Business

Strike about to cost jobs

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A day after Hollywood's writers went out on strike, the major studios are hitting back with plans to suspend scores of long-term deals with television production companies, jeopardizing the jobs of hundreds of rank-and-file employees whose names never appear in the credits.

Assistants, development executives and production managers will soon be out of work, joining their better-paid bosses who opted to sacrifice paychecks as members of the Writers Guild of America. At some studios, the first wave of letters are going out today, hitting writer-producers whose companies don't currently have shows in production.

"Anyone who's not working on pilots or shows is going to get suspension letters," said one top studio executive.

That the studios are unleashing these rapid suspension notices so early into the strike underscores just how hostile their relationship has become with the writers who supply them with a steady stream of TV programs.

Now, in addition to having writers going without pay, many other entertainment industry employees will have to worry about their car payments and rent. That is likely to have a broad impact beyond Tinseltown, rippling across the Los Angeles region's entire economy.

The Writers Guild, whose 10,000 members began picketing Monday morning, decried the studios' tactic. "This is an industry based on talent, and to break relations with the most talented people in town is not a very good business plan," said Jeff Hermanson, assistant executive director for Writers Guild of America, West.

These suspensions stop payments to production companies that are largely bankrolled by studios, which count on them to come up with the next "Grey's Anatomy" or "House." Under multi-year deals, studios such as Warner Bros., Walt Disney Co., and 20th Century Fox pay for the salaries, the office space, the project development costs, even the utilities whether these entities generate hits or not. Producers and writers typically serve as creative heads of these companies, which vary in size from a handful of employees to hundreds, most of whom do not belong to the WGA.

The major studios that have issued or are planning suspensions include Fox, CBS Paramount, Disney, Warner Bros. and NBC Universal. Sony has yet to act, two people familiar with the issue said. Not all production companies financed by the studios will be cut off. The most prolific ones, run by such high-profile figures as David E. Kelley ("Boston Legal," "The Practice") and John Wells ("ER"), are unlikely to be touched, according to studio executives.

If the strike continues for long, some studios are expected to follow suit with their less fruitful movie production deals, using the same escape clause.

The employment contracts that studios have with talent contain a provision known as force majeure that allows them in a crisis situation such as a strike to suspend and terminate deals. Before a deal can be ended, a studio must first suspend it for a period of time, typically for four to eight weeks.

Some studios are using this clause to purge expensive and unproductive arrangements, according to industry executives.

"It's so sick," said one television writer worried about getting a suspension letter who asked not to be named for fear of losing his job. "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."

Dana Gould, a former writer on "The Simpsons," described the studios' tactic as a "controlled burn" strategy that would save these giant companies millions of dollars. He said the timing couldn't be better, amid television's recent poor ratings.

"It's a reboot. They want to hit Control-Alt-Delete on the fall season," Gould said.

Studio executives said the writers have no one to blame but themselves, though they declined to be quoted by name.

"In firing the bullet from the gun, they've declared war," one top executive said.

The collateral damage is likely to include people such as a 30-year-old assistant at a TV production company who depends on a weekly check of about $600 for food, shelter and gas.

"Everybody's worried," he said. "We live check to check and hope things pan out. None of us want a strike." The assistant, who asked not to be named, works at a company that hasn't been suspended yet because it's still producing a show.

Dawn Parouse, an executive producer of "Prison Break" for Fox, said she assumed she would get a letter ending her production deal after seven years at the studio -- as soon as her company finished shooting the episodes that have been written.

Barring a settlement, her head of development and two assistants also would have to hit the street.

"I'm completely bummed," Parouse said.

"Not only does it affect my show but someone who's worked with me for five years," she added, referring to her vice president of development. She said he received a form letter Tuesday from Fox warning that his job might be suspended within the next 60 days.

This week, the studios also warned writer-producers in charge of current shows that they must carry out their production duties or face termination. That can put such show creators as Shawn Ryan ("The Shield"), who is a WGA member, in an awkward position. Should they picket with other members or cross the picket line to run their show?

At least two studios have threatened to sue these top producers, known as show runners, but most of them are staying off the job.

"Should you refuse to perform your show-runner or producer duties because of a WGA strike, please be advised that your refusal may constitute a legal breach under your contract with the studio entitling us to take legal action against you," ABC Studios wrote in a recent memo.

"If you have an episode that's mostly been shot, they expect you to edit," said Marc Cherry, executive producer for ABC's hit show "Desperate Housewives," who refused to cross the picket line Tuesday outside Universal Studios. "It's kind of an ugly situation."

"The show-runners are caught in the middle," said Steven Katleman, an entertainment attorney at Greenberg Traurig. "They're stuck between going against their guild and exposing themselves to sanctions, as opposed to breaching their contract as producers."

Times staff writers Meg James and Maria Elena Fernandez contributed to this report.

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Copyright © 2014, Los Angeles Times
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