Monday, December 17, 2007

WGA Strike: How to Restart the Talks, And Why

There may still be time – a small window at best – to negotiate a solution to the WGA strike before the DGA does its deal. How might this be done, what’s the deal the WGA and AMPTP should do, and what will happen if the DGA does negotiate a deal first? Read on; but first, some background.


The WGA’s trying to compel the AMPTP to return to the table by filing charges with the National Labor Relations Board (NLRB). This might work, since three of the AMPTP’s non-negotiable demands (“roadblocks”) – distributor’s gross, fair market value and, arguably, industry standards – relate to compensation, which is a subject of mandatory bargaining under the National Labor Relations Act, 29 U.S.C. §§ 158(a)(5) & (d). A caveat – although I’ve spoken to several labor lawyers (both pro-labor and pro-management) on the issues discussed in this section, I’m not one myself.

Thus, the AMPTP in my view has no right to walk out on talks over two or perhaps all three of those issues, at least until an impasse is reached. Given the apparently desultory nature of the negotiations so far, this does not yet appear to be the case. (See WGA Strike - Negotiation Issues (sec. 2(a) of memo) for explanation of the AMPTP’s roadblocks.)

The problem with the charges, however, according to at least one labor lawyer I spoke with, is that the process is so slow that the DGA will probably be done negotiating before a final decision on the charges is reached.

The WGA is also trying to force each of the companies – the 6 majors plus CBS, at least – to negotiate separately, notwithstanding that they usually negotiate as a multi-employer bargaining unit, the AMPTP. I’ve not yet had a chance to research this issue.

However, as a strategic matter, the charges that the WGA filed with the NLRB make the AMPTP, and the companies individually, less likely to bargain voluntarily, because now they would seem to be caving to legal pressure. That’s not good, and that’s why I called the charges “ill-advised” in an AP story. (I also called the charges “inflammatory,” which was probably a bit strong.) The charges also probably all but destroyed back-channel efforts to restart talks.

In any case, if the Guild leadership does have legal justification for forcing individual negotiations, it should have taken this tack months ago, before alienating the companies with invective and legal charges. This move would have resonated with the public from day one, because almost everyone outside the companies is concerned that media conglomerates have grown too big and too powerful. Even some Republican members of Congress have expressed misgivings.

Moreover, at least two of the WGA’s demands – jurisdiction over reality and over animation – are not subject to mandatory bargaining, according to three labor lawyers with whom I spoke. These issues are two of the AMPTP’s six roadblocks. Thus, the WGA has no right to force the AMPTP to bargain over these issues.

Why does the Guild care so much about reality? In my view, it’s primarily so that the Guild can choke off reality as well as scripted product the next time that negotiations take place, in three years. With no access to reality, the networks would have nothing to substitute for scripted programming in the event of a strike, whereas, this time around, such substitution is exactly what we’ll see starting next month.

That would be great for the Guild, but such extreme loss of leverage is unacceptable to the companies. Pigs could sprout wings and fly up and down Wilshire Boulevard, and the Guild would never get this jurisdiction. Not now, not ever.

There’s another reason the companies won’t grant jurisdiction, and that’s because the IA is organizing reality already, more successfully than the Guild, in fact. The companies won’t step into an inter-union fight – and if they did, they’d favor the IA, because it’s a larger, more powerful union, and because it apparently tends to drive an easier bargain.

This latter point applies to animation as well, which the IA has organized for many years, although the Guild has also had some success. Nonetheless, this area doesn’t affect many existing WGA members, and it’s hard to escape the conclusion that the focus on animation is due to the occupation of the Guild president, Patric Verrone (hint: he’s an animation writer).

The sixth roadblock, the Guild’s demand that it be allowed to honor another union’s picket lines, such as SAG’s, may or may not be subject to mandatory bargaining; my quick research suggests the matter is unclear. Nonetheless, such a sympathy strike provision is completely unacceptable to the companies, since labor peace is a key benefit of the bargain for the companies when they sign a union agreement. This is another non-starter.

How to Restart Talks

So, what to do? The companies started this mess by presenting incendiary proposals in July and sticking to them for months. The Guild’s not blameless either; it’s pushed for reality and animation since July as well. Since then, both parties have deployed vitriol in equal proportions, and, by most reports, negotiating sessions have been marked by lectures, inefficiency and infantile pranks more often than serious negotiation.

At this juncture, the AMPTP is to blame for walking out, and the Guild should keep up the pressure on companies to bargain individually. The AMPTP is structurally a problem – each of the companies has a veto right, which means that hardliners may prevail for quite some time. Moreover, the AMPTP’s president and chief negotiator, Nick Counter, reports to the CEO’s of all eight or so member companies. That situation inherently breeds caution and stalemate, ensuring that Counter will resist Guild demands even if there were some he’d otherwise be inclined to agree to (which there may not be, however).

So, unfortunate though it may be, to restart talks, the Guild will need to take a bold step: accede to three of the AMPTP’s demands and drop reality, animation and sympathy strikes. The WGA’s never going to get these, and everyone knows it. Indeed, Verrone recently began to back down on reality, stating that "It's not a sticking point . . . there is room to negotiate." Without these steps, the companies and the AMPTP are unlikely to return to the bargaining table in time to head off the DGA.

The Guild should also step up the pressure to make writers less dependent on the studios in new media. Training classes on technology, software, business models and entrepreneurship; negotiated discounts on software; awards to foster new media creation – all of these steps should have been taken at least a year ago, but better late than never.

