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A Timeline of the WGA Strike

by Kathryn Durfee
01/19/2008

Since early Fall, we have heard again and again that the Writers Guild of America is on strike and that this is the reason that our beloved Heroes, The Office, and other hit shows have shut down production for the season. What hasn't been made clear is why the WGA is on strike. What are the issues, what are the sides, and why hasn't this all been settled?

In 1988, the WGA went on strike from March to August, making it the longest writer's strike in history and costing the industry over $500 million. The main disagreements concerned residuals (a payment made to the creator or performer for subsequent showings or screenings of work) for hour-long shows and reduced pay for reruns of television shows broadcast in foreign countries. Also among the arguments were concerns for new video and recording technology of the time. Now, almost twenty years later, we find the WGA striking for similar reasons regarding the new-media of today.

Every three years, the WGA and AMPTP form a new basic contract, called the Minimum Basic Agreement (MBA), to which all members are held. The last contract expired on October 31, 2007. Thus, both sides began talks in early fall, attempting to reach an agreement before the contract was up. At first, the AMPTP proposed a plan that would result in the scaling back of residuals. This plan was obviously unpopular among the writers. Producers later removed this plan from the table, but this did not bring the two sides any closer together. The AMPTP would not agree to increase residuals for DVD sales and digital downloads.

What's the big deal with residuals? Hollywood has, for decades, paid residuals to writers, directors, producers, and actors for television shows and films rerun on television and sold on VHS or DVD here and abroad. Many people depend on residual income. Recently, studios have claimed that production and marketing costs are on the rise; thus, they put forth a proposal in which they state residuals would be paid out only after studios recoup their costs. In other words, studios aren't too keen on paying more for their talent.

On October 17, Nick Counter, the industry's chief negotiator, announced that the AMPTP would not increase residuals on DVDs and Internet downloads. In addition, residuals would not be paid for reruns on different networks or for programs made for pay television or cable. Producers also opposed the guild's request for residuals for movies and TV distributed through electronic downloads and streaming video.

Six days before the WGA contract expired, producers offered the WGA a new package, still hoping to stave off a strike. The new proposal included notifying writers of product placement in TV shows and increased health and pension plan benefits. The new-media concerns were again rejected.

The WGA believed that removing its proposal to double DVD pay would help move negotiations along. However, producers denied concessions in other areas. For instance, producers refused to give the union jurisdiction over new-media writing and also proposed a plan that would give them the right to reuse movies or television shows any way they like without paying residuals.

After reaching a stalemate, the WGA membership voted to give its board authorization to go on strike. The vote went through on Friday, November 2, and the strike began on Monday, November 5.

Why are DVD residuals such a sticking point? The current method for calculating residual pay on DVDs is a discounted pay formula that dates back to the mid-1980s. With this system, writers receive about 4 cents per disc sold. This formula was originally based on the high cost of the manufacture of VHS tapes. When this industry boomed and technology progressed to those nice shiny discs we all keep laying around, writers felt shortchanged. This pay formula is also applied to digital downloads of films. Producers and studios still refused to budge on this issue, claiming DVD sales are needed to offset today's higher production and marketing costs.

In late November, three weeks into the strike, the WGA and AMPTP met at the bargaining table. The rallies and picket lines of earlier weeks illustrated that no negotiations could be held while guild members were out on the streets. The talks were kept under a news blackout, but were ultimately fruitless. It was later released that at a meeting on November 4, both sides began making concessions. The WGA took the DVD proposal off the table and the AMPTP agreed to compensate writers for streaming video, but only after a "promotional period" of 45 days. The WGA went back saying the period should only last 3 days. The talks broke down when WGA East went on strike. By November 16, the AMPTP eased up on demands and negotiators agreed on a second meeting, both sides feeling the pressure of firings and delayed productions.

