The AMPTP will definitely next talk with the DGA beginning in January, hoping to make a deal that will put pressure on writers while the WGA seeks to do individual contracts with producers, beginning with David Letterman’s company this week

By Alex Ben Block

HOLLYWOOD, CA (Hollywood Today) 12/17/2007 – Divide and conquer. That’s the current plan for both Hollywood writers and management in an increasing bitter strike now assured of going well into 2008. Spurning the writers, management will definitely next hold talks with the Directors Guild beginning in January as a way around what the moguls view as unionism run amok at the WGA, a source close to management told me late last week. The moguls are even excited at the prospect.

Writers meanwhile, while waiting to see if their unfair labor practices charge before the Labor Board gives them any leverage, are looking to do individual deals with studios, production companies and distributors, to break up or weaken the alliance. The WGA will sign some deals quickly, including David Letterman’s company as early as this week. (NBC’s top talkers, Leno and O’Brien are also expected to go back to work in January, but without the writer’s blessing).

However, consolidation of power and ownership in show business of almost all major movie and TV distributors into the portfolio of a handful of companies has made it much more difficult for writers to sign individual companies; there just aren’t any. Contrast that with the 1988 writer’s strike, when there were hundreds of movie and TV distributors, as well as producers, to sign guild deals, and some did. That was before the end of fyn/syn in 1992, and a congressional communications act that empowered the biggest companies. Now most of those independent distributors are gone. Some eight companies have a stranglehold on all entertainment in America, and a large share around the world.

The writers want to break the alliance apart. If one mega-company did cut its own deal and went back to work , it would put all the others big companies at a disadvantage. However, at least for now, the studio-network alliance is holding together. Management has even launched an advertising campaign to tout their unity, in which the individual moguls list their names instead of just the AMPTP logo. This is one of the first public manifestations of the behind the scenes work of a new group of consultants that come out of the political as well as the business world.

The new management ad reads:

“Different assets…”

“Different businesses…

‘Different companies…

“One Common Goal.

“To reach a fair and just agreement with writers and get back to work.”

The ad, which first appeared on the AMPTP web site on Sunday, is personally signed by the CEOs of the companies who dominate these talks, so there can be no need to wonder exactly who calls the shots within the 300-member AMPTP these days: Peter Chernin of News Corp./Fox, Brad Grey of Paramount, Robert Iger of Disney/ABC, Michael Lynton of Sony, Barry Meyer of Warner Bros., Leslie Moonves of CBS, Harry Sloan of MGM and Jeff Zucker of NBC Universal.

The DGA is seen as a union the bosses can do business with, and that has proven to be the case historically. The DGA has not been as aggressive as the writers. In the years since guilds were organized in the 1930s, the DGA has gone out on strike only once, and that lasted about five minutes. In that period the writers have gone on strike about half a dozen times, often for months, as in 1988. The current writers strike is entering its seventh week. It will be at the 10 or 11 week mark when the DGA and AMPTP meet.

The DGA negotiation team will be led by Gil Cates, who simultaneously will be producing the Academy Awards, unless of course they are cancelled because the Academy can’t get a waiver from the WGA (which is highly unlikely). The directors have had their own group of consultants doing research for more than a year on the marketplace, and will come in with facts and figures to go with their demands.

The writers had lots of facts and figures as well, but those never seem to get taken seriously by management. In the DGA talks, it could well be different. The AMPTP will likely be paying a lot more attention to what the DGA team has come up with.

The theory is that the DGA has different priorities than the writers. Almost half the DGA members are below the line (assistant directors, unit production managers and the like), and so they aren’t in line to get residuals in any case. They are more like workers covered under IATSE who only share in residuals as contributions to their health and pension plans. Add to that the reality that many of the feature film directors make enough on their overall deal residuals are not as important to them. However, there is one big common goal. This time around the writers and directors share a desire to share in new media.

The one thing that now seems certain is that management will open negotiations with director’s next, not renew talks with the writers, as the AMPTP led by J. Nicholas Counter III will hope for a more favorable outcome. The moguls and managers consider the writer’s leadership to be union activists, but believe the DGA will be more focused on economic issues. All continue to search for a workable formula for new media..

Of the six issues that the AMPTP has demanded the WGA take off the table, four are as good as gone. The two that remain, and could come up with directors as well, is first and foremost whether the residuals will be paid from the gross taken in by the movie distributors and broadcast networks, or a lesser sum that reaches the production entity that made the show or movie.

Although the network and production arm might share common ownership, the AMPTP attitude is that the WGA contracts are with the production entities, not the networks, and that is where the residuals stream must start. Writers say the producer’s gross share is chump change and the real money flows to distributors who are part of what they call the corporate “mother ship.” No guild has ever been able to pull that off in the past.

The other demand that could be in play is over fair value. The writers, actors and directors share a common fear, for good reason, that the various divisions of that mother ship will self deal with one another in ways that shuffle product at below market rates. In other words, they think the producer will sell movies or TV shows to a sister division, say a TV network, at a better rate than it could fetch on the open market. So they want to put in place an arbitration process where a third party decides the value., Management insists that it is best to let the market decide; and point out creative participants would always have the right to sue. But the reality is that a lawsuit is hugely expensive, requires an expensive accounting procedure, and those costs put it out of the reach of most writers, actors and directors.

Writers meanwhile, behind the scenes, have been working to improve communications and consultation with the DGA. A few weeks ago the two guilds seemed at odds, but now both are being especially respectful of the other, and there is much discussion about shared goals. What that means is that it the DGA and AMPTP will be at the table next early in 2008, and writers will be looking over their shoulder.

The writers have said they will not be bound by whatever deal the directors make with the alliance. However, the history of show business is that there has been pattern bargaining. The lead dog set the pace for all the guilds. Now the writers say that doesn’t apply to them. However, the pressure to make a deal could apply to them.