Directors Strike Settled After a Brief Walkout : Tentative Pact Comes as Producers Back Off Demand That Residuals Be All but Eliminated

The Directors Guild of America tentatively settled a contract dispute with movie and TV producers Tuesday after a strike that lasted three hours in New York and only minutes in Los Angeles.

The 8,500-member guild also reached agreement with the NBC television network. But the directors did not conclude new contracts with CBS and ABC. Negotiations with those two networks continued in New York, with no immediate strike in prospect.

Ratification Sought

The tentative settlements averted a strike-lockout that threatened to virtually shut down the American entertainment industry. Guild members will be asked to ratify the contracts in a mail election this week, union officials said.

Both sides declared themselves pleased with the agreement. But, in an apparent victory for the Directors Guild, the main contract with the Alliance of Motion Picture and Television Producers, a bargaining group for more than 200 companies, kept most of Hollywood’s complex residuals system intact. Producers backed off on demands that residuals be all but eliminated as a cost-saving step.

Residuals are payments made to directors and others when movies and TV shows are rerun or sold on cassettes.

Producers President Nicholas Counter III called the proposed three-year production contract “a win-win agreement.” Counter appeared at a an early morning press conference with guild President Gilbert Cates to announce the settlement.

Counter said producers and directors would both benefit from one important contract change, which alters the residual formula for the sale of reruns of hourlong television shows into syndication.

The proposed contract also gives directors an immediate 5% increase in basic pay, with another 5% increase in 18 months. Currently, a TV director, for example, is guaranteed a minimum of $17,935 for 15 days’ work preparing and shooting an hourlong TV show.

Settlement came at 6:05 a.m. PDT Tuesday, just minutes after pickets began assemblying in front of the Burbank Studios, home of Warner Bros. and Columbia Pictures. The guild had targeted those two studios and the NBC television network for the strike, but the other studios and networks vowed to retaliate with a lockout in the event of a strike.

A guild spokesman said several celebrities, including comedian Joan Rivers, had assembled to join in the picketing early Tuesday only to learn of the settlement.

Picketing went on for three hours at Columbia and Warner Bros. corporate headquarters in New York, where the strike had been launched at 6 a.m. EDT, before the settlement was announced.

Agreement was reached after an all-night bargaining session that climaxed at 5 a.m., when producers withdrew a demand for rollbacks of residual payments for movies shown on pay-per-view television.

“They broke the logjam,” Cates said of the producer’s move on pay-per-view.

The pay-per-view issue had become a critical sticking point in the negotiations, as both sides jostled for a favorable compensation formula covering the relatively new technology by which TV viewers are charged only for films they actually watch.

According to Counter, both sides finally decided that it was “just too soon” to force a confrontation over pay-per-view, which brought a total of only $73 million in revenue to the multibillion-dollar entertainment industry last year.

According to two top studio executives, producers pulled back from their demands to decrease residuals less because they feared the guild’s strike threat than because of difficulties in keeping about 25 of the biggest companies focused on a single strategy.

“I would say there was confusion, or at least a lack of consistency” at a meeting of top company executives just before the final bargaining session, according to one executive in attendence. He also sharply disputed other reports that one of the major studios had broken ranks, destroying the companies’ bargaining unanimity.

Counter declined Tuesday to discuss details of the final bargaining, but he has explained in the past that the alliance’s core companies have a rule of unanimity under which any one of them can veto critical decisions.

Several studio executives later expressed dissatisfaction with the failure to reduce residuals.

“I’m glad it’s over, and a I’m glad we avoided a strike,” said Lee Rich, MGM/UA Communications Co. chairman.

“But it is a disappointment” not to have overhauled the residuals system, he continued. “I guess it’s very difficult to take away what you’ve been giving away.”

According to both Cates and Counter, the new syndicated TV residuals formula will make it easier for producers to sell hourlong shows such as “Miami Vice” or “Scarecrow & Mrs. King” as reruns.

Under the old syndication formula, producers were forced to pay directors a fixed-dollar residual representing compensation for a nationwide sale even if they sold the show in only a single city. The system made it unprofitable to syndicate shows in less than about 75% of the country.

Under the new formula, producers would pay directors a percentage of the money they actually receive for syndicated programs, making it feasible to sell the shows in a smaller number of markets.

Cates and Counter told reporters that the directors’ 1986 residual payments, which totaled about $50 million, would actually have been higher under the new contract. The higher payments would have resulted, they said, because the new formula would have resulted in more shows in the market, thus increasing the total residuals pool.

The guild’s old contract expired June 30, but directors and their assistants had continued to work while simultaneously negotiating and threatening to strike.

Despite the guild’s success in fending off producers’ rollback demands, other Hollywood unions were cautious in assessing the settlements, which came only hours after the Teamsters, the Screen Actors Guild, the Writers Guild of America and other organizations had made a public pledge of support for the directors at the organization’s Sunset Boulevard headquarters.

“We’re obviously delighted there was no work stoppage. But we haven’t had a chance to look at the specifics” of the DGA settlement, said Ken Orsatti, national executive secretary of the Screen Actors Guild. Orsatti said he hoped that the directors would prove as willing to support his own union’s ongoing strike against several animation studios as his guild had been to support a directors’ strike.

A Writers Guild spokeswoman said her union was withholding comment on the contract until it was more familiar with the details.

Neither Cates nor Counter gave details of the so-called “creative issues” section of their agreement at the morning press conference. But Counter afterward said that the guild had consented to a proposal under which studios would be allowed to delete the director’s name from certain large newspaper advertisements. Sources involved with the negotiations said the directors had strongly resisted the step for weeks.

One studio executive familiar with the advertising agreement said the provision could save up to $400,000 in advertising for a major studio release by clearing the way for the elimination of writers’ and other credits that are tied to the director’s credit for advertising purposes.