WGA Deal: Extended Talks Highlight Major Shifts in Peak TV Era

On April 9, the day before the Writers Guild of America and major studios resumed contract negotiations after a two-week break, CBS Corp. chairman-CEO Leslie Moonves and Warner Bros. chairman-CEO Kevin Tsujihara met secretly for about 90 minutes with four members of the WGA negotiating committee: co-chairs Chip Johannessen, Chris Keyser and Billy Ray, and Meredith Stiehm.

The Sunday session, held at the Alliance of Motion Picture and Television Producers’ headquarters in Sherman Oaks, was designed for the CEOs to hear directly from writers on the most pressing issues in the contract negotiations, which had gotten off to a bumpy start on March 13. Moonves and Tsujihara were sent as emissaries for the AMPTP, not to hammer out deal points but to assure the WGA that Hollywood’s CEOs were attuned to the importance of the negotiations.

The writers spoke of grappling with the challenges of maintaining their income levels amid broad industry shifts. Stiehm explained her dilemma of earning half as much when she worked on Showtime’s “Homeland” for 12 episodes per season as she did when she delivered 22 episodes of the CBS/Warner Bros. TV drama “Cold Case” — even though the two shows took nearly as much time to produce.

In sharp contrast to a decade ago, the meeting was an effort by the studio side to offer the kind of personal touch that was lacking during the run-up to the contract talks in 2007, the last time WGA and major studios came to blows in the bargaining room.

The outreach by Moonves and Tsujihara on April 9 was a sign of the coordination among the CEOs of the AMPTP’s dominant conglomerates as it became clear that there were big hurdles to clear in this round of WGA contract talks.

Early Tuesday, it was revealed that both sides came to a tentative agreement, averting the threat of a strike — following a marathon day of negotiations. The talks during the day were mostly rocky, sources reported, with pessimism about the prospect of reaching a deal just hours before the deadline of the previous contract.

During this past weekend, with 48 hours to go until the contract expired at midnight (PT) May 2, leaders of the TV and film congloms held multiple conference calls to assess the state of the talks and management’s strategy for averting a strike. Participants included Moonves, Tsujihara, NBCUniversal’s Steve Burke, Disney’s Ben Sherwood and Alan Horn, Fox Networks Group’s Peter Rice, Sony’s Michael Lynton and Paramount’s newly named chairman Jim Gianopulos.

Hollywood leaders have worked collaboratively to build consensus for their response to the WGA’s contract demands and to find places to give ground in order to avoid the disruption of a strike. The CEOs are mindful of the leadership vacuum a decade ago that led the AMPTP negotiators to back the WGA into a corner, paving the way for the 100-day walkout that lasted from November 2007 to February 2008.

The memory of the 2007 work stoppage hung heavily over the biz as WGA and AMPTP talks went down to the wire against the deadline. As the sides grapple with a host of complex issues, two huge gaps in perception versus reality help explain why Hollywood has come to the brink of a crippling work stoppage for the second time in 10 years.

The conflicts that emerged in the negotiations have punctured some of the myths surrounding Peak TV.

The exponential increase in the number of original series and the outlets hungry for shows have created boom times for writers, right? Well, yes and no. There are more scripted series than ever — 455 in 2016, by one count — but not all jobs are created equal, in compensation and in work terms. Also, the explosion of competition has put enormous pressure on production costs, spurring producers to eliminate some lower-level writing jobs. This has increased the income and opportunity gulf between the haves and have-nots among WGA members.

At the same time, the television content business is not bulletproof, no matter what the media conglomerates in the AMPTP tell Wall Street. The studios are wrestling with how to adapt their production businesses to a new model of profits that now come through a patchwork quilt of digital syndication, international sales and upfront fees from buyers who control worldwide rights. The days of a show raking in $300 million-plus in one fell swoop with a domestic syndication sale are over. Advertising revenue is in decline, as is live-TV viewership.

In this context, the WGA has skillfully framed the narrative of the 2017 negotiations as an urgent need to adjust compensation formulas and working terms to address the realities that writers face. By the WGA’s math, the six major conglomerates that dominate the AMPTP made a combined $51 billion in operating income last year, and the guild is determined to get a larger slice of that pie for its members.

From the studios’ perspective, WGA negotiators came into the bargaining room repeating the $51 billion figure as the justification for seeking big increases and as much as $90 million to shore up the guild’s overtaxed health insurance plan.

The AMPTP sought to ease some of the tension in the talks by upping its offer for a capital influx to boost the WGA’s health plan from $60 million to the nearly $90 million initially sought by the guild.

The studio side has been rankled by the fact that the $51 billion includes revenue derived from business units far removed from film and TV, such as Comcast’s cable systems and Disney’s theme parks and hotels.

It did not help the dynamic in the negotiating room that the talks coincided with a stream of disclosures of mega-size CEO compensation for 2016, including $69.6 million for Moonves, $46.1 million for Burke and $18.9 million for Netflix’s Ted Sarandos.

