Internet looms in new Hollywood contract talks

LOS ANGELES (Reuters) - With Hollywood bracing for a season of possible labour strife, screenwriters sat down on Monday with studio executives for contract talks expected to hinge in part on how the Internet has altered show business.

The two sides also are likely to clash over industry proposals to revamp the decades-old system by which television and film writers are paid extra when their work goes beyond an initial broadcast or theatrical release and into reruns or onto DVDs.

The pact for the Writers Guild of America’s 12,000 members expires October 31.

With unions and management sharply divided on key issues, strike concerns have been running high in Hollywood. Studios and television networks are stockpiling scripts and accelerating production on some projects as a precaution.

Sources close to the talks said Monday’s morning session focused on a presentation by the writers guild, whose negotiators include “Desperate Housewives” creator Marc Cherry and “Dreamgirls” writer-director Bill Condon.

The Alliance of Motion Picture and Television Producers (AMPTP) will get its chance to lay out its offer Monday afternoon, the sources said.

J. Nicholas Counter, the chief industry negotiator and head of the AMPTP, told reporters last week he felt “very pessimistic” heading into Monday’s sessions, calling them “the most complex” labour talks he has faced in 25 years.

The head of the guild’s bargaining team, David Young, said members were “united and prepared as never before.”

The outcome of talks on a new three-year deal will set the stage for producers’ separate labour negotiations with actors and directors, whose contracts run out next summer.


Hollywood screenwriters last walked off the job in 1988 when a 22-day strike delayed that fall’s TV season and cost the industry a reported $500 million.

As in the past, the writers have made a top priority of seeking increases in residuals -- bonus payments they earn as movies and TV shows enter secondary markets such as cable TV reruns, overseas distribution and DVDs.

This year, the guild is pushing hard to expand residuals for TV and film content that is reused on the Internet and other digital media platforms, such as cell phones and iPods.

Industry executives insist that wireless and Web-based entertainment still consist largely of experimental ventures whose business models are unproven.

The producers also argue that the old system of calculating residuals of all types as a percentage of gross revenues is outdated in the fast-changing, fragmented world of the Internet and other new media.

They want a new system that withholds residual payments to writers and other creative talent until studios recoup costs for development, production, distribution and marketing.

Payments of residuals to screenwriters total more than $100 million a year, according to industry figures. The union says such payments account for as much as half the income earned by the “middle-class” writers, the bulk of the WGA’s membership.

Rather than trying to negotiate new Internet compensation and residual formulas now, the producers have suggested the two sides study those issues and return them to the bargaining table in three years. Union leaders have rebuffed the idea of a study as a stalling tactic.