WGA strike mediator: Has anyone considered Candy Spelling?

Well, ain't that a stitch. After the jump, a well-reasoned analysis of the strike circumstances from Mrs. Candy Spelling. 

The whispers about how our business is the only one that pays residuals are increasing. The auto workers who put together our cars do not get bonuses when we hit 100,000 miles. The doctor who performed successful heart surgery doesn’t get a percentage of our salaries when we return to work. I don’t like the logic or the implications, but I’m hearing it more and more and feel the strike may be an excuse to provide less, not more.

The biggest problem, though, is that, no matter how many pie charts, no one knows the size of the pie, how many flavors will be offered, if it’s good or bad for us in the long run and how many will be manufactured.

How can the writers negotiate for percentages when they don’t have an idea about the grosses, revenues, sales, overhead deductions or anything that makes this is a valid math problem?

And, how can the studios claim there isn’t that much revenue to be generated, when we all know there is?

Class, continue to discuss amongst yourselves. -- Dana Harris

WHERE HAVE YOU GONE, LEW WASSERMAN?

The WGA strike of 1988 doesn’t seem that long ago until you look at the differences in technology.  Anyone who could have predicted the Internet, downloads, YouTube, iTunes, video-on-demand, and others of the, literally, millions of ways people can get content created by our entertainment industry, would have been dismissed as belonging in some low-budget science fiction business, not the entertainment industry. Videotapes and laserdiscs were the ultimate in technology then. Combine that with cable and its choices, and people in the 1990s would be able to actually enjoy entertainment at home anytime they wanted. 

The entertainment industry of 1988 now seem like it consisted of the pioneers of our business, even more than the pioneers of the late 1940s and 1950s. 

I remember the last WGA strike very well. My late husband, Aaron Spelling, was in the midst of “Dynasty,” “Hotel” and other TV and film projects; and, as a “multi-hyphenate” – who always put writer first – he was truly torn. At least, he felt, the issues were clear. And, as much as he understood and appreciated both sides’ positions, he always voted with the writers to be able to share in the revenue.

Fade to 2007. I have no financial interest in either side, but that doesn’t mean I’m not a very interested bystander, consumer and resident who sees the repercussions to our local economy.

What scares me most is that we don’t have Lew Wasserman to get everyone out of this fairly. The longer Lew is gone, the more we realize his contributions, wisdom and love for the entertainment industry and vision for the future.  We do have brilliant and wise pioneers. Has anyone called Barry Diller or