With ratification of a hard-fought contract imminent, the Writers Guild of America has shifted its fight with movie and television studios to a new front: the state Legislature.
The guild and two labor allies, the Screen Actors Guild and the International Brotherhood of Teamsters union, on Monday announced that they were sponsoring a bill that could boost their share of revenues when programs are licensed to be shown on affiliated cable networks or stations.
At issue is the contention that Hollywood’s six major studios charge their co-owned affiliates, including cable networks, artificially low prices to rerun popular shows. Such discounting means that writers, actors, directors and other creative workers get less money in the form of residual payments that are calculated as a percentage of the license price, the Writers Guild contends.
Tension between screenwriters and production companies and movie studios over alleged below-market licensing agreements has been building for years. Studios have been hit with lawsuits involving the sale of reruns for a number of popular television shows, including “Home Improvement,” “NYPD Blue,” “The X-Files” and “Will and Grace.”
The Teamsters union, which represents some craftsmen working on movie sets, argues that alleged studio self-dealing reduces the flow of contributions into union health and welfare funds.
Patric M. Verrone, president of the Writers Guild of America, West, said the proposed legislation would bring “reliable accounting” and fair compensation for entertainment industry workers.
The two-paragraph bill would require that studios sell their affiliates the rights to films, TV series and radio shows only at the “fair market value” they would fetch in a competitive market.
The studios oppose the measure, SB1765, calling it an attempt to make an end run around recently concluded labor negotiations between the Writers Guild and the studios’ bargaining group, the Alliance of Motion Picture and Television Producers.
“Now, while the WGA ratification process is still ongoing, the WGA is attempting to circumvent the process by seeking legislation in Sacramento,” said Seth Oster, a spokesman for the Motion Picture Assn. of America, the lobbying and trade group of the studios.
The proposed Writers Guild contract was expected to be ratified Monday, with results set to be announced today. The agreement contains a provision requiring that residual payments for shows distributed online between units of the same company be based on the product’s fair market value.
The bill is being carried by state Sen. Sheila Kuehl (D-Santa Monica), a former actress who played Zelda in the 1960s television series “The Many Loves of Dobie Gillis.”
Kuehl calls passage of the bill “a no-brainer,” saying it’s unfair for a studio “to sell a product for so little that I’m not getting a fair payment.”
The bill, which needs to be approved by simple majorities of both Democratic-controlled houses of the Legislature, has a good chance of getting to the desk of Gov. Arnold Schwarzenegger, a former action movie star and Screen Actors Guild member. One of its co-authors is incoming Senate leader Darrell Steinberg (D-Sacramento).
The governor, however, as yet has no position on the bill, spokeswoman Sabrina Lockhart said. The studios are expected to lobby heavily to persuade lawmakers and the governor to oppose the bill.
Television show creative executives blamed increasing consolidation in the entertainment industry -- including companies such as News Corp.'s Fox and General Electric Co.'s NBC Universal -- that has resulted in common ownership of various cable and broadcast outlets, for making it difficult to get full value for shows when they go into reruns.
Setting artificially low licensing prices is “an unfair business practice” that should be prohibited, Kuehl said.
But translating that right into a workable law might not be easy, said Jack Kyser, chief economist of the Los Angeles Economic Development Corp. “How do you determine what a fair market value is?” he asked. “This just sets up the situation for a lot of legal challenges.”
Kyser cautioned that a post-strike brawl in the Legislature between studios and the writers could spur so-called runaway production from California to other states and countries and worsen already bad labor relations. “There’s still a lot of anger, hostility and angst in the industry,” he said.