Alright, now what?

Well, in the way of significant events during the 2 ½ month old writer’s strike, this week probably takes the prize.

Forced Out

Since the beginning of the strike, speculation has run rampant that the studios would use the work stoppage to clean house.

For the uninitiated, it is common practice for studios to give what are called “overall deals” to A-list writers.  In exchange for healthy pay checks, writers are asked to develop new programming and in some cases this pays off for the networks.  On average, the vast majority of these writers never generate anything that makes it to air.  This means that the studios are paying a lot of people, a lot of money with little or nothing to show for it.  Another circumstance involves these same production deals that manage to produce a show that becomes a series.  Take shows like Journeyman or The Bionic Woman as examples.  Both became shows and were developed by writers with overall deals.  When the ratings were less than stellar, these projects became albatrosses around the necks of their respective studios.  They invested all that money to produce shows that didn’t generate anything in return.  Both were or are likely to be cancelled due to the low ratings but the writers still receive paychecks from the studios even after the show is cancelled because they have “overall deals”.  Typically, these deals are setup with 2 to 3 year contracts which means whether the writer generates a hit or not the studio is on the hook until the end of the contract. Now you may be asking yourself “what’s in it for the studios”?  Well, when a writer does manage to churn out a hit TV show, the studio has them under contract and has the rights to anything he/she produces during the contract.  It’s a calculated gamble that rarely pays off but when it does it can make the studio a HUGE return on their investment.

The speculation I alluded to above relates to a clause in all of these overall deals that allows the studios to invalidate their contracts with writers and incur no penalty in the event of a major work stoppage.  It’s called “Force Majeure” and it started last Friday.  ABC began the process and was quickly followed by all the major studios by midweek.  Dozens of deals were axed, essentially cleaning house of what all the studios considered to be dead weight.  The speculation has always been that the studios had no reason to return to the bargaining table until they could use force majeure to jettison these deals and start anew.  With this move the studios have wiped the slate clean of these costly deals and can go back to the bargaining table, strike a deal, then bring the writers they cut loose back when it makes financial sense.  However in reality, it’s more likely that many of the writers who lost their deals won’t be back anytime soon.

DGA Strikes a Deal!!

Last week I reported that both the Director’s Guild of America and the AMPTP (the producers) had agreed to begin formal contract talks this past Saturday.  And to pretty much no one’s surprise, Thursday saw a formal agreement announced.  Both sides had agreed to a media blackout and the week saw little in the way of leaked information about the status of the talks until Thursday’s announcement.  The initial terms of the deal that were disclosed included:

* Increases both wages and residual bases for each year of the contract.
* Establishes DGA jurisdiction over programs produced for distribution on the Internet.
* Establishes new residuals formula for paid Internet downloads (electronic sell-through) that essentially doubles the rate currently paid by employers.
* Establishes residual rates for ad-supported streaming and use of clips on the Internet.

These were the major issues that had held up a deal between the AMPTP and the WGA in their own contract negotiations.  So now comes the $24,000 question, what will the WGA think of the deal and can it lay the framework for a new agreement between the two?  Reactions from the various factions of the WGA have been mixed.  Some seem to think it’s good enough and want to strike a similar deal now so they can get back to work.  Some think it’s a good starting point.  While others have panned the deal insisting that it was another example of the DGA’s poor bargaining skills.  Obviously, the truth lies somewhere in the middle.  The fact is that the AMPTP and studios have played their game according to the playbook everyone assumed all along.  First they let the WGA strike and waited things out until they could use force majeure to cut loose the deals they didn’t like.  Then they gave the DGA a little more than they were willing to give the WGA in their negotiations and got a deal done.  Finally, they announced to the world that they were ready to return to the bargaining table with the WGA once the deal with the DGA was in place.  Obvious?  Yes.  Effective?  Maybe.  This puts significant pressure on the WGA to get back to the table and hammer out a contract.  The real question is whether the WGA can stomach the basic framework of the DGA’s deal and use it as a starting point for legitimate negotiations.  Nobody but the WGA leadership can answer that question.  The next week should bring us some answers.

I for one believe that the DGA’s deal, while not optimal, should be enough to get things jump started.  At the very least it should setup new bargaining sessions that actually have the potential to generate a contract, unlike the last session back in early December.  I believe the studios got what they wanted with force majeure.  Now that it’s done they are likely to be serious in future negotiations.  I can only hope that the WGA isn’t so inflexible that they decide not to get down to serious bargaining.