Sunday Morning

I'm starting to lean towards the idea that The Strike could last a lot longer than the optimists among us have been suggesting. "Could" is the operative word in that sentence.

It's difficult to predict these things because at various points, the companies that comprise the AMPTP have to caucus among themselves and their CEOs or reps all have to sign off on a new offer or a new strategy. Outsiders are not privy to those discussions. At any given point, the Producers have a reasonably good idea of what it would take to settle with the WGA — how close to our demands they'd have to come to get 51% of the membership to vote to take the deal and get back to work. That they don't just offer that is because at least one of the member studios in the multi-employer bargaining unit thinks a better deal (for them) is attainable at a cost-effective cost.

Of course, it could be more than one member corporation that doesn't want to make that kind of settlement offer. It could be all of them. But during the long strike of '88, rumors circulated — who knows if they were true? — that at a certain point, Paramount wanted to make a real settlement offer, whereas Disney vetoed it. Or was it the other way around? There were also rumors that some of the companies were squabbling over matters unrelated to our strike, and that these squabbles were getting in the way of them getting together on an offer that would end our strike.

The point is we don't know. When the WGA has a rift in its ranks, as we did in '85, it's a matter of public record. When they get to fighting in the AMPTP, it's a carefully-guarded secret.

So that's one reason it's tough to forecast how this thing will play out. The other biggie is that there are wildly-varying estimates of how much money is involved in certain deal points, especially the ones that relate to new technology and expanding markets. You could see this vividly with the latest offer, the one that got summarily rejected last week. The Producers say they're offering a $130 million increase. The WGA analysts say it's a rollback. How good is it really? You can't answer that easily and since you can't, you can't say at what point it makes financial sense for one side or the other to pack it in, rather than hold out.

The other day, the WGA put out a statement that included the following…

On Wednesday we presented a comprehensive economic justification for our proposals. Our entire package would cost this industry $151 million over three years. That's a little over a 3% increase in writer earnings each year, while company revenues are projected to grow at a rate of 10%. We are falling behind. For Sony, this entire deal would cost $1.68 million per year. For Disney $6.25 million. Paramount and CBS would each pay about $4.66 million, Warner about $11.2 million, Fox $6.04 million, and NBC/Universal $7.44 million. MGM would pay $320,000 and the entire universe of remaining companies would assume the remainder of about $8.3 million per year.

Observers look at that and say, "So what's the standoff here? The Producers say they're offering $130 million and the Writers want $151 million. They're only $21 million apart. That's about what this strike if supposedly costing Hollywood per day! Why can't the two sides split the difference and end this thing so we can get fresh Colbert Reports?" The problem is that even if both sides' numbers are honest — and they may not be — nobody really knows how much loot will eventually be involved. We're talking a three year contract here and no one can say precisely where the home video and Internet Streaming markets will be in three years. The dollar figures cited are guesstimates extrapolating from where those markets are today.

And to further throw uncertainty into the mix, the Producers aren't thinking about how much it would take to sign the WGA. They're thinking of that amount plus how much they'll then have to give the Directors Guild and the Screen Actors Guild and other unions that will demand and presumably get similar increases. (The precise multiplier is arguable because not every concession applies to every union…but for example, a movie has a lot more actors than it does writers. So conceding another dollar to writers might translate to four or five more bucks to actors.)

Beyond that, the Producers probably have two related concerns. One is that for the past 30 or so years, they've done a pretty good job of keeping the unions from making major gains. None of them expect a lot, which is why even the supposedly-militant WGA is (see above statement) willing to settle for a 3% increase in an industry that they project will grow at a rate of 10%. From the employers' POV, there's a certain value to not disrupting the momentum of not allowing unions to win demands. The 22-week Writers Strike of '88 could never, in and of itself, have been cost-effective from the Producers' standpoint. Some estimates say they lost $100 million for every million bucks they managed to deny us. But they also scared the hell out of all the unions in town. In the two decades since, no union or guild (including the WGA) has tried to gain much and most have eaten a few rollbacks, rather than get into another all-out war. That's worth something to the studios.

The other, connected consideration is this: Delivery of entertainment via Internet is a new frontier, a new place the industry seems to be relocating. There are undoubtedly those who dream of settling that territory without unions and labor getting a real foothold. The studios had to concede to principles like residuals and paying health benefits in the old venues and you can almost hear them saying, "Let's not make that mistake this time" or at least, "Let's not make it before we absolutely have to." That's one of the reasons all the other unions in town are lining up behind the WGA. They all sense that the business is being redefined and in their own ways, they'll all have to battle to not start over from scratch, fighting for the benefits they now take for granted.

All of this makes it very difficult to gauge how long it could be before the Producers decide they're losing too much. Could be tomorrow, could be April. I still don't think it'll be April because if they settle with us then, they'll be getting scripts just in time to face the possibility of a strike by the actors and maybe even the directors. That could throw the entire industry into chaos for all of '08 and do some irreparable structural damage to the biz, like putting theaters out of business for lack of product or causing major advertisers to largely abandon broadcast television.

Right now, a major date to keep in mind is February 24, 2008. That's the scheduled date for the Academy Awards. In order to have a relatively normal Oscarcast on that date, the strike would have to be darn close to over by the end of January. If it's still going strong the day of the Oscars, all the unions will boycott. Jon Stewart, the announced host, certainly wouldn't be up there in his tux and even if he would, can you imagine what that monologue would be like? I'm guessing twenty solid minutes of CEO-bashing, followed by no one of note presenting to a lot of recipients who couldn't be present to accept because they were outside with signs. The show would be a fiasco, sending word around the globe that the American film industry can't deliver product…can't even produce its annual tribute to itself.

If I were the AMPTP, I'd start pressuring the Academy to move the ceremony later in the year…maybe even into early April, which is when they used to have it. Like I said, I don't think the strike will last that long but if the Producers aren't prepared to settle by the end of '07, they're going to have to at least pretend they're willing to hang tough and hold out for several months beyond that. Delaying the Oscars, or at least trying to delay the Oscars, would be a convenient scare tactic. Let's see if they try it.