AT ISSUE : TV Writers, Producers Battling Over Residuals : Cost of Payments Makes Hourlong Shows Hard to Syndicate, Some Claim

Are writers’ residuals killing the one-hour TV drama?

The question has become a serious sticking point in 2-month-old contract talks between the 9,000-member Writers Guild of America and some 200 entertainment companies represented by the Alliance of Motion Picture and Television Producers.

The writers’ current three-year contract with the producers expires at midnight Monday. Unless negotiators make substantial progress this weekend, Hollywood could find itself dealing with a writers strike, despite earlier predictions by both sides that a new agreement could be reached without any work stoppage.

“It hasn’t been encouraging,” Brian Walton, chief negotiator for the writers, said of the talks’ tenor during the last few weeks.

Is a strike likely?

“Only if expectations of the other side aren’t realistic,” said J. Nicholas Counter III, head negotiator for the producers.

Both agreed that TV residuals have become a primary focus of the talks.

The companies claim that dozens of popular one-hour shows, such as Universal’s “Miami Vice” and Orion’s “Cagney & Lacey,” can’t be sold to TV stations as reruns because residual payments to writers are prohibitive in today’s soft syndication market.

The directors have already made a concession on their one-hour residuals, and actors might come under heavy pressure to reduce their payments in 1989 contract negotiations if the writers agree to a change now.Producers normally make such shows at a loss for the networks, then try for profits later by selling them as reruns. If they can’t make syndications sales, they may stop producing some shows altogether, the companies claim.

Writers say the problem is exaggerated by unreliable studio statistics and is strictly temporary if it exists at all.

At issue is whether TV writers should give up some of their residual payments to make one-hour shows more economically viable.

Pro

During the past four years, Hollywood companies claim to have piled up a cumulative deficit of roughly $1 billion because they can’t profitably syndicate one-hour shows that were originally made at a loss for the networks.

The typical one-hour action drama, a hot commodity for producers such as Universal a few years ago, can easily cost $1.5 million an episode to produce. But networks pay much less than that in licensing rights to the first two showings. According to the companies, each one-hour episode carried an average deficit of $370,672 last year, and the industry racked up a one-year deficit of $268 million.

Companies originally hoped to make up those deficits by selling the shows as reruns. But TV stations, drawn by better ratings to half-hour comedies, stopped buying heavily a couple of years ago.

Producers say they could still make some money on the shows if it weren’t for the peculiar structure of writers’ residuals.

Under the current contract, the companies must pay a writer a fixed residual covering reruns for the entire country, even if they sell to a single station. The producers want writers to change that, by accepting a formula that was introduced in the new Directors Guild of America contract last summer.

Under the directors’ formula, reduced residuals are paid as a percentage of sales until a show is sold in at least one-third of the country. According to Counter, more than 130 series that are on the shelf or sold only to cable--where the residual structure is more accommodating--might receive more airings if the writers accepted a change.

“It would allow us to test-market,” he explained.

Without relief, Counter and others claim the companies can’t keep feeding expensive one-hour shows to the networks. Already, according to the producers alliance, less expensive domestic dramas such as “thirtysomething” are supplanting action shows like “The A-Team” for cost reasons.

Con

“Why should we stand our residual structure on its head forever to resolve a temporary situation?” said Walton, executive director of the guild’s 6,500-member western division.

Walton strongly contended that the syndication market will snap back, and he doesn’t want guild members caught with a permanent rollback in their next contract.

He also said that only about 11 shows are being caught in the squeeze, and that the producers have inflated their deficit numbers by averaging only the most expensive, action-oriented shows.

“We think the average deficit for 1986-87 was closer to $232,000 an episode,” Walton said. Writers offered a reduced residual formula for some of the existing shows they believe to be affected, but were turned down by the producers.

The issue is a big one for writers, because nearly 30% of their $50 million-plus in annual residuals come from one-hour shows.

But Walton and other guild officials complain that the companies, by focusing on the hourlong issue, have avoided dealing with other demands by the writers. The guild contends that residuals on foreign TV sales should be sharply increased to reflect a much stronger foreign market, and that writers should be allowed to consult on major creative decisions by companies producing original scripts.

Resources

The guild can cause major disruption in the movie and TV industry by calling a strike.

Writers struck for two weeks in 1985, but didn’t seriously delay production schedules. In 1981, a three-month writers strike did delay the start of the fall TV season.

Producers are generally equipped to sustain at least a brief strike by using scripts in hand, but they haven’t stockpiled or made serious strike preparations of the sort that preceded a brief directors strike last July.

Prospects

Negotiators for both sides say they don’t expect any resolution before Monday. Guild members are expected to meet here Tuesday and in New York on Wednesday to consider whatever proposals are then on the table.

Sources close to the guild complain that company negotiators, in dealing with all the Hollywood unions, have developed a pattern of stonewalling until the 11th hour.

Counter simply said the talks have been “businesslike.”

WRITERS’ RESIDUALS

Residual payments for one episode of “Little House on the Prairie,” a one-hour TV drama first syndicated in 1982.

Year Payments 1982 $8,913 1983 1,981 1984 3,302 1985 3,631 1986 990 1987 990

Total to date: $19,807

Source: Writers Guild of America.

NO-SHOWS

Some one-hour TV series are not currently sold to stations as re-runs. Producers claim such shows could be shown more readily if writers’ residuals were lower.

Series Producer Episodes Airwolf Universal 80 Cagney & Lacey Orion 125 Miami Vice Universal 113 Murder, She Wrote Universal 113 Remington Steele MTM 94

SOURCE: Alliance of Motion Picture and Television Producers