Tag Archives: wga strike

WGA Deal (Pretty Much) Closes. Now Let The Healing Begin.

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Everywhere you look, change is in the air.

All indications point to the writers strike being called off by Monday; certainly by sometime next week, at the latest. This is great news but it will likely take many months for the industry to get back on its feet and much longer to discern how the industry changed forever as a result of the strike. With NBC head Jeff Zucker talking about changing the business model that dominated the development and production of television shows for the past 50 years, you can be rest assured that some things will never be the same.

The strike in many ways affected a discreet group of people working in the business: the major studios and networks and those writers employed by them. This group by no means represents the entire entertainment industry.

Despite the strike, many non-signatory independents continued to do business and there was a boon in reality television production. Scribes writing screenplays for non-signatory companies continued to write. Nevertheless, there remained a cloud of dread over the entire industry.

Now that the strike appears to be over, I expect that the most dramatic short-term effect will be a spike in industry-wide morale rather than a spike in production. In my negotiations with reps this week, most are optimistic about the near future. To be sure, there is much to be happy about. However, it is unlikely that there will be a significant difference between working conditions over the next few weeks and those of the last few.

The WGA’s rank and file must approve the new contract (though it appears that the strike will be called off while the details are worked out). Many TV shows will remain shut down until next season; some shutting down permanently, making it unlikely that many writers and crew will have jobs to return to next week. The local economy will continue to languish; with industry job losses and mortgage foreclosures likely continuing into the spring if not longer.

However, the new deal should make many writers happy in the longer term. Go here for a summary of the tentative deal. The most notable deal points are the WGA’s exclusive jurisdiction over the Internet and cell phones, a residual kicker in new media reuse fees and separated rights. I will provide a more detailed analysis of the tentative deal in another post.

It will be interesting to see what effect, if any, the WGA’s exclusive Internet jurisdiction will have on those writing new media content. Although many writers of podcasts and similar content will be clamoring to join the Guild, Internet writing services apparently don’t apply towards membership in the WGA. Podcasts and other web content are not generally produced by signatories to the WGA agreement. Consequently such services will not be subject to the WGA’s jurisdiction despite the terms of this deal.

Despite the lack of details, most of my clients writing new media content for the Internet who are not yet Guild members will still expect the new agreement to analogously apply to their writing services even if their employer is not a signatory. Signatories for their part will no longer be able to hire non-WGA scribes to create new media content. Regardless of signatory or membership status, it is safe to say that these developments will likely mean big changes for new media creatives and those that hire them across the board.

The Negotiation Culture: The Approach That (Might Have) Resolved The Strike

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As of this writing, news outlets are cautiously optimistic that striking writers will be able to close a deal with the AMPTP within the next few days
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But what broke the impasse? Writers’ dwindling bank accounts? The studios’ mounting revenue losses? The Oscar telecast? While all of these elements were contributing factors, there’s no doubt that the addition of studio principals to the negotiations made all the difference.

Several weeks ago, Alfredo Barrios, a former corporate lawyer turned writer and WGA strike captain, posted a missive on a pro-WGA blog, unitedhollywood.com urging that studio principals become directly involved in talks in order to restart negotiations. Regardless of which side you’re on, and despite Alfredo Barrios’s obvious bias in favor of striking writers like himself, Barrios eloquently describes the “psychology” of the deal for both sides; a mindset that ultimately required the principals to take the lead in strike negotiations.

The following is an edited version of Barrios’s post. You can read it in its entirety here.

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BASIC RULES
First, understand the relationship between Nick Counter and the studios. It’s essentially a lawyer-client relationship. The AMPTP is run by lawyers like Nick Counter and Carol Lombardini. Think of it as an in-house law firm. Their goal is to “negotiate” deals with unions on behalf of their clients – the studios.

As lawyers, Counter and Lombardi have to justify their paycheck. What does that mean? They have to add value. They’ve promised to deliver a more favorable labor deal than the studios would get without them. Otherwise, there would be no point in hiring them (or more aptly, keeping them around). So our loss is their gain. And the bigger our loss, the bigger their gain.

Now here’s the thing to remember, fairness and reasonableness have NOTHING TO DO with their approach. No corporate lawyer I’ve ever known has ever met with a client and promised to get them the most “fair and equitable deal” possible. That’s not their goal. Instead, they promise to save them a lot of money – remember, added value. If the studios were genuinely interested in reaching a fair and equitable deal, the CEOs and their CFOs would talk directly to our negotiating committee and financial people, and a deal could be reached today – by the way, this is what we’re driving towards. We will know we will have won when the CEOs and their CFOs talk to us directly. [Editor's Note: as we all know now, this is what happened here].

