Wednesday, February 6, 2008

WGA, studios hammer on details

Scenario emerges for strike's end

WGA strike

As the lawyers work overtime to hammer out the details, scenarios are emerging that could -- underline could -- bring an end to the WGA strike as early as next week.

Insiders strongly emphasize that many aspects remain to be ironed out in the contract being drafted between the Writers Guild of America and the Alliance of Motion Picture & Television Producers, and that the process could be derailed by even a seemingly small dispute over contract language.

But after guild toppers briefed members of the WGA West board and WGA negotiating committee Monday on the status of the negotiations, it's clear that the process has the wind at its back.

The WGA is hoping to have a draft contract to present to the boards of the WGA West and WGA East and negotiating committee by Friday, and to hold informational meetings with members of both branches over the weekend.

In an email message to members late Monday the WGA's negotiating committee chief John Bowman notified members of the upcoming informational meetings and said neither the negotiating committee nor the boards would take action on the contract until after those meetings.

If the broad strokes meet with approval, the WGA boards may vote on whether to call off the strike, now entering its fourth month. Insiders said if the sentiment at the weekend membership meetings is generally supportive of the deal, the WGA boards could move quickly on a vote to call off the strike while the weeks-long ratification voting process is held.

Bowman urged caution in his message about concluding that a deal has been reached. "While we have made important progress since the companies re-engaged us in serious talks, negotiations continue," he wrote. "Regardless of what you hear or read, there are many significant points that have yet to be worked out."

The sides reached an agreement over the weekend to modify the terms of the Web-streaming compensation formula in the third year of the contract that insiders say has gone a long way to ease WGA concerns about being locked into a rigid formula in a key growth area.

Insiders said the mood was very positive at WGA West headquarters Monday afternoon as negotiating committee members and WGA West board members received separate briefings on the developments of the weekend's contract talks. Making the presentations to both groups were WGA West prexy Patric Verrone, WGA West exec director David Young and Bowman.

One insider said the discussion was focused on learning the specifics of the terms reached during Friday's breakthrough session with studio toppers rather than debating whether the deal was worthy or not.

The prevailing sentiment was that Bowman, Verrone and Young had made substantial progress in the informal talks that began two weeks ago with News Corp. prexy-chief operating officer Peter Chernin and Walt Disney Co. CEO Robert Iger.

Another upbeat signal: In response to a question during a conference call about News Corp.'s second-quarter earnings, Chernin said Monday that he was "optimistic" about a resolution to the work stoppage. He said the discussions were "positive" but declined to comment further, citing the news blackout.

The most significant movement at Friday's session came with regard to the compensation formula for TV shows and movies offered for ad-supported streaming on the Internet.

The WGA's latest round of talks with the majors has used the three-year contract struck last month by the Directors Guild as a foundation for the writers contract negotiations as it pertains to the most contentious issue of compensation for work produced and distributed on new-media platforms.

On the issue of Web streaming, the DGA pact calls for helmers to be paid a fixed residual for the first year that a program or movie is offered for streaming (after a 17- to 24-day window of free usage for promotional purposes). For the second year and beyond in which a program is made available for streaming, the fee in the DGA pact shifts to 2% of the distributor's gross.

The proposed deal for the WGA is the same as the DGA terms for the first two years of the WGA contract. But starting in the third year of the WGA contract, the formula would change to give writers 2% percentage of distributor's gross from the get-go after the promo window ends, rather than a fixed residual for the first year of streaming availability.

That adjustment to the DGA template went a long way in easing the concerns of the WGA leaders that they would wind up locked into a rigid formula on Web streaming, knowledgeable sources said. Granting scribes a percentage of distributor's gross in the first year of streaming was seen by WGA leaders as a good-faith compromise on the majors' part and would set an important precedent for future WGA contracts.

One big challenge in calculating the new-media compensation terms is that the business of Web streaming of programs and paid downloads of TV shows and movies is still in its formative stage.

It's hard to put a dollar figure on the profits studios are realizing from Web streaming and downloads. It's also hard to put a traditional license-fee value on such deals, especially when transactions are conducted between different units of the same congloms -- e.g., what is the implicit value of an episode of an ABC Studios-produced show that offers for ad-supported Web streaming.

Because of all the unknowns surrounding the new-media issues, one of the most significant elements of the DGA contract that will also apply to the WGA pact is the gains made in the kind of financial and transaction data the studios have committed to making available for guild review.

As DGA reps noted last month in announcing their groundbreaking pact, the new disclosure requirements bring transparency to the studios' deal making process, which will allow the studios and creatives to track the growth (or lack of growth) in the new-media biz and thus craft more equitable compensation formulas.

Industry veterans note that the tussling over new-media compensation won't end with this round of guild contract negotiations but will likely be the dominant theme of the next few rounds of WGA, DGA and SAG contract negotiations.

By many accounts, WGA West toppers Verrone and Young are poised to put their stamp of approval on the deal taking shape with the majors. The looming question is whether the WGA West board and the broader membership of both branches will be sufficiently satisfied with the gains to ratify the contract.

Given the high esteem that Verrone and Young enjoy among rank-and-file members, even as the strike enters its fourth month, insiders say they ought to be able to shepherd the pact through the votes by the boards and membership.

At a WGA benefit concert at Miracle Mile nightspot Busby's East Friday night, Verrone helped spur hopeful chatter that an end to the strike is near. Verrone told the crowd that the two camps had been making good progress in the informal negotiations -- a note of optimism that set off a tsunami of emails, text messages and blog postings about the possibility of a resolution coming sooner rather than later.

Still, WGA leaders continued to insist Monday that the strike's not over.

Pickets continued at the usual locations at major lots in Los Angeles and Burbank and outside TV shows such as ABC's "The View" and NBC's "Late Night With Conan O'Brien" in Gotham.

Click here for all WGA Writers Strike coverage

No comments: