Scripts may soon be blank as writers and producers argue over new media income split
By Alex Ben Block
HOLLYWOOD, CA (Hollywood Today) – 7/16/07 – With the threat of a strike looming, tense talks kick off today between movie and TV producers and unionized script writers over . While aimed at a contract expiring in October, some insiders believe that ultimately the acrimonious battle over digital compensation could push a final agreement to June 2008, when actor’s contracts are up as well.
That could set the stage for an epic labor showdown in Tinseltown pitting corporate owned, bottom-line oriented management — facing a rapidly changing marketplace – against creative talent (writers and actors) who feel short changed seeing their work pop up on broadband, digital, online, wireless and in other new media markets.
There has not been a strike in two decades by writers but both sides are prepped for battle and neither side appears ready to back down any time soon. Even worse, each side seems to lack real respect for the other side. The producers snidely put down WGA President Patrick Verrone because he is not as well known and doesn’t have the stature of past guild leaders like John Welles. The writers see many of the producers as former lawyers and accountants who only care about the bottom line; and not about those who contribute their ideas, vision and sweat equity.
J. Nicholas Counter, the tough as nails lawyer who will represent producers in the negotiations, has already said publicly that he is especially wary of David Young, who joined the WGAW as director of organizing in July 2004, and was named interim exec director in September 2005, because he comes from a labor organizing background.
“I’ve been doing this since 1982 and, except for the 1988 strike, this is the lowest point of the relationship,” Counter told Variety.
SAG and the WGA both have activist new leadership elected on a platform promising to get writers and actors their fair share of the new electronic and digital markets. The writers and actors don’t want a repeat of 1988, the last year the writers had a strike, when creative talent accepted a deal that gave them a small share of the home video market. That strike lasted five months and caused a delay of the fall TV season. Now there is strong sentiment to make sure the creative talent gets a fair share of the new emerging media markets even if it leads to another strike.
“Based upon the statements of the Writers Guild [which represents both movie and television writers in any contract negotiations], it’s quite clear these are going to be very contentious negotiations,” Counter told the Associated Press.
Some of Counter’s remarks are seen as bluster. The L.A. Times recently did a profile of Counter, noting that despite a quarter century on the job, he remains a somewhat mysterious and little known figure in Hollywood: “Counter’s tactics often involve putting opponents on the defensive, portraying their positions as unreasonable while rattling off statistics showing the industry’s economic woes. When leaders of the Writers Guild of America recently telegraphed their demands, including securing “fair compensation” for entertainment distributed over emerging technologies, he publicly blasted them as an “assault on the industry.”
Management, meanwhile, sees itself bargaining from a position of strength, backed up by large conglomerates that by definition try to avoid unions and guilds as much as possible. The big studios and networks are already stock piling scripts and will have plenty of episodes of series and other content ready if there is ever a strike.
The producers contend that it can’t be business as usual because they now face competitors online who are never going to be subject to guild rules. “We need to be able to (experiment with online, new ad models) without being subject to a lot of the old legacy contractual restrictions that frankly, a lot of our competitors such as You Tube that are competing for the advertising dollar are not subject to,” Marc Graboff, Co-Chairman of NBC Entertainment and Universal Media Studios, told reporters over the weekend.
Increasingly, the networks have come to rely on reality programming that is less expensive to produce and for the most part is done outside WGA and SAG jurisdiction; a sore point for both writers and actors who have been agitating to unionize reality shows, so far with little success. The threat of a strike some believe could cause a “defacto strike” meaning a period when the studios act as if a strike is a certainty, causing them to go toward even more non scripted shows.
To make clear how little the producers care about the writers agenda, last week they AMPTP held a press conference to announce an 11th hour bombshell proposal to do a rewrite on residual payments for talent. Although the producers deny it makes them profit participants, the truth is exactly that. If imposed, the producers plan would effectively put the studios that finance movies and TV shows in the same line as their paid creative employees who receive residual payments.
The producers say they just want to withhold residual payments to actors, directors and script writers until they re-coup the costs for production, marketing and distribution. As if it is some big favor, the producers said they won’t charge interest on the money as well.
The writers cried foul because of infamously bad Hollywood accounting. The producers counter by pointing out that their books are regularly audited. What that doesn’t address is that it is the way contracts are written that are the legal way to take much larger sums of money. In other words, a show like “The Simpson’s,” longest running in TV history, is officially losing money. That’s because the profit participants and studio distribution fees have already drained off much of the cash flow.
There is also a lack of unity on the residual issue among producers. While some are gung ho about forcing changes, others were as surprised by the proposals as were the writers. The residual issue could just be a prod to frighten writers; but if it is a real issue, that could split the ranks of the producers.
