Writers' Strike: Is Political Posturing About to Trump Good Economics?

I'm about to get myself in a lot of trouble. So be it... Listening to both sides in the looming writers' strike, it's clear to me that politics is about to trump sound economics. Neither the Writers Guild nor the Alliance of Motion Picture and Television Producers is looking at the issue properly.

If you look at the amount of money that was at issue during the last writers' strike in 1988, I bet it was less than the amount the strike ended up costing all concerned. And I believe that will be the case this time around, too.

Expecting movie studios and television networks to change with the times is not asking too much. New technologies have dramatically altered Hollywood's economic landscape, but the AMPTP is still clinging to a revenue model that was created back in the days of Lew Wasserman and Abe Lastfogel - and was, as I understand it, adopted from the record business (you remember records, don't you?). The movie business took the formula used for calculating record royalties and basically transferred it to the sale of videotapes (you remember videotapes, don't you?). What's more, the current royalty formula for DVDs factors in the cost of manufacturing (today's electronic DVDs and web downloads, of course, cost absolutely nothing to "manufacture"). Clearly, the media world has gone through a major evolution since Lew and Abe, and it's time for its business practices to follow suit.

On the other hand, what the representatives of the Writers Guild have to remember is that all union contract negotiations are to set minimums, and that the effect of the change in residuals from DVDs and New Media they are seeking will not rise to the level of revenue they are asking for - or what the strike is going to cost the Guild's active members. Once again, the eventual cost of a strike will exceed the financial gain being sought.

Going on strike to lose more than you gain is not smart negotiating.

Both sides should also keep in mind that TV ratings have fallen significantly over the last few years, and the movie box office hasn't been all that great either.

But, who knows, maybe clearer heads will prevail - and sound economics will supersede political posturing. Let's hope so, not only for the sake of the writers, the studios, and the networks but for the millions of people in the community who will be hurt by a strike, including below-the-line workers and all those who aren't in show business but whose livelihood is dependent on a Hollywood that is up and running.

Read more thoughts about the strike on Huffington Post's writers' strike opinion page

Comments

[wadenelson1]

I'm sure we'll hear an equal amount of whining when Wal-Mart employees finally decide to unionize and demand a living wage from THEIR employer.

[WesleyDumont]

My wife wrote (adapted) a movie that while being the number one rated premier on not one but two cable stations, ran in foreign countries, sold DVDs, and only cost $1M to produce, never, according to the producers (The second largest premium cable channel) turned a profit.
And her share of DVD sales - five cents each.

It's a personal account, but one that rings true for the greater problem - the producers rarely admit to making a profit on a movie; and the residuals formula for after market monies should have been addressed in 1988.

For the producers to revoke their "offer" of residuals rollback is a lark. It was never an offer any more than me offering to take my fist out of your face is an offer.

Accounting needs to change, residuals need to be fair. It's time for a hard reset for the perception and reality of writers. Writers without producers = writers. Producers without writers = ???

[smike]

I think an idea to consider on this issue is that the guild's money is well spent if 'big dogs' are encouraged to consider the fact that a bigger pack of 'little dogs' can bite back. I feel that we sorely need a better balance between the faceless corporations and the real people they employ.

[drblack]

I agree with above posts that Yellow Dog Contracts in all business need to be made illegal.
If someone creates something they should get royalties as long as it makes money.
Reagan, just like Clinton and both Bush's and Hillary clinton is are anti-individual and pro-big business.
We need some real Americans who support individual freedom over freedom of the collective or big business.

[glickstein]

All due respect, but Ari's logic is not only faulty, but laughable.

Having worked at a Big 5 agency, and seen people like Ari 'up close and personal' as opposed to an episode of Entourage, this comes to mind.

1) What kind of 'sound economics' will Ari apply the next time an agent comes into his office asking for a raise/promotion?

Agents leave over two things; power and money. Would Ari say ICM 'trumped good economics' when they let the highly respected Ed Limato leave over salary and (deserved) position within a corporate structure?

Would Ari apply his logic to the defection of several UTA agents to CAA? Last I checked, when an agent goes, their clients ('revenue stream') often go with them.

