Hollywood’s Labor Battles Blindsided by a Downturn

Uncertainty over the nation’s slowing economy and layoffs by major entertainment companies are pressuring both sides in Hollywood’s labor dispute to move quickly to resolve their differences in a way unforeseen just a few weeks ago.

The drumbeat of bad economic news is deepening fears about stalled talks between studios and writers, whose contract expires in a month. And pessimism is growing as studios and actors continue to delay the start of negotiations before their contract expires July 1. Already, film and television production is slowing as studios have begun shelving projects that won’t be completed before a possible strike.

Writers, actors, studio executives and veteran labor negotiators predict that both sides may have to reevaluate their bargaining strategies if the economy continues to soften.

“This is not the time an industry should go out on strike for a long period of time,” said Los Angeles Dodgers Chairman and former Warner Bros. chief Robert Daly, who oversaw industry negotiations for years. “You have to be dense not to be affected when you are watching the news.”

Underscoring that point last week was Walt Disney Co.’s surprise announcement that it is slashing 4,000 jobs in the largest action taken so far by an entertainment company. Disney’s move follows 2,400 layoffs at AOL Time Warner, about 400 job cuts at NBC and tens of thousands of other job losses nationwide at such technology and industrial giants as Cisco Systems and Procter & Gamble.

Not wanting to undermine their negotiating positions, neither the studios nor the guilds are likely to suggest publicly that the economy will make them more likely to settle.

But, as CBS Television Chief Executive Leslie Moonves said, “No one can dispute that . . . the world is a different place than it was a year ago.”

The economic downturn wasn’t on the horizon last fall when labor and management staked out their positions. Maintaining that they’ve been shortchanged for years, writers want better residual payments, especially when their works air in foreign markets, on cable TV and when sold on videocassette or DVD. Actors, who have yet to present their demands, are expected to push similar issues. But studios are taking a hard line, arguing that their profits are squeezed by soaring costs and a splintering of TV audiences.

With talks stalled, studios have seized the daily economic news to argue that writers need to rethink their demands.

“When the writers headed into negotiations, they were buoyed by the strength of an economy that had been growing steadily for a decade,” Disney President Robert Iger said. “It’s absolutely not the case now.”

But negotiators for writers and actors said that studios are trying to use the economy unfairly as leverage by painting the worst possible scenario.

Screen Actors Guild chief negotiator Brian Walton denied that talks are being influenced by the economy, arguing that consumer demand for films and TV has historically remained strong even in economic downturns.

“Our opinion is that it does not affect the negotiations in any significant way,” Walton said in a statement to The Times. “The ‘fear of recession’ may be used as a propaganda tool, but it has no substantive impact. In any event, the goal here is a deal, and we are confident one will be reached.”

Cheryl Rhoden, assistant executive director of the Writers Guild of America, acknowledged: “Clearly, the economic climate is different than a year ago.” But she noted that Mel Karmazin, president of entertainment giant Viacom Inc., at a luncheon last week in Beverly Hills, said that, while advertising revenue may not match the booming pace it did last year, it still is expected to be strong.

“This is an undeniable economic picture that supports the guild’s proposals,” Rhoden said.

Still, even highly paid, top-level writers and actors are growing concerned about the stalled progress set against a backdrop of a worsening economy.

“As people are now considering the real possibility of a strike, if the first thing that catches their eye when they read the papers is a cloudy future, yes, they’re going to have to think more carefully about the repercussions of a strike,” said writer-director Cameron Crowe, an Oscar winner last week for best original screenplay for “Almost Famous.”

Important to ‘Settle This Thing Now’

Warren Beatty, one of Hollywood’s most high-profile actors, writer-directors and producers, added: “It’s urgent not to underestimate what the consequences of unreasonable posturing on the part of either side might be on the culture, the industry and the city. It’s important to get into these meetings immediately and settle this thing now.”

Steven C. Currall, a Rice University management professor who specializes in studying labor negotiations, said that hard times can galvanize union members who feel increasingly helpless. “As a rule of thumb, unions are less likely to go out on strike when unemployment is going up,” Currall said.

Veteran screenwriter Nicholas Kazan, whose credits include “Reversal of Fortune,” said, “I think what will happen is that the downturn in the economy will cause reasonable people to find a reasonable solution.”

And news of the economic downturn is raising the anxiety level even further for lesser-known actors and writers.

“Most actors I know are sitting around and saying, ‘I’ve got to have some kind of secure day job,’ because things are looking progressively worse. It’s terrifying when you consider what potentially could happen,” said actor David Jean Thomas, whose films include “Fight Club” and “Buffalo Soldiers.”

Brian Jacobs Meyer, a writer on “Politically Incorrect With Bill Maher,” said, “If the economy was flush and the studios had plenty of money to throw around, they’d be making a deal. But the way things are now, they aren’t interested in meeting any of the guild’s demands.”

‘Don’t Hold Things Up Until 11:59 p.m.’

For studios, the worsening economy carries its own set of problems in negotiations. They don’t want to accept higher costs when business may suddenly turn dramatically worse. But taking a hard line amid the slowdown could backfire if it looks as if they are turning the screws unnecessarily tight on actors and writers.

While Iger insists that Disney doesn’t want a strike, he also says that the slower economy increases the industry’s resolve not to make a bad deal for itself. Whereas during good times “we would be more inclined to stretch a little bit at the negotiating table,” the downshifting economy means that “we can’t make a deal that isn’t supported in today’s business climate.”

Nonetheless, some are frustrated with the combination of the stalled talks, the sliding economy and a public relations campaign by both sides that has grown increasingly inflammatory.

“Both sides should shut up and get into a room,” said Dick Wolf, producer of “Law & Order” and a member of the Writers Guild. “You don’t hold things up until 11:59 p.m.”

Producer Tom Pollock, the former chairman of Universal Pictures, said the news of the slowing economy and wholesale layoffs across the entertainment industry should have an effect on negotiations.

“I think everyone in this town hopes and believes that, because of these economic facts, both sides should come to a meeting of the minds.”