Hollywood writers ponder the producers’ real intention, studios and nets using strike to get out of “unproductive” deals, directors get into the act

By Alex Ben Block

HOLLYWOOD, CA. (Hollywood Today) 11/08/2007 – The Hollywood writers strike appears to have become a virtual management lockout as well, aided by a key change in contracts since the last work stoppage in 1988. At that time, producers had to give written notice and then wait as much as eight weeks to cancel contracts under the force majeure clause that in a crisis allows them to terminate deals.

Since then contracts have been revised, and studios today are free in most cases to immediately cancel writing and producing deals if they wish, which producers such as CBS Paramount began to do the first day of the strike.

As a result, studio bosses are using the strike, or are poised to use the job action, as a way to get rid of producing, writing and development deals they consider unproductive, along with people no longer in favor with management and an associated army of assistants, aides and support staff, many of whom have already been locked out of their offices. Some lots, such as the CBS Radford facility in Studio City, have been near ghost towns since pickets hit the bricks.

This is separate from legal letters the writers, and especially those who are also show runners, expect shortly notifying them that they are in breach of their contracts. “When we took this action as show runners to leave our obligations on the stage and come out here, we knew we were in violation of a contract and that we could be suspended, or worse, we could be terminated with cause,” said Donald Todd, Executive Producer, Co-Creator and Show Runner of “Samantha Who” on ABC, one of the season’s few new hit shows, as he walked with a picket sign Wednesday in front of Disney Studios in Burbank.

“That’s how much people out here care about this,” added Todd. “You’re talking about a billion dollars in salary represented out here (by those picketing). Who knows how much? A lot of people making a lot of money, leaving all that on the table when they came out here. So we clearly feel strongly about it.”

So do the half a dozen companies that control the vast majority of television (CBS Paramount, NBC Universal, News Corp. /Fox, Time Warner, ABC/Disney and Viacom). While it appears they genuinely did not want this strike, their negotiators led by AMPTP President J. Nicholas Counter did not push very hard for a settlement, and at times appeared to be stalling or posturing, as if taking a strike would also give them an opportunity to re-invent their business model for the new media age. In other words, even when the strike is eventually settled, the producers will be in a position to re-evaluate all deals, and decide who to take back, potentially at a lower cost.

Peter Chernin, President of News Corp., parent company of Fox Broadcasting, laid out the new economics for Wall Street analysts on Wednesday, in a conference call when it announced News Corp. revenues for the Spring quarter were up 9 percent to $7.4 billion, and profits had soared 24 percent to $718 million compared with a year earlier.

Chernin told the analysts the strike would not hurt his company unless it goes on well into late next year, and in the short term would actually be helpful. “My guess is that during fiscal ’08 [through next June] a strike is probably a positive for the company,” said Chernin. “We save more money in term deals (that are cancelled) and story costs, and probably the lack of making pilots, than we lose in potential advertising (if they actually aired the shows).”

“It’s so sick,” a television writer told the L.A. Times. “The studios are using the strike to clean their books, getting rid of the writers they don’t want and keeping the ones they do.”

This has led some writers to ponder just how seriously the AMPTP was during pre-strike negotiations. “I observed some behavior during the negotiations that clearly indicated to me that there was some gamesmanship going on from the other side,” said Marc Cherry, Executive Producer, Creator and Show Runner of ABC’s hit dramedy “Desperate Housewives,” as he walked the picket line on Wednesday.

“They (the producers) didn’t get into serious discussions until the day before we said we were going to strike, which was a really bad sign to me,” continues Cherry. “And the truth is we went in last July very kind of honestly and earnestly saying here are out proposals. And they didn’t start discussing them with us until the last possible second. I was very concerned about that. And I do think the fact that they had their press release prepared (when talks ended abruptly this past Sunday) prior to us even discussing things was a really bad sign.”

Unlike 1988, the producers are now part of much larger conglomerates that by definition are not union friendly. These big companies have deep pockets and can take a strike much longer than individual writers facing mortgage and car payments every month.

Even the way the talks ended is controversial, with each side telling a different version of events. The last minute talks on Sunday did mark more progress in a few hours than the two sides had made in all the months leading up to the deadline. One reason was that the writers took off the table their proposal to double the royalty rate on DVD sales, which had been a central component of their demands from the beginning, and a stumbling block, according to management. Dropping the DVD demands was a shock even to many of the WGA members, who had been briefed on the talks last week before the final decision was made to strike.

Sources within the WGA say that they were given a signal through back channel sources (people trying to bring the sides together) that if they withdrew the DVD proposal, producers would respond with a major initiative on other proposals, primarily paying royalties on TV shows streamed over the Internet with commercials. Instead, the WGA made their move but the producers did not respond at the same level.

“I know from our side the perspective was pretty strong that we had an indication that if we were willing to move in that direction then in fact there would be some serious movement,” said David N. Weiss, who wrote the movie “Shrek 2,” and is Vice President of the WGA and a member of the board of directors. “There wasn’t serious movement.”

“”It was a shock and an affront to everyone in the writers guild that they didn’t follow up with some serious movement there,” said Marc Cherry, “and sadly, because I think he’s a nice guy personally, I’m starting to not believe Nick Counter, whatever he says.”

The writers insist they made clear to Counter on Sunday, as talks began, that if there was no deal, the strike would go forward as scheduled.

Counter said in a statement on Nov. 4 that they were surprised the WGA did not delay the strike.

“Notwithstanding the fact that negotiations were ongoing, the WGA decided to start their strike in New York,” said Counter in a statement. “When we asked if they would “stop the clock” for the purpose of delaying the strike to allow negotiations to continue, they refused.”

