WGA, SAG, DGA Strike Over New Media Could Cripple Hollywood

Sept. 17 -- A monster looms over the Hollywood sign, and it could do more damage to Tinseltown than any rubber-suit lizard or CGI nightmare. It's the dreaded megastrike -- a work stoppage next summer that could cripple the entertainment industry if three major unions join forces and picket at the same time for a piece of the "new media pie."

Emerging online distribution methods are fueling the dispute, as Hollywood writers demand residual compensation for TV and film content sold through iTunes and other services. Producers want to delay those royalty payments, calling the technologies too new to know how much actual profits they generate.

The Writers Guild of America, West (or WGA), the Screen Actors Guild and the Directors Guild of America each want to tap the new revenue streams. If they decide on a simultaneous strike, the entire entertainment industry -- movies, TV, videogame shoots, online productions, etc. -- grinds to a halt. Careers and companies could be ruined.

Robyn Heath, an executive with Tom Wagner and Mark Cuban's 2929 Entertainment, said she and her insider friends are very much aware of the professional threat.

"A lot of us, at least the people I talk to daily, are definitely worried about losing their jobs, but they also believe that the talent does deserve a piece of the new media pie," Heath said. "We just all hope that the issues will get worked out fairly, but without too much delay."

In talks underway between producers and the WGA, the guild is looking to seal a new three-year deal before Oct. 31. The current contract was put in place in 2001, narrowly averting what would have been the first WGA strike since 1988, when a 22-day walkout cost Hollywood an estimated $500 million.

The two sides waited until the zero hour in 2001 to settle their dispute, finding middle ground in a last-minute deal that upped writers' pay for cable and DVD outlets. At the time, speculators said the guild settled because its rank-and-file membership was reluctant to vote for a strike.

That's not the case this year as Halloween's WGA witching hour approaches. Hollywood's other two major unions, the Screen Actors Guild and the Directors Guild of America, will see their collective bargaining agreements expire in summer 2008. If the WGA can't work out a deal by Oct. 31, it's believed the guild's members would continue working under the old contract's terms until the other two unions' deals expire.

The three guilds could then strike in unison, bringing Hollywood to a halt. Producing just about anything -- including many reality shows -- would become impossible if writers, actors and directors walked out together, potentially pushing losses into the billions. That's the powerful bargaining chip the unions are holding over producers as the WGA continues its negotiations.

Alternatively, the producers could foresee the guilds' joint action and lock them out before they could strike, essentially dropping the proverbial hammer before the unions can take hold of it.

Leading up to the talks, John Bowman, chief of the WGA negotiating team, made an official statement dismissing the producers' "wait and see" attitude.

"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," Bowman said. "We don't need a study. We need a fair share for writers of the revenue our work generates."

Requests for a statement from the Alliance of Motion Picture and Television Producers received no response. But some producers are rushing projects through development before next summer's potential big freeze.

According to Heath, 2929 is rapidly prepping several films.

"We are basically trying to get as many films in before this supposed strike, which we all pray will get resolved in a timely manner," she said. "Otherwise we're not quite sure what we'll be doing at work every day."

But J.C. Spink, co-founder of powerful management and production firm Benderspink, said his company isn't looking to rush into anything.

"I think the strike has a good chance of happening," Spink said. "But ... the business is full of timing issues, and the strike is just another timing issue."

In recent days, buzz over the rumored lockout grew in volume as the stockpile of rushed projects means the producers and studios will have enough product to keep them fed while the writers, actors and directors starve.

Dinah Perez, a Hollywood entertainment lawyer and veteran negotiator, said such a lockout would be a bad long-term move for producers.

"The guilds and their members only want fair treatment and compensation," Perez said. "Producers should take this into consideration before exerting their power to shut out the guilds. (A lock-out) will only serve to breed contempt rather than to nurture the creativity on which this industry depends."