Directors, Studios Make a Deal

The Directors Guild of America today reached an agreement with the major studios that will now put pressure on Hollywood writers to revive talks to end an 11-week-old strike that has roiled Hollywood.

In a new three-year contract, directors negotiated an improved deal than what studios had initially offered writers, including higher royalties for online sales of their movies and TV shows.

Disputes over how writers should be paid when their shows are distributed over the Internet, cellphones and other new media have been the central sticking point in failed negotiations between studios and writers.

With the directors' deal complete, pressure now shifts to the leaders of the Writers Guild of America to use that agreement as a basis for concluding their own contract that would end the industry's costliest strike in two decades. The walkout shut down the television industry and is upending the awards season. In Hollywood, contracts are often determined through "pattern bargaining," where the first union to negotiate a deal sets the template for the other unions.

Concurrent with today's announcement, media executives invited writers to revive talks that studios broke off last month with an eye toward having more cordial and productive negotiations like they had with directors.

It's unclear, however, whether writers will find the terms sufficiently acceptable to frame their own agreement. Although studios gave better terms to directors, they still fall short of what writers were seeking in their negotiations.

What's more, leaders of both the WGA and the Screen Actors Guild, whose contract expires June 30, have stressed that they won't be tied to terms set by directors.

Many writers feared that directors would sell them short, especially in the area of Internet residuals. Many still blame directors for negotiating a much-maligned formula for home video residuals more than two decades ago that became the standard for all talent unions.

However, WGA leaders would probably face a backlash if they summarily reject the directors deal. Many TV and screen writers have been urging guild leaders to seriously consider the DGA deal as a framework to revive their own contract talks that studios halted last month.

"If the WGA rejects the basic concepts of a DGA deal, there's going to be a great deal of dissatisfaction among the membership," said Dick Wolf, creator and executive producer of the "Law & Order" franchise. "The bottom line here is: This town should be back to work in three weeks."

Jerry Bruckheimer, one of Hollywood's biggest movie and TV producers, echoed the sentiments. "I think there is enormous pressure on everybody to settle this and move on," said Bruckheimer, whose TV shows -- including the "CSI" franchise, "Without a Trace" and "Cold Case" -- halted production because of the strike.

The contract covering 13,400 members guarantees directors a $1,260 fixed residual payment for one-hour TV dramas streamed over the Internet in the first year, compared with $250 the studios had offered writers. The studios also would be entitled to a 24-day promotional window in the first year, and a 17-day window in the second year. After the first year, writers would receive 2% of the distributor's gross revenue.

When movies are sold online, directors will receive the current DVD royalty, 0.36% on the first 50,000 downloads, and 0.65% thereafter. Directors would get a 0.36% residual for the first 100,000 downloads of their TV episodes, and 0.7% after that.

Directors received jurisdiction over Web episodes based on existing scripted shows and original Web shows above a certain budget threshold. For instance, Web series costing less than $500,000 would be exempted.

The deal contains a so-called revisit clause that allows contract provisions to be adjusted after the three-year term.

Anxieties have been running high among television writers, who are rapidly losing their studios deals because of the strike.

ABC Studios, 20th Century Fox Television, CBS Paramount Network Television, NBC Universal and Warner Bros. Television each terminated development and production agreements with writers in the last week. So far, more than 65 deals have been terminated, and more are expected if the strike drags on.

TV and screen writers have held a series of meetings with members of the guild's negotiation committee and board members to voice their concerns about the strike's effect on their livelihoods. That message was conveyed in a meeting Monday attended by more than 30 TV writer-producers, and a series of meetings last week with screenwriters.

The DGA deal came together rapidly and without the kind of rancor that characterized the negotiations between writers and the studios. As is their custom, directors spent months laying the groundwork for the studios.

Formal negotiations wrapped in less than a week because so much of the legwork had already been done.

One reasons for the fast pace was the direct involvement of News Corp. President Peter Chernin and Walt Disney Co.'s Bob Iger. The executives had been designated by their counterparts at the media companies to hammer out a framework for a deal. Chernin helped negotiate the new media terms of the deal.

Chernin and Iger also are expected to be similarly involved in any resumed writers talks.

Beyond the writers, the studios also face what could be equally contentious negotiations with actors, whose contract is up June 30. Actors share many of the same concerns as writers and have strongly supported them on the picket lines.

Studios already have begun preparing for the possibility of an actors strike by pushing up shooting schedules of various movies.