Towards the end of November, picketing resumed but member requirements were cut down from 20 hours per week to 12. Both sides met again, and by an agreement set forth that would require writers to go back to work (for non-writing chores like editing and post-production) if the studios agreed to return to the bargaining table, many TV writers returned to their offices. Rumors spread of a possible agreement, but it proved to be false due to the complexity of the new-media issues. In response, many popular TV shows shut down production earlier than was expected. This was a catalyst for more negotiations.

In the fourth week of the strike, the AMPTP unveiled what they believed to be a groundbreaking plan, the "New Economic Partnership," that would deliver $130 million to writers over 3 years (the span of the next contract). This was rejected by the WGA. Frustrated by the WGA's reluctance to sign a contract, the AMPTP approached the Directors Guild (DGA), whose contract expires on June 30, 2008. The DGA, previously in support of the WGA's efforts, announced in early December that they are willing to negotiate even if the WGA hasn't reached an agreement.

The AMPTP proposed a $250 annual residual on streaming video for one-hour dramas, but the current rate for TV reruns is $20,000. The WGA was expected to deliver a counteroffer that would focus on the new-media issues. The Screen Actors Guild (SAG), whose contract also expires in summer of 2008, remains on the writers' side, saying if the guild can achieve fair pay for all involved, they will not strike.

On December 5, Variety announced that the DGA is ready to enter negotiations with AMPTP. According to the Directors Guild, the Writers Guild is not making any progress because they keep taking breaks from negotiation rather than going around the clock. The guild claims the WGA has unrealistic expectations and will find itself floundering for a deal as time pressures the studios. The following day, worried that the AMPTP would tire of negotiations and would soon offer a take-it-or-leave-it deal, the WGA proposed its counteroffer to the proposal laid down the week before. The new plan included fixed residuals plus escalating payments per 100,000 downloads. The problem is that this won't work when extended to the DGA and SAG.

In early December, the WGA claimed the reason for not reaching an agreement was that the studios were unable to work together to reach a consensus. They therefore made a "legal demand" for individual meetings with studios. On the other side of the table, this move proved that the WGA never had a coherent bargaining strategy and was more interested in social progress than making a deal for its members.

Shortly before the end of the year, one of these individual meetings resulted in an agreement. The WGA and David Letterman's Worldwide Pants reached an agreement on December 28. This allowed Letterman and fellow CBS late night host Craig Ferguson to return to the air with their writers. Other late night hosts returned to the air the same night (the first week of January), but they were without their writing staff. All hosts made public their support for the guild. Letterman and Conan O'Brien appeared with "strike beards," and Leno's Top 10 list was a compilation of wishes from striking writers. The Number 1 demand? "Producers must immediately remove their heads from their asses."

So the late night hosts are back, but will they be any good without writers? The question now is whether or not the A-list stars will cross the picket lines to appear. The WGA hopes that the stars will stay on the writers' side to illustrate to networks that they may have the power to put shows back on the air, but they can only produce good shows with the help of the writers.

On January 3rd, Variety published details on the deal struck between Worldwide Pants and the WGA. The WGA claimed that it presented WWP with the same deal that was set before the AMPTP before talks collapsed on December 7th. The deal struck gives writers more than the deal proposed by the AMPTP. Worldwide Pants will pay writers 2.5% of "accountable receipts," which is the distributor's gross (the largest pool of money from which to draw residuals). This also goes for free web streaming and for paid downloads with a three-day window of free usage (as opposed to the six-week window offered by the AMPTP). Some of this is still up in the air since distributor's rights can be very complicated. For example, CBS controls all distribution rights to WWP productions, but the WGA has yet to reach an agreement with the network. Does this make the agreement between WWP and the WGA null? Not yet, but there is a safety net built into the deal: WWP can revert to whatever terms the WGA and AMPTP finally agree upon.