All of these conflicts began a slow boil at the same charged moment that many rank-and-file WGA members were in clenched-fist mode because of the nation’s sharp political turn to the right. Having a large group of writers who were already waving the “resist” flag and were feeling a pinch in their paychecks amounted to near ideal conditions for WGA leaders to rally support for a strike. That explains why more than 96% of the voting members of the guild authorized a strike last month.

“I will lose a lot if the writers strike,” says veteran TV scribe Nell Scovell, “but I will lose more if I don’t support my union.”

On the other side of the table, industry executives who work closely with writers expressed frustration over what they’ve seen as a mixture of intransigence and idealism in the WGA’s position. “The Directors Guild does its homework and comes into negotiations ready to make a business deal,” says a senior TV executive. “The writers come in to fight a battle between good and evil.”

The myriad issues complicating labor relations today are an echo of the dynamics that led to the WGA work stoppage that last shuttered Hollywood.

In 2007, writers hit the streets with picket signs to fight for residuals and unequivocal WGA jurisdiction over work done in what was then the emerging digital realm for high-end series content. This time around, the WGA is attempting to deal with the ramifications of the growth of digital giants — Netflix, Amazon, Hulu, YouTube and a handful of others — as significant employers of guild members, albeit with very different business models from traditional TV players. On top of this, the spike in pay and basic cable’s appetite for original series have transformed the job market for writers.

“Who knows if I’d even be working in television if there wasn’t an AMC,” says Thomas Schnauz, a “Breaking Bad” alum who is now an exec producer on “Better Call Saul.”

There’s no question that Hollywood writers are enjoying a bonanza of work opportunities in an environment that prizes creative diversity and originality like never before. But there are consequences to such rapid growth. The WGA’s minimum basic agreement with the AMPTP, which covered 671 pages in the 2014 edition, is still rooted in the television business as it existed a generation ago.

“The construct of the contract has for too long been lodged in the 22-episode, September-to-May framework,” says David Simon, creator and showrunner of HBO’s “The Wire,” “Treme” and the upcoming “The Deuce.” “Two weeks of work on an episode has stretched into four to six weeks. There needs to be a new framework.”

The pressure point for working TV writers has coalesced around the fact that the triple-digit spike in TV series production means that short-order series — so called because they produce fewer episodes per season than the traditional 22 or 24 of broadcast TV — are now the norm rather than the exception.

It works out to simple math: Writers who are usually paid per episode are increasingly getting hired for shows designed to run six to 13 episodes per season. That means half the income the same scribe might have commanded 10 years ago. The math gets worse for midlevel writers when extended production schedules are factored in.

“These days I might be lucky and earn my per-episode quote — but now it takes four or five times longer to produce every episode,” says TV drama veteran Rick Cleveland. “So I have to work two or three times longer for the same amount of pay.”

The minimum pay scale was historically hammered out on the notion that writers put in two weeks of work per episode. On cable and streaming shows that get all episodes in the can well before the show premieres, the pre-production period can be as long as two months, plus production cycles that run 10 or more days per episode. A writer making $30,000 an episode for 10 episodes can wind up seeing those fees stretched out beyond a 12-month period, compared with the nine-month norm of years past. Moreover, some writers find themselves hampered in seeking other work during the downtime between production ending and the decision on a show’s renewal because of exclusivity and noncompete clauses in their contracts.

“Certainly, the quantity of TV writing jobs has increased, but to some extent the quality of those jobs has decreased,” says Matt Nix, creator/showrunner of USA’s “Burn Notice” and other shows. “It’s far more likely these days that a writer is going to get on a show that doesn’t even aspire to make a lot of episodes. Combine that with a survival rate of new shows that is at least as low as it ever was and you end up with a lot of writers working at well below their capacity.”

The trend across the industry is smaller writer’s rooms in general, a tightening that began after the end of the last strike. There are an increasing number of high-profile series penned largely by only one or two writers, such as HBO’s “Big Little Lies” (David E. Kelley), Showtime’s “Penny Dreadful” (John Logan) and Netflix’s “Master of None” (Aziz Ansari and Alan Yang).

“An awful lot of these shows are very short seasons that are written either by one person or by a select few upper-level writers. There are writers with multiple shows on the air,” says Kay Reindl, a writer whose recent credits include Freeform’s “Dead of Summer” and MTV’s “Scream.” “Mid-level and lower-level writing jobs are vanishing, which means fewer writers learning how to be producers and gaining experience in the writer’s room.”

HAPPIER DAYS Sarandos with “House of Cards” creator Beau Willimon; top: Amazon’s Joe Lewis and Roy Price flank “Transparent” creator Jill Soloway. Rex/Shutterstock

Showrunners are often caught in a bind caused by pressure from the network or studio and the needs of underlings. Generally speaking, experienced showrunners are commanding higher fees than ever. That’s partly because Netflix in particular pays high licensing fees for shows to compensate for the lack of syndication potential down the road, as the streaming service typically controls worldwide rights for at least 10 years. Showrunners and creators with clout command commensurately higher fees to offset the lost chance of profit participation from after-market sales.

