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Deals, Lies and Back Channels 

Why the WGA strike is a bigger mess now than ever

Wednesday, Nov 7 2007
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DAYS INTO THIS STRIKE, only sources within the Hollywood moguls’ camp have discussed what really went on during 11th-hour contract negotiations between the Alliance of Motion Picture & Television Producers (AMPTP) and the Writers Guild of America (WGA) at the Sofitel Hotel Sunday, and the subsequent segue into the start of a strike Monday. And the movie studios and TV networks were especially savvy in getting out first their story about how the writers were to blame for the bargaining talks’ breakdown. And they’re still telling that story. (Just read the producers-slanted coverage by Variety and The Hollywood Reporter and the Los Angeles Times and The New York Times, which all depend on studio and network advertising, while I stay smack in the middle on my Web site, DeadlineHollywoodDaily.com.)

But the WGA leadership finally broke its silence and told me it was “deliberately duped” by the moguls in a back-channel deal to bring the guild back to the bargaining table Sunday. The WGA leaders say the lure was a promise by two Big Media CEOs — Peter Chernin and Les Moonves — that if the writers gave up their demands for increased DVD residuals, then the producers would respond by improving the formula on the central sticking issue of electronic sell-through (EST), the successor technology to DVDs, for movies and television. My producer sources confirmed to me that such a deal was indeed made. In other words, it could have been possible Sunday that a settlement was only days or a week away, with enough progress having been made to induce the writers’ side to suspend the WGA East and West walkout.

The writers say they kept up their end by dropping their demands for richer DVD residuals — a huge concession that later puzzled the WGA membership because it seemed to come out of nowhere and had to be explained by WGA president Patric Verrone without revealing the whole back story. The reason? The WGA says it was abiding by the “mutual pledge of confidentiality” with AMPTP that, for the first time in all the negotiations, applied to Sunday’s session. The WGA accuses the producers of not delivering all day on the all-important electronic sell-through issue. (Even the producers confirm to me that, no, their negotiators did not offer anything like “DVDs for ESTs.”) So that’s the real reason that the 12:01 a.m. strike wasn’t averted and that the WGA quickly reversed its DVD concessions.

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As a spitting-mad WGA leader put it to me: “All I can say is, if someone calls me and says, “You do X, and I do Y,” and that someone doesn’t do it, then I’ve been lied to and I’ve been played. It’s a complete betrayal. I just don’t know what the studios’ game is.”

NOR, APPARENTLY, DO THEY. Ironically, as I was being told of the WGA’s complaints, the moguls were being briefed on what went down Sunday inside the negotiating room. But are they being told the whole story about the back-channel deal? Not that I can tell. About the promise that’d been made? Not that I can tell. About the promise they broke? Not that I can tell.

Let me start at the beginning of last weekend, when back channels — such as bringing in former WGA president and ER executive producer John Wells — were being explored and cultivated, even though Wells was considered a 2001 near-strike sellout by a majority of his union. All the moguls were working their phones and relationships once the reality of a walkout suddenly smacked them upside the head. Still, the Hollywood CEOs backing off the central sticking issue of electronic sell-through residuals for movies and television shocked the writers, since, as recently as last week, AMPTP had been telling the WGA that it wouldn’t move off the DVD formula on digital downloads.

As the Sunday negotiation was being scheduled for the Sofitel, the producers announced to the media Friday night that both sides had been “ordered” back to the table by the federal mediator. “The companies used the federal mediator to give them cover so they didn’t look like they’d caved and made the first call,” a WGA leader told me.

The meeting began at 10 a.m. with the WGA making clear it was ready to negotiate without stopping, and for as long as two to three days if necessary. “But we said that without a deal by midnight, or unless we were really, really close, we were not going to suspend the strike. We said that, as things stood, the strike was going ahead at 9:01 p.m. in the East. And they said they understood. And we got going.”

As its gesture of good faith, the WGA took the DVDs issue off the table. And the producers said they would get together and talk and respond.

In the meantime, both sides haggled over a side issue: the funding of the Showrunner Training Program. The WGA claims it waited and waited for the producers to keep their “DVDs for ESTs” promise. But the AMPTP negotiators kept “stalling and returning again and again to the bullshit for hours.” Both sides agree that two other producer proposals were discussed: a new economic model for streaming TV shows online and a new jurisdictional model for made-for-new-media content. Then the two sides left the talks and went out to dinner.

Finally, a little before 9 p.m. Pacific time, just before the strike was to start at 12:01 a.m. Eastern time, the producers came back, according to a WGA leader, and said, “We stand by our former position that you will get the DVD formula on digital downloads. And we would like to ask if you guys would suspend the strike starting at midnight in the East. Are the pickets starting?”

The producers confirmed to me that they didn’t move off their electronic sell-through position to answer the WGA’s taking increased DVD residuals off the tables Sunday. “There wasn’t enough time!” one of their insiders claimed to me.

According to a WGA bigwig, “We told them what we’d said right at the beginning of the day’s discussion — that we had to see progress for the strike not to start. They said, ‘Well, that’s it, we’re walking out. Goodbye and good luck.’ Our guys shouldn’t have been shocked, but they were shocked. They weren’t ready for the game that was being played.

“Their story was that they saw on the Internet that the strike had started — but they just happened to have a news release ready. By the time we realized what was going on, we’d missed the news cycle . . . and we got caught with our pants down.”

So why is what happened Sunday still important days later? Because now, both sides in this fight are further apart than they have ever been, and that’s saying a lot. Both sides believe they have fresh and ample reasons not to go back into negotiations anytime soon. Really smart people have told me that if this walkout doesn’t settle in the next few weeks, say, by December 15, then there may not be an incentive for the moguls to settle it until June, when the Screen Actors Guild contract expires. As for the Directors Guild, whose contract is up next June as well, everyone expects the DGA to fold like pup tents: no shocker there. In film, the studios prepared for this labor action starting two years ago. But I broke the story pre-strike that the Hollywood moguls viewed this TV season as a total loss and welcomed the walkout as an automatic “do-over” that would allow them to regroup and then refashion their business models. At the same time, the Writers Guild two years ago began to draw a line in the sand on new media and the Internet that they’re etching deeper every time they walk the picket line.

Worse, both sides believe that, after Sunday’s betrayals, they can’t trust the other side enough to even talk about scheduling new AMPTP-WGA negotiations, much less try back channels. But such private discussions have been the only successful way labor strife in Hollywood has been settled in the past. In short, Hollywood, Los Angeles, maybe even the entire economy of the state of California, is really screwed.

That is, unless tourists from around the world realize that the next weeks and months will be a wonderful time to come here and see celebrities in their new natural habitat: the picket line. If anyone in Los Angeles city government had a brain, they’d market the hell out of this. All 15 strike locations could be the next big attractions and the city a giant theme park featuring actors supporting writers, such as Grey’s Anatomy stars Katherine Heigl and Sandra Oh and T.R. Knight, walking and chanting, “More money, less Moonves,” or, my personal favorite, “How much you earnin’, Peter Chernin?”

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