Studios Scorn Writers’ Demand

Ratcheting up the spin war between studios and writers in the midst of their stalled labor talks, a group of Hollywood’s top entertainment chiefs on Thursday declared the latest contract demands from writers so ominous that they would sink their companies.

The claim, made at a news briefing at ABC headquarters in Burbank, was an attempt to refute arguments by writers that the price of labor peace is just $99.7 million over three years, which they argue is a pittance for the multibillion entertainment conglomerates controlling today’s film and TV production.

But the studios estimated the cost of the package demanded by writers at $227.4 million over three years and eventually $1.6 billion overall. Studios said they expect the huge overall figure because they would be forced to offer actors, directors and other Hollywood workers they bargain with similar deals.

“$1.6 billion in profits taken out of these businesses over the next three years will simply bankrupt them. And that is an irrefutable fact,” DreamWorks SKG partner Jeffrey Katzenberg said. Katzenberg was joined by Warner Bros. Chairman Barry Meyer, Walt Disney Co. President Robert Iger and J. Nicholas Counter, the industry’s chief negotiator.

The $227.4-million estimate sparked controversy because it is double what the studios projected just two weeks ago. The higher figure was attributed to a fresh company-by-company analysis. Studio officials also argued that estimates by the Writers Guild of America are wrong because they rely on minimum rates paid to writers. The reality, they said, is that virtually all TV and film writers are paid well above scale. The studios also argued that history shows that boosting the minimum contract acts like a “rising pool” that significantly increases the actual amounts writers are paid.

For example, the studios argue that the three-year, 9.3% increase in the minimum scale that they agreed to in 1998 actually led to a 20% increase in amounts paid to writers.

In addition, the studios said, increases in residual payments--money writers receive when their work is rerun--also are tied to increases in minimum contract levels.

“It’s disingenuous to think that when you’re negotiating an increase in minimums that’s all it’s going to affect,” Meyer said.

But Chuck Slocum, director of strategic planning for the guild, challenged the studio numbers, calling them inaccurate.

“There is nothing new here, and nothing that makes us want to change the numbers we put out,” he said. “I can’t add up anything in our proposal to get to $227 million.”

Slocum also called the assertion absurd that the guild’s proposed increase would bring such a large industry to its knees.

“This is $33 million a year, probably out of $40 billion to $50 billion in revenue,” Slocum said.

The briefing set up the latest volley between the two sides over cost estimates. The briefing, held in a screening room and featuring a multimedia slide presentation, was marked by a mixture of praise by the studio executives for the professionalism of Writers Guild negotiators and blistering accusations they are being naive.

“You have got to wonder what is in their minds. They are being completely unrealistic as it relates to what the industry can afford,” Iger said.

According to the new numbers from the Alliance of Motion Picture and Television Producers, the studio bargaining arm, writers are being offered $84.8 million in initial compensation (the first paychecks they receive); an additional $20.3 million in residual payments that come when work is rerun; and $10.8 million in pension and health contributions. The studios put the total increase at 9.7% over three years.

Writers, who use a different base for their calculations, estimate that they are asking for only a 2.7% raise: $36.8 million in initial compensation, $60.9 million in residuals and $2 million in pension and health contributions. Producers peg those same demands at a 19% increase: $119.2 million in initial compensation, $84.1 million in residuals and $24.1 million in pension and health payments.

The two sides have not scheduled new talks, although negotiations are expected to resume in April. Katzenberg dismissed recent suggestions that the two sides could avoid a strike by simply splitting the difference.

“The notion offered by some that the gap between us can possibly be bridged by simply meeting in the middle is ill-informed and, unfortunately, a nonstarter for us,” he said.