Showrunners are forced to make tough calls when it comes to staff positions. In the case of HBO’s “Deuce,” the pilot was shot in the fall of 2015. After the series was greenlit in January 2016, production on 10 episodes ran throughout the summer. But the show isn’t slated to premiere until August or September of this year. HBO’s fantasy drama “Westworld” is another series that took nearly 18 months to complete its first 10-episode season. That’s a long time for writers paid on a per-episode basis.

“As a showrunner you want to keep your writing staff together,” says Simon. “You don’t want to tie them up, and at the same time you don’t want to lose them. You’re in a constant state of hoping they can find something that isn’t competitive and won’t lock them up if you need them again.”

The WGA and AMPTP are attempting to address these dilemmas by hammering out adjustments to the compensation formulas for short-order series for mid-level writers and to specifically define the span of a TV season as 12 months from the time the first person on a production is hired. These are not issues that either side had to contend with in the days when “Dallas” and “Dynasty” ruled the airwaves.

By all accounts, the will is there on both sides of the bargaining table to make a meaningful change to long-established protocols in the WGA’s MBA. But as always in labor negotiations, the devil is in the details.

AMPTP members have to be mindful that any increases given to the WGA will be sought by the DGA, IATSE and SAG-AFTRA, the latter of which is expected to begin negotiations this month as it faces a June 30 contract deadline.

“Nobody wants a strike. But you can’t agree to a contract that is going to hurt your business,” says a top studio executive with past experience in labor negotiations. “The writers seem to think that production budgets will grow to cover these higher costs. That’s not going to be the case. You’ll see that money taken out of other areas, and you’ll see more writing jobs cut.”

For the studios, nothing is more of a flash point in these negotiations than what is viewed as the WGA’s irresponsible approach to managing its health plan. The WGA insurance plan is known for offering generous benefits to members who meet the income requirements — about $39,000 a year — with minimal out-of-pocket expense. The lack of premiums is a recognition that writers’ incomes can vary greatly from year to year.

The plan, funded by AMPTP contributions, is projected to run at a deficit of $13.2 million this year and $25.6 million in 2018. The guild is pushing for an increase in employer contributions, which are calculated as a percentage of each studio’s annual payments to writers, and to raise the existing caps on employer contributions for high-earning writers. The guild has asked for as much as a $90 million capital influx to the plan to help shore up its reserves.

The WGA has resisted suggestions to tighten up coverage options or to increase premiums for dependents. Studio executives involved with the plan were angered when guild leaders in 2015 canceled at the last minute a planned session with healthcare consultants to study ways of saving money. The perception on the studio side is that the WGA sees periodic health plan bailouts as a contract negotiation issue.

As the depth of the divide between the writers and the studios became clear during the past few weeks, memories of the 100-day strike in 2007 put nerves on edge.

John Oliver and Tina Fey on the picket lines in 2007 Rex/Shutterstock

“I remember being pretty overwhelmed. It was the first time I had ever been on strike,” says Rina Mimoun, an alum of “Everwood” and “Mistresses.” “I was working on ‘Pushing Daisies’ at the time and had just sold a pitch to the CW that I was really excited about, and then everything just stopped. I remember thinking, ‘How much longer is this going to last?’ ”

The WGA West and WGA East have seen an influx of members in the past decade, some of whom are too young to have walked the picket lines a decade ago. But members say it’s a mistake to think that only youthful idealists are willing to take the WGA’s battle all the way to a strike.

“I’m painfully aware how many below-the-line jobs are at stake, and how many people could get hurt by a strike,” Cleveland says. “I’m prepared to back my brothers and sisters if we lay down our pens and laptops. At this point in my career, as concerned as I am about my own healthcare and pension, I’m just as concerned for the young writers coming up. I don’t want the kids coming up behind me to be taken advantage of or be willing to do anything to get a job in this industry.”

Last time around, the looming battle over digital compensation was on the horizon for guild members and the studios for more than a year before contract negotiations got under way in the summer of 2007. Writers had time to tighten their belts in preparation for lost income, and the studios stepped up efforts to stockpile film and TV scripts. This year, the drama flared much closer to the start of negotiations, catching many off guard. WGA leadership didn’t realize how pervasive the problems related to short-order series and long hold times were until it began surveying members late last year in preparation for contract talks.

Amid the incessant debate over Peak TV and whether the current volume of production is sustainable over the long term, guild leaders determined the time had come to push for changes on short-order shows and to eliminate anachronistic formulas that pay writers more for work on broadcast TV shows than those produced for cable or streaming outlets.

For writers, the feeling that the industry is slogging through a best of times/worst of times moment is unsettling, which also has the effect of galvanizing support for the guild among members. In the back of the minds of every WGA member born before 1995 is the hard fact that the home-video revolution yielded billions in profits for the studios, but only a fraction trickled down to writers because of a bad call in an early 1980s contract negotiation.

“I think we did a poor job in previous contracts of assessing transformational moments” in the industry,” Simon says. “We missed the boat on DVD [residuals] and at this point DVDs are a dead letter. At a certain point, technology has called the tune. I am proud of the guild for trying to get ahead of this other transformational moment.”

Get more from Variety and Variety411: Follow us on Twitter, Facebook, Newsletter