Writers, studios break off talks

Los Angeles Times Staff Writers

Talks between Hollywood writers and studios collapsed Friday, dashing hopes of an imminent resolution to a 5-week-old strike that has upended the entertainment industry.

The breakdown is the latest turn in what has become one of the nastiest labor disputes in recent Hollywood history. It comes after eight days of contentious negotiations that yielded very little, if any, progress.

The sides remain deeply divided on how to split up new media revenues as digital technology and the Internet transform the way entertainment is delivered to viewers.

Each side blamed the other for the breakdown of the talks, which fell apart over disputes about how much writers should be paid for shows distributed online and whether writers who work in reality TV and feature animation should be covered under the Writers Guild of America contract.

In a statement, the Alliance of Motion Picture and Television Producers, which represents the studios, said it was “puzzled and disheartened by an ongoing WGA negotiating strategy that seems designed to delay or derail talks rather than facilitate an end to this strike.”

The WGA’s chief negotiator, David Young, said in an interview: “What they want us to do is give up our future, particularly in new media. . . . The other side doesn’t view us as partners, they just view us as someone they can play with.”

If talks don’t resume soon, the strike will have far-reaching consequences across Hollywood and for many businesses throughout the region that depend on the industry.

It may also foreshadow a new period of labor unrest in Hollywood, which has enjoyed relative peace for most of the last two decades.

A continued walkout won’t affect only the 10,500 writers on picket lines, but also thousands of other workers -- from crew members and actors to talent agents and studio office employees. Already, the strike has taken a heavy toll on so-called below-the-line production workers who work behind the scenes on film and TV shows.

“It’s going to be a very black Christmas for everybody,” said veteran producer Alan Ladd Jr., whose credits include the Oscar winner “Braveheart.”

The television industry, which already has been disrupted by the shutdown of more than 50 shows, will be even harder hit. Virtually all scripted TV shows are expected to stop production by next week, causing a loss of 15,000 jobs and costing the Los Angeles economy about $21 million a day in direct production spending, according to one recent estimate.

Viewers, instead of watching new episodes of their favorite shows, will see reruns and a plethora of reality, sports and news programs.

With no fresh episodes, networks stand to lose tens of millions in ad revenue as they are forced to give free commercial time to sponsors to make up for a shortfall in ratings. They could also see a further exodus of disaffected younger viewers to the Internet and other forms of entertainment, eroding the networks’ market share.

Studios plan in the coming weeks to ratchet up the pressure on writers by invoking force majeure clauses in contracts with producers and others. The provision allows studios in a crisis such as a strike to stop paying TV show producers and their staffs, which has already begun.

Most studios have contingency plans to pare overhead after Jan. 1 that include shedding some production deals and employee layoffs, several studio executive said this week. Talent agencies, which have slashed expenses, plan similar job cuts.

The studios will now try to strike a deal with directors, whose contract expires June 30. The Directors Guild of America has struck only once in its 71 years -- for five minutes.

Studios hope that a deal with directors will set the template for agreements with writers and actors, whose contract also expires June 30. Such a strategy, however, could harden the resolve of the striking writers and drive them even closer to actors, who share many of the same concerns. Screen Actors Guild leaders have strongly backed writers during the walkout.

Studios have been preparing for months for the prospect of an actors strike by moving up movie production start dates so they could wrap by June 30.

A prolonged strike also carries risks for the Writers Guild. Although union members have been strongly united behind their leadership, the solidarity could fracture if the strike drags on, creating severe hardships for many lower- and middle-income writers.

With so much at stake for both sides, many question why the parties have failed to come to terms on a new, three-year contract. The parties remain sharply at odds over how writers will be paid in the digital age.

“The industry is at a crossroads,” said Sidney Sheinberg, former president of Universal Pictures’ longtime corporate parent, MCA Inc. “Fear is a great motivator here on both sides.”

Writers fear being shortchanged as the studios rush to distribute their TV shows and movies on the Web, cellphones, video iPods and other devices. They sharply disagree with studios over how much they should be paid when shows are sold and reused online or created specifically for the Web.

“I’m not going to be the chairman of the negotiating committee that gives away the Internet,” said the guild’s John F. Bowman. “There’s an enormous burden of history here.”

The studios, confronted with dwindling DVD sales and rising production and marketing costs, say they are concerned about committing to the guild’s new-media pay demands when the economics of the Internet and other digital technologies are unknown.

The dispute isn’t fueled only by the issues, however. A clash of personalities and styles of the opposing parties -- with the guild’s chief negotiator, Young, and President Patric M. Verrone facing off against the studios’ negotiator, Nick Counter.

Young, a veteran labor organizer of garment and construction workers but a newcomer to Hollywood, transformed the guild into a more activist union. His confrontational tactics put him sharply at odds with Counter, a hard-nosed industry veteran.

The conflict set the stage for an erratic bargaining process.

Although negotiations ostensibly started in July, they didn’t get serious until Nov. 4, the day before writers walked.

Talks resumed last week, prompted by a flurry of back-channel communications involving writer-producers, studio executives and top agents. That raised hopes that a deal was within reach. However, negotiations deteriorated as the week wore on.

The final bargaining session began at 11 a.m. Friday at the InterContinental Hotel in Century City. Guild leaders said they waited hours for the studios to submit new proposals.

In late afternoon, studios offered writers a modest improvement in pay for films delivered online and insisted that the guild drop six demands, including representing writers in reality TV and animation. The guild had also put forth a “sympathy strike” proposal that would allow members to honor the picket lines of other unions without losing their jobs.

Young said he was summoned by Counter shortly after 6 p.m. while the writers huddled in a separate room. Meeting Young in a hallway outside, Counter delivered an ultimatum: The studios would not proceed with the negotiations unless the guild took the six issues off the table -- and put it in writing.

Accounts differ on what happened next. Sources close to the studios said Young stormed off and slammed a door behind him. Young said he did no such thing.

Young said Counter told him; “We’re leaving. When you write us a letter saying you will take these items off the table we will reschedule negotiations.”

Times staff writer Robert W. Welkos contributed to this report.