The Stakes Are Far Larger Than Most Will Admit

The stakes are far higher than either side admits publicly.

The surprising reality of the Writers Strike is that the Companies truly believe they had no choice but to force the writers to strike. This is not because the Networks want to write off a bad season in 2007, or because the Companies want to void expensive overall deals. That money is chicken feed compared to what is truly on the table.

Here's what's going on, and it's chillingly simple: by forcing Writers and Actors to accept a fraction of their rightful share of DvD sales twenty-odd years ago, the Companies saved over ten billion dollars. If the Companies can do the same with the Internet, they stand to save that amount many times over. The Companies are employing a cold but somewhat logical strategy. In foregoing a certain amount of current revenue - perhaps as high as the value of an entire season of TV - they hope to save tens of billions in the distant future.

Before negotiations with the Writers began, the Companies said to their negotiator, Nick Counter: "This is how much of our future profits we are willing to share with the Guilds, and this is how long we can wait before we have to get back to work." And then they concluded, "between now and that certain deadline, get the Guilds as far below our maximum as you possibly can."

So Nick did his usual dance - pretend to negotiate with Writers, and then try to cut a deal with Directors that can be used against the Writers. Why does Nick prefer the Directors Guild? Because it is more reasonable or powerful than the other Guilds? It's not necessarily either of those things. No, Nick prefers the Directors simply because they are the least expensive Guild. Half of the DGA's members don't depend on residuals, as do all of WGA and SAG. Nick has given DGA preferred status over the years, granted it early negotiations, and declared it "powerful," simply so he can try to use DGA deals to apply pressure on WGA and SAG.

And just as Nick tries to use DGA as a front to pressure the Writers, he tries to use the Writers as a front to try to weaken SAG. SAG is Nick's ultimate quarry, not just because it is large and beloved by the public - but because it's the most expensive Guild. Every residual WGA gets, SAG contractually gets three times more. Nick's cynical strategy of using the Directors to force a bad deal on the Writers, so that the Writers deal will apply to the Actors, has worked more or less perfectly for thirty years.

So what's different this time around? The stakes. Just as the Companies are looking at higher stakes than ever before, so are the Writers. This time around, probably to the consternation of the Companies, Nick has gone too far. The deal he laid before the Writers is bad in the short run, but in the long run, disastrous. "New Media" is an inaccurate term. It's no longer new, and in a few years, it will encompass all Media. By trying to cut writers out of New Media, Nick has declared that he wants to cut them out of the business altogether.

But as many wars have taught us, imperial powers routinely underestimate what people will do to protect their homeland. While the Companies are only fighting to avoid sharing profits that the writers will earn for them in the future, the Writers are fighting for their professional lives.

The clock is quietly ticking toward the secret deadline the Companies gave Nick. That deadline could be February, or, God forbid, September, depending on how much the companies have decided to invest in this strategy. But it will come. And for every indication that Nick's old tactics may be working, there are ten never-before-seen indications the Writers are stronger than ever.

Where did the Companies go wrong? In not studying the current WGA. The signs that Nick's thirty-year old strategy might not work this time around were evident three years ago, when Patric Verrone and nine prominent writers announced their "Writers United" slate. For the first time, a slate of WGA candidates campaigned together, organized vote captains, developed a functioning, de-centralized organization that led to the largest voter turnout in Guild history and virtually every member of the slate beating all other candidates by a two to one margin. In case the Companies weren't paying attention three years ago, Verrone and his Writers United slate repeated the feat last year, winning reelection overwhelmingly with an unprecedented turnout strongly indicative of a well-oiled, mature organization.

If the Companies weren't paying attention then, it's hard to believe they aren't paying attention now. With solid public support for writers, sustained picket lines, SAG and other union support, the Worldwide Pants deal in TV, the UA deal in film, and the "inevitable" negotiations with DGA already behind schedule, the Companies may soon have little choice but to reconsider their strategy. However "logical" it may be to lose a billion now to avoid sharing tens of billions others have earned for you, it's another thing entirely to lose a billion now and then have to share the rest of the money, anyway.

Read more strike coverage on the Huffington Post's writers' strike page.

Comments

[jhoughton1]

I'm sure this has already been said. The idea that the Companies are willing to take certain losses as they wait for the WGA to fold would make sense if They could put their foot in the same stream, months later, that they took it out of when the strike began. The truth is that people are going to lose interest in network TV and movies and turn their attention to other forms of entertainment. This is going to happen anyway, but putting on a lousy season (or two) and slowing the flow of theatrical releases is going to hasten the eventual irrelevance of the studios and their owners. When they come back into the game, it's going to be a lower-stakes game. They are overplaying their hand. One suspects that ego has more to do with their continued intransigence than economics.

[Perspicackle]

Two things:

The DVD specification was finalised in 1995 - so hardly 20 years.


Second: If a carpenter builds a door frame, he doesn't keep getting money if someone rents out the house. Why should a writer? (Don't say they require the money - if the system they rely on is amoral, they'll need to find another way)

[NicoleAnonymous]

I thought the whole point of having a union was to present yourself as a cohesive unit where nobody is looking out for what is best for them but what is best for the entire group. That means that people will have to make sacrifices and some people will suffer more than others but you have to remain focused on the larger picture.

The writers who work for some late night talk shows are being paid while the writers who work for other late night talk shows are not being paid although all the writers belong to the WGA. That doesn't seem fair and it certainly doesn't make it seem as though all the writers are doing what is best for the union instead of looking out for themselves. Now some writers who work for UA will be paid while writers who work for other studios will not be paid.

The writers need support each other and the union or else having the union is pointless. That means NOBODY works until the union agrees on a contract. That might mean some writers will be worried about paying their bills or will suffer financial hardship but NOBODY should be working and getting paid until ALL writers are working and being paid.

