliance of Motion Picture and Television Producers.

In cutting the deal it has with the Directors Guild of America, the AMPTP puts the writers in a position to do one of three things.

The writers and their union could accept the terms offered the directors, which in addition to increasing new media payouts would double residuals on DVD sales, one of the demands of the writers.

That seems unlikely, considering the hard line taken by the guild's leadership, though they will have no choice but to give those terms a fair review.

The deal offers directors 3 percent of residuals for six months, after a promotional period of 17 days, compared to 1.2 percent for a year for writers after six weeks of free use for promotional purposes. The writers have demanded 2.5 percent of new media revenues.

Guild leaders believe clearing the way on new media payouts is critical at this point, even though they now represent only a small revenue stream for the studios. They recall 1988, their last walkout, when the WGA agreed to small payouts on DVD sales, thinking they could renegotiate at a later date. That rate is still in effect.

The guild and the writers could in unison reject the terms offered the directors, continuing their strike.

That's a possibility, and something the union leadership would argue for on several grounds.

One, the WGA has succeeded in cutting a number of independent deals with small and mid-size studios, independent of the AMPTP. Each such deal represents a defection from the AMPTP and weakens its power. Each such deal puts more pressure on other studios to also bolt and cut their own side deals.

If enough studios bolt, the WGA wins.

Also, the WGA has the actors' support, and the real worry for the studios is that the actors, whose contract runs out in June, join the writers and effectively close down Hollywood's entire TV and movie-making apparatus. As labor lawyer and strike analyst Jonathan Handel notes, those directors won't have much to do without writers to pen the scripts and actors to memorize and recite their dialogue.

The third scenario, one the studios would most benefit from, would be that the work-a-day writers, the union’s rank and file, break from the union leadership and push for a contract that gets them back to work in a jiffy.

Dissident writers could argue that while new media may be important down the road, it's just small potatoes at this point, and not worth staying out of work for. Let it become an issue the next contract talks.

It could well be a winning argument in the wake of the directors’ agreement. The DGA undertook a lengthy analysis of new media revenue potential and essentially decided it was too little, and would be too little for too many years, to haggle over in these contract talks.

Of course, the directors have far less at stake in new media residuals. Many don't stand to receive any. But it could be enough to sway writers who have been out of work for months with no settlement in sight.

In such a squeeze play, the studios would see a double win. They would get a favorable deal on new media residuals, of course.

But they would also break the WGA leadership, which appears to have been one of their aims all along. That would have a long-term payout for the studios, affecting the next round of negotiations and the round after that. Once broke, the WGA would probably never mend.

The challenge for the WGA will be to hold back its membership from bolting. It could be tough. There are already strong signs of rising disenchantment with the hard-line approach taken by the WGA leadership.

Whether the leaders can head off a revolt will become clear in the coming days as writers meet to haggle over the terms of the DGA deal.

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Lisa Snedeker is a staff writer for Media Life.




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