Hollywood studios and writers hit stalemate

LOS ANGELES Thu Nov 1, 2007 2:54pm EDT

The Hollywood sign is shown on a hot fall day in Hollywood, California October 22, 2006. With Hollywood braced for the possibility of an imminent strike, screenwriters and studio bosses met on Wednesday for one last bargaining session before the midnight expiration of their current contract. REUTERS/Lucy Nicholson

The Hollywood sign is shown on a hot fall day in Hollywood, California October 22, 2006. With Hollywood braced for the possibility of an imminent strike, screenwriters and studio bosses met on Wednesday for one last bargaining session before the midnight expiration of their current contract.

Credit: Reuters/Lucy Nicholson

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LOS ANGELES (Reuters) - With hours to go before their contract was set to expire, Hollywood screenwriters and studios deadlocked on Wednesday in talks aimed at averting the first major strike against the film and TV industry in 20 years.

It was unclear what would happen next, but leaders of the Writers Guild of America have ruled out declaring an immediate walkout when their contract covering 12,000 members expires at 12:01 a.m. (3:01 a.m. EDT) on Thursday.

Instead, the union said it would brief its rank and file at a meeting in Los Angeles on Thursday night. In the meantime, WGA members may continue to work under terms of the old three-year labor pact, though a spokesman said "they will technically be working without a contract."

No further talks were scheduled, but an industry spokesman said after Wednesday's eight-hour session that union negotiators had told studio officials they would contact them on Friday.

The latest round of talks ended with the studios issuing a statement saying writers' demands for an increased share of revenues earned from DVD sales and Internet downloads of their work was "a complete roadblock to any further progress."

"We want to make a deal," said Nick Counter, head of the Alliance of Motion Picture and Television Producers. "But ... no further movement is possible to close the gap between us so long as your DVD proposal remains on the table.

"We call on you to take the necessary steps to break this impasse so that bargaining can continue."

Counter added that he was referring also to the writers' proposals for higher "residual" fees on other forms of "electronic sell-through -- i.e. permanent downloads."

UNION COUNTEROFFER

The union responded that it had presented a new counteroffer that "took nine proposals off the table" and included other concessions on DVD residuals.

"The companies returned six hours later and said they would not respond to our package until we capitulated to their Internet demand," the WGA said. "Every issue that matters to writers ... has been ignored. This is completely unacceptable."

Union leaders won approval two weeks ago from members to call a strike if deemed necessary once the existing contract expires, though the WGA has set no strike deadline.

Nevertheless, studios and TV networks have treated the end of the month as a de facto deadline as they scramble to stockpile scripts and fast-track various productions in anticipation of a work stoppage.

The last major film and television strike was a WGA walkout in 1988 that lasted 22 weeks, delayed the start of the fall TV season and cost the industry an estimated $500 million. The motion picture and TV industry generates $30 billion in annual economic activity for Los Angeles County alone.

Wednesday's bargaining session marked the second day of talks joined by a U.S. federal mediator.

Studios have said union demands for higher residuals on DVDs and Internet downloads would stifle growth at a time of rising production costs, tighter profit margins and piracy threats. They insist that digital distribution of movies and TV remains largely experimental or promotional and new-media business models are just developing.

The union accuses the studios of pleading poverty and argues that writers have never gotten a fair deal on the lucrative DVD industry. They also see more of film and TV migrating toward the Internet and wireless platforms and want a bigger piece of that revenue pie.

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