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October 22, 2007 |

By Seth Freilich | Industry | October 22, 2007 |

Over the last few weeks, the looming writer’s strike has frequently been mentioned on the site. But maybe you don’t follow as many Hollywood, movie and TV blogs and sites as us — because, you know, you have a life — and don’t know what this strike business is all about. Well that’s why the TV Whore is stepping in to give you the what’s-what. Two quick notes before we get into the mess. First, I think I’ve done a good job of making this relatively readable, but it’s still loaded with business- and industry-type stuff — so while you shouldn’t need an MBA or JD to follow it, I can’t guarantee that you’ll actually be interested unless you care about inside industry stuff. Consider yourself warned. Second, I don’t claim to be an expert on any of this, and I’m sure that I’ve misstated at least one thing. Apologies in advance, and I have no doubt that one of our fearless readers will point out any mistakes in the comments. (Also, a healthy hat tip to If a TV Falls in the Woods and The Artful Writer, two of the many invaluable resources I used in putting this all together.)

There are three unions in Hollywood that get most of the attention from the general public — the Directors Guild of America (the “DGA”), the Screen Actors Guild (“SAG”) and the Writers Guild of America (the “WGA”). (Actually, there are two writers guilds — an East and West version — and as I understand it, there’s often quite a bit of contention between the two. But for the purposes of this discussion, we can collectively refer to them as the WGA.) There are plenty of other Hollywood unions, but we don’t care about the day laborers, right? We care about the “talent!” Anyway, as is the case with all unions, each of these guilds has a large collective bargaining agreement with the Hollywood studio system, and this agreement lays out many details about what kind of work the studio can use the union members for, minimum terms of payment, how royalties and residuals works, etc. These agreements only cover a limited amount of time, so every few years, the unions go into negotiations for new agreements. Sometimes these negotiations are quiet and not contentious, and you don’t hear shit about them. Sometimes, they’re like this year. The WGA agreement is slated to expire on October 31, while the actors and directors agreements are slated to expire next spring (end of June, I believe). Originally, the thinking was that the WGA was going to wait on any possible strike until June, so that it could band together with the DGA and SAG. And yes, even though the WGA contract expires on October 31, that doesn’t mean the writers have to stop working on that date. In these situations, unions often keep working while negotiations are ongoing, and the terms of the expired agreement continue to apply (this is exactly what happened three years ago when the last WGA agreement expired — everyone kept right on working while the negotiations wrapped up over the few months following the expiration). So the writers could keep chugging along, if they want, and take part in a potential three-tiered assault come June.

However, the tide has changed of late, and a strike is now looking increasingly likely. It was clear as early as June that the WGA was actually thinking of an early strike, as it started to put a call out at meetings for folks to help with picketing. However, this was largely ignored by the general press and media, so the notion of an early strike didn’t really enter the minds of most people until earlier this month, when the WGA set a strike authorization vote. Basically, the WGA sent out ballots asking its member writers to vote for or against a strike, with the votes set to be tallied on October 18. This step of getting authorization is an obvious first step towards an actual strike, so this was a clear sign that the WGA was giving serious thought to an early strike. Having now tallied the votes, the WGA says that it got about a 90% authorization for a strike, which is a pretty strong statement from the membership (and the WGA also got the highest voting turnout of its members ever). This was a good bit of luck for the WGA, from a negotiating standpoint, as a united front gives the guild more power than if the strike had been authorized by a lower percentage of the writers (strength in solidarity and all that).

Now this authorization doesn’t mean that the WGA has to strike at midnight on November 1. Rather, it just means the WGA now can call a strike any time after Halloween. But another sign that a strike could be coming sooner rather than later is that a few weeks back, the WGA began circulating draft strike rules to its members. If and when the WGA goes on strike, these rules will apply to the members of the WGA, letting them know what they can and can’t do (primarily this means what projects, if any, they’re allowed to write). And these circulated rules showed that the WGA is planning its strike to be quite broad in terms of the types of projects member writers can and can’t work on. For example, animated features and much online content are not generally covered by the WGA agreement, yet the strike rules forbid WGA members from working on any animated features during a strike. Similarly, the rules indicate that non-WGA members will be banned from future admission to the union should they “scab” it up and do studio work during the strike.

So all signs point towards a strike. But let’s step back and take a look at what the hubub is actually all about. For the purposes of this collective bargaining agreement, the group sitting across the table from the WGA is the Alliance of Motion Picture & Television Producers (the “AMPTP”). This is a trade association which is responsible for handling negotiations on behalf of producers, studios, networks, etc. (that is, Big Hollywood). The current fight between the WGA and the AMPTP actually dates back to 1989. During negotiations that took place way back then, a big sticking point for the writers was getting residuals from the sale of VHS videos. Ultimately, they mostly folded on the issue, and wound up agreeing to take very little in the form of residuals (at least with regards to TV, this was largely due to the fact that it wasn’t really conceivable that folks would buy much TV on VHS, let alone whole seasons or series). However, the way 1989 agreement and subsequent agreements have been worded, this residual issue has also applied to DVDs, where we know sales are now a very big money game, both for flicks and TV. So the writers feel like they wound up getting hosed because of some bad negotiating almost 20 years ago, and they don’t want to get hosed again.

