Hollywood strike immediately affects shows

Ryan Paige · December 15th, 2007, 11:18 PM

The networks are streaming shows with advertising, so they are apparently making a small amount of money off of their streaming efforts.

But I think the desire to make a deal now that sets the residual rate is to have something in place when streaming or downloads or what-have-you does become a much bigger revenue stream.

If we wait, the studios and networks might get used to having that money and be less likely to part with it. And I think that's why we've been asking for a percentage rather than a flat fee. If the stream doesn't create any revenue, then there's no residual to pay (1.2% of $0 is still $0 after all). It wasn't until the studios proposed a flat fee that we countered with the flat fee per 100,000 views.

I don't know, though. The Internet is such a different animal than television, theatrical or even home video. Just the logistics of slicing up the revenue pie is going to be a major pain (and I think that even after we agree to a deal and the strike ends, there will be some legal wrangling and probably some lawsuits or arbitrations over definitions, etc. for years to come).

Theodore McNeil · December 16th, 2007, 10:53 PM

http://www.reuters.com/article/telev...35771320071217

My summary...

The producer's association got together and signed unity pact, mostly in reaction to:

1) World Wide Pants indication that they may break ranks and sign an interim deal with the union. WWP reckons they can do this because they are an independent production company separate from CBS.
2) The WGA's new wedge strategy. The WGA is trying to negotiate with the Studios individually rather than as a group.

Boyd Ostroff · December 17th, 2007, 12:54 PM

There's an article in today's Wall Street Journal: http://online.wsj.com/public/article...066332667.html (I think this link may expire quickly though)

It mentions several developments:

Quote:

David Letterman's production company Worldwide Pants said it plans to seek an interim deal with the guild, a settlement people in the industry would watch closely to see how it reflects the guild's most recent offer to the Alliance of Motion Picture and Television Producers. That would mean "Late Show with David Letterman" and "Late Late Show with Craig Ferguson," both of which are wholly owned by Worldwide Pants, would be able to return to air with their writing staffs as soon as the deal is done

The article also points out that such a deal is by no means a certainty. It also claims that some studios may use the strike as a way to cancel existing contracts which they don't like:

Quote:

The force majeure clause in many production deals goes into effect six weeks into a labor action, enabling studios to cancel those deals. The studios have many such deals on the books, and the chance to wipe out deals that weren't yielding hit shows was thought to be one appealing aspect to the studios of a protracted strike.

Meanwhile, some other shows may go back on the air without the writers:

Quote:

NBC is expected to announce this week "The Tonight Show with Jay Leno" and "Late Night with Conan O'Brien" will return to air without writers as early as Jan. 2, according to two people close to the shows. The hosts of Comedy Central's "The Daily Show with Jon Stewart" and "The Colbert Report" are considering returning without writers on Jan. 7.

Ryan Paige · December 17th, 2007, 02:58 PM

It seems disingenuous for us to say on Friday "Hey, we want to negotiate with our signatories separately" and as soon as one signatory says "Okay. Let's negotiate separately", we apparently change our minds.

Theodore McNeil · December 17th, 2007, 09:23 PM

without writers...

Conan's statement:

http://nbcumv.com/release_detail.nbc...fromconan.html

Leno's Statement:

http://nbcumv.com/release_detail.nbc...tfromjayl.html

Jon Fairhurst · December 19th, 2007, 05:56 PM

Quote:

Originally Posted by Ryan Paige

I don't know, though. The Internet is such a different animal than television, theatrical or even home video. Just the logistics of slicing up the revenue pie is going to be a major pain...

I don't know. On the music side ASCAP and BMI have to keep track of everything in order for composers to get their royalties. And then you have to reply on Nielsen ratings to guess the number of eyeballs. On the Internet you just look at the web stats and count the views. The studios want to give the largest number to the advertisers, but the smallest number to the writers and other royalty earners, so they'll probably split the difference and play it honest - we hope...

