Dealmakers spurred by fear, loathing
Dollars and sense of the 3-month strike
By CYNTHIA LITTLETON
Was the strike worth it?
In the eyes of many scribes, the answer is an unqualified yes. But when it comes down to dollars and cents, the answer is murkier. The victories in new media that may pay big dividends in the future have come at a high price in the here and now.
The contract agreement that the Writers Guild of America clinched with the Alliance of Motion Picture & Television Producers last week includes precedent-setting deal points and establishes residuals formulas for the first time in the uncharted waters of new-media reuse -- gains that most likely would not have been achieved, or at least realized at the same level of compensation, had the biz not been paralyzed by the work stoppage.
For the WGA, it was all about setting precedent and cementing the idea that scribes deserve to be paid for Internet exploitation of their work. More specifically, they wanted a deal that paid them a percentage of distributor's gross, on the principle that "when you get paid, we get paid."
But the cost of achieving that principle through a strike has been considerable -- particularly for the busiest and most successful WGA members with the most to lose. Meanwhile, the money to be made through the hard-fought new-media residuals is not exactly eye-popping.
A TV writer, for example, will earn about $1,400-$1,600 a year for each streamed episode on which he is the credited writer -- while some showrunners may have lost as much as six figures from unproduced episodes. Screenwriters will probably earn less from this new income source, as Web streaming of movies is not nearly as ubiquitous as streaming of TV programs. Meanwhile, pic scribes have lost out on assignments and on rewrite and polish deals, and they will face the intangible costs of having lost the momentum a project may have had before the strike -- momentum that may or may not be regained.
On the TV side, a showrunner who was slated to make around $40,000 per episode on a 22-episode order for the 2007-08 season that has been downscaled to 12-15 segs is out at least $280,000. The deal the WGA cut for ad-supported Web streaming of series calls for a scribe to earn about $1,400-$1,600 a year for each seg on which she is the credited writer, and that's even after the compensation formula switches to a percentage of distributor's gross in the third year of the deal.
Financially, the deepest cut was felt in the TV biz last month, when the majors invoked force majeure provisions on more than 70 overall term deals. The wave of pinkslipping not only affected scribes but the nonwriting producers who have become so ubiquitous on the talent rosters of major studios during the past decade.
Of course, IATSE members and other industry workers also took a hit from the strike since their livelihoods were affected from its first day.
Beyond the immediate pain, network and studio brass have vowed that they will never load up again on so much overhead in the competitive frenzy to lock up creative talent. Writers who are solid performers but not superstars will be grappling with more one-off deals in the future, rather than the studio housekeeping deals that paid them $1 million or more over a few years to develop pilots and pitch in on series.
Networks, in varying degrees, are vowing to use the jolt provided by the strike to tame the madness of pilot season by cutting the volume of development -- not just this year but for good. If the nets hold to this promise, it will mean fewer opportunities for scribes and other constituents in scripted TV to draw their highest paydays, as pilot fees have traditionally been higher than regular episodic minimums. And, of course, the shutdown of scripted series production only spurred the broadcast nets to dive deeper into the well of writer-free reality programming.
With all of these payday opportunities at stake -- and the savviest of WGA members surely knew they were on the line when the walkout began Nov. 5 -- what was the motivating factor that put so many feet on the street? How could guild leaders have maintained such remarkable solidarity (albeit with some restlessness in the last few weeks) among its members?
Fear and loathing, that's how.
The fear stemmed from the same issues that keep the media conglom CEOs up at night. Nobody in the biz knows how the digital revolution in showbiz wrought by iTunes, TiVo, YouTube, the Wii and their ilk will change the entertainment-consumption habits of generations to come. The only certainty is that things are changing, at warp speed, thanks to the availability of paid downloads and Web streaming and the evolution of the DVR and digital video cameras as household appliances.
WGA leaders were supremely effective in summoning a demon from the guild's past -- the hated homevideo residual deal reached in 1985 -- to raise the specter of a similar injustice inflicted on scribes in the digital realm. "Won't get screwed again" was the rallying cry of WGA West prexy Patric Verrone from the time he was elected guild prexy in 2005.
That most of the majors have been offering ad-supported Web streaming of full-length TV shows for more than a year without offering any kind of compensation for scribes only made members more inclined to believe the WGA leaders' sketchy logic that if the guild didn't fight to the death for a fair shake, the studios would shut them out of Internet revenues forever.
The loathing part stemmed from a major tactical blunder by the AMPTP early on in the WGA negotiations. At the highest levels within the media congloms, it's recognized that the 32-page proposal to overhaul the residual payment system that the majors put on the table when negotiations began in July was akin to pouring gasoline on a fire.
Insiders say there was dissent among the AMPTP conglom leaders about the proposal and that it was in large part a maneuver to put the WGA on the defensive. In fact, it couldn't have been a bigger gift to guild leaders, as it provided them with so much ammunition to paint the majors as intransigent and focused only on rolling back writer compensation, not expanding it in the Internet realm.
The blow-up at the outset set the tone for negotiations that got more poisonous as they went on, in fits and starts, through the fall, with plenty of missteps and misplaced rhetoric emanating from Verrone, WGA West exec director David Young and, to a lesser degree, WGA negotiating committee chief John Bowman. The rollback proposal was so offensive to many members that the guild's success at shutting it down was a key point that Verrone and Young used to sell the contract at Saturday's membership meeting.
By the time the sides arrived at their day of infamy on Dec. 7, when the AMPTP broke off talks after demanding that the WGA drop six deal points (including the quixotic bid for jurisdiction on reality and animation), the bosses of the AMPTP congloms were firmly focused on putting the WGA talks in a deep freeze while they cut a deal with the Directors Guild of America that would serve as a basis for restarting the WGA conversation.
The DGA and WGA both wound up benefiting from this high-stakes chess move by the majors. The DGA went into its negotiations with incredible leverage given the strike and the majors' eagerness to cut a deal. The WGA strike gave the DGA some ammo, but the DGA also brought its experience, its research into the new-media marketplace and the strength of its industry relations to seal a deal that became the foundation for the WGA accord.
The DGA deal helped the WGA both in the contract terms and in the approach to negotiations, when the leaders of the AMPTP member congloms stepped in and became actively involved in hashing out the pact. In the end, all of the major players agree that movement in the WGA talks began when Disney CEO Robert Iger and News Corp. prexy Peter Chernin got into the same room with Verrone, Young and Bowman.
The momentum toward a deal further accelerated when the WGA retained respected showbiz lawyer Alan Wertheimer to help it sort through thorny issues, such as the definition of distributor's gross, shortly after the DGA pact was unveiled on Jan. 17.
But the real thaw in WGA-studio relations began about a week before the DGA pact was completed, when Endeavor partner Ariel Emanuel helped set up a private meeting for Bowman, Chernin, CBS Corp. chief Leslie Moonves and Warner Bros. chairman Barry Meyer at Chernin's home.
The gathering for drinks was cordial and focused on big-picture issues, clearing up some past misunderstandings and coming to terms on a process for the negotiations that will finally bear fruit for scribes.