By AriLogic, UTA (and CAA/ICM/WMA/Endeavor) should realize the 'cost' of keeping them outweigh letting them go. We know better and agencies will continue letting agents go over a few dollars.

2) Ari says, "Going on strike to lose more than you gain is not smart negotiating."

If this is how Ari feels about labor negotiations, every agent at Endeavor should ask for a raise; per AriLogic, a $100K a year payraise, 'trumps' losing commission on a $10M payday for Talent X.

3) Ari says, "Both sides should also keep in mind that TV ratings have fallen significantly over the last few years, and the movie box office hasn't been all that great either."

I can see Ari telling his top agents, "...I can't give you a $100K raise, as the box office didn't perform...TV lost more of their audience."

Does Ari apply his logic to his (or network president, studio chief, media mogul) million dollar plus salary? If less than 50% of his clients had a 'hit' movie/TV over the past year, he'll reduce his salary by a fifth, fourth, third?

What's that you say Ari? You said NO?

The only one 'posturing' is Ari (ironic, considering he evokes Wasserman; a true fountain of knowledge from a bygone era when talent reps stayed outside the limelight).

[CrackpotPress]

But the writer's should get something, no?

As I understand it, the writer's get no residuals for DVD's.

When studios are making millions off of repackaging the DVD (aka "Friends: The Thanksgiving Episodes"), shouldn't the person who wrote it get at least a tip?

[Swift2]

Oh, God bless the new progressives! You can print a column with the usual bosses' claptrap, and not be called a reactionary! Way to win in the 21st century!

All the writers want is, if the corporation makes money with their content online, then the writers should get a cut instead of bupkus. I'm sure an exception can be made if the company maintains a site for promotional purposes. Writers don't get a cut of the promos on TV or anywhere else, because they hope to share in the box office.

[Lackland]

Ari's fear that the strike will cost WGA members more than it gains seems to contain two key errors. First he assumes he knows how long the strike will last and how much work suspended during that time will never be reordered. But the DGA struck for an hour last time and lost zero and made some true, immediate net gains. No one knows at this point how long a WGA strike will last or what it will gain. Second, he doesn't take into account long-term gain and loss. If the Guild does not conduct a successful strike now, in years to come emboldened companies will force rollbacks on a demoralized Guild - and the net cost of *not* striking could be gigantic. The truth is, nobody in the WGA or AMPTP knows what a strike will cost yet. But everyone knows that if you never stand up and fight, you will ultimately lose everything - a point the AMPTP drove home when it started these negotiations by demanding gigantic rollbacks from the Guild, a bullying strategy that instantly unified the Guild by underscoring what was really at stake.

[kcnativnla]

This strike is going to risk millions of jobs - mine included. And for what?

I'm sure Detroit thought they were going to be the car capitol forever, and Pittsburgh was going to be steel city until the end of time! You think Hollywood as the entertainment capitol can't die out?

Where the hell is Governor Arnold's leadership on this issue?! He should be doing something, no only to help prevent this strike, but to provide competitive incentives to prevent productions from going overseas as well.

[LiberalLo]

Long live the unions. Without them, none of us would have anything. The reason the middle-class is fading from the scene is the death of the unions. Wise up, people, before it is too late.

[blowoutfan]

Is he saying it's a losing proposition b/c the writers got hosed in the last negotiation, thus making it a net loss? They didn't stand up for the 'home entertaiment' residuals and are now paying the price. To say that because historically, they suffered a loss, so now, they should take what's offered is ludicrous.

[pigsatthetrough]

Ariana, you fox, I want you to know why you will not be hearing from me soon. I will have to honor the theoretical writers picket lines here on the Post. Many of us who comment, must surely consider ourselves of the same import as the ones who are planning or being forced to go on strike for more money. Alas....

[edgespeaker]

Hey hey hey hey....what about this: "Gerard Colby, president of the National Writers Union, noted that in its historic 2001 ruling in Tasini vs. New York Times, the Supreme Court ruled that the principles of copyright apply to online distribution of editorial content, and that ***articles cannot be distributed in cyberspace without permission of their creators***. The Tasini litigation was initiated by the NWU and funded in part by its parent union, the United Auto Workers.***

The same should be true for screen writers. Period. Come on, without the writers there is NO SHOW, not for the actors, not for the producers, not for the directors. I am sick and tired of those who have the imagination and talent being given the short end of the damn reward stick.