There was a time in Hollywood when all of those represented by the AMPTP were essentially unified in their goals. Today that is not true at all. There are studios that own networks and some that don’t. There are companies with cross currents of interest in video, consumer electronics, online, wireless and gaming, that conflict with some of the other companies which are part of the AMPTP.
No matter how they try to play this story, that means the financier and copyright holder, who owns this asset perpetuity for all media, now also wants to share in the “profits” going to the talent – actors, writers, producers, crafts people – who don’t own the company, and are bartering their talents for a fair salary and the promise that they will share in downstream success.
The producers are also asking for a study that could take several years to determine exactly where the market is headed. They say things are changing so fast that it is impossible to make any deal right now.
“The digital landscape is unpredictable,” Bruce Rosenblum, President, Warner Bros. Television Group told journalists over the weekend. “We are making very, very short-term deals. All of the deal as a studio that were entering into with our network partners are one year deals, at the most two-year deals. And the reason for that is we know today that we are going to know a lot more in 12 months from now and we going to know a lot more 24 months from now. And the notion of establishing some business models today that are going to apply 12, 24, 36 moths from now just simply isn’t prudent. We don’t have enough information to allow us to structure those deals.”
Rosenblum insists that “we want to make deals. We want to share in success with both the networks and our creative partners, but we just nee d time to figure out what those business models are going to look like.”
The guild response is that they have learned over the years that any deal they make will be nearly impossible to change later, as happened with home video, where the writers have never felt they got a fair share. “The companies have made hundreds of deals in the new media arena over the past year, which proves that they do have viable business models,” responded John Bowman, head of the WGA negotiating committee over the weekend in response to statements by the producers. “We don’t need a study, we need a fair share for writers of the revenue our work generates….Our members can’t rely on Hollywood accounting.”
However, there is some precedent for taking time to study the issues. That is what SAG did not long ago with its commercials contract. Both sides essentially agreed to a two year extension while producers, actors and advertisers figure out new models.
The studios see costs rising and profits eroding, and fear giving away a share of new media which may not even cover the losses they face as old media fades. The producers in the past, for instance, have contended that they can’t pay more for home video because they need those profits to cover all the movies and TV shows that fail.
Still, the producers understand as much as the writers the dangers ahead. “You can’t just say, ‘Okay, were going to give you a little piece of this, while were looking at everything else,’ because it’s hard to take back that little piece of this, if you give it.”
As a negotiating tool, some of the producers may look to drive a wedge between AFTRA and SAG, both representing actors. AFTRA traditionally has jurisdiction over taped shows while SAG does film projects, but what does that mean when everything is recorded on a memory chips the size of a pinhead? Since AFTRA offers somewhat lower rates, producers will push to have more shows fall under their aegis and fewer under SAG.
On the table, along with the digital battle, there will be these kind of jurisdictional disputes, as well as discussion over compensation, the rising cost of health and pension benefits and much more. For instance, this negotiation has long been targeted by the writers as the place to correct what they see as an early injustice in the digital age. When the Ipod for TV came along, the producers arbitrarily agreed to pay residuals based on the home video contract formula, instead of the pay TV formula desired by the guilds. The home video split for talent is much smaller.
As an example of the lack of flexibility under current contracts, producers cite “webisodes” that they wanted to produce using series writers. The guild objected that it was a new kind of work, and there was no compensation scheme, so they told the writers not to cooperate. The networks saw that as a violation of their right to use their employees as they saw fit. However, when it went to arbitration
In February, the National Labor Relations Board dismissed as “totally unfounded” an unfair labor practice complaint brought by NBC/Universal Television which claimed the WGA “unlawfully pressured” the writers of “The Office,” “Heroes,” “Crossing Jordan” and other shows not to pen “webisodes” until there was an agreement on employment and payment terms
This past March, CBS worked out a deal with the WGA for a “flexible framework” covering online, wireless and other new media deals which did cover “webisodes” written for distribution on the Internet or via a wireless device. It gave writers a base compensation and the benefits of the WGA’s original contract, such as payment coming in from re-runs on cable, DVDs, and other “new media.”
Ultimately many of these issues are going to be important for many years to come; so both sides see this negotiation as crucial to their own survival. There is a sense of history around these talks; meaning that what is done here will have an impact on future generations. That alone has stiffened the backbone on both sides.
That is why some insiders say the talks with writers are not going to be the end of it. They say there needs to be a larger industry wide solution. That could mean the writers will extend their contract while talks continue; and AFTRA which has a contract coming up in January will extend; and it will all come down to June when the writers and actors will either be unified, or the networks will have found the leverage they need to win the day.
No matter how they eventually reach an accord, with or without a strike, the road to labor peace in Hollywood appears to be long and rocky.