As talks between the Writers Guild of America and the Alliance of Motion Picture and Television Producers resume Tuesday, two divergent paths have come into sharp focus: In one direction lies a strike as early as May 2 by a guild emboldened by an overwhelming 96.3 percent strike authorization tally achieved Monday, while down the other path lies a deal that the two sides have been edging towards inside the bargaining room.
That latter journey takes places behind closed doors, but sources provided The Hollywood Reporter with detailed descriptions of the latest offer made by the AMPTP and the WGA's responses. Talks were suspended April 17.
Although both organizations declined or failed to comment, the sources' descriptions amount to an X-ray of the state of the confidential negotiations. For that reason, they spoke on condition of anonymity.
When THR last looked at the parties' positions, they were $350 million apart, with the writers looking for what they described as a $535 million deal and the studios more inclined to reach an agreement valued in the neighborhood of $180 million, according to an analysis and a source. That's a ratio of 3-to-1.
There has been some movement since then on both sides, but it is difficult to quantify the cost of the respective packages and determine how far apart the parties remain. It's difficult to see how a multi-hundred million dollar gap was or will be bridged prior to the May 1 contract expiration, but on an issue-by-issue basis, the parties have moved closer, according to sources' accounts. A deal may yet be in reach - or, perhaps, a strike.
The health plan is running deficits, predicted to amount to $135.5 million through 2020. The companies have proposed to contribute $45 million and have asked the WGA to agree to $10 million in cost reductions, i.e., benefit cuts, premium increases or tightened eligibility. The guild countered with $5 million, and the companies replied by dropping their request to $8 million. No word on how the other $82 million in deficits would be addressed.
The companies also requested that the plan maintain a six-month reserve against expenses, then softened that to a commitment to an "appropriate level of reserve." The WGA has refused, fearing that even the softer language could trigger automatic cuts if reserves fell.
The $45 million the companies put on the table would be funded by diversions from what would otherwise be basic wage increases. This is common in Hollywood, though not on this scale. For instance, the DGA deal reached several months ago nominally provides 3 percent increases for each year of the three-year agreement, but the first year's increase is actually 2.5 percent, with a 0.5 percent diversion to the pension plan. In the case of the WGA, that $45 million would be funded by three 0.5 percent diversions, one for each year of the agreement.
Basic Wage Increases
The companies are offering 2 percent per year, while the WGA wants 3 percent plus a number of outsize increases. It's likely that the WGA will get the same triple 3 percent that the DGA did - with one or more 0.5 percent diversions to shore up the health plan - as a result of a phenomenon called "pattern bargaining" in which the first above-the-line union's deal (usually the DGA's) in a cycle sets the pattern for the other two with respect to issues of common concern, such as basic wage increases and residuals enhancements.
TV Writers - Writing Fees for Short Series
The way TV writers get paid for their work is complicated. Currently, there is a negotiated per-episode fee, which is subject to a schedule of minimums. It's also subject to a weekly floor specified in the guild agreement, so if a writer is asked to work many weeks on just a few episodes, she may find her actual compensation hits this floor. The WGA says that the number of weeks of work per episode has been increasing to three weeks per episode in short series, whereas two weeks was the preexisting norm.
In response, the companies proposed that episodic fees be amortized over a maximum of 2.6 weeks. That may sound like an odd number, but it's one of the breakpoints that the WGA itself lists in its description of pain points for TV writers. If working time per episode exceeds that number of weeks, the writer would receive an additional payment calculated pro rata based on his episode fee. This protection would be in addition to the weekly floor.
The company proposal would not apply to writers earning $275,000 or more annually (exclusive of script fees) and writers on overall deals. It would only apply to short order series, which the companies define as 12 or fewer episodes per season, a number that is probably about at the average (which was 13.2 episodes per season in 2014 and on a downward trend). The WGA, however, wants the new rule to apply to any series where the season is shorter than 22 episodes.
TV Writers - Holds and Exclusivity
The other problem for TV writers on short order series is that when they're not working, they're held idle and under option for the rest of the year, so that if the series is renewed the writers will be available. This was less of a problem when series were 22 or more episodes long, but is tough on writers in an age of six-, eight- or 10-episode series.
As a solution, the WGA and the companies agreed in their 2014 negotiations that after 90 days of being held idle, a writer on a short order series would either have to be paid each week (at a rate of one-third the weekly minimum) or released from exclusivity (which in practice is what usually happens). But this mechanism only applies to writers who earn under $210,000 per year. The companies have offered to raise that ceiling to $275,000 starting in year two of the contract and $280,500 starting in year three (with lower ceilings, $220,000 and $224,500, for children's programming due to its differing economics). The WGA initially wanted to remove the ceiling altogether, but is now at a figure that a source described as close to the companies'.
TV Writers - Script Parity
Depending on budget and other factors, the minimums for cable and streaming video-on-demand (SVOD, such as Netflix and Amazon) are less than network minimums. The WGA wants the minimums raised, because writing a show for another platform involves the same amount of work as for network. The companies refuse, because the economics of those other platforms are different and, the companies say, generate less revenue.
This group, like the TV writers, has been seeing incomes decline, but for different reasons: fewer studio movies being made (not something the negotiations can address) and less work being commissioned on any given script. These so-called single-step deals - the writer is hired to write a single draft and that's it - stand in contrast to the multistep deals of days past (a draft, a rewrite and a polish).
The WGA wants to prohibit single-step deals, at least under certain circumstances. The companies say this is a creative issue, since they don't necessarily want to be required to pay for a second step from a given writer. A possible creative compromise? Increase the so-called script publication fee - which despite its name is really just a deferred bonus - from $10,000 to something higher, at least if the writer is being paid near the screenplay minimum.
Pay TV Residuals
The WGA pay TV residuals formula - which applies when a pay TV show like HBO's Game of Thrones is rerun on pay TV - is worse than the DGA's (which is the best) or SAG-AFTRA's (middle-tier). What happened to pattern bargaining? This is one of the few areas where the formulas are significantly "out of pattern." That happened because the WGA actually went on strike in the 1980s to demand what turned out to be a worse formula than the DGA's. Then they went on strike again to try to get the DGA formula when the misjudgment became apparent. They didn't succeed.
In the current negotiations, the WGA was initially asking for the DGA formula, but they've dropped that demand. The companies proposed a 5 percent increase in the WGA's residual in contract year one and another 5 percent in year three. The WGA is asking for 15 percent, 3 percent and 3 percent. The companies also proposed for the first time that comedy-variety writers (e.g., writers on pay TV late-night talk shows) would receive residuals.
Netflix, Amazon and Hulu Residuals
The companies are offering the WGA essentially the same enhancements as the DGA achieved in high-budget SVOD and ad-supported VOD (AVOD). This was expected as a result of pattern bargaining.
The WGA was initially requesting an infusion of money to increase the soundness of the pension plan, which is healthy at present but trending in the wrong direction. The guild has dropped this request.
The WGA wants some kind of industry-wide family leave policy in the union agreement. The companies refuse, preferring that the issue be dealt with on a show-by-show basis.