Ryan Paige · December 20th, 2007, 09:19 AM

In television, writers get single flat fee for broadcast of the episode regardless of the ratings. But the amount is so high (over $20,000 for an hour-long program) that it would stifle streaming for all but the largest companies. So, both the WGA and the AMPTP have been arguing over a percentage of advertising formula (even the flat fee per 100,000 views plan reverted to a percentage in Year Two).

So, how do you count revenues?

Do the banner ads count? What about the revenues that come from selling products or services (ringtones, wallpapers, etc) based on the properties?

Which gross is the percentage based on? The gross that goes to the producer? Or the gross that goes to the distributor? That's an important distinction. On the one hand, writers feel like they got screwed by the Home Video formula because it's a percentage based on producer's gross. But the vast majority of WGA signatories don't self-distribute. So if the percentage is based on distributor's gross, they're paying a percentage based on money they don't earn.

And in these relatively early days of the industry, it appears that the studio sites sell advertising by the package. The last time I poked around a network website and watched some of the streaming programs, all the ads were the same GM ad. Presumably, the media buyer negotiated a flat fee for the total coverage, so how does that single advertising buy that covers advertising on shows that aren't WGA-covered (reality shows, for example) and probably banner ads on the main page and whatnot get allocated to the individual writer of the individual episode of a specific show.

And as it relates to movies, the WGA doesn't want to make any exception for partial use of a movie for promotional purposes. So, if the studios want to put a trailer for the movie online, they're required to pay a full residual for that. Same with those sneak previews we see from time to time that actually do promote movies (like when the first five minutes of a movie will be streamed online).

There has to be some exception for promotional uses, but where is the line drawn?

All these definitions have to be agreed to and all the loopholes have to be closed as best as possible, while also setting up a system that doesn't gouge producers or make them pay residuals on revenues that writers aren't entitled to.

I think it's a little more complicated than just counting the eyeballs.

Harry Hannigan · December 20th, 2007, 01:31 PM

That's not quite right, Ryan. The AMPTP doesn't want to pay for promotional use, that's true, but I don't think the WGA is looking to get paid for movie trailers. The AMPTP wants to the term "promotional" to apply to whatever they decide to apply it to. So if they want to stream every episode of the Simpsons, for example, sell advertising on the site, and call it promotional, the writer's of those episodes would not see a dime.
That's the sort of thing we're talking about with New Media, and obviously this would be a huge pay cut, since these episodes would not be repeated on the air, where we get paid for them through the residual system in place now.

Ryan Paige · December 20th, 2007, 10:24 PM

I don't think we want to get paid for movie trailers, either, but the point is that it's complicated because we have to allow loopholes but we have to define them narrowly enough that the studios don't exploit them to our detriment. And so far, none of our proposals, which are admittedly not that detailed, have defined a loophole that allows for any partial use.

Paulo Teixeira · December 21st, 2007, 05:52 PM

http://www.eonline.com/news/article/...32&entry=index

I’m going to have to record this since theirs a good chance I’ll be in Portugal by then.

Theodore McNeil · December 28th, 2007, 12:26 AM

Looks like the strike may go on for a while yet...

http://www.deadlinehollywooddaily.co...ook-very-grim/

Theodore McNeil · December 28th, 2007, 11:57 PM

I love Dave.

http://online.wsj.com/article/SB1198...googlenews_wsj

Theodore McNeil · January 6th, 2008, 12:45 PM

Variety says yes and it is going to be announced Monday....

http://www.variety.com/article/VR111...ryId=2821&cs=1

LA Times says the deal is still in the works but could be inked today

http://www.latimes.com/news/printedi...-pe-california

Jon Fairhurst · January 18th, 2008, 01:01 PM

Directors Reach Accord With Hollywood Studios

http://www.nytimes.com/2008/01/18/ar...in&oref=slogin

Chris Hurd · February 8th, 2008, 09:55 AM

Eisner says the strike has ended:

"A deal has been struck between the major media companies and the Writers Guild of America to end the writers' strike, former Walt Disney chief executive Michael Eisner revealed on CNBC."

