Directors reach deal with Hollywood studios

By Lynn Elber

LOS ANGELES – Hollywood directors reached a tentative contract deal Thursday with studios, a development that could turn up the pressure on striking writers to settle their 2-month-old walkout that has idled production on dozens of TV shows.

“Two words describe this agreement – groundbreaking and substantial,” said Gil Cates, chairman of the Directors Guild of America’s negotiations committee. “There are no rollbacks of any kind.”

Among other things, the three-year agreement establishes key provisions involving compensation for programs offered on the Internet.

That issue has also been a key sticking point between striking writers and the studios, which broke off talks on Dec. 7.

In announcing the deal with directors, the Alliance of Motion Picture and Television Producers, which represents studios, expressed hope that it would help end what it called an extremely difficult period for the industry.

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It also called on the writers guild to engage in informal discussions to determine if there was a reasonable basis for returning to the bargaining table.

The Writers Guild of America said it would evaluate the terms of the directors’ deal. It also reiterated that it has been calling on the studios to resume negotiations.

“We hope that the DGA’s tentative agreement will be a step forward in our effort to negotiate an agreement that is in the best interests of all writers,” the writers guild said in a statement.

Writers previously said directors do not represent their interests.

The deal with directors gives their union jurisdiction over programs produced for distribution on the Internet and sets a new residuals formula for some paid Internet downloads that essentially doubles the rate currently paid by employers, the guild said.

In addition, it sets residual rates for ad-supported streaming and use of clips on the Internet.

“Our industry’s creative talent will now participate financially in every emerging area of new media,” the studio alliance said in a statement.

The deal was welcomed by others in Hollywood.

“I’m very pleased with the new agreement and I hope it helps speed up the negotiations” with the writers guild, George Clooney said.

Clooney has often commented on the need to resolve the strike to put thousands of people back to work in Hollywood.

The directors guild was well-prepared when it started negotiations Jan. 12.

It had spent $2 million researching the potential value of new media over the next decade and held a series of meetings with key studio heads to establish a basis for the formal talks.

Cates, who’s been involved in union contract negotiations for three decades, served as lead negotiator for directors.

He is also producing this year’s Academy Awards program, which is imperiled by the writers standoff.

Sunday’s Golden Globes were reduced to a news conference after actors refused to cross writers’ threatened picket lines.

NBC lost millions of dollars in ad revenue, and award winners were deprived of instant publicity that could have provided a box-office bump.

New media issues also were expected to dominate negotiations with the Screen Actors Guild, whose contract expires in June.

The directors guild said late last year that it would delay the start of talks to give writers a chance to come to an agreement with studios.

But the guild clearly lost patience after negotiations between the writers and studios broke off last month and the strike dragged on.

Among other things, the studios’ deal with directors says:

– Programs produced for the Internet will be directed by guild members, with the exception of low-budget shows.

– Residuals for downloaded movies will be increased by 80 percent over the current rate paid by employers. Those payments will be based on a distributor’s gross, which the guild said was a key point in negotiations. (Distributors’ gross represents the amount received by the company responsible for distributing the film or TV program on the Internet.)

– Companies are contractually obligated to provide the guild “unfettered access to their deals and data,” the guild said, calling that unprecedented transparency.

– For ad-supported streaming of Internet programs, an initial 17-day free window will be followed by a requirement that companies pay 3 percent of the residual base – about $600 for a network prime-time drama – for 26 weeks of streaming. Companies can continue to stream for another 26-week period by paying an additional 3 percent, or a total of $1,200 for one year’s worth of streaming. During a program’s first season, the 17-day window is expanded to 24 days to help build audience.

In their talks, the writers guild and studios have clashed over using a percentage of a distributor’s gross receipts to determine Internet compensation.

The guild said it sought that approach but was told by the alliance it was an unworkable and unacceptable formula. Instead, the studios offered a flat $250 payment for a year’s use of an hourlong TV show on the Web.

The guild balked, citing the $20,000-plus residual that writers now earn for a single network rerun of a TV episode.

Also at issue for the writers guild is unionization of reality and animation writers.

Talks broke down after the alliance demanded the guild take that and other issues off the table, claiming there had been an agreement to drop it.

The guild’s next move may be influenced by history.

There’s a lingering resentment among members over what they considered raw deals in the 1980s involving what eventually became lucrative home-video and DVD markets.

The writers guild home-video deal was shaped by a deal made previously by the directors guild, following an industry practice of pattern bargaining.

That created resentment among some writers guild members toward the directors.