The studios set the table

As WGA talks loom, AMPTP pushing Internet study

A studio briefing Wednesday on looming talks with film and TV writers showed the parties miles apart, with management suggesting a study on how to eliminate writers' revenue participations even as union scribes seek expanded Internet residuals.

The media event at the headquarters of the Alliance of Motion Picture & Television Producers in Encino is a pre-negotiations tradition, but for the first time remarks by top studio and network execs were on the record. Execs said that was to underscore the revolutionary changes sweeping the industry as its reps prepare to sit down with WGA negotiators starting Monday.

"This is a unique point in time," Warner Bros. chairman and CEO Barry Meyer said. "We feel that operating under terms and business models that were formulated a half-century ago is an outmoded way of doing business."

CBS Corp. CEO Leslie Moonves said a study of how new media is affecting traditional television will allow time for a volatile marketplace to sort itself out.

"It is a time of great experimentation — that's the key word," Moonves said. "We don't know yet where this is heading. A year ago, it looked like VOD was going to be more important than advertising-based. Now it has shifted."

Summarized Anne Sweeney, president of Disney-ABC Television and co-chair of Disney Media Networks, "We really see ourselves firmly in a revolution in television."

Talks between AMPTP negotiators and representatives of the WGA West and East are expected to swing largely around the subject of Internet pay formulas. The writers complain that too often they receive skimpy residuals or none at all when work written for use in film or TV projects is repurposed on the Internet or other new-media platforms.

Studios suggest that new-media distribution platforms are largely only promotional opportunities at present, with more experimentation needed before profitable business can develop on the Internet or elsewhere.

"Talking about the 'reuse' of programming is something that we have to stop talking about," Meyer said. "There are no ancillary markets anymore. There are no supplemental markets anymore. It's all just one market."

Viewership — and profits — have been cannibalized by the emergence first of cable television and more recently by Internet and mobile-based entertainment, the execs said. But it remains unclear precisely how the digital revolution will play out, they said.

AMPTP president Nick Counter said he believes any new action on new-media compensation should be delayed three years — until the next WGA contract in 2010 — to allow time for a formal study of the relevant landscape to be commissioned and completed.

"Early indications are that the guilds are not willing to do that," Counter said. "But that's what bargaining is all about, and we'll be trying to convince them that's the way to go."

Management is ready to discuss unspecified other bargaining points if WGA negotiators insist on keeping new-media compensation on the table, he added. "If they don't buy into the study concept, we have alternatives," Counter said.

But hashing out new-media issues would make contract talks "far more complex" than any he has faced previously, the management negotiator said. That's quite a claim considering Counter's 25-year tenure and the five-month writers' strike that interrupted negotiations in 1988.

John Bowman, chair of the WGA's negotiating committee for the impending talks, issued a statement critical of the AMPTP proposals.

"The industry conglomerates declare windfall profits to Wall Street while pleading poverty to the talent community," Bowman said. "Our proposals will be fair to writers and to the industry. What we are seeking over a three-year contract is about what a couple of failed executives get every year in severance packages.

"The companies have made hundreds of deals in the new-media arena over the past year, which proves that they do have viable business models," he added. "We don't need a study, we need a fair share for writers of the revenue our work generates."

Bowman also questioned the idea of moving from residual formulas to a profit-based compensation arrangement.

"Our members can't rely on Hollywood accounting," he said. "According to studio analysis, (long-running TV series) 'The Simpsons' doesn't turn a net profit. The companies have lost the right to talk about a profit basis for residuals."

WGAW has about 8,000 members and WGAE about 4,000, with a third of the latter's membership composed of newswriters covered by separate contracts.

The AMPTP has 350 members, including production entities big and small. Its 11-member board includes two execs each — representing film and TV divisions — from Warner Bros. and the Walt Disney Co. and one each from Fox, Sony, MGM, Paramount, CBS, NBC Universal and HBO-Turner.

The AMPTP's main film and TV contracts with SAG and the DGA expire in July 2008, and it tends to approach those contracts and the WGA pact with a similar mind-set on key issues.

In Wednesday's presentation, the theme was clearly that studio profits are under attack on a shifting economic landscape. To drive home that notion, officials distributed data purporting to show member studios' combined theatrical slates failed to reach profitability the past five years.

Handouts also contained statements like, "85%-90% of (TV) series fail before they can be syndicated, and some 70% of pilots never make it to series."

WGAW president Patric Verrone was unavailable for comment on the AMPTP pronouncements.

Dan Petrie Jr., who was WGAW president during the most recent film and TV negotiations in 2004, said he doesn't believe it's necessarily cause for alarm that the parties appear so far apart at the start of talks.

"Negotiations tend to start with people taking their most extreme positions," Petrie said. "It generally does seem at the beginning of any negotiations that both sides are completely at loggerheads. Sometimes that turns out to be true, and sometimes that turns out not to be true."

The WGA's current film and TV contract expires Oct. 31. Yet both sides already have plans for how to cope should no pact be reached by then and a strike breaks out sometime afterward.

The WGAW and WGAE each maintain strike funds, which collectively total about $12 million and could be used to help members overcome strike-related hardships. The studios and the networks have been preparing for the possibility of labor strife by ordering extra episodes of TV shows, developing more reality programming and accelerating movie greenlighting.

"You should not underestimate our resolve to keep our businesses healthy," Sweeney told journalists assembled in the same conference room where dozens of negotiators on both sides will convene Monday.

"Let's put it this way," Moonves said. "CBS is not going to go blank."
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