What’s the Deal They Should Make?

Here are key points to the deal the parties should make:

* Guild’s Proposals re Reality, Animation and Sympathy Strikes. Not happening.

* Industry Standards. This is the Guild’s proposal that, if the companies subcontract work, the sub will have to comply with the guild agreement’s requirements. Completely reasonable; otherwise, subcontracting becomes a hole in the agreement big enough to drive a Teamster’s truck through.

* Fair Market Value. This is the Guild’s proposal that self-dealing transactions – such as program licensing deals between two divisions of the same conglomerate – be valued at fair market value, in order to protect residuals from being artificially depressed. Also reasonable. But, the companies are concerned that an overzealous arbitrator could dramatically overvalue a transaction, creating disproportionate liability for the company. That would create uncertainty for business projections and financial statements. My compromise: cap the increase in value the arbitrator is permitted to impose. The Guild gets a degree of fairness, and the companies get a degree of risk protection.

* New Media Residuals. See WGA Strike - Negotiation Issues (secs. 3(b) & 4 of memo) for my proposals. Distributor’s gross is one component of the new media residuals issue. The Guild will probably have to compromise here.

* Other Issues. See WGA Strike - Negotiation Issues (sec. 6 & Ex. A of memo) for details.

* Tri-Guild New Media Adjustment Committee. The revised Guild agreement should establish a Tri-Guild New Media Adjustment Committee. See Memo to DGA - Please Propose a Tri-Guild New Media Adjustment Committee.

* DVD Residuals. The Guild was seeking to double the DVD residual, but has withdrawn this proposal (and publicly confirmed the withdrawal). This removes a major impediment to a deal, although I think it’s a mistake. See Slipped Disc: Why DVD Residuals Still Matter — and Always Will.

Why It’s Important to Do a Deal Before the DGA Does

If the DGA negotiates first – it’s planning to commence negotiations in early January – it will probably conclude a deal promptly. Since the DGA cares less about residuals than the WGA or SAG do (see sec. (1) of Writers' Strike: Why They're Talking), the DGA’s deal on residuals will probably be unacceptable to both of the sister guilds (the DGA will trade for a better deal on other issues). The WGA, for its part, has already signaled as much, stating “We wish [the DGA] well [in its talks], but they do not represent writers. Our strike will end when the companies return to negotiations and make a fair deal with the WGA.”

In addition, after more than two months of a bruising strike, it will seem untenable to the WGA leadership to admit that the DGA was able to accomplish what the WGA couldn’t. The WGA’s already trying to defuse this issue by arguing that the WGA has “softened up” the AMPTP for the DGA to strike a decisive blow, but the loss of face would nonetheless be real.

More importantly, the criticism from the IA and other sectors of the industry – including WGA members themselves – would be loud and unrelenting, and could even result in a movement to oust the leadership in the next election. In fact, such a movement is likely unless the WGA achieves significant gains. The WGA leadership is playing a high-stakes game, and has painted itself into a corner that may turn out to be the edge of a precipice.

Thus, I fear that both the WGA and SAG will reject the DGA deal. The WGA leadership will urge its members to hold on and keep the faith until the cavalry arrives, in the form of the 120,000-strong SAG, which will be free to strike after June 30, when its contract expires. We’ll then face the prospect of both of those guilds on strike, arrayed against the DGA, as well as the IA (which has consistently criticized the strike and the WGA’s leadership) and probably the Teamsters (whose support has apparently slipped away in the last few weeks).

The WGA leadership is betting that this approach will bring the companies not just to the bargaining table, but to their knees. The companies are likely, however, to continue to resist, because the financial structure of their businesses are at stake. Maybe this approach will work nonetheless – but it’s a scorched earth policy that could bring the entire industry to the brink of ruin. How much better it would have been for both parties to have negotiated reasonably from the beginning. What a disgrace.

This article first appeared on the Huffington Post on December 17, 2007.


  1. Well reasoned analysis, but it assumes that both sides want to play fair. AMPTP may have purposely walked away so as to be able to get Force Majuere. The WGA is negotiating more emotionally than rationally; as they feel they got the short end of the stick in the last negotiations, NOT a healthy negotiated win-win outcome. That anger has probably festered for many years resulting in a desire to not only win the next negotiation but assure that the producers lose.

  2. Perhaps reality is a lost issue, but they should continue to push the legal issue of the violation of labor laws. I want to know what you mean by the IA being successful at unionizing the reality writers...I've only heard of firings when told to unionize. And they've not been able to help with the no overtime, the lack of healthcare, and the 80 hour weeks these folks endure or get fired.

    Not allowing a union to add members b/c it might hurt them in the furture is not smart of the AMPTP Mega Corporation. It only shows how powerful and money hungry they've become.

    I say stick to your guns. Push the legal issue with reality b/c their loose there and at least reality can fight back individually, if not collectively. The IA is obvious to stupid and large to care and fight for them.

    Forcing 6 of, 10, issues off the table is just a bully tactic and the AMPTP Mega Corporation desevers to slit by their throats by their own children.

    FYI...Nick Counters Daughter and son-in-law are writers...what good Christmas this one will be.

  3. Here's what I've been wondering, about the industry standards demand:

    In the context of the WGA MBA, what constitutes "subcontracting"?

    Is it, a signatory company subcontracts a non-signatory company to produce theatrical or television motion pictures, which includes hiring writers to create the literary material for use in the motion picture?

    Or is it, a signatory company subcontracts a non-signatory company to hire writers to create the literary material for use in motion pictures only?