The idea that Counter did not know the WGA would go out on strike is “a lie,” adds Weiss. “We couldn’t have been clearer. We were going out and if they wanted us not to go out, they needed to respectfully reply to our very reasonable proposals. And they didn’t do it.”

“The writers wanted to make a deal and were willing to negotiate until there was a deal, but the other side never made us an offer, never put an economic package on the table, so here we are on the picket line,” said Carol Mendelsohn, Executive Producer and Co-Creator of the CBS hit “CSI,” who is a member of the guild negotiating committee.

An industry source told Hollywood Today that Counter had been instructed by the studio bosses in advance to terminate any and all negotiations the second that a strike actually began, so he had no choice but to walk at that point. However, indications now are that it is management that is stalling on re-starting negotiations. There have even been indications the producers don’t plan to start talks again until some time early next year when the WGA will be joined by representatives of the Screen Actor’s Guild, whose contract is up at the end of June in 2008.

Next June is also when the Directors Guild of America contract is up, and the WGA has asked the directors not to negotiate separately while they are on strike. It is unclear if the DGA will wait. The directors have their own independent agenda and may act pre-emptively to make a deal.

John Wells, Executive Producer of “E.R.” and a former WGA president, as well as a member of the DGA, said that the Internet is also important to directors. “I don’t think (the DGA talks) will be an easier negotiation,” said Welles as he walked the picket line Wednesday. “If they choose to negotiate when we are on strike (they) will feel pressure from dual members (of both guilds) to make sure they don’t undercut the kind of things the Writers Guild has been asking for.”

A DGA deal could set a precedent for the WGA and SAG, although the writer’s leadership has said they will not be forced to make a deal based on what the DGA or anyone else does if it isn’t what they are seeking.

What are they seeking? The key issues that remain all revolve around the Internet. The WGA wants a share of any revenue produced by distribution over the Internet, whether paid for by consumers or subsidized by advertising; and they want jurisdiction to organize new media writers and bring them into their union.

The producers continue to say that the Internet is still experimental and that airing of shows online is simply a promotional mechanism, even when it includes paid ads. “It’s shocking to me actually that you can go on CBS.com or Innertube and download an episode of my show that wasn’t even rerun once before on television, which constitutes about half our income – the second run residual,” said Kari Lizer, Creator and Executive Producer of the CBS show “The New Adventures Of Old Christine,” as she walked the picket line.

“And so there’s something wrong with that. It’s not a commercial for the show. It’s not a sneak peek at the show. It’s the entire episode of the show the day after it’s aired…There’s a basic problem with that. There are fundamental creator’s rights to their material.”

The producers have won the public relations war for the most part. The highly professional PR staff at the AMPTP, which includes the former head of PR at Warner Bros., has done a better job of briefing key trade and consumer press on their views, and getting out statements with their positions more promptly, making it more likely to be picked up by the mass media. That was the case as talks broke down. The AMPTP was ready almost immediately with a press release making their case that it was the writers who forced an end to the talks by going out on strike at that point (first in New York).

The producers have gotten out the message that their proposals are realistic even when they were not. For instance, the AMPTP spent weeks pushing a proposal to roll back residuals and replace the formula in place since at least 1960 with a system where the studios only pay when a project goes into profit, according to the studio accounting for that movie or TV show. That sounded reasonable to the public, but not to anyone familiar with Hollywood accounting.

“Let’s go back to the very beginning,” said Neal Baer, Executive Producer of “Law And Order: SVU.” “Do you think it’s a good way to negotiate by presenting a 32 page proposal that takes away the writers credit and rolls back residuals, and a seven page proposal that said everything is beautiful on the Internet, but just give us a couple years to study it.? They telling us they need to do a study when they are already telling Wall Street there’s a lot of money to be made on the Internet. We’re not going to take that. They gave us a 32 page screw you proposal.”

The producers are negotiating the same way they manage, so it isn’t a complete surprise, according to Donald Todd: “Most of us, especially the show runners, have been in this business long enough to know how we’re dealt with, and we accept it. We understand they’re going to bring a non-starting deal to start. It’s going to waste time. Then they are going to back off and call it a concession. That is the way our day to day operations are…so there’s no reason to believe they would behave any differently on the larger issues, and that’s exactly what they did.”

“Nobody has anything to win in a strike,” added Carol Mendelsohn. “The writers aren’t trying to win anything. The writers are just trying not to lose what they already have. If management takes away all the money they want to take away now, next time they are going to come after our pension and health benefits. So this is an issue that affects unions and guilds everywhere. This is a moment the writers happen to be on the front line.”

All of the writers who commented for this article made the point that they are the first to face the producers, but they are aware that what happens to them will set the precedent for all the other unions and guilds. They are also aware that management has been pushing and pulling back proposals to confuse things and try to create a situation where they believe writers will take whatever they can get eventually.

At least during this first week, the writers remain firm. The writers also believe there is a formula that can bring this to an end, when the producers are ready to put it on the table. Writers insist they are ready to resume talks immediately.

”Despite their spin, the (AMPTP) has not brought a deal to the table,” says Todd. “Speaking specifically about Internet downloads; the number in their mind is ‘zero.’ That’s not a number..It’s a non-number. I know that they know that it is not going to settle at zero. Not since the last century has there been no participation by artists in their creative endeavors. Now they’re saying we’re not going to get any. Well, we know that isn’t the case. To not bring that to us now, well, it’s on them.”

Photos: Jeffrey Jolson, Paola Perla