CEOs hate uncertainty. They run their businesses based on long-range plans that are based on long-range assumptions. So as a lawyer, you do your very best to put their mind at ease when faced with an inherently unstable situation – be it a lawsuit, a takeover deal, or a strike. You say to them, “You don’t have to worry about a thing. We have this under control.” Then you spell out what you believe (more often hope) is the most likely outcome. “We feel confident that we can get this suit dismissed at the pre-trial stage;” “ get this deal closed by Christmas;” “resolve this strike by_______ on ________ terms.” The CEOs nod their heads happily, confident that their well-heeled, well-paid lawyers are looking out for their interests, and then go about their business.

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Going back to CEO peace of mind. This comes in a couple of forms. First, lawyers tell their clients that they won’t have to get their hands dirty. Lawyers will be the bad cops on their behalf. They’ll serve as a shield for their clients. Lawyers always want their clients to feel comfortable – that’s part of what’s promised. “Go about your life. Don’t worry about a thing.” Second, it comes in the form of laying out how things will play out. “You can expect that the plaintiffs will engage in several months of discovery;” “the company you’re hoping to acquire will seek a white knight;” “the strike will lose steam and the writers will fragment.” All things that have a very good chance of happening. And when they do, the lawyer looks like a genius, and his client thinks, “Man, I’m in really good hands. I have nothing to worry about.” It’s about managing expectations.

THE LAWYER’S STRATEGY

Lawyers try to do three things to their adversaries: (1) get them to doubt the validity of their position; (2) undervalue whatever cards they’re holding (in other words, underestimate whatever leverage they have); and (3) kill their resolve.

How does a lawyer get an adversary to doubt his position? Well, in litigation, it comes by spinning the facts. In transactional deals, by spinning the financial numbers. And in a strike situation, by spinning both. One common technique is making a nonsensical argument so many times that it begins to take on the air of a legitimate one and eventually some people (judges, jury, the public in general and sometimes even your adversaries) begin to accept it as truth. Lawyers are masters of this. Think of these doozies: “If the glove doesn’t fit, you must acquit;” “Smoking doesn’t cause cancer;” and my personal favorite, “We don’t have a business plan for or any real revenue from the Internet.” Or how about that $130 million offer that the studios supposedly made us several weeks back? The one that didn’t actually add up. Facts and numbers are spun every day in the courtroom, in the negotiating room and in the press by lawyers.

Now, here’s the thing to remember. It’s the lawyer who does the spinning. No CEO wants to do it. Why? Because so many of them want to be known as “straight shooters” – i.e., guys who don’t lie. Plus, they like to be liked. And going out and spinning facts and numbers… well, that’s like acting like a lawyer. Like Nick Counter. That’s why they hired him to do it. They want to be comfortable. Notably, neither Counter nor any of the CEOs has actually done any real press interviews to defend their position. Not hard to see why: it’s utter nonsense. So they spin in press releases or “leaked” stories that are regurgitated by mouthpiece trade papers and other seemingly “unbiased” but wholly bought off parties.

And how does a corporate lawyer gets an adversary to lose confidence in whatever leverage he has? One way is to engage in positional bargaining. That means anchoring your negotiating position to an extreme and unprincipled number over such a long period of time that your adversary starts to doubt the cards he’s holding and eventually moves off of his number and gets closer to yours. That’s what the AMPTP has been attempting to do with its new media proposals – or actually, lack of proposals. They’ve anchored to basically zero payments for new media in the face of our fairly principled new media proposals. They’re hoping that doubt will creep into our psyche – “Wow, man, those companies are really holding to that number, maybe our bargaining position isn’t as strong as a I thought. Maybe we should take whatever the DGA gets.” And so on…

Once you start down that path, you’re losing your resolve. The corporate lawyer knows you’ll start to rationalize why you should take a really bad deal. And you start to buy into the arguments he’s making – “That lawyer of yours isn’t doing you any favors.” “I hate to tell you this, but you’re wasting a lot of time and energy with this case. It’s a loser.” “As a guy who knows, you should take what we’re offering you because it’s not going to get better.” Sound familiar? It’s the sort of stuff being put out by the AMPTP’s PR guru, Chris Lehane, who, by the way, is also a lawyer – and a classmate of mine from law school. Small world, huh? Couple this psychological warfare with the increasing expense of fighting… and people will crack.