Full story at http://www.cnbc.com/id/23057002?

December 16th, 2007, 10:53 PM	#107
Theodore McNeil Major Player Join Date: Sep 2006 Location: Centreville, Maryland Posts: 258	Divide et impera? http://www.reuters.com/article/telev...35771320071217 My summary... The producer's association got together and signed unity pact, mostly in reaction to: 1) World Wide Pants indication that they may break ranks and sign an interim deal with the union. WWP reckons they can do this because they are an independent production company separate from CBS. 2) The WGA's new wedge strategy. The WGA is trying to negotiate with the Studios individually rather than as a group. __________________ http://twitter.com/tedmcneil

December 17th, 2007, 09:23 PM	#110
Theodore McNeil Major Player Join Date: Sep 2006 Location: Centreville, Maryland Posts: 258	Conan and Leno are back Jan 2nd without writers... Conan's statement: http://nbcumv.com/release_detail.nbc...fromconan.html Leno's Statement: http://nbcumv.com/release_detail.nbc...tfromjayl.html __________________ http://twitter.com/tedmcneil

December 21st, 2007, 05:52 PM	#115
Paulo Teixeira Trustee Join Date: Dec 2005 Location: Massachusetts Posts: 1,773	Daily Show, Colbert Report Returns January 9th http://www.eonline.com/news/article/...32&entry=index I’m going to have to record this since theirs a good chance I’ll be in Portugal by then. __________________ https://www.youtube.com/user/PhotoVi...esEtc/featured https://www.pond5.com/artist/paulot Last edited by Paulo Teixeira; December 21st, 2007 at 06:23 PM.

December 28th, 2007, 12:26 AM	#116
Theodore McNeil Major Player Join Date: Sep 2006 Location: Centreville, Maryland Posts: 258	Things look grim for the writers Looks like the strike may go on for a while yet... http://www.deadlinehollywooddaily.co...ook-very-grim/ __________________ http://twitter.com/tedmcneil

December 28th, 2007, 11:57 PM	#117
Theodore McNeil Major Player Join Date: Sep 2006 Location: Centreville, Maryland Posts: 258	Letterman signs deal with writers guild... I love Dave. http://online.wsj.com/article/SB1198...googlenews_wsj __________________ http://twitter.com/tedmcneil

December 15th, 2007, 11:18 PM	#106
Ryan Paige Regular Crew Join Date: Oct 2006 Location: Plano, Texas Posts: 44	The networks are streaming shows with advertising, so they are apparently making a small amount of money off of their streaming efforts. But I think the desire to make a deal now that sets the residual rate is to have something in place when streaming or downloads or what-have-you does become a much bigger revenue stream. If we wait, the studios and networks might get used to having that money and be less likely to part with it. And I think that's why we've been asking for a percentage rather than a flat fee. If the stream doesn't create any revenue, then there's no residual to pay (1.2% of $0 is still $0 after all). It wasn't until the studios proposed a flat fee that we countered with the flat fee per 100,000 views. I don't know, though. The Internet is such a different animal than television, theatrical or even home video. Just the logistics of slicing up the revenue pie is going to be a major pain (and I think that even after we agree to a deal and the strike ends, there will be some legal wrangling and probably some lawsuits or arbitrations over definitions, etc. for years to come).

December 17th, 2007, 02:58 PM	#109
Ryan Paige Regular Crew Join Date: Oct 2006 Location: Plano, Texas Posts: 44	It seems disingenuous for us to say on Friday "Hey, we want to negotiate with our signatories separately" and as soon as one signatory says "Okay. Let's negotiate separately", we apparently change our minds.

