Work Speeds Up as Hollywood Braces for Strikes

Facing the worst labor tensions in more than a decade, Hollywood is bracing for separate strikes by actors and writers next year that could shut down production, force massive layoffs and prove financially devastating for the entertainment industry and Southern California’s economy.

In the past month, making contingency plans has become a top priority at studios, television networks and talent agencies, even though contracts with the labor unions representing actors and writers don’t expire for nearly a year and face-to-face talks haven’t even started.

The urgency reflects not only the long lead time required for movies and TV shows, but also a near-unanimous pessimism on the part of all parties that long-debated issues won’t be easily resolved.

At the heart of the negotiations will be how much actors and writers are paid when their work appears on cable TV or overseas, where business is booming. Members of both guilds also want a guarantee that they will be fairly compensated when programs are distributed over the Internet.

Across the table from them will be the most formidable opposition Hollywood’s creative rank and file has ever faced. In the past decade, a flurry of mergers, such as Viacom’s acquisition of CBS and America Online’s pending purchase of Time Warner, has consolidated power into a handful of global giants.

To prepare for a potential work stoppage, Hollywood’s major studios are stepping up the number of movies they are making, accelerating production schedules and making plans to stockpile scripts. TV networks are leaning on producers to make more shows for their inventory and are even preparing to fill more time slots with unscripted programs such as game shows, sports and reality shows like the current hit “Survivor.”

Likewise, entertainment lawyers and agents are urging their clients to work as much as possible before jobs dry up. “I’m telling my clients to take jobs now, bank their money and be cautious about spending,” said attorney David Colden.

Union officials are going so far as to advise members to hold off on major purchases. “Now is not the time to be buying the biggest house or the nicest car you can possibly afford,” the Writers Guild of America warned in its July newsletter. “If you have a TV staff writing job, begin putting money away now. If you make a feature deal, bank every penny you can.”

In the past, such statements might easily have been dismissed as typical nervousness, prestrike posturing or the hyperbole that often precedes labor disputes. But top leaders on both sides predict that negotiations will be more adversarial than in the past because long-simmering tensions underlying 12 years of labor peace are finally boiling over.

“The storm feels like it’s moving closer, not away from you,” said Nina Jacobson, president of Walt Disney Co.’s movie group.

One barometer is the current strike against the advertising industry by members of the Screen Actors Guild and the American Federation of Television and Radio Artists over actors’ pay in commercials. Now entering its 12th week, the strike’s key issues mirror those actors and writers will negotiate with Hollywood producers next year.

The closely watched strike is sending a strong signal that peace won’t come easily. “This is kind of a bellwether strike,” said SAG President William Daniels, an Emmy-winning TV actor.

Actors and writers say that for years they cut companies slack on the residuals they were paid when their work appeared on cable TV channels or in foreign countries in an effort to nurture those markets. Today, those outlets are lucrative profit centers for entertainment companies and the labor guilds believe it’s time to pay up.

“The creative talent has not shared in the bounty,” complained John Wells, president of the Writers Guild and one of TV’s top producers, with such hit shows as “ER” and “The West Wing.”

In addition, writers want companies to address the problem of how talent will be paid when work is distributed over the Internet as the broadband era evolves, saying they don’t want to be burned again.

But studios, networks and producers counter that the guilds are naive about the shifting economics in entertainment. The proliferation of channels has fragmented audiences so that companies no longer enjoy the same easy profits they did when ABC, NBC and CBS dominated TV.

They also argue that, as foreign broadcasters have grown and matured, they have developed more of their own programs and now are relying less on Hollywood-produced shows and movies. Producers also argue that money from foreign TV sales effectively keeps shows in the U.S. on the air by offsetting the huge initial outlays.

Both sides, then, are far apart philosophically, even before they have put a single proposal on the table. The Writers Guild contract is up May 1, while SAG’s expires July 1. A strike could happen any time afterward if the contracts aren’t extended or renewed.

Southland’s Economy Would Take a Big Hit

Lengthy strikes would be devastating, not only for the entertainment industry, but also for Southern California’s economy. The nonprofit Los Angeles Economic Development Corp. estimates that 253,000 people in Los Angeles County work in the entertainment industry.

In addition to actors and writers, thousands of agents, secretaries, electricians, grips, caterers, lighting technicians, carpenters and many others whose jobs are tied to the business could be furloughed.

It wouldn’t take much for a rippling economic impact. The 22-week strike by Writers Guild members against producers in 1988 caused an estimated $500 million in economic damage.

Since then, Hollywood has taken an increasingly important economic role in Southern California as the industry expanded rapidly during the 1990s to meet the growing program demands of cable and broadcast networks and foreign TV channels.