So there are several sticking points in the negotiations. One is that the WGA would like to see greater residuals on the DVD front from here moving forward, to make up for all the money the writers “lost” over the DVD boom of the last few years. But the other big issue focuses on the internet, content for cell phones, and other types of so-called “new media” (including things that folks aren’t even thinking about yet, new technologies, etc.). Here, the writers believe they are also getting a short stick since, right now, they get paid bubkis for content re-shown online. There are certainly a variety of other issues in the mix, but as I understand things, these are really the two big ones.

Early on in the negotiations, the AMPTP said: “OK, we hear you on this new media issue. However, we’d like to take some time to actually study the business aspect of online entertainment and other forms of new media, and after conducting a study, we can re-approach the issue.” The WGA’s responded by basically saying “balls.” Then the AMPTP made a proposal that would’ve changed the fundamental way residuals work, basically saying: “Instead of getting some flat residual based on every use or resale of a product, we’ll tie your residuals into our profits. So we won’t pay you until we recoup our costs, and then we’ll give you some percentage of profits.” And the WGA said “big fat hairy balls” to that. In fact, this proposal got the writers quite fired up. From their perspective, this proposal is a problem because the studios and networks can play with their accounting to say that almost anything isn’t profitable, thereby cutting out the need to make any such payments. Also, the writers argue that this goes against the fundamental theory behind residuals, namely, that you get paid for new and additional uses of something you’ve already created (or written, here in the case of the WGA), regardless of the financial outcome of that new or additional use. Under this new scheme, the AMPTP wouldn’t be paying the writers simply for their authorship, but would be tying their earnings to the end product’s success, which is largely out of the writers’ hands.

And just to really stick the writers’ collective craw, the AMPTP also proposed something with regard to writers who are paid more than scale (that is, more than the minimum fee required by the agreement between the WGA and the AMPTP). Let’s say a writer was paid $10,000 above scale. Under this proposal, once residuals start getting calculated, that writer wouldn’t see any money until there is over $10,000 in residuals. In other words, the AMPTP wanted to say that any above-scale payment essentially amounts to a pre-payment on future residuals. The WGA was fired up over this too, arguing that this also changes the way residuals work, because the upfront payment is supposed to be considered payment for the labor of writing, while residuals are basically a payment for reusing that original work.

As I say, this proposal pissed the WGA off to no end. In fact, they were so hot and bothered by it that the AMPTP recently took a step back on the whole thing (blinking for the first time, if you will), taking the profit-based residuals back off the table. In a statement issued last week, the AMPTP basically said it was pulling this proposal not because it thought it was a bad scheme, but because the writers were treating it as an absolute impasse. In other words: “So we’ve pulled that roadblock, writers — come play nice with us!” And this is, of course, is the major benefit of the WGA moving towards a strike, even if they never actually do strike — if there wasn’t this threat of a strike in mere weeks, the AMPTP surely would’ve pushed this issue harder and longer (that’s what she said!).

Now, aside from the negotiating strength it gives the writers, there’s another reason why the tide has turned, making a WGA strike more likely sooner rather than later. And this is that the DGA is looking increasingly likely to cut a deal with the AMPTP before its agreement expires in June. This obviously impacts the strength of a united front in June, giving the WGA less incentive to wait. But the other thing is that the WGA is afraid of actually getting screwed by the DGA. If the DGA is the first of the three unions to put a new agreement together, that agreement would act as a baseline precedent for the eventual agreements the WGA and SAG put together. And because many directors are below the line (industry jargon meaning “they don’t get no residuals”), the DGA probably won’t fight the residual issue nearly as hard. And whatever ends up in their agreement could wind up being the same residual scheme the writers are stuck with, and this scares the writers to no end, particularly because the WGA blames the DGA for getting screwed over royalties in the past.

It’s all quite contentious in Hollywood, don’t you know?