December 20th, 2007, 09:19 AM	#112
Ryan Paige Regular Crew Join Date: Oct 2006 Location: Plano, Texas Posts: 44	In television, writers get single flat fee for broadcast of the episode regardless of the ratings. But the amount is so high (over $20,000 for an hour-long program) that it would stifle streaming for all but the largest companies. So, both the WGA and the AMPTP have been arguing over a percentage of advertising formula (even the flat fee per 100,000 views plan reverted to a percentage in Year Two). So, how do you count revenues? Do the banner ads count? What about the revenues that come from selling products or services (ringtones, wallpapers, etc) based on the properties? Which gross is the percentage based on? The gross that goes to the producer? Or the gross that goes to the distributor? That's an important distinction. On the one hand, writers feel like they got screwed by the Home Video formula because it's a percentage based on producer's gross. But the vast majority of WGA signatories don't self-distribute. So if the percentage is based on distributor's gross, they're paying a percentage based on money they don't earn. And in these relatively early days of the industry, it appears that the studio sites sell advertising by the package. The last time I poked around a network website and watched some of the streaming programs, all the ads were the same GM ad. Presumably, the media buyer negotiated a flat fee for the total coverage, so how does that single advertising buy that covers advertising on shows that aren't WGA-covered (reality shows, for example) and probably banner ads on the main page and whatnot get allocated to the individual writer of the individual episode of a specific show. And as it relates to movies, the WGA doesn't want to make any exception for partial use of a movie for promotional purposes. So, if the studios want to put a trailer for the movie online, they're required to pay a full residual for that. Same with those sneak previews we see from time to time that actually do promote movies (like when the first five minutes of a movie will be streamed online). There has to be some exception for promotional uses, but where is the line drawn? All these definitions have to be agreed to and all the loopholes have to be closed as best as possible, while also setting up a system that doesn't gouge producers or make them pay residuals on revenues that writers aren't entitled to. I think it's a little more complicated than just counting the eyeballs.

December 20th, 2007, 01:31 PM	#113
Harry Hannigan New Boot Join Date: Sep 2007 Location: Sherman Oaks, CA Posts: 9	That's not quite right, Ryan. The AMPTP doesn't want to pay for promotional use, that's true, but I don't think the WGA is looking to get paid for movie trailers. The AMPTP wants to the term "promotional" to apply to whatever they decide to apply it to. So if they want to stream every episode of the Simpsons, for example, sell advertising on the site, and call it promotional, the writer's of those episodes would not see a dime. That's the sort of thing we're talking about with New Media, and obviously this would be a huge pay cut, since these episodes would not be repeated on the air, where we get paid for them through the residual system in place now.

December 20th, 2007, 10:24 PM	#114
Ryan Paige Regular Crew Join Date: Oct 2006 Location: Plano, Texas Posts: 44	I don't think we want to get paid for movie trailers, either, but the point is that it's complicated because we have to allow loopholes but we have to define them narrowly enough that the studios don't exploit them to our detriment. And so far, none of our proposals, which are admittedly not that detailed, have defined a loophole that allows for any partial use.

January 6th, 2008, 12:45 PM	#118
Theodore McNeil Major Player Join Date: Sep 2006 Location: Centreville, Maryland Posts: 258	UA may going back to work tomorrow? Variety says yes and it is going to be announced Monday.... http://www.variety.com/article/VR111...ryId=2821&cs=1 LA Times says the deal is still in the works but could be inked today http://www.latimes.com/news/printedi...-pe-california __________________ http://twitter.com/tedmcneil

January 18th, 2008, 01:01 PM	#119
Jon Fairhurst Inner Circle Join Date: May 2006 Location: Camas, WA, USA Posts: 5,513	Directors Reach Accord With Hollywood Studios Directors Reach Accord With Hollywood Studios http://www.nytimes.com/2008/01/18/ar...in&oref=slogin __________________ Jon Fairhurst

February 8th, 2008, 09:55 AM	#120
Chris Hurd Obstreperous Rex Join Date: Jan 2001 Location: San Marcos, TX Posts: 27,368 Images: 513	Eisner says the strike has ended: "A deal has been struck between the major media companies and the Writers Guild of America to end the writers' strike, former Walt Disney chief executive Michael Eisner revealed on CNBC." Full story at http://www.cnbc.com/id/23057002? __________________ CH Search DV Info Net \| 20 years of DVi \| ...Tuesday is Soylent Green Day!