“If they go out on strike, it would dent our economy by a lot. It would definitely drag down our overall growth rate,” said Los Angeles economist Jack Kyser.

While Hollywood’s big agencies might ask employees to take pay cuts in the event of a lengthy strike, smaller literary agencies risk going out of business.

What makes heading off a strike difficult is a wholesale change in the cast of characters who have the power to stop it.

Although the industry’s veteran chief negotiator, J. Nicholas Counter, will head its bargaining team, the days are gone when a towering figure like Lew Wasserman, the former MCA studio chief and once-powerful agent, could personally maintain labor peace. Wasserman forged deals behind the scenes with the understanding that he was speaking for all of the studios.

Today, studios are owned by conglomerates with divergent priorities and agendas. Warner Bros. is part of the huge Time Warner Inc. empire, which will soon be part of America Online. Paramount Pictures is owned by Viacom Inc., which merged with CBS Inc., and Walt Disney is now combined with ABC. Universal Studios is owned by Seagram, which is being bought by France’s Vivendi, a water company. Columbia Pictures is part of Japanese electronics giant Sony Corp., while 20th Century Fox is part of the multinational communications giant, News Corp.

These companies are so large that they could withstand a lengthy strike.

In addition, the executives in these companies who would be most directly affected by a strike--studio chiefs, network bosses and producers--run proportionally smaller and smaller pieces of their parent company operations. No executive, not Disney’s Michael Eisner nor News Corp.’s Rupert Murdoch, has stepped forward to fill the vacuum left by Wasserman’s retirement.

Likewise, Hollywood’s labor guilds have been in open revolt for the past two years and have shown a more inflexible and militant attitude than before.

It started in 1998 after the ouster of longtime Writers Guild negotiator Brian Walton, a strong proponent of measured negotiations with producers long in advance of strike deadlines. Last November, a more militant faction of SAG forced out the union’s more moderate leadership, setting the stage for the current strike over commercials and the prospect of adversarial negotiations next year.

Beyond the common economic issues they share with actors, writers want to go to the mat to finally eradicate, after a decades-long drive, the common practice of giving movie directors “a film by” screen credits that writers believe diminish their contributions. That has caused some resentment, because other unions believe the issue should be resolved separately rather than at a time when all the guilds should be united in fighting producers over economics.

Both Sides Laying Groundwork for Talks

The heads of the writers and actors unions have yet to sit down with studios, networks and producers with outlined proposals, in part because neither side knows how much money is at stake.

To help answer that question, the studios are nearly finished with a study largely involving the amount of money they are making and expect to make on foreign, domestic and cable TV. That information is expected to be shared with the guilds within a month.

As a sign of the magnitude of the issues at hand, the guilds have quietly hired some of the very people who know those TV deals first hand. Powerhouse entertainment attorney Ken Ziffren, who forged a number of major TV deals, has been retained by the actors and directors unions as an outside advisor. Former top MCA Inc. lawyer Bob Hadl has been hired by the writers guild.

In addition, the Writers Guild now has as its executive director and chief negotiator John McLean, formerly the top labor negotiator for CBS. The writers have the additional clout of being led by Wells, one of TV’s top producers as well as one of its most respected writers. As president of the guild, Wells commands enormous respect on both sides of the table and knows intimately the financial intricacies of the TV business.

The movie studios have all set deadlines to start next year’s productions by March 1 and finish principal photography by the end of June, in case of an actors’ walkout. Columbia Pictures Chairman Amy Pascal says the studio plans to start movies between January and March of next year to make sure they are wrapped up by June.

Because of their complexity, bigger films with lots of special effects need longer preparation times and will start as early as this October.

“We’re accelerating the process where possible and trying to schedule starts well in advance of a potential strike,” said Warner Bros. President Alan Horn. “We’re looking at hundreds of scripts--going through existing inventory and commissioning screenplays to be written. . . . We’re being aggressive.”

Some studios are coaxing filmmakers to accelerate projects. “We’re looking at ‘can we get directors to move projects along’ and are applying pressure to keep the momentum going,” said Stacey Snider, chairman of Universal Pictures.

A strike could further exacerbate what’s already a nightmare for writers: the proliferation of shows that don’t need them. Networks have drastically cut the number of comedies and dramas in prime time in favor of cheaper reality shows, news programs and game shows, such as “Who Wants to be a Millionaire,” which are popular with viewers.

One network chief said: “Reality programming should really scare the unions more than anything else. It’s a weapon that becomes more valuable--a great equalizer.”

If there’s any hope, it’s that both sides acknowledge that, as entertainment attorney Colden put it, “money lost in a strike is never found again,” and that a strike would be financially devastating to both sides.

But hoping isn’t enough. As one top agent put it: “There’s a full moon out. People are confused and vexed by a market they can’t get their arms around.”