April 17, 2009 / 8:53 PM / 10 years ago

UPDATE 2-Actors, Hollywood studios reach deal, avert strike

* Union board to review deal Sunday

* Talks had split SAG membership

* Uncertainty has slowed film production (Adds quotes, reaction, details)

By Alex Dobuzinskis

LOS ANGELES, April 17 (Reuters) - Hollywood studios and the largest U.S. actors union reached a tentative deal on Friday on a new film and television contract that ends a bitter deadlock and would avert a strike the industry fears in a recession.

The Screen Actors Guild with its 120,000 members and the Alliance of Motion Picture and Television Producers, which represents movie studios, gave no details of the agreement.

In a joint statement, the two groups said the labor deal would go before SAG’s national board of directors for review on Sunday. If approved, it would be put to a vote by SAG members, which one entertainment lawyer said might not occur until late May.

The tentative deal would replace a contract that expired last June 30 after months of often rancorous talks broke down over issues including how much actors should be paid for work delivered by new media, including the Internet and mobile phones, which are seen as a vital future distribution outlet.

Film production has since slowed in Hollywood due to labor uncertainty and the recession, and experts said a deal should pave the way for some increase in moviemaking.

Hollywood has feared a rerun of the 2007/2008 writers strike that crippled most television production and cost the Los Angeles-area economy an estimated $3 billion.

The lengthy talks split the SAG membership, with a moderate faction ousting hard-line chief negotiator Doug Allen in January and forming a new negotiating team. Talks resumed, then broke down again in February when the two sides could not agree on the length of a new contract.


The tentative deal reached on Friday resulted from recent back-channel talks between SAG and studio chiefs, said sources familiar with the pact. A new contract would expire in mid-2011, but would not be retroactive — a major SAG goal — the sources added.

As a result, SAG members would lose tens of millions of dollars in pay hikes they would have earned had SAG accepted the AMPTP’s offer last June, one source said.

The expiry date of SAG’s contract would be aligned with those of other Hollywood unions, which analysts believe would give the union greater leverage with the studios in 2011.

Sources said the Internet pay aspects of the tentative deal were similar to what SAG’s sister union, the American Federation of Television and Radio Artists, accepted in July last year, which included concessions SAG hard-liners had opposed.

That deal called for a doubling of the rate of reuse fees, or “residuals,” paid for TV shows downloaded on the Web. That rate went to about 2.1 percent of a distributor’s gross revenues from roughly 1 percent, but the higher rate only kicks in after the first 100,000 downloads. The AFTRA deal also required the studios to hire union talent when producing for the Web, depending on a production’s budget.

“I think most people would not see this as a great victory for SAG because of how long it’s taken and the toll it’s taken,” said entertainment attorney Mark Litwak, who has monitored the talks. “But I think most people in the industry are going to be relieved that this is finally resolved.”

Jonathan Handel, an entertainment attorney also following the talks, said the studios were motivated to reach a deal because they need to produce movies for release in 2010, and the threat of a strike hampered that.

Ratification of the deal will likely not happen before the end of May at the earliest, Handel said. "There will be opposition from the hard-liners. They've vowed to oppose virtually any deal possible," he said. (Editing by Jill Serjeant and Bob Tourtellotte) (To read more about our entertainment news, visit our blog "Fan Fare" online at blogs.reuters.com/fanfare/)

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