[scendereinpiazza]

"On the other hand, what the representatives of the Writers Guild have to remember is that all union contract negotiations are to set minimums, and that the effect of the change in residuals from DVDs and New Media they are seeking will not rise to the level of revenue they are asking for"

Huh?

[darylfrancis]

Reworking outdated formulas won"t ever happen in the name of fairness. It will happen only if successful writers stand behind the have-lesses and demand a fair deal for all. Otherwise, with few exceptions, writers will always be considered the dregs of the industry. And that is insane. At a strike meeting years ago, Mel Shavelson warned that if writers didn"t demand a fair deal on video and ancillary rights, it would be almost impossible to get them later. But we were tired and hungry, and management made us believe that we were ultimately powerless (and virtually unnecessary), so we caved. Only writers helping writers can ever summon the clout to prevent this from happening over and over again.

[danielmcvicar]

Thanks for some very interesting thoughts.
The Media is evolving. Residuals may be an important issue but the real threat is the changing of the business model. One place that producers and writers, as well as other people involved in the creation of film, television and video are on the same side is the protection of copyright.

This is where the unions need to get involved and protect their members. The addition of a simple clause in the contract would allow the unions and members to go after infringement of copyright.

Can you imagine the writer's union going after Youtube, or Google.

[PlanetKansas]

Blaming the writers for the lack of success at ABC, NBC and CBS is disengenuous. Expanded cable programming, daily and even hourly newscasts have created more writing opportunities than ever existed before, and the excellant writing is still out there, it's just spread thinner. Even reality shows have writers influencing the story arc, don't let them tell you otherwise.

The reason SNL isn't funny anymore is all the writers can now work for Comedy Central, so the talent isn't as concentrated, and good writers can always name their price.

Blaming the writers is political posturing prior to the high stakes negotiating for a brave new world. Television and movies are facing the same technological changes as the record industry, and Google is going to make a lot of money becoming the middleman and content distributer. With all the money at stake, the writers are fortunate to be organized enough to have a guild represent their interests.

It's not often enough we get to see the artists beating the lawyers.

[Brandoland67]

Ari... want to second the motion floated by "TVWriter". There seems to be a great deal of animosity between Verrone and Counter... and I'm wondering if this is hurting the negotiations.

[itolduso]

I find it funny that those who never created anything think it's all about money. It's about fairness. It's about acknowledging the value of your efforts. It's about respect.

[Pdubya]

can we have wolf blitzer, sean hannity, ann coulter, bill o'reilly, keith oberman, glenn beck and all of the other hacks stop stuffing script down our throats?

[JScott]

They deserve the strike there is unmitigated greed on producers/corporations part, the unions HAVE to set their residuals stuff NOW other wise they'll never be able to.
As for no new tv shows, movies etc. Hey America will do JUST FINE!!!!

[PeteBogs]

can we have just the "reality" show writers go on strike? I'd like that!

[singermuse]

Good! Let the writers go on strike! Maybe it will encourage more people to read good books. Oh wait! They can't. The powers that "think they be" have dumbed down the educational system so much that too many people can't even read at a High School level. Literacy in this Country is at an all time low; and we still think we're "number one"?? In our dreams! An educated and LITERATE general population is an imperative to REAL democracy and we no longer have this.

[TJS]

Does anyone seriously think that the writers will stop writing during a strike? Suppose there is a strike, it lasts for an extended period, and then it ends on a Tuesday morning. By Wednesday, I suspect that hundreds of writers will show up at the studios with polished scripts, claiming, "Look what I whipped out last night!"

[TVWriter]

ari -

You're a major hitter. You really can't do more than hope clearer heads prevail? This is a disaster. We needs the men in the middle to broker a compromise - lawyers and agents with enough suction to have an opinion that matters to studios. I'm telling -- the writers are getting crazy put here.