As the news blackout lifts, the gloves come off

The town should have plenty to talk about by the time the WGA-AMPTP talks resume Tuesday.

The PR war over the WGA-AMPTP negotiations has amped up; the AMPTP's latest move on Friday afternoon was to release a letter to its members along with a review of the current state of its proposal to the WGA. Here's the letter; the "AMPTP Fact Sheet" is after the jump.

-- Dave McNary

To the Companies represented by the AMPTP:

On behalf of all of our member companies, the AMPTP has proposed a New Economic Partnership to the WGA. This New Partnership includes bold moves by the AMPTP in several areas of new media, including streaming, content made for new media and programming delivered over digital broadcast channels. The New Economic Partnership is summarized in the attached one-page document.

The New Economic Partnership will deliver more than $130 million in additional compensation above and beyond the more than $1.3 billion working writers already receive each year.  This could mean an increase up to $31,000 over the 3-year life of the contract for working writers which would be on top of the current average writer’s compensation of more than $200,000 a year.   With these improvements, writers remain among the highest paid employees in America.  This more than $130 million increase is believed to be one of the largest compensation increases of any major union contract negotiated in recent American history.

In addition, our proposed New Economic Partnership included increases in producer contributions to the WGA health and pension plans. This increase helps assure that writers will continue to enjoy the security of these well funded plans, which offer an array of benefits to participants that are among the most generous of any in the nation.

During our negotiations on Thursday, November 29th, the WGA asked for a halt in talks until Tuesday, December 4th to give the WGA time to study our New Economic Partnership. While we strongly preferred to continue discussions without any interruption, we also understood the WGA’s need to take the time necessary to process our groundbreaking New Economic Partnership.  We therefore were disappointed to see such a quick and decisive attack on the plan that they had asked for so much time to study.   We look forward to resuming talks on December 4th.

Between now and Tuesday, we hope that the discussion about our proposed New Economic Partnership will focus on the facts. For example, the allegation that the New Economic Partnership and its groundbreaking proposals to extend and increase payments and jurisdiction for the writers in three wholly new areas of new media is somehow a “rollback” does nothing to advance a substantive dialogue over these issues, especially given that the WGA asserted for weeks that we were unwilling to share in new media revenues (despite, for example, our ongoing payments for digital downloading).

Simply put, a proposal that increases working writers compensation by a total of $130 million is in fact a very big “roll” forward.

We remain confident that there is common ground to be found between the two sides. Our proposal for a New Economic Partnership is meant to help find that common ground, and we hope that the WGA’s leadership will thoughtfully consider both our Partnership proposal and the increasingly severe economic impacts of this strike before the WGA comes back from the bargaining hiatus that it requested and gets down to work again on December 4th. We believe to generate the necessary momentum to reach a deal, we must be at the table talking.

As we await the WGA’s return to talks next week, we must all keep in mind the basic principle that is guiding our companies through this difficult process: We have a fundamental obligation to our employees and shareholders to create a modern economic system for our industry that will allow us to prosper in the face of increasingly difficult and fast-changing competition. Other industries have tried to take the easy way out by pretending that the fundamental changes around them were not really occurring, and as a result many businesses have declined at great cost to their workers, investors and communities. We are determined to deal successfully with the revolutionary global and technological changes confronting our industry before it is too late. That is why we are so committed to a fair deal for all parties, one that gives everyone a share in the profits of success and allows our business to change and grow.

Sincerely,

The Leadership of the AMPTP

"New Economic Partnership" --

The members of the AMPTP have proposed to the WGA a comprehensive plan designed to forge a New Economic Partnership.

This plan would help writers and producers prosper in the rapidly changing, highly competitive and increasingly globalized economy in which we all work.

History has demonstrated what happens to industries that do not adapt to new technology and other modern economic realities, and we are determined to give the entertainment business the best possible opportunity to survive and grow.

Summary

The AMPTP plan for a New Economic Partnership could potentially deliver to writers more than $130 million in additional compensation over the life of the 3-year contract, above and beyond the more than $1.3 billion writers already receive each year.  That is in addition to what writers would receive in new jurisdiction and revenue sharing opportunities in new media.  All totaled the average compensation for a working writer could increase up to $31,000, on top of the current average working writer’s salary of more than $200,000.

Our plan would also ensure the continued viability and excellence of the writers’ health care and pension plans, which are already among the very best in the country, providing them with long-term financial protection that is simply unavailable to many American workers.

