Will ‘Ugly Betty’ and others strike for SAG?

‘UGLY’ TRUTH: America Ferrera in “Ugly Betty,” which is moving to New York to cut costs.
‘UGLY’ TRUTH: America Ferrera in “Ugly Betty,” which is moving to New York to cut costs.
Los Angeles Times Staff Writer

HERE we go again. The entertainment industry quivers near the brink, threatened with another devastating strike even as people are still picking up the pieces from the last one. Can it be much longer before we start seeing A-list celebrities wielding picket signs again?

Last week’s flameout of talks between the studios and the Screen Actors Guild means that TV and film performers could walk off the job as soon as June 30. If that happens, Hollywood would have enjoyed barely four months of labor harmony since the 14-week writers strike ended in February. Another TV season, much of which is set to be unveiled beginning today during the networks’ annual “upfront” presentations to media buyers in New York City, would be imperiled.

It’s not freak-out time -- yet. SAG and the studios are likely to resume talks at the end of this month, which would still give them plenty of time to hammer out a deal over payment for shows that run on new media, product-placement fees and other issues. And while much attention has been paid to tensions between SAG and its sister guild, AFTRA -- which represents many broadcast performers and which last week started negotiating separately with the studios -- the sideline blowhards aren’t blowing as Santa Ana-hot as they did during the run-up to the Writers Guild of America strike.

Neither are most of the major players. Asked about the prospect of another walkout, Doug Allen, SAG’s chief negotiator, told me last week: “That’s not our objective. We’ve made more progress than management admits or has been reported.” Studio sources who declined to speak for attribution also downplayed the likelihood of a work stoppage.

Still, mere talk of another strike is enough to jolt Hollywood, where ordinary workers who took massive hits to their pocketbooks during the writers strike are still scrambling for scarce TV and film jobs, as my colleague Richard Verrier recently reported in this newspaper.

But let’s face it -- Hollywood doesn’t have a technology problem. It has an income-disparity problem. Everyone knows it, and yet no one talks about it.

Learned explanations abound of how the industry finds itself in this sorry mess, centering on emerging technologies -- often meaning the Internet -- and how new formats are changing the way consumers view and pay for movies and TV shows. Those theories are all true, as far as they go; no one disputes that viewers are migrating to the Web, and it’s understandable that Hollywood guilds want to help protect their members’ economic interests as part of the transition. That’s what they’re supposed to do.

Yet In Hollywood, where enormous wealth is celebrated as the ultimate marker of talent, it’s considered bad form to state the obvious. Income disparity? What are you, some sort of Marxism-spouting grad student?

Yet grotesque levels of income inequality are at the root of the industry’s current labor troubles. And that’s what everyone should remember the next time one of those A-listers makes an arty “Speechless” video in support of striking writers, marches a picket line alongside middle-class Hollywood workers, or, for that matter, publicizes any other call-to-arms for social justice.

Starting in the 1980s, the studios started making sweeping, multimillion-dollar deals with talent -- A-list actors, mainly, but also some name-brand writers and directors. The types of riches thrown about might have embarrassed imprisoned former Tyco chief L. Dennis Kozlowski, famed for his opulent party where an ice sculpture urinated premium vodka.

Stars with precious few hits to their credit and their agents began sniffing that a $20-million fee for a motion picture wasn’t meeting their “ask.” In the final seasons of NBC’s “Friends,” each of the six principal cast members collected $1 million per episode (and they were by no means alone -- such stars as Kelsey Grammer and Ray Romano got packages that were even richer). Huge advances and “first-dollar gross” deals -- in which talent collected money directly off the top of the box-office revenue, crimping studio profit margins -- became commonplace.

Studio chiefs naturally started complaining about the soaring costs of movies and TV shows. The sensible thing to do, of course, would have been to start saying “no” to the stars and their handlers. But for the most part, that’s not what they did (well, Viacom boss Sumner Redstone eventually said “no” to Tom Cruise, but only after the star had made himself damaged goods). Refusing the stars might have risked the studio’s competitive position, they reasoned.

Instead, the bosses started trying to make up for their spendthrift ways by economizing elsewhere -- that is, taking money out of the hides of ordinary workers. Or, as Hollywood prefers to call them, people “below the line.” Indeed.

So studios have been trying to save nickels and dimes by using cheaper labor to make TV shows and films overseas or by snagging tax incentives and other goodies to produce entertainment in states other than California.

This is why the producers of ABC’s “Ugly Betty” announced last week that they’re decamping the Los Angeles area for New York, so the show can take advantage of recently passed tax credits in the Empire State. Meanwhile, two-thirds of 150 production workers in Southern California are expected to be laid off. What timing! Can you say “collateral damage”?

The studios, for their part, are still reeling from their largely self-inflicted wounds, which may explain why guild officials have found the bosses so difficult to deal with in recent negotiations.

Back in the ‘70s and ‘80s, studios routinely recorded profit margins as high as 20%, according to financial analyst Tom Adams of Adams Media Research. Today, most are lucky to squeak by with single-digit margins, Adams said, adding that rich talent deals are a major reason for the shift. (Remember, though, that studios are now relatively small parts of sprawling, diversified corporations whose overall balance sheets generally look much better.)

When I asked if there was any sign that studios are making progress rolling back these types of frothy talent deals, Adams replied simply, “No.”

Figures bear that out: The average movie in 2007 cost $70.8 million to make, or 48% more than in 2001, according to the trade group Motion Picture Assn. of America. That’s more than double the overall rate of inflation.

Last month, a group of actors -- including household names such as Ben Affleck and Kevin Bacon -- were pushing a proposal to limit SAG voting to performers who work at least one day a year. The idea was to not have the union’s future decided by, say, a waiter whose greatest triumph was a bit part 30 years ago on “Quincy.” (Those nutty stars -- first they take your money, then they tell you to shut up.)

But the SAG board rejected that bid in favor of an approach designed to help middle-class members. “We don’t want this to be a profession practiced only by actors who make millions,” SAG’s Allen told me.

He added that the union can only negotiate the minimum rates on the pay scale, not what the studios pay the mega-stars. “Management has to be willing to take responsibility for what they’re willing to pay at the top,” Allen said.

Until that day comes, though, the industry’s ordinary workers can do little other than pray that unions deliver some incremental gains for them.

Oh, and maybe find some creative places to stick a picket sign toted by a multimillionaire mega-star.

The Channel Island column runs every Monday in Calendar. Contact Scott Collins at