Hollywood ‘Balkanization’ Makes Contract Talks Ever More Complex

As Hollywood holds its breath over the possibility of a writers strike, ongoing internal struggles within the writers and actors guilds and at the studios are making this year’s negotiations the most complex ever.

Within both unions and the handful of giant media conglomerates that control the entertainment industry, sharply divergent agendas are making it more difficult to reach consensus in negotiating contracts.

Those differences are coming to a head today as the Writers Guild of America and the Alliance of Motion Picture and Television Producers face a contract expiration that comes just after midnight. Most observers expect talks to continue beyond then if progress is being made, and remain hopeful that a deal will be negotiated without a strike. Even if talks break off, any walkout wouldn’t happen immediately, because writers must first hold a strike authorization vote.

Hollywood’s current state of labor unrest is underscored by sharp divisions within the two guilds--the employed versus the jobless, those who work in TV versus film, newcomers versus veterans, headliners who make millions versus those who barely make a living.

Complicating matters is the consolidation of the industry into giant multimedia companies with different goals; technological advances such as DVD and the Internet that have vastly expanded the outlets for entertainment; globalization of the market; and the proliferation of cable TV.

Hollywood’s shifting economics have seen dramatic increases in both studio revenue and the costs of making films and television programs.

“I call it the Balkanization of both groups,” said Ira Shepard, a veteran labor lawyer who negotiated for advertisers during last year’s six-month commercial strike by actors. “It’s like the fall of the Soviet Union.”

The Writers Guild, for instance, takes pains to stress that negotiations affect both TV and film writers. But three key money issues--money paid when shows are rerun on cable TV, in foreign markets and on the Fox network--that could trigger a strike almost exclusively affect the two-thirds of its members who write for TV and are of little interest to most screenwriters.

Likewise, the Screen Actors Guild, which is expected to start negotiating with studios in mid-May to replace a contract that runs through June, is an even more fractious group plagued by open infighting among its 100,000 members, who include working and unemployed actors, highly paid stars, commercial actors, dancers, extras, stunt performers and others pushing their own agendas.

But factionalism isn’t exclusive to the labor guilds.

On the other side of the negotiating table are studios and networks that now are part of huge, diversified media conglomerates cobbled together from giant mergers during the last six years. Despite being the center of the talks, film and TV operations are an ever-shrinking portion of the overall businesses of their parent companies.

Although differences have long existed within the groups, for more than a decade they bubbled beneath the surface, allowing an unprecedented period of labor peace through the 1990s. Contracts were negotiated with little animosity well in advance of their expiration dates.

But changing industry economics brought about by soaring production costs, the expansion of cable TV and foreign markets, the expected emergence of digital distribution of films and bitter internal rivalries within the labor guilds pushed those differences into the open.

“With such diverse interests, it’s amazing they ever get a deal done,” said one top entertainment lawyer.

Residuals Versus ‘Creative Issues’

Unlike labor unions in the auto, airline or other industries, most members of Hollywood’s guilds are unemployed most of the time, with wage disparities between the haves and have-nots running into the tens of millions of dollars. At SAG, about 85% of the nearly 100,000 members are unemployed. The Writers Guild says that in any given year half of its 11,500 members don’t work.

Although some writers are multimillionaires, 25% of the guild’s members make less than $30,000. About 70% of SAG members make less than $7,500 a year acting.

Adding to the pressure is that both guilds, for maximum leverage, are negotiating about the same time.

In the current writers talks, the stickiest money issues have proved to be residuals that largely don’t affect screenwriters. Instead, film writers have been preoccupied with enlisting the guild to help protect them from what they see as disturbing practices by studios and directors in making films. Those “creative issues” include whether directors should routinely have “A film by” screen credit and whether writers are included in meetings, allowed on the set and invited to press junkets.

“There are fewer economic issues to talk about in a collective bargaining agreement for screenwriters,” said Oscar-winning writer Ron Bass. “There’s more of a focus on the creative relationships we should be having with our employers.”

Those “creative” issues are of little concern to TV writers, most of whom enjoy greater stature in their fields. That’s because television producers depend on them to provide a constant flow of scripts, as well as continuity in stories and characters, to keep audiences watching.

As a result, writers are considered the driving force in television. Top writers often serve as executive producers, creating and overseeing programs. John Wells, president of the Writers Guild’s Western faction, is one of the most high-profile and successful, with such shows as “ER,” “The West Wing” and “Third Watch.”

Generation Gap Also Exists

In contrast, screenwriters complain that they are treated as second-class citizens--easily replaced, rewritten and frequently ignored. Movie writers do want more money when their work is sold on video and DVD, but that is of little concern to most TV writers.

About the only money issue they share is how they will be paid when their work is distributed via the Internet or new broadband technology companies that Walt Disney Co. and Sony Corp. are working on.

Generational gulfs also exist among writers. More than half its 11,500 members weren’t in the guild during its costly 22-week strike in 1988, estimated to have cost the industry about $500 million.

Guild officials note that the goals of younger members can vary from those of older ones. While older members worry about the stream of residual payments they get and such issues as pension and health benefits, younger ones are concerned about such issues as how their work will be distributed using new technologies.

“Older writers are concerned about constant income from what they do. Younger writers ought to be as well. You can’t leave any writers behind,” said David Rintels, president of the Writers Guild in the mid-1970s.

Even more fractious are actors and the two unions, the Screen Actors Guild and the smaller sister union American Federation of Television and Radio Artists that represents soap actors, radio personalities and talk shows.

SAG’s relations with AFTRA have long been strained, with the two unions failing for decades to forge a merger. SAG’s ranks have swelled to nearly 100,000, in part by a decision in the early 1990s to absorb screen extras. SAG’s strike against advertisers also exacerbated tensions between militant and moderate wings.

The aftermath of a 1999 coup that saw a more militant change in leaders has left SAG split into several warring camps, with e-mail chains and Web sites such as https://www.radiofreesag.com emerging to criticize current leaders.

With studios, a flurry of mergers in the late 1990s left Hollywood’s prized assets in the hands of companies whose primary roots are in the Internet (AOL Time Warner), water (France’s Vivendi Universal), cable TV (Viacom Inc.), newspapers (News Corp.) and electronics (Sony Corp.).

Sony and Vivendi Universal have no major broadcast network, unlike Disney with ABC, Viacom with CBS, Fox with its network and Time Warner with its fledgling WB. DreamWorks SKG and MGM are essentially movie studios. Unlike the other companies, theme parks are major parts of Disney and Universal.

General Electric’s NBC, with no link to a Hollywood movie studio, has even less in common with the others. Said one NBC executive: “We have no dog in this fight.”

One of the biggest internal rifts involves whether Fox should continue to enjoy paying a discount on residuals, something granted when it was a fledgling network. Fox’s rivals believe it’s unfair, given the network’s growth and its ability to outbid other networks for the rights to major sports events such as NFL football and major league baseball. In a recent Times interview, NBC chief Robert Wright called the Fox discount “ridiculous.”

Former SAG President Barry Gordon said the evolution of negotiating since the days when studio heads such as Lew Wasserman ran, and often owned, their companies has put more pressure on negotiators to find creative solutions.

“If you go from where you have a handful of studios to the situation we have now, you’re going to see that diversion of interests. Does it make negotiations more challenging? Yes. Does the gridlock mean there will always be failure? I don’t necessarily think so,” Gordon said.