We have also offered to continue and increase our payments to writers for the use of their content in “new media” markets.
 
Details

In its New Economic Partnership plan, the AMPTP has offered writers:

-- Residual payments for Internet streaming.  This gives writers a completely new source of compensation, one which they currently do not receive in their current contract.

-- Exclusive WGA representation over “derivative” programming made for new media, meaning that the Guild will have jurisdiction over content made for the new media market which is derived from their work on comedy and dramatic programs in the television market.  This also gives writers a completely new source of compensation, one which they do not have in their current contract.

-- Residual payments for programming delivered over alternative digital broadcast channels, an industry first.

-- Increases in the amount of money paid to writers for their work on a wide variety of motion picture and television projects.

--Continuing contributions to the writers’ pension and health benefit funds, ensuring lifelong financial and health security.

--A contribution of more than $500,000 over the next three years for a showrunner training program to be run by the Guild.

--Consultation with showrunners in cases where product integration is contemplated for television programs.

The AMPTP Compromises

In the interest of promoting a positive atmosphere for negotiations, and out of respect for the views of the writers on key issues, the AMPTP has:

-- Formally withdrawn twenty-nine proposals from its original plan.

-- Offered to remove six additional proposals.

Among the proposals withdrawn by the AMPTP is the one involving recoupment, which would have provided that producers pay residuals to writers only after they recovered their basic costs.  Withdrawal of the recoupment proposal means that producers will continue to pay writers residuals, before recovering basic costs on programs, and even when films and television shows have lost money.

Conclusion

The negotiations between writers and producers have taken place in the context of a paradigm shift in how entertainment is distributed and consumed.  Our industry must keep pace with those changes lest we lose audiences to competition that didn’t even exist just a few short years ago.

At the same time, we know the impact that the writers’ strike is having, not only on the producers of entertainment and the writers themselves, but on the thousands of workers who have lost jobs, or face diminished income, simply because the business of making entertainment has been slowed.  The economy of this region is at risk.

We continue to believe that common ground can be found between the two sides, and our comprehensive New Economic Partnership is designed to make an agreement possible.   

Comments

[Marc Guggenheim]

The news blackout wasn't "lifted" -- it was unilaterally broken by the AMPTP when they issued this statement. Sadly, this is not the first time the AMPTP has done so during these negotiations.

[Greg]

Doug--first the writers make too much money, now they make too little money. You can't have it both ways. Make up your mind.

And what does the money have to do with the negotations? The writers either deserve a small percentage of revenue when their product is streamed online, or they don't. Networks are already making a *sizeable* amount putting episodes on their websites (one episode of "Pushing Daisies" at abc.com has commercials exclusively from Tropicana--I guarantee you that didn't come cheap. And that's *one* episode. Every episode ABC has posted has advertising you're required to watch, and for destination shows like Desperate Housewives or Lost (or "The Office,") it seems very likely the network's turning a profit; seems to me it's perfectly reasonable for a writer to make a small percentage. Do you disagree?

[ed]

Unfortunately, you can't make any real conclustions about cost and revenue regarding the online episodes. Given the relatively small download rate, Tropicana may not have paid much at all, so you can't "guarantee" that. Just like with broadcast television, the number of eyes generally dictate the cost. Plus the infrastructure required to provide streaming video -- web site development, massive servers, and data bandwidth costs -- all constitute large up-front and ongoing costs. The iTunes store was not profitable for a couple of years until music sales were large enough. No word yet as to whether the video sales have seen any net profit. NBC obviously didn't feel they were getting much value from it, causing them pull out. (Granted, there likely were other issues involved beyond price.)

That's mostly the problem here. The studios are not yet seeing any significant revenues from online distribution, mostly using it as promotional material at this point. But both the studios and the writers see the future, to some extent, as being online. The writers want a piece of the action *now* where money doesn't really exist, but they also don't want to get burned like they feel they were with home video sales percentages back before those sales took off.

And, yes, I would concur that writers should be seeing a percentage simply because that is the way the studios have created the payment structure. Going way back, they started the notion of paying writers (and actors) less up front to keep costs down and pay residuals as a form of profit sharing. The studios either need to pony up more money up front and take a bigger cost risk, or deal with the hassle of residuals. But both sides need to determine a fair balance about what a promotional piece would be.