News

Will New Deal Spur Action?

1/18/2008 7:00 PM Eastern

Hollywood's biggest cliffhanger is now whether writers, whose strike is entering its 12th week, will accept the same deal points on new-media compensation that the Directors Guild of American agreed to last week. But at least one early signal didn't look good.

The issue is whether the Writers Guild of America, on strike since Nov. 5, will adopt the DGA's new contract with the Alliance of Motion Picture and Television Producers as a template for its own deal.

The WGA and the AMPTP broke off talks Dec. 7, in large part deadlocked over residuals and compensation for content that is used on new-media platforms, such as the Internet and cell phones.

Pressure has mounted for the WGA to settle, as the strike takes a mounting economic toll on the entertainment industry, with TV and film productions shut down; studio employees laid off; and key industry events cancelled, with next month's Academy Awards ceremony in jeopardy.

But as of press time Friday, the WGA didn't seem to be letting up on its resolve. It announced that this Tuesday, the day the 2008 Oscar nominations are announced, more than 30 award winners — from Oscars to Emmys — will rally in Manhattan to send a message to the industry: “Awards are nice, but we'd rather the writers get a fair contract,” according to the union.

In a statement, the WGA said, “They will be bringing their awards and their passions about the importance of writers and how the ongoing Writers Guild strike may affect the upcoming Academy Awards.”

Last week, the DGA was asserting that its new contract made big strides in terms of payment for new-media compensation, by: establishing guild jurisdiction over programs, both original and derivative, produced for distribution on the Internet; establishing a new residuals formula for paid Internet downloads that essentially doubles the rate currently paid by employers; and setting residual rates for ad-supported streaming and use of clips on the Internet.

However, in several instances those terms are less than what the WGA has sought in the past in terms of new-media compensation.

For example, the new DGA contract more than doubles residuals, to 0.70% of gross revenue, for television downloads and increases by 80% residuals for film downloads to 0.65%. But the WGA has previously sought 2.5% of revenue.

As for ad-supported video streaming, under the new DGA contract after an initial 17-day window for free promotional streaming, companies must pay 3% of the residual base (about $600 for a network primetime one-hour drama) for 26 weeks of streaming. They can continue to stream for an additional 26-week period by paying an additional 3% — or a total of $1,200 for one year's worth of streaming.

In contrast, the WGA has asked for a formula for compensation for streaming based on the actual hits the first year, then reverting to 2.5% of gross revenue.

Last week, the WGA said it hoped the DGA agreement “will be a step forward” toward reaching a deal with the AMPTP.

The WGA has struck interim agreements with a number of companies. Just last week, it announced pacts with Jackson Bites, Media Rights Capital and Spyglass Entertainment, and it previously closed deals with David Letterman's Worldwide Pants, United Artists and The Weinstein Co.

The New Deal
The Directors Guild of America agreement:
Source: Directors Guild of America
Increases both wages and residual bases for each year of the contract.
Establishes DGA jurisdiction over programs, both original and derivative, produced for distribution on the Internet.
Establishes new residuals formula for paid Internet downloads (electronic sell-through) that essentially doubles the rate currently paid by employers.
Establishes residual rates for ad-supported streaming and use of clips on the Internet.
Allows both sides to revisit new media when the agreement expires, under a “sunset provision”

September