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Writers' strike: Fast-changing technology complicates talks with producers

Critical sticking point is the writers' demands for a bigger share of the burgeoning DVD market.

By / November 6, 2007

Walkout: Elizabeth Page of ABC and fellow TV and Hollywood writers went on strike Monday for the first time in 19 years after contract talks collapsed.

Gary He/AP

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Los Angeles - Now that Hollywood writers have put down their pens and picked up their picket signs, movie and TV fans – as well as an entire industry – wonder how long the strike will last.

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At stake: more TV reruns and fewer films for fans around the world, not to mention an estimated $1 billion in lost revenue for America's entertainment industry if this strike drags on as long as the last major walkout by writers in 1988.

Ostensibly, the crucial sticking point is the writers' demands for a bigger share of the burgeoning DVD market. But the larger issue is how to carve up the revenue pie when technology is changing so quickly that it's impossible to predict how big or even what shape that pie will be.

"So much is unknown about where distribution and entertainment is headed," says Roger Goff, principal of Goff Law Corp., an entertainment-law firm in Redondo Beach, Calif. "And everyone bandies about these huge hypothetical profits that nobody wants to be left out [of]. So it's making the negotiations even harder than usual."

"Usual" in Hollywood is tough enough.

Producers know they must give the same concessions to the directors' and actors' guilds as the writers, which induces extreme caution in every agreement. The last strike lasted five months and cost the industry some $500 million.

Since then, costs have escalated and revenue outlets have expanded, making the film and TV industry one of America's largest foreign exports. It accounts for $30 billion in Los Angeles County alone.

Over the years, writers have negotiated what many producers call more than a fair share of revenues, largely in the form of residual payments. Current Writers Guild of America (WGA) contracts provide for a sliding payment scale. A typical TV scribe might receive roughly $25,000 for a show that runs twice on a network (once as a first-run episode, then again as a rerun). The scale may go down quickly for subsequent airings in syndication, from $5,000 to $3,500. After it hits a certain point, say $300, that's where it will continue to pay the writer in perpetuity every time an episode airs. Many writers depend on these payments as a financial bridge between jobs.

But as programs move to new venues, such as the Internet and cellphones, nobody knows if revenues will follow.

"The advertising models for new media are still up in the air," says new-media guru Jack Myers, publisher of JackMyers.com in New York, who adds that it could be four to five years before the networks or studios can hope to generate sufficient revenue from new media to compare with the billions of dollars they currently earn from broadcast advertising.