Hooray For Hollywood! For Those About To Strike, We Salute You
Well, boys and girls, get ready for another writers' strike.
The WGA and the AMPTP (The Alliance of Mot... uh, the studios and the networks, basically) just wrapped up two weeks of negotiations on the replacement of their existing agreement, the 2011 MBA, which expires May 1. After taking the bullet-points they've ended on to their constituencies, the two sides will reconvene on March 3.
The opening offer from the producers called for around $60 million in rollbacks over the three-year term of the next deal, mostly culled from decreased health/pension contributions and a lowering of the floor on minimum payments.
Compare that to what Daily Variety reports the Directors Guild ended up with: increased residual bases, a 3% wage increase, established minimums for made-for-new-media series (i.e., Netflix's House Of Cards) and free puppies for everyone.
Outrageous!! (Also, I may have made up the "puppies" thing, but the producers sure do love the DGA, boy, so it might be true and just unreported...)
Yet, do the math for a second and we see something else: $60 million divided by three years divided by the major players involved (the studios-proper and the networks) and we end up around $2 million per year per AMPTP overlord.
Given the cost structure and balance sheets of the primary members, it wouldn't seem to be a number a serious management group would dig in over.
Though the question has to be asked: how serious a group is the AMPTP if they insisted on their team starting off with this warning shot so soon after the last strike? Many of the companies involved are run by fairly volatile personalities (Sumner Redstone and Rupert Murdoch, anyone?). For all the scuttlebutt over the last 10-15 years about the MBA-ing of Hollywood, highly successful CBS is run by a former actor. Go figure.
Eventually, a deal akin to the DGA's will materialize and all will be well(ish) for the next three years.
But make no mistake -- another strike is coming.
For those of you who don't know, when the 2007/2008 strike occurred, there were two major points the WGA had entered into those negotiations with -- internet payment and jurisdiction over "reality TV."
The primary reason for the strike was the internet: writers wanted to be paid for scripts written for it and the delivery of their other works over it. The producers, basically, claimed that the internet wasn't necessarily the future so there was no need (yet) for anyone to be paid for anything transmitted over it.
"Look, kids, this 'net' thing might be something someday, but right now it's just a gimmick. Who knows if we'll even be able to sell ads and make money with it? How about we give you a 1% raise instead and go to Canter's for a nice pastrami?"
The thing you need to know about companies -- all companies -- is when they say "later" they mean "never." The Guild stood its ground and, although all hell broke loose, ended up with significant contractual footholds on digital production, streaming and EST that the other guilds have since taken advantage of.
(The fact that the WGA had to drop their "demands" on reality television isn't as absurd as even having to "demand" it in the first place -- the WGA has ALWAYS had jurisdiction over "game shows" and "documentary series." By allowing the Jedi mind trick of "Survivor isn't a 'game show,' Keeping Up With The Kardashians isn't a 'docu-series' -- they're 'reality' programming" to take root in the first place, the WGA owns -- in my opinion -- one of the most abject failures of any labor representative group in American industry over the last forty years.)
But that was then and this is now.
"So why," you may ask, "if the two sides are going to come to an agreement this go around, do you think a strike is coming in the near future?"
Three (primary) reasons:
The "digital" landscape -- for lack of a better term -- is going to continue to refine itself over the term of the next contract, to the point where it will become clearer to everyone which direction everything is headed and how the monetization is going to come.
We can see shades of that future in things like the proposed Comcast / Time Warner Cable merger -- maximum exploitation of existing infrastructure in the delivery of entertainment product to the masses and, eventually, a near-total abandonment of "traditional" over-air broadcast.
No-skip advertising will become better woven into content, and that advertising will be better targeted to the client's most-desired demographics. The premium this targeting creates in the pricing structure will (mostly) off-set the fragmentation of the total viewing audience into smaller, niche viewing clusters.
(A side note: for everyone out there who keeps lecturing me about the "new Golden Age" of television, let me point out that Dog With A Blog brings in more viewers than Girls and True Detective, combined. The more things change and all that...)
As these numbers become better defined, writers will want better compensation out of those revenues. Which leads us to the--
Profit margins are collapsing.
Not just in film and TV, and not just in entertainment -- everywhere. Labor costs are rising around the globe, marketing costs are not retreating and the great consumer middle is being decimated, leaving even countries like the United States with a growing us/them profile more like a BRIC nation than a fully developed Western economy.
When you are pressed on issues of margin, you can do one of two things:
You can increase your revenue by doing things like growing your customer base, increasing the frequency and velocity of product consumption by that base and finding new arenas to exploit with regards to your product.
These solutions are external, require a lot of thought and planning and are known as "expanding your top line."
You can attack "inefficiencies" in areas like payroll, production costs and research-and-development, thereby expanding your profit margin.
These solutions are internal, require little more than a red-pen and a closed heart and are known as "protecting the bottom line."
Smart companies -- and the studios and networks ARE smart companies -- do both.
Studios are tuning their theatrical product explicitly for better penetration into foreign markets. Networks are developing new(ish) "event viewing" (see: The Sound Of Music). Cable shows like Game Of Thrones and The Walking Dead are being as expertly merchandised as any Lucas-bred franchise.