Posture and overwhelm with superior power – or the semblance of power. That’s Corporate Lawyering 101.

So… how do we win?

OUR STRATEGY

In my experience, the guys that win against corporate lawyers and their clients – and believe me, I’ve seen it happen – are the guys that (a) never lose sight of their cards – in other words, aren’t fooled into believing that they’re holding garbage, and (b) play lots of offense.

I’ll begin with playing offense. That means taking the fight to the other guy’s client – the decision makers – the CEOs. Remember, THEY LIKE TO BE COMFORTABLE. That’s what their lawyer promised them they would be. So how do you take the fight to them? Well, in litigation, you bring them into the game by making them the target of discovery – you depose them, go through their papers, ask them all sorts of question. You take them out of their comfort zone. You make them the focal point of the case… they’re the bad guy. In transactional matters, say a takeover attempt where you represent the buyer, you go after the “entrenched management” that wants to deprive the shareholders of the real value of their holdings… they’re the bad guy. In a strike, you hold the CEOs accountable. Why? Because they are ultimately the bad guys… the buck stops with them, and they need to be reminded of that always. Counter is just their hired gun.

And by taking the fight to them. I mean, maintaining picket lines at the studios at peak levels, relentlessly picketing locations, continuing to put out creative videos that entertain and inform people about the strike, denying waivers to award shows and picketing those shows, seeking alternative ways to put out creative work on the Internet for pay, etc.

Playing this kind of offense serves a couple of purposes. First, when a CEO drives through the studio gates, or hears about how a location shoot was impacted by picketing (like for example, when an actor leaves the set or a day has been added to the schedule), or sees how his untenable bargaining positions are being ripped apart on websites, or is told about how his award show is falling apart, or reads how Google is about to form a competing entertainment powerhouse, it all collectively begins to call into question the promise that Counter made – i.e., that we would crumble. It’s a daily reminder that we are not losing our resolve. It makes him worry. His expectations aren’t being met. Things are uncertain again. And it begins to chip away at Counter’s credibility as the guy who could resolve the strike with minimal inconvenience to the studio CEOs.

This last point is important. Why? Because the way you win is by taking the lawyer out of the equation. Deny him the promise that he made to his client – i.e., that he would add value by battering all of us down. Once the CEOs begin to believe that we’ll stick to our guns until we get a fair and equitable deal, that’s when we’ve won. That’s when the CEOs and their CFOs will step in and begin to deal directly with us. Why not Counter? Because his job wasn’t to deal with real and fair numbers; it was to screw us. Once he fails at that, it’s time for others to step in. Trust me, it happens.

But it requires believing in the cards you’re holding – your leverage – and sticking it out. The bigger the show of resolve, the faster the CEOs will dispatch Counter. As profit losses mount and their share prices take bigger hits, the studios will realize that holding out for Counter’s promise looks increasingly like a fool’s game.

But the CEOs will only step in if they believe a fair a reasonable deal can be reached. That’s why it’s important to always maintain principled bargaining proposals on the table – as I believe we have throughout. Unlike Counter, I don’t believe we’re engaging in the positional bargaining. Having said that, I think we made one very serious mistake in continuing to keep our DVD proposals off the table. Bad faith bargaining – like the type that Counter has engaged throughout – can never be rewarded, and I have heard no compelling reason to keep our DVD proposals off the table.

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As for acting like “nicer” and “more accommodating” guys and gals… Well, let me just say that in all of my years as a corporate lawyer, “nice” and “accommodating” adversaries who never stuck to their guns and didn’t bring the fight to us never got better deals. They only get worse ones. So don’t buy into the our leadership’s too militant line of argument. They’re not. They’re being appropriately tough. Trust me, you wouldn’t want it any other way. Now it’s up to the rest of us to hang tough with them.

Potential Breakthrough In Writers Guild Strike

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The Los Angeles Times and other news outlets reported over the weekend that the broad strokes of a deal between the AMPTP and the WGA could be in the offing as early as next Friday. The parties reportedly closed the gap over how much the studios should pay writers for free streaming of movies and television programs over the Internet. The parties still need to find a mutually agreeable distinction between content exploitation in which residuals would be payable and content promotion which would be residual-free.

The Directors Guild closed their deal over these issues last month but many striking writers (and SAG members) criticized that deal for not going far enough on streaming.

