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Jack Egan: A Question of Survival

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From the current print edition of BTL:

A Question of Survival

By Jack Egan

The New Year is beginning on a glum note. The crippling writers’ strike is about to enter its third month with no prospect in sight for a resumption of negotiations between the Writers Guild of America and the Association of Motion Picture and Television Producers.

Many of those being hit the hardest so far have been in effect innocent bystanders caught in the crossfire: below-the-line crew members, industry vendors and service suppliers. For them, “it could become a question of survival,” says Jack Kyser, senior economist for the Los Angeles County Economic Development Corp.

The only potentially bright spot on the horizon is the decision by the Directors Guild of America to move into the vacuum and start its own negotiating round with the AMPTP. The tentative starting date is Jan. 7. If the directors can expeditiously reach a new contract agreement, there’s some hope it could serve as a template for a similar settlement between the studios and the WGA, as well as with the Screen Actors Guild, whose contract expires midyear.

“When the DGA starts to negotiate, maybe that will encourage the talks to resume with the WGA,” says Kyser. However, a quick deal is not necessarily in the cards. Topping the DGA’s negotiating agenda is a demand for directors to get residuals when their work appears on new technology platforms like the Internet and cell phones. The WGA has also made residuals on digital distribution a top priority, but the demand has gotten nowhere in talks with the DGA.

Largely overlooked is a recent deal reached between Fox and Apple to make the studio’s films downloadable to personal computers or to Apple’s ubiquitous iPod for a limited period of time, akin to a DVD rental. The agreement may have a major bearing on the issue of extended residuals for both the writers and directors.

The entertainment companies have been downplaying the profit potential of these new technologies, as part of their negotiating stance with the WGA, though they’ve been bragging about it to Wall Street. The Fox-Apple arrangement is a concrete example of how digital distribution may become a significant profit center for Fox parent News Corp. as well as other entertainment conglomerates.

Meanwhile, the economic impact of the work stoppage is rippling beyond Hollywood into the broader Los Angeles economy, where entertainment is the third largest industry, accounting for nearly $50 billion a year. Due to a multiplier effect, losses to date for the local region now top $1 billion, according to Kyser. Before the WGA strike ends, the total could approach $2.5 billion, in his view.

More than 10,000 jobs were lost in just the first month of the strike, Kyser estimates, out of an industry total of around 160,000 employees. “The longer this goes on, the more painful it’s going to get,” he says. “Both sides have to recognize that nobody wins in a prolonged strike.” This is especially true for many of the smaller firms that make up the bulk of Hollywood employers, Keyser adds.

Beyond the mounting job losses, many of the 40,000 members of the 18 IATSE Hollywood unions, for good reason, fear their medical and pension benefits could be in jeopardy if the strike continues for a number of months. That’s because they may not be able to work the requisite 300 hours over the next six months to qualify, and don’t have enough hours saved to compensate for a shortfall. (Up to 450 hours can be banked.)

Adding to the spreading distress, some of the most financially vulnerable workers are already facing catastrophic consequences. “I have rent due and nothing to pay it with,” said one responder to Below the Line’s strike blog, identified only as Denise. “I am going to be asked to move and I have children… Everyone wants us to support them in this fight, but how can I when I am having everything destroyed by this strike and I sure don’t see anyone supporting me in my hour of need.”

In an effort to help alleviate some of the burden, a “Strike Survival Strategies Seminar” is being held Jan. 4 at the headquarters of IATSE Local 80, the grips union, at 2520 W. Olive Ave. in Burbank. The event is being hosted by IATSE in cooperation with Community Service/United Way. Topics to be covered include housing assistance information for rents and mortgages; temporary employment opportunities; budget advice “for lean times”; and information on assistance for paying utility bills.

There will also be an effort to raise a kitty for workers on the brink, but it’s unlikely to make more than a dent. By comparison, the WGA raised a $13 million war chest in advance of its decision go out on strike Nov. 5, which is being disbursed to needy members of the guild.

Proprietors of many Hollywood-related business are meanwhile cutting back hard on overhead and other costs. A case in point is History for Hire, a North Hollywood prop house. “The terrible thing is that your biggest expense is your labor,” says Pam Elyea, one of the firm’s co-owners. At the beginning of the writers strike in early November, six part-time employees were laid off, “but our permanent staff of 12 is continuing to work,” she says. However, all overtime has been eliminated, representing about a 10-percent pay cut for those still at their jobs.

Cancellation of television production as scripts run out has hit the prop suppliers’ bottom line especially hard. “The TV business is almost gone,” says Elyea. And she’s pessimistic about any relief in the near-term. “I think it’s going to be a very long and protracted strike, longer than the writers strike in 1988.” (That last big work stoppage to hit Hollywood lasted 22 weeks.)

Purported behind-the-scenes efforts by Dreamworks Animation chief Jeffrey Katzenberg and others to get the negotiations between the WGA and AMPTP back on track have so far yielded no results. WGA West President Patric Verrone has charged the studios unilaterally walked out on the talks in early December, adding the writers’ union is ready to resume negotiations as soon as they return. With negotiations with the DGA about to start, AMPTP has little incentive to pay attention to the WGA.

As the stalemate continues, both sides have resorted to waging a public relations war, hiring highly paid consultants. The WGA claims to have so far been more successful, pointing to surveys that show more than 60 percent of the public is on their side. But if such a poll were taken among crew and other parties suffering collateral damage, the levels of support probably wouldn’t reach double digits.

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