Hollywood Producers and Actors Avert Strike

A strike threat by actors that could have paralyzed Hollywood ended Sunday when representatives of actors and producers agreed to a tentative three-year contract that leaves unresolved the thorniest issue of how much performers deserve when their work airs on cable TV or in the booming foreign markets.

The settlement, which is expected to be ratified by members of the two unions involved, is a relief for an industry that viewed this year’s labor negotiations as potentially among the most contentious ever.

Any strike, or slowdown in activity caused by the threat of a strike, would have sent a sharp ripple through the Southern California economy because entertainment production has been booming. Hollywood’s growth over the past five years has given it a central role in the overall health of the Southland economy.

Even though the actors’ current contract will not expire until June 30, the mere threat of a strike this summer had the industry on the verge of what is known as a “de facto strike.” That happens when producers choose to slow, halt or move productions they fear might have to be shut down.

So much money is at stake making films and TV shows--which require months of preparation--that many producers would have rather postponed shooting than risk the huge losses they would absorb if forced to pull the plug on projects midstream.

Scattered reports of a slowdown in production already had surfaced in recent weeks. Companies were frantically preparing contingency plans and speeding up work on some projects to protect themselves. Financiers had become wary of funding new production.

The core of the new deal, according to sources, includes three annual raises in the basic minimum amount actors in an array of categories receive: 3% the first year and 3.5% in each of the last two years of the contract. Other issues include gains for performers such as TV dancers, stunt coordinators and extras.

Affected are some 130,000 performers nationwide represented largely by the Screen Actors Guild and to a lesser extent by the American Federation of Television and Radio Artists, which covers such people as soap opera performers. Representing major studios, networks and production companies in bargaining was the Alliance of Motion Picture and Television Producers.

“It’s a very broad and balanced agreement that I feel very confident our members will be strongly supportive of,” guild president Richard Masur said.

Nicholas Counter, the chief negotiator for the producers, was traveling and could not be reached. But sources inside the producers’ camp said they are relieved any significant slowdown was avoided.

“Nobody on either side of that table wanted a strike,” one executive said.

In Hollywood, strikes are rare and the industry has enjoyed an unusually long era of labor peace that some had feared was nearing an end. The last Screen Actors Guild strike was in 1980, which caused havoc with that year’s TV season. The most devastating Hollywood strike was a 22-week walkout in 1988 by writers that cost the industry an estimated $500 million.

Negotiations picked up steam last week. The two sides had set a self-imposed deadline of last Thursday, but extended talks through the weekend, with each session lasting past midnight. An agreement finally was reached at 5:30 a.m. Sunday at the alliance’s headquarters in Encino, where talks had to be moved from the Radisson Valley Center Hotel in Sherman Oaks because the negotiators lacked weekend reservations at the hotel.

Negotiations got off to a rough start in February when both sides produced a long list of demands that put more than 100 issues on the table. Actors submitted 34 pages of proposals, including a demand to double the rates of money actors receive when shows air on foreign TV. Producers countered with their own 12-page list of demands, including cutting residual rates when TV shows are rerun domestically. In the end, sources in both camps agreed, both sides made substantial concessions.

“In every negotiation, there are times when it looks like you are never going to get an agreement,” Masur said. “There were times when this thing could have fallen apart, but it was like a shark. As long as it kept moving, it wouldn’t die.”

In years past, influential Hollywood figures such as mogul Lew Wasserman or former agent Michael Ovitz often played pivotal behind-the-scenes roles in helping resolve labor disputes. No one played that kind of activist role this time, sources said, although some executives, notably Warner Bros. Co-Chairman Robert Daly, were said to have been quietly active in helping bring about a resolution.

In the end, the biggest and stickiest issue--how much should actors receive in residuals when work airs on cable TV or in foreign markets--was tabled by the two groups when it became apparent that the complex issue could not be dealt with adequately in a few weeks. The two sides agreed to complete a comprehensive, industrywide study over the next two years before deciding to negotiate new formulas.

Actors have long said the residual rates are antiquated given the explosion the past two decades in cable TV activity and foreign television channels.

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Producers, in turn, have argued that even though the rates may be low, actors get overly generous compensation in other areas, particularly for syndicated shows.

In all likelihood, producers will study the residuals issue, not only with representatives of actors, but with guild officials representing writers and directors since residuals are an industrywide concern. Executives at the Writers Guild of America have been urging for some time that the three guilds would be more effective in tackling the issue as one.

By tabling the issue now, however, both sides run a distinct risk. The issue could still become a significant sticking point within the next three years.

Even with the residuals issue remaining unresolved, Masur said, getting information from producers on their cable and foreign revenue is a major step because it will provide everyone with a joint set of agreed-upon facts when the issue finally gets to the bargaining stage.

“It’s very important that for the first time we have access to this information. Now we can talk about it on the merits,” Masur said.

Screen Actors Guild National Executive Director Ken Orsatti added that the union made some progress in another key area: broadening its scope for actors in shows shot in Canada, where an increasing number of TV programs have been shot to save money.