The breakthrough came when Bob Iger and Peter Chernin, the designated studio heads negotiating the deal, included more favorable streaming residuals than those in the DGA deal and separated rights for shows created for the Internet so writers receive extra compensation and credit for television shows based on online programming.

However, Guild leaders issued the following cautionary statement on Sunday morning:

To Our Fellow Members,

While fully mindful of the continuing media blackout, we write you to address the rumors and reports that undoubtedly you have been hearing.

The facts: we are still in talks and do not yet have a contract. When and if a tentative agreement is reached, the first thing we will do is alert our membership with an e-mail message. Until then, please disregard rumors about either the existence of an agreement or its terms.

Until we have reached an agreement with the AMPTP, it is essential that we continue to show our resolve, solidarity, and strength.

Picketing will resume on Monday. Our leverage at the bargaining table is directly affected by your commitment to our cause. Please continue to show your support on the line. We are all in this together.

Best,

Patric M. Verrone
President, WGAW

Michael Winship
President, WGAE

As I posted earlier, the break in the impasse here was the result of the principals fronting these discussions and negotiators likely ghost writing arguments for and against critical deal points. Sometimes, this approach is the only way to make meaningful progress in deal negotiations. Once Iger, Chernin, Verrone and Winship work out these broad strokes, the Guild’s rank and file still have to approve the deal. That would pave the way to resolving the strike and getting writers back to work in time to save pilot season and part of the fall television schedule (not to mention feature work) even if it takes months for labor negotiators to work out the details.

Cracks In The Veneer

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The three month old writers strike dramatically reduced the number of produced programs for the 2007-08 television season and pilot season is now in jeopardy. Movie deals are on hold; term deals have been terminated for force majeure and thousands are either out of work or about to be let go (including several agents I know who are hard pressed to find any other form of meaningful work – go figure!).

Studios and guild reps are under a news blackout while they engage in back channel and informal discussions regarding the strike impasse with the goal of more formal talks in the next few days; the first since negotiations broke down on December 7th.

Guild leaders recently withdrew their animation and reality TV proposals. They also agreed not to picket the Grammys. The Guild’s actions could be viewed as good faith concessions to help restart negotiations. On the other hand, they could simply be signs of strike fatigue and capitulation. Whatever the motivation, the AMPTP’s perception (and that of the WGA membership) stand to profoundly affect the psychology of pending negotiations and ultimately, the outcome of any deal.

While the Guild’s alternatives are limited, their current tactics may weaken the leverage that only a complete shut-down could support. The Guild continues to enter into piecemeal agreements with independent production and distribution companies – most recently, Lions Gate, RKO, Marvel and The Weinstein Company – based on the WGA’s initial proposals in an attempt to gain additional leverage. The WGA is betting that these deals will put pressure on the studios and networks to settle. However, the AMPTP dismissed these pacts as meaningless “one-off” agreements since the terms will be superseded by any deal ultimately negotiated by the parties. The Guild also runs the risk that these deals will split the rank in file between those working and getting paid on waiver-projects and those that remain unpaid and on picket lines. The Guild is already contending with an erosion of support in some quarters.

Certain Guild members are already grumbling about the prospect of “going financial core.” Rumor has it that a number of writers continue to develop projects during the strike “without paper” (i.e., without a written agreement in place) to pay the bills. It’s obvious to anyone watching “The Daily Show” or “The Cobert Report” that staff writers continue to work for these shows despite strike rule prohibitions. Hey, but I could be wrong.

With those reservations, there are several good things going for this latest round of talks for all concerned.

The principals are now talking instead of their reps. To be sure, representatives for both sides are still involved with these discussions but direct communication by the principals can diffuse the current hostility between the parties and allow them to refocus their energies on material deal points instead of petulance and platitudes.

The Directors Guild pact can be used as precedent. Since the AMPTP closed their deal with the DGA, the parties can now use the material terms of that agreement as a template for their own negotiations and adjust their respective expectations to those deal points in which there is a real prospect for consensus.

Weakening resolve on both sides. The studios and networks are quickly running out of content; writers need to work. Both sides realize that given the strike’s enormous financial toll on individuals, the local economy and corporate profits, it is in everyone’s best interests to work a deal as soon as possible; ideally before the Oscar telecast on February 24th.

Lastly, both parties should offer the other an ego nickel; a deal point or two of minimal value to the giving party that validates the receiving party’s demands enough for them to save face with their constituencies. Sooner or later, the parties will be working together again and a few ego-nickels might expedite closure of a deal both parties can live with if not embrace.