The second interim deal to come together was announced on January 7th. The WGA and United Artists came to an agreement that allowed writers on feature film projects to go back to work for United Artists. Though details have been kept quiet, the deal is most likely a mirror of that made with WWP. The deal does not include MGM, the majority owner of UA. Rather, it was Tom Cruise (he's everywhere!) and Paula Wagner, who own 35% of the studio, that had the most say. Once the deal was struck, the studio was able to revive in-progress projects such as Cruise's next pic Valkyrie. Maybe UA, who struggled with their last release Lions for Lambs, will end up ahead of the game with less competition from the majors this year.

Interim deals place more pressure on the AMPTP to return to the table. Having independent companies reach agreements drives home the point that the WGA requests are not unreasonable. However, at this time, both sides are still picking on each other and avoiding blame for this prolonged strike. The WGA hoped that inking a deal with one indie (UA), the rest would fall into place. Since the strike has been going on for so long, interim deals might not amount to much.

So we have late night shows back, but what else? Because the strike is costing studios loads of money, the big companies are beginning to look for ways to cut costs. On January 9th, it was announced that Paramount, Universal, and Fox all ended first-look deals and expensive relationships with some big names. Both sides are suffering, though; the WGA cancelled its own awards show. The Golden Globes were the next to go. The traditional red-carpet event was reduced to a one-hour press conference in which winners were announced as blandly as an emission from C-SPAN. This not only costs sponsors, advertisers, and the local economy millions of dollars, but it also effected the films nominated as well. Indies or films with limited distribution would have gotten free publicity from the event.

On January 11th, it was announced that the Weinstein Co. signed an interim deal nearly identical to that between the WGA and UA. Since then, no announcements concerning the WGA have been made. Instead, the AMPTP has turned to the Director's Guild of America, or DGA, in hopes of quickly settling on a deal that could be modified for the WGA. The strike has undoubtedly put a lot of pressure on the DGA, whose contract will be up soon, to reach an agreement quickly. It seems that the tentative deadline to break this stalemate is February 24, the night of the Academy Awards (though plans for an alternate presentation were recently released). Producers fear that if the strike goes past this point and turns the biggest awards show of the year into a boring memo, the strike will most likely continue into the second half of 2008.

The DGA also planned to negotiate new media issues, but not in the same fashion as did the WGA. Producers hope that the WGA will learn from the DGA's willingness to compromise. It should also be noted that any agreements reached will likely be accompanied by a clause that will force the issue to be reevaluated when the new contract expires three years from now. Monday, January 14th marked the third consecutive day of talks between the DGA and AMPTP. Both sides are currently optimistic about reaching an agreement. AMPTP may turn around and deliver an adapted version of its deal with the DGA as a take-it-or-leave-it deal to the WGA. In this case, the WGA may splinter as writers exhausted by the strike are ready to embrace a deal but the higher-ups refuse to settle.

Currently, many TV networks are announcing the dropping of writers and producers from their staffs, citing the strike as a major factor. Of course, the WGA maintains that the firing of its members from major productions is ultimately the fault of the AMPTP. And now, everyone is waiting on a deal between the AMPTP and DGA, though it most likely will not put an end to the labor war.

So where does this leave us? The sticking points in the strike are clearly too complex to reach an agreement overnight, but the strike has already had lasting effects on the production calendar for both television and film. In the late 1980s, the writers held out for almost six months and cost the industry over $500 million. As of December 28th, the strike had cost the industry over $151 million, a much larger sum than the writers had hoped to gain from a new contract. Thus, the strike has been more expensive than compromise. The longer the strike lasts, the more the trickle-down effect will hold; not only are studios effected, but so is the entire economy of Los Angeles, which is dependent upon the entertainment industry.

Regardless of the outcome of this strike, the system by which Hollywood does business will change dramatically for the first time in fifteen years. The new-media issues in question were unavoidable in a world of ever-increasing technology, but it remains to be seen exactly how the strike will effect the industry, the economy, and viewer habits.

You can keep up with daily accounts of the goings-on in the strike by visiting Variety at www.variety.com.