Imagine what would have happened during the civil rights movement if some people said "I found some white people who will hire me and give me benefits and treat me equally so now I'm working for them and I don't care about all of you who aren't lucky enough to have my job! Good luck everyone - hope you get everything worked out eventually!See you later!"

The late night talk shows are back on because the rich men who are making millions from those shows need them back on because they're worried they might not be able to keep paying the salaries of their employees themselves. As if someone who makes MILLIONS can't afford it.Furthermore, Steve Allen and Johnny Carson were talented enough to have funny shows without writers and these late night talk shows hosts clearly can't handle it.

[Stanley]

To break the stranglehold the media monstrocities have, we have to open the means of distribution as far and wide as possible. While I understand the need to find a long term agreement as you describe, that does little to change the basic problem. All the power and wealth is at the top and entry into the club is very limited. If the Guilds want to open the future to greater revenue streams, then the guilds should as a group encourage low-budget production exemptions to many of the fixed costs of doing business with guild members on low-budget independent internet distribution of film and television. By growing a larger base of smaller independents the potential of the internet to change the current problem through a vast distribution system democratically available to all is enormous.

[independentrepublicrat]

It seems a little more complicated than your first couple of sentences suggest. Nonetheless, this is one of the best posts in this section. Thanks.

[larry278]

Neither side may be called stupid. The analysis is proving to be true. The companies's old ruses aren't working. There is too much money at risk to use old ruses on the writers or others who deal with the companies. That is a constant problem for companies who hire unionized creative people. Companies must employ talented, creative writers to make money. The talent to write well is rare. It will be impossible to find & hire scab talented writers. The story 'hopeless277' is writing isn't the work of a talented writer. It won't sell. To beat a dead horse-nobody is buying it.
The audiences will get little to no good stuff to watch. The companies's profits will shrink as the audiences shrink & people stay away in droves. Meeting the writers's demands is the quickest way to re-gain profits; it may prove to be the only way. Good writers don't grow on trees plus it take time to develop a most rare talent. Time is money in this case.

[unidentifiedman]

I have a question. This post and many others point out that not all DGA members receive direct residuals. As I've noted elsewhere, while this is deceptive it is accurate in a limited sense. My question is, do all members of the WGA earn significant, direct residuals? Do the writers of news programs earn residuals? Awards shows? Soap Operas? Are there numerous reruns of the Letterman Show I just don't know about? Or are CBS Evening News box sets being released on DVD? Are people streaming As the World Turns?
I know this sounds a bit snarky but that's only because I think I know the answer. I could well be wrong and would like to know the facts.

[kalapa]

"The writer's fold and the producers win. It's the golden rule."

There is nothing that's set in stone. If it was, the Roman Empire would still be standing,never mind the British Empire, and as we can already see - the American Empire is crumbling before our eyes.

Everything changes. It just takes enough people to believe that they are right to stick it out to the end.

Eventually all greedy powerful corporations/ structures fall apart and lose. Eventually.

Very interesting article, btw.

[unidentifiedman]

Correction. All members of the DGA depend on residuals. It is residuals that pay for the Guild's health plan, from which every member profits.
It is increasingly irritating to hear the DGA slagged on these pages...they are neither sycophants nor quislings. The WGA and the DGA are sister Guilds with common interests. Period.

[CoolerHeads]

Roger,

This is one of the most cogent articles on the strike in a long while. Thanks, forwarding.

[petegrif]

excellent analysis.

I would point out one more dimension to this that I have been harping on about. As the internet erodes the media companies control of the media distribution channels and more cash than ever before will be available to fund next generation advertising business models the studios are facing real strategic threats. Ironically one of the strongest cards they have against new companies or coalitions that will probably come into being over the next decade to challenge their control of advertising dollars (think google) is their relationships with talent. It is ready access and established working relationships and working practises that makes it possible for the studios to produce enough product to constitute a risk sharing portfolio. But is is precisely the talent that the studios are presently alienating.

The strategic question that is still deeper than the very large stakes that are so ably outlined by Roger above is, how can they use their relationships with talent to make it hard for others to enter the market and compete? Not by alienating them.

What is at stake for the existing media companies? Everything! Literally their very survival. If they lose control of distribution and too much talent then they will be competing on a playing field on which they will lose. Because the next generation of competitors will be better at maximising advertising revenues than them (google has a lot more technology, infrastructure, research etc invested in this and is WAY ahead of any media company)

So whilst the studios are indeed playing for big stakes they have lost sight of the biggest stakes of all. And whilst their strategy is rational vis a vis the big stakes outlined, it is suicidal vis a vis the biggest game that is emerging.

[screenwrite]

The writers have their own secret deadline, too. It's the point at which a majority plus one decide they have had enough. It's a simple numbers game - about 500 voted against the strike to begin with. Out of the 4900 or so that voted to authorize the strike, say 500-1000 did so in the hopes their vote would help prevent a strike. There are easily another 500 who have already changed their opinion about the strike since it began. These numbers will only be added to as the strike progresses. Trust me, this is a losing game for the writers. If there is a DGA deal, take it. It may not be the best deal the writers could get in a perfect world but we don't live in a perfect world. In this world, the DGA deal will be the best deal.

[westwind]

The paragraph beginning "Here's what's going on..." should be required reading for anyone wanting to understand what is going on with this strike.

The relationship of the WGA strike to the AMPTP negotiations with the DGA and SAG are also important (and also very well explained in this post), but the AMPTP strategy of forgoing current income in the hopes of screwing writers even more royally in the future, because they think they have the resources to hold out longer, needs to be understood by everyone.

[hopeless277]

Want me to write the ending to this story? Ok, I will. The writer's fold and the producers win. It's the golden rule.