Letterman to return in deal with striking writers

(Updates with CBS statement, adds details)

By Steve Gorman

LOS ANGELES, Dec 28 (Reuters) - Late-night TV host David Letterman reached a deal on Friday with the union for striking screenwriters that will let his show return to the air next week while bringing his writing staff back with him.

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

The WGA said its "comprehensive agreement" with WorldWide Pants included provisions to pay writers for work distributed over the Internet -- presumably covering the large assortment of advertising-supported video clips of Letterman's show that CBS (CBSa.N: Quote, Profile, Research, Stock Buzz) posts on its Web site.

Compensation for Internet content has been the main sticking point in stalled talks between the WGA and studios aimed at ending the writers' strike, now in its eighth week.

The strike by 10,500 WGA members 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 Letterman's deal will pave 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.