UPDATE 2-Striking writers union reaches deal with Letterman

(Adds details, quotes on Letterman deal)

By Steve Gorman

LOS ANGELES, Dec 28 (Reuters) - Late-night TV comedian David Letterman has reached a deal with the union representing striking screenwriters that will let his show return to the air next week with his writing staff, the union said on Friday.

The Writers Guild of America hailed the accord with Letterman's production company, WorldWide Pants Inc., as a sign of the union's readiness to negotiate a deal with major film and TV studios to settle Hollywood's worst labor crisis in 20 years.

For now, the most certain outcome of Letterman's deal is it paves the way for his "Late Show," and "The Late Late Show with Craig Ferguson," also owned by WorldWide Pants, to resume CBS broadcasts of fresh episodes with their writing staffs intact starting on Wednesday.

It also could give Letterman a decisive advantage in the late-night ratings war over his chief rival, Jay Leno, host of NBC's "The Tonight Show," who has long commanded a bigger audience and plans to return the same day without writers.

Letterman's executive producer, Rob Burnett, said real estate tycoon Donald Trump was booked as one of the show's first new guests.

NBC's "Late Night with Conan O'Brien" and ABC's "Jimmy Kimmel Live!" also resume production next week without writers. Like Letterman, they belong to the WGA, but their shows are owned by larger media companies at odds with the union, so they are unable to negotiate separate deals.

The strike by 10,500 WGA members, now in its eighth week, has thrown the U.S. television industry into disarray, postponed production on several major motion pictures and is threatening to spoil Hollywood's annual awards season.

The latest round of contract talks broke down on Dec. 7 when the studios, represented by the Alliance of Motion Picture and Television Producers, demanded the writers drop several of their demands, and union negotiators refused.

The union has since said it would pursue separate talks with smaller, independent production companies.

'NOT A SOLUTION TO THE STRIKE'

"WorldWide Pants has accepted the very same proposals that the guild was prepared to present to the media conglomerates when they walked out of negotiations," the WGA said in a statement.

The main sticking point in the talks with the major studios has been the question of how writers should be paid for work distributed over the Internet, and the WGA said its agreement with Letterman addressed those issues.

No details of the pact were disclosed. It was unclear whether the deal with WorldWide Pants, one of just 340 AMPTP member companies, would help break the union's deadlock with the larger studios.

Letterman, who has kept his show off the air and in reruns since Nov. 5 in support of striking writers, said in a statement he was "happy to be going back to work, and particularly pleased to be doing it with our writers."