So where do we go from here? Well as I said, the WGA wants increased video and DVD residuals, but the AMPTP continues to say “scram.” Basically, the WGA is trying to make up for its monstrous fuckup back in 1989, and many think that this ship has already sailed and that the WGA just needs to chin up on this issue and move on. My guess is that there may be a minuscule increase in the residuals writers see on video and DVD, but that they’ll basically have to give this point up to move forward. In fact, in the AMPTP’s statement last week pulling back its profit-based residual scheme, it also emphatically said that there would be no increase in residuals for video or DVD, for downloads, and for shows made for cable. (Oh yeah, back in ‘89, the WGA fuckup also cost it residuals on most cable programming). In addition to the video and DVD residuals, there’s also a fight over animation, which has largely been outside the scope of the WGA agreement in the past. Here, too, I think we’ll see the matter largely tabled and, at the end of the day, the focus will be almost entirely on the internet and other forms of “new media” — on the reuse of old material online, and on things created specifically to appear online.

But I don’t think it’s going to shake out fast or easy, and I suspect we will see the first writers strike in almost 20 years (the last strike was a five-month stint back in 1988). I don’t think they’ll strike right on November 1, but I do think it will happen in a matter of weeks, likely before Thanksgiving. Which of course brings us to the $64,000 question — what does a strike mean? Hollywood has been preparing for all of this as best it can so in the very short term, the impact on movie and TV consumers would be minimal. If the strike only went a couple of weeks, you’d barely notice. Anything longer than that, however, and you’ll definitely notice. The largest initial impact will be on TV, and it would be big. In preparation for the looming strike, the networks have been pushing to have as many episodes written as possible and, as one studio VP put it, “we are trying to get as much stuff as possible shoved through.” (One imagines that they’re shoving it through the same way one shoves shit through a clogged outhouse.) But even still, they won’t have all that many new scripts if a mid-November strike hits and new episodes would probably dribble out sometime in January, meaning February sweeps would be a rerun and reality-laden disaster for the networks (except for Fox, which can at least bank on “American Idol”). Many new shows that are on the fence in terms of possible renewal or even just full-season orders could see their hopes dim — a network may look at a show and say: “Why should we keep the sets running, and keep paying the cast and crew when they can’t do any work ‘cause we’re out of scripts, when we could just cancel the show now and cut our losses?” (And this would also hurt the network’s bottom line internationally, as new shows generally need 13 episodes to be sold overseas, and most new shows won’t be able to finish 13 episodes if the scripts dry up in mid-November.) All of which means, we can expect more reality TV and more news magazine shows. The networks have been ordering up a bunch of reality TV, and while there will be old workhorses like “American Idol” and “The Amazing Race” (which CBS craftily held as mid-season show, likely for this very reason), we’ll also be flooded with new levels of reality crap. It’ll be a true heyday for television (if the news magazine shows did actual news, I’d say there would at least be a minor bright side to this, the notion of having more news and important stuff on our TV, but we’ll surely just see more sensationalism on things like a special Wednesday 8 p.m. edition of “Dateline: To Catch a Hot Teacher Who Sleeps with Her Students!”).

There are two other important impacts of a strike on the TV side. First, a November strike isn’t just a sword to this season of TV, but it could also hurt the hell out of next season. Pilot scripts for the upcoming season are usually submitted in November and December. Everyone has been scrambling to get whatever pilot scripts they can in by October 31, but this surely means that the quality will be a bit down (some would surely argue a new season couldn’t get much worse than this season, though, so what’s the difference?). And any pilots that do get a greenlight won’t have the advantage of having writers available for re-writes while the pilot is being shot, another dagger to the quality of the final product. But the bigger ramification of a strike is this — you can likely kiss most of your late night shows, including “The Daily Show” and “The Colbert Report,” goodbye. During the ‘88 strike, Carson and Letterman were both off of the air for months without their usual stable of writers, and a strike now would surely mean an almost immediate hiatus of Leno (good!), Conan, Letterman, Kimmel, et al.

Now on the movie side, I don’t think things aren’t quite as bad. The studios have stopped taking writing pitches and have told agents that they only want to see fully developed products being brought to them. Also, they’ve been stockpiling and greenlighting films like crazy, though this is more geared towards getting things completed by June, since a director or actor strike would put all movie production to a screeching halt. A strike of a month or two probably doesn’t have a huge impact on the movie landscape, although we will likely see the ratio of crap-to-good rise slightly. But a longer strike could mean that we see the number of releases on any given Friday slow down a little, and a long strike would surely impact the landscape come next fall and winter. But, as I say, I think the crunch would be felt much harder by the TV networks.

