Writers Ratify Pact, Take Aim At Sweetheart Deals

This afternoon brought the announcement from the Writers Guild that by an overwhelming 93.6 percent majority, their membership has ratified the deal that brought an end to the three-month strike. The agreement is to run from February 13, 208, to May 1, 2011. Said WGA West president Patric Verrone:

This contract is a new beginning for writers in the Digital Age. It ensures that Guild members will be fairly compensated for the content they create for the Internet, and it also covers the reuse on new media platforms of the work they have done in film since 1971 and in TV since 1977. That's a huge body of work that will continue to generate revenue for our members for many years to come as it is distributed electronically

According to the guild's release,

The contract breaks new ground for writers by:

* establishing WGA jurisdiction over writing for new media
* giving writers "separated rights" in new media content (separated rights are the contractual rights traditionally enjoyed by writers of original television and motion picture scripts)
* establishing residual payments for new media reuse of covered material, including Internet downloads and ad-supported streaming of feature films and television programs
* establishing "distributor's gross" as the basis for calculating new media residual payments
* creating meaningful access to information and auditing tools that will allow the WGA to monitor the development of new media markets

The Alliance of Motion Picture and Television Producers issued a characteristically terse acknowledgment, saying,

The members of the Writers Guild of America have ratified their new labor agreement. Now that our industry is back in business, our goal is to collaborate with everyone in the industry - writers, directors, actors and stagehands alike - to produce the highest-quality entertainment products without any further interruption.

Even as the announcement was being prepared, the Writers Guild of America opened a new front in what some had thought was a demilitarized zone. Joining with the International Brotherhood of Teamsters union, under the banner of California state senator Sheila Kuehl of Santa Monica, they announced Monday that they were sponsoring a bill that could increase their share of the take when programs are licensed to be shown on cable networks or stations who have the same corporate parent.

The proponents of the bill argue that such vertical integration leads to "sweetheart" deals and undercuts the kinds of prices various programs would have fetched in a more competitive bidding environment--thus the tag of "Fair Market Value" attached to the bill (also known as SB 1765).

As summarized by the Los Angeles Times,

At issue is the contention that Hollywood's six major studios charge their co-owned affiliates, including cable networks, artificially low prices to rerun popular shows. Such discounting means that writers, actors, directors and other creative workers get less money in the form of residual payments that are calculated as a percentage of the license price, the Writers Guild contends.

Tension between screenwriters and production companies and movie studios over alleged below-market licensing agreements has been building for years. Studios have been hit with lawsuits involving the sale of reruns for a number of popular television shows, including "Home Improvement," "NYPD Blue," "The X-Files" and "Will and Grace."

The Teamsters union, which represents some craftsmen working on movie sets, argues that alleged studio self-dealing reduces the flow of contributions into union health and welfare funds.

For the WGA, which took pains to insert into their New Media settlement agreement language about htis fair market value issue, it was a second crack at securing writers' future income and benefits.

WGA West president Verrone said in a release co-signed by Kuehl and the Teamsters,

The WGA West wholeheartedly supports this bill and we applaud Senator Kuehl for authoring it. This important piece of legislation will help ensure reliable accounting among the major Hollywood studios so that creative talent and all entertainment employees that rely on residuals will be fairly compensated for the contributions they make to the industry.

Verrone promised a vigorous campaign to educate lawmakers about the measure--a promise that to the studios and networks who took something of a P.R. bludgeoning during the writers' strike, probably felt more like a threat.

The riposte by Seth Oster, a spokesman for the Motion Picture Assn. of America, he MPAA didn't have a very long shelf life before the ratification was announced: "Now, while the WGA ratification process is still ongoing," he said, " the WGA is attempting to circumvent the process by seeking legislation in Sacramento."

The companies' argument that the bill is an attempt to end run an issue that should have been settled during the strike negotiations drew this from Teamsters Union lobbyist Barry Broad when I reached him today: "It was established in good faith that there are third parties sharing in [the profit] from these--some things you shouldn't have to bargain for. This is a species of funny Hollywood accounting that's been the subject of a slew of suits."

Indeed, recent history shows that the producers of shows like the Disney-produced hit Home Improvement sued the company for not seeking the highest bidder when the show came up for renewal. Other conglomerates including News Corp, Time Warner and NBC Universal, have faced similar actions from writers, show runners and actors. In all the major cases, the settlements have come out of court, leaving the real accounting practices veiled.

The companies may have settled partly--given their institutional memory--to avoid the kind of antitrust inquiries that the federal government undertook in 1938 with a series of suits that would be interrupted by the Second World War but later revived.

The government's late 30's antitrust suits were aimed at several large theater chains, but also reached deeper to implicate the major studios as co-defendants. The studio chiefs fought an effective rear guard action, leading to the Consent Decree of 1940, and after the war's end, the Justice Department began the second phase of U.S. v. Paramount, et al. The studios' theater circuits largely survived that onslaught, but by the time of a U.S. Supreme Court verdict in 1948, the studios were forced to divest themselves of their movie theater chains. (A small irony is that in recent years the studios have pointed their finger at kingpin theater chain owners like Phillip Anschutz, whose distribution clout threatened to eclipse their own.)

Kuehl herself, as a veteran of The Many Loves of Dobie Gillis and other shows, was disadvantaged by the traditional accounting practices in place five and six decades ago. "Oh, the deals were much worse then," she recalled today, "I stepped onto the set of the first filmed television series [prior to that show were live or on kinescope] in 1950 at the age of 9."

She made virtually nothing from that show, nor from the highly successful Dobie Gillis series, which was aired repeatedly over the years, including runs on Nick at Nite and TV Land. "Yes," she says, "You could certainly say I'm sensitive to people doing work that others make money from. Anyone who's done this work is cognizant that it's the crew, the drivers, stunt men, et cetera, who make it all happen."

Democrat Kuehl's constituency embraces a uniquely show-business-heavy swatch of the west San Fernando Valley and the west side of Los Angeles. One of her allies is incoming Senate leader Darrell Steinberg (D-Sacramento). For their part, the WGA is hoping to recruit support for the bill from the Screen Actors Guild (who have their own upcoming negotiations to conduct with the AMPTP). What's also unknown at this stage is whether Governor Arnold Schwarzenegger, who clearly has an insider's knowledge of the issues at stake, will come down pro or con. He and the senate Republicans are distracted by a massive spending cut-binge to reduce the deficit, a quest that Kuehl likens to Sweeney Todd's rampages.

After hearings that commence in March, the two-paragraph bill ("It's nice and uncomplicated," says Broad) is expected to be forwarded to the state Senate's Judiciary committee by early April. From there, complications--and to some extent a replay of the companies-versus-talent debate that lost much of its savor over the last three months--are sure to ensue.

(Governor Arnold Schwarzenegger in Washington, 2004; photo by Scott J. Ferrell/Congressional Quarterly/Getty Images)