Talks Between Writers, Studios Begin as Mellow Drama

Few unions can script a cliffhanger as well as the one representing Hollywood’s writers.

When the Writers Guild of America last negotiated with studios in 2001, an agreement wasn’t reached until after the contract expired. After talks broke down, both sides publicly blasted each other and came dangerously close to a strike.

This time around, the bargaining over money and healthcare coverage would seem to have all the elements for drama: The contract runs out in less than a month and, in a tense sideshow, two guild presidents resigned under pressure in the run-up to the negotiations that begin today.

But Hollywood appears to be taking it all in stride.

“Nobody seems to be panicking this time,” said Jack Kyser, chief economist at the Los Angeles County Economic Development Corp. “It’s calm, given what’s going on.”

That doesn’t mean the deal-making won’t get ugly.

Writers want studios to pump more money into their health plan to alleviate concerns that rising medical costs threaten the plan’s stability. They contend that members have done their part to keep the plan in shape by trimming $18 million in costs.

The even stickier issue is the writers’ desire for more money from DVD sales, which brought in about $16 billion to Hollywood last year. Writers argue that out of every $500 that consumers spend, studios reap $300, of which they share just $1 with writers under formulas set up in the 1980s when videocassettes were fledglings.

Studios counter that DVD sales help prop up the otherwise shaky economics of the overall movie business. They note that 6 in 10 films fail to break even, and cite figures released last month by Motion Picture Assn. of America President Jack Valenti that show the average cost to make and market a film for the first time exceeded $100 million in 2003.

Writers contend that DVDs have been a lucrative windfall for studios, and say they’ve heard the cries of poverty before.

“Every time we negotiate, the companies tell us how terrible the business is,” said Daniel Petrie Jr., president of Los Angeles-based WGA, West, which has 9,000 members.

Petrie and other guild officials say the business can’t be that bad off. Otherwise, they ask, why would General Electric Co.’s NBC be buying Universal Studios from Vivendi Universal and cable giant Comcast Corp. have Walt Disney Co. in its sights?

Writers also want studios to pony up more residuals to TV writers, saying they are entitled to more money as giant media companies exploit their work.

Companies are expected to claim that the TV business also is suffering, with most shows failing to recoup costs because international sales are down, the syndication market is drying up and the costs for actors and top writers are soaring.

For their part, studios aren’t talking publicly, making their case instead in private meetings.

That wasn’t so in December, when writers first made public their general demands. At the time, studio negotiator J. Nicholas Counter called the writer proposals “a disaster waiting to happen” and “the most excessive package of demands we have ever seen.”

One reason tensions are lower this year is that writers haven’t hitched their negotiations to talks held by actors. Writers and actors approached the 2001 talks in a somewhat united front, figuring they could help each other in facing off against studios.

But this time the Screen Actors Guild and the American Federation of Television and Radio Artists agreed to a one-year extension, pushing their contract expiration off until June 2005.

Until now, negotiations were overshadowed by the writers guild’s internal problems.

Victoria Riskin resigned in January after an internal investigation found she had failed to write enough to keep her membership current when she ran for reelection last year. Successor Charles Holland resigned last month after a story by The Times revealed evidence that he had embellished his military and college athletic claims.

He was replaced by Petrie, a former WGA president. The guild recently agreed to head off a potential Labor Department lawsuit over Riskin’s election by agreeing to hold another presidential vote in September.

The last writers strike came 16 years ago, lasted five months and cost the industry about $500 million. Another walkout would take place in a vastly different business climate in which networks are already loading up their schedules with the popular “reality” genre, which requires minimal writing.

There are no signs that studios feel much of a threat.

“I have not seen the strike preparation efforts, like stockpiling scripts,” said Howard D. Fabrick, entertainment labor lawyer with Akin, Gump, Straus, Hauer & Feld in Los Angeles. “I think that bodes well. That shows there’s optimism.”

*

(BEGIN TEXT OF INFOBOX)

The issues of contention

Negotiations begin today between the Writers Guild of America and major studios on a new contract to replace one expiring May 2. Here are some of the major issues.

HEALTH

Writers’ position: Because of rising healthcare costs, studios should contribute more to the writers’ plan. Writers note that they have kept the plan financially afloat by shaving $18 million in costs and requiring members to shoulder more of the burden. They now say studios should step up.

Studios’ position: Although they acknowledge rising costs, companies contend that the writers’ heath plan is a generous one that is in relatively good shape.

Outlook: Studios are likely to show some flexibility here.

DVD SALES

Writers’ position: Studios should share a bigger piece of their DVD bounty with writers. Current formulas are antiquated, drafted in the early 1980s when video was a fledgling business.

Studios’ position: Although the DVD business is healthy, it offsets soaring costs to make and market films, a majority of which don’t break even.

Outlook: Probably the most contentious issue. Studios are dead set against yielding because they would also have to do the same for other guilds. But writers are adamant about scrapping the old formula.

RESIDUALS

Writers’ position: TV writers deserve better residuals, especially in cable and on the UPN and WB networks.

Studios’ position: TV costs are rising, with most shows losing money. UPN and WB are still developing networks and need to be free of costly burdens if they are to succeed.

Outlook: The issue could get contentious, although studios have yielded over the years on the issue of raising rates for writers on Fox shows.

JURISDICTION

Writers’ position: The guild’s representation of writers on animation, nonfiction and “reality” shows should be unambiguous.

Studios’ position: The issue should be handled on a show-by-show basis and kept out of negotiations.

Outlook: Although important to both sides, jurisdiction doesn’t look like a strike issue.

STRIKE THREAT

Most Hollywood industry and labor executives don’t expect a strike, and say both sides are likely to continue talking even if the current contract expires. Talks could get heated, but studios haven’t been stockpiling scripts or taking other steps that would signal a strike is looming.

Graphics reporting by Times staff writer JAMES BATES

Los Angeles Times