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Although Hollywood averted actor and writer strikes this year, maintaining labor peace will only get harder amid rapidly changing technologies, huge media mergers and shrinking film and TV profits.
While writers and actors made some gains in contract negotiations, they fell short of a full-scale restructuring of pay formulas they believe inadequately reflect the growth in cable TV, foreign, video and DVD markets. They also made few inroads into fledgling new media outlets such as the Internet. As a result, the day of reckoning that many in Hollywood thought would come this year has only been postponed, perhaps for as little as three years.
"These negotiations will stay complicated for the next couple of cycles. There's a lot of unfinished stuff," said Charles Slocum, strategic planning chief for the Writers Guild of America.
An agreement Tuesday by actors, coming on the heels of a May settlement by writers, dodges back-to-back strikes that were considered a virtual certainty as little as three months ago. Those threats disappeared largely because of an unexpected downturn in the economy and the continued slide in the stock market. Additionally, once-hot prospects, such as delivering programs over the Internet, became marginal with each dot-com that imploded.
Even though major pay issues remain unresolved, some entertainment company heads argue that averting strikes this year bodes well for future talks.
"Each side has shown problem-solving skills and recognition of the economic realities, and that's a positive sign for the future," said Viacom Entertainment Group chief Jonathan Dolgen.
News Corp. President Peter Chernin added that, as long as guilds continue to maintain the same high employment levels that they've had in recent years, "I'm not sure there would be tremendous impetus for a strike."
Nonetheless, labor tensions could surface again as early as next year, when directors face off with studios over many of the same issues, as well as some unique ones, such as deciding how guild members will be paid when television shows are shot in the emerging digital format.
"You have rising labor costs, rising talent costs and an expanding universe of money coming from new platforms, new methods of distribution and new markets outside the U.S.--and that's the tension," said Jeff Berg, head of talent agency International Creative Management, which represents such actors as Julia Roberts and Mel Gibson.
Writers and actors predict that issues left unresolved this year at the bargaining table will reappear when their next contract is up in 2004.
For Hollywood studios, the trick will be to figure out how to get the guilds to return to the kind of preemptive negotiating style that got the industry through the 1990s without even so much as the threat of a strike.
After a painful 22-week walkout by writers in 1988, studios and unions defused tensions by negotiating well in advance of contract expirations and without deadline pressures.
That prevented the kind of frantic production ramp-up and inevitable slowdown that occurred over the last year when the threat of two strikes hung over Hollywood.
"The sides had to posture and position themselves and couldn't do it below the radar as we had done it for the past 12 years without the paranoia of a work stoppage and without all the chest beating," Warner Bros. Chairman Barry Meyer said. "Early negotiations have resulted in great deals for all the guilds and increased employment."
But this year, negotiations with writers and actors went down to the wire.
Meyer suggested that guild memberships "were led to believe they could maximize their leverage by taking it down to the last minute." But, he said, "even a short work stoppage is never made up by incremental benefits."
But the guilds have been increasingly skeptical that early talks lead to the best deals and believed they had failed to make satisfactory gains since the 1988 strike.
"The '90s were a decade of holding still," Slocum of the Writers Guild said.
Sounding more militant than they had in more than a decade, writers originally formed a lengthy list of demands for their most recent contract and openly warned Hollywood that a strike was possible. Last summer, one guild official went so far as to advise members against making any major purchases such as houses or cars in light of a potential work stoppage.
Now, other issues make it even more difficult to return to the peaceful 1990s-style negotiating: New ways to deliver movies and TV shows--such as the Internet, video on demand, satellite systems and digital television--are making the unions gunshy about committing early to contract terms before future prospects are clear.
While writers and actors made some gains in contract negotiations, they fell short of a full-scale restructuring of pay formulas they believe inadequately reflect the growth in cable TV, foreign, video and DVD markets. They also made few inroads into fledgling new media outlets such as the Internet. As a result, the day of reckoning that many in Hollywood thought would come this year has only been postponed, perhaps for as little as three years.
"These negotiations will stay complicated for the next couple of cycles. There's a lot of unfinished stuff," said Charles Slocum, strategic planning chief for the Writers Guild of America.
An agreement Tuesday by actors, coming on the heels of a May settlement by writers, dodges back-to-back strikes that were considered a virtual certainty as little as three months ago. Those threats disappeared largely because of an unexpected downturn in the economy and the continued slide in the stock market. Additionally, once-hot prospects, such as delivering programs over the Internet, became marginal with each dot-com that imploded.
Even though major pay issues remain unresolved, some entertainment company heads argue that averting strikes this year bodes well for future talks.
"Each side has shown problem-solving skills and recognition of the economic realities, and that's a positive sign for the future," said Viacom Entertainment Group chief Jonathan Dolgen.
News Corp. President Peter Chernin added that, as long as guilds continue to maintain the same high employment levels that they've had in recent years, "I'm not sure there would be tremendous impetus for a strike."
Nonetheless, labor tensions could surface again as early as next year, when directors face off with studios over many of the same issues, as well as some unique ones, such as deciding how guild members will be paid when television shows are shot in the emerging digital format.
"You have rising labor costs, rising talent costs and an expanding universe of money coming from new platforms, new methods of distribution and new markets outside the U.S.--and that's the tension," said Jeff Berg, head of talent agency International Creative Management, which represents such actors as Julia Roberts and Mel Gibson.
Writers and actors predict that issues left unresolved this year at the bargaining table will reappear when their next contract is up in 2004.
For Hollywood studios, the trick will be to figure out how to get the guilds to return to the kind of preemptive negotiating style that got the industry through the 1990s without even so much as the threat of a strike.
After a painful 22-week walkout by writers in 1988, studios and unions defused tensions by negotiating well in advance of contract expirations and without deadline pressures.
That prevented the kind of frantic production ramp-up and inevitable slowdown that occurred over the last year when the threat of two strikes hung over Hollywood.
"The sides had to posture and position themselves and couldn't do it below the radar as we had done it for the past 12 years without the paranoia of a work stoppage and without all the chest beating," Warner Bros. Chairman Barry Meyer said. "Early negotiations have resulted in great deals for all the guilds and increased employment."
But this year, negotiations with writers and actors went down to the wire.
Meyer suggested that guild memberships "were led to believe they could maximize their leverage by taking it down to the last minute." But, he said, "even a short work stoppage is never made up by incremental benefits."
But the guilds have been increasingly skeptical that early talks lead to the best deals and believed they had failed to make satisfactory gains since the 1988 strike.
"The '90s were a decade of holding still," Slocum of the Writers Guild said.
Sounding more militant than they had in more than a decade, writers originally formed a lengthy list of demands for their most recent contract and openly warned Hollywood that a strike was possible. Last summer, one guild official went so far as to advise members against making any major purchases such as houses or cars in light of a potential work stoppage.
Now, other issues make it even more difficult to return to the peaceful 1990s-style negotiating: New ways to deliver movies and TV shows--such as the Internet, video on demand, satellite systems and digital television--are making the unions gunshy about committing early to contract terms before future prospects are clear.
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