Of course, this discussion is about how the strike impacts us, the viewers. But it’s worth remembering that strikes are also devastating to a lot of people in Hollywood, on a very personal level. Some people might think: “Well the directors and the actors and the writers and all of them can afford a strike because they make a fuck ton of money.” But remember, the vast majority of the guilds are not the Steven Spielbergs, Tom Cruises and (fucking) Paul Haggiseseses. That is, they’re not the folks with plenty of money to burn, who can go the rest of their lives without working. Particularly with regard to the writers and actors, they’re folks who make as much as, or less than, you and I. Working schmoes just struggling to get by. I was reminded of the personal stakes in all this when I met a friend of a friend last week — as a member of the WGA, she was talking about the fact that a strike would mean she’s essentially unemployed come Halloween. And having recently purchased a new home, she’s got two mortgages staring down at her like the double-barrel of a shotgun. While she was commendably upbeat about it during our conversation, she also noted that she’s basically been an emotional wreck ever since the WGA strike became a looming reality, and I can only imagine the emotional roller coaster I’d be on if I suddenly found out that I was not only about to be unemployed, but that I was essentially prohibited from seeking out any other job I’m actually qualified for. That’s fucking terrifying. And it’s these types of folks — people really no different than you or I — who are the real stakeholders on the union side of things. Plus, a lot of assistants and low-level Hollywood types are the ones who will feel the financial crunch from the studios. In fact, many places have already cut down on overtime and other expenses for these folks, and a prolonged strike would surely see a fair number of layoffs. (One could also talk about the financial hit many agents would take from a prolonged strike, but nobody feels bad for agents, rights?)

While it’s important to remember these personal stakes, none of this is meant to suggest that I’m 100% on the union side. Yes, I’m generally inclined to take the side of labor in any sort of People v. Big Business situation. And for the most part, I think the WGA is in the right here. But to at least a certain extent, Hollywood’s side of things is equally understandable, if a bit less “personal.” For example, when the WGA published its strike rules, the AMPTP went apeshit. The rules were full of threats of fines and punishments and blacklisting, and the AMPTP said it was a waste of energy, and amounted to tactics which were antithetical to avoiding an actual strike. I think there’s something to that — the threat against blacklisting non-WGA members who “scab” is harsh, and the WGA’s attempt to ban writing animated features, online content and other things that aren’t even in the WGA’s general scope is a bit authoritarian.

More importantly, you’ll recall I told you about the profit-based residuals which the studios proposed and then took off the table. Now I know the writers went ape-shit over this, but in the right context, I don’t think it’s an entirely terrible proposition. For example, the real dog in the fight here is online content. Now the studios proposed conducting a study of how shows are distributed, how money is made, etc., and the WGA said “no.” I have no problem with that. But the fact of the matter is, because it is a relatively new business model, I wonder how much networks actually do make off of the shows that they simply post online or make available for downloads, for free. The only source of revenue would seem to be, for now, ad sponsors, and I suspect that the ad revenue doesn’t amount to a ton more than the costs involved with getting content online (while not terribly expensive, the costs also aren’t negligible). While it may go against the “nature” of residuals, I’m not so sure that it’s a terrible idea that the writers’ “residuals” for online content should be some share of profit, rather than a base payment regardless of whether the studios make money or not. Part of this is because I worry that there could be a negative impact to online content in the long run — if residuals are set at a relatively high amount, what happens if the advertising revenue isn’t incredibly strong? Networks may start cutting back on the free online content, simply turning to pay-to-download/view services (e.g., iTunes or that Amazon box-whatever service). And, personally, I don’t want to see online content take a step backwards like that. Second, I think the WGA may be a bit short-sighted here. The trend surely seems to be more and more towards “new media” viewing of TV and I suspect that, five or ten years from now, any base residual they set now could be dwarfed by some percentage of profit (as long as some way was setup to ensure that the studios and their magic accountants were relatively fair in categorizing and tabulating the relevant finances).

In any event, that’s the state of the landscape. The AMPTP president says that the WGA is “hidebound to strike,” and that in the most recent negotiation sessions, the AMPTP was “met with only silence and stonewalling from the WGA leadership.” I agree that, from all appearances, the WGA seems absolutely ready to strike. Is it a good thing or a bad thing? I’d say it’s neither — it’s just a thing. This isn’t a black or white issue, and there aren’t any easy answers. As a lawyer and someone who follows the TV industry, I find all of this fascinating and am curious to see what twists and turns it all takes as things shake out. But as a viewer, I want to see things resolved as quickly (and hopefully, fairly) as possible, lest the TV landscape in February and March look absolutely bleak and barren. Though I guess I could always read a book.

Grocer: Why don’t you just join the union, we’ll go upstairs together and cap daddy!
Marty: This union, there’s gonna be meetings?
Grocer: Of course!
Marty: No meetings.

Seth Freilich is Pajiba’s television editor. He’s thinking about going on strike for better working conditions here at Pajiba. He doesn’t understand why Dustin makes him wear a thong while he writes all his pieces.

"This Is Your Union. It's for Your Own Protection, So Shut Up and Sign the Fuckin' Form."

The Looming Hollywood Strike / The TV Whore
Oct. 22, 2007

Industry | October 22, 2007 |

Seth is a Senior Editor and sometime critic. You may email him here or follow him on Twitter.

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