The difficulty for the writers is that these top-line solutions cannot accurately predict their outcome to the bottom-line whereas bottom-line solutions (such as, say, NOT giving writers any increase on basic cable minimums or -- better yet! -- rolling them back) can be projected fairly accurately.
"But you said the AMTPPT-whatever wouldn't dig in on those roll-backs."
And I don't think they will.
But that leads us to:
The third, final (and biggest) reason why there will be another Writers strike:
Because the producers HATE writers.
Always have, always will.
"Schmucks with Underwoods" and all that.
And, right now they are still pissed -- PISSED!! -- over the strike of 2007/2008.
That and that alone is why you even saw an opening salvo of rollbacks proposed by the AMPTP (see, I can get it right) -- just to poke the other side in the eye. There have been background quotes in articles in all of the industry trades from people in the producer's negotiating camp admitting as much -- that their marching orders were to walk in and start a pissing match.
So they did.
That being said, once the rollbacks were floated, the Guild went out of its way to let membership (read: everyone and their Aunt Louise) know about this "shocking!" and "insulting!" development.
"The studios and networks are willing to send the Industry into turmoil! Here we go again!!"
Why do that? Part of me thinks it's because writers love to feel victimized. That notion of martyrdom, it plays into the idea that they are "artists" toiling away at an unappreciated masterpiece as opposed to architects drafting a plan for a new engine of creative commerce they couldn't realize alone.
(Note to my screenwriter friends: you want complete control, don't want to deal with notes or suits or directors? Write a novel.)
But, primarily, it was to stir up the hornet's nest, get the town edgy. The number of people in Hollywood who were there for the last strike and don't have an opinion as to whose fault it was is exactly zero.
Some blame "corporate greed" and side with the writers. Most of them are writers.
Others blame the writers, accusing them of laying waste to the economy, sabotaging their own self-interests and boiling the Easter Bunny.
A good example of this mindset could be found in a sarcastic screed in The Hollywood Reporter last week written by a former uber-agent turned power-producer. It perpetuates a commonly held fallacy, namely that the Writers Guild and its membership had some kind of ethical obligation to not cause economic harm to others in the industry who had no dog in the Guild's fight with the AMPTP.
The only group a guild or union is -- and should be -- beholden to is membership.
That's it. That's the reason it exists.
The fact that thousands of non-writers couldn't work because of the strike was certainly unfortunate. Maybe there were screenwriters lounging in club chairs in the Grand Havana Room, smoking Cohibas, and rubbing their hands, cackling "Bwah ha-ha-ha! Take THAT, key grips!" I don't know.
My guess is that most writers felt badly for everyone but were more worried about their own families and felt that the strike was the only way to secure a better situation for them.
You'd think an agent, of all people, might understand self-interest.
Once the strike was settled, news outlets were breathless trying to determine who "won." The answer was the same as it is for almost all modern strikes -- nobody.
In a labor negotiation, a strike is the least-desired of all outcomes by all sides. It's always a mutually-assured-destruction type of scenario and reaching it is almost always an indicator of failure by all parties.
Writers have consistently failed these negotiations by demanding "respect" in ways that seem silly and, sometimes, outright Quixotic.
(My understanding is that a part of the 1988 strike was predicated on a desire by feature writers to be consulted on both casting and director selection, as insane an idea as I have heard in all my time in Hollywood. A sticking point in recent years has been the so-called "vanity credit" of "A Film By" that many directors get/take. A silly credit -- every "film" is "by" a ton of people. Let it go, guys.)
Studios and networks, on the other hand, have consistently failed these negotiations by being studios and networks (they probably ARE lounging in club chairs in the Grand Havana Room, smoking Cohibas, and rubbing their hands, cackling "Bwah ha-ha-ha! Take THAT, writers!").
The fact that the AMPTP is composed of a disparate group of member companies with varying -- and, in many cases, competing -- agendas doesn't help matters any.
The only agenda the AMPTP members seem to agree upon -- at least in regards to the WGA -- is "NO!" Every negotiation with the studios and networks begins with their claims of poverty. Through some combination of runaway costs, piracy and "uncertain future," they make it seem as if the world is about to go back to reading for their fun.
Given the revenues that the intellectual property the Writers Guild members create still generates (essentially all the R&D for the greater entertainment industry), it would seem worth the compensation the writers get, if not every increase they seek, and, at the end of the day, the last strike is still way too fresh a wound to be picked at in these negotiations. Cooler heads will (most likely) prevail and a deal similar in terms to the DGA will appear and get ratified.
But these two parties have a lot of distrust, a lot of bad blood, and have shown a willingness to go to the mat (something, to be fair, the DGA also did in 1987 in what they proudly refer to in their history as "The Five-Minute Strike").
When two frequent negotiating partners consistently bring a world-view of "Fuck you!" versus "Up yours!" into the room, it is always going to be just a matter of time before the next brawl breaks out.
As all who were present for the last strike know, a shutdown caused by anyone ends up hurting everyone.
Maybe, then, the question for those standing around the perimeter of this triennial Fight Club pit is one of self-interest as well:
If you're going to get pulled into the fray in any case, are you better served supporting those who can give you something or those who can take everything away?
And which one is which?
Hooray For Hollywood! is a column on the business practices, philosophies, and mechanics of the Hollywood studio system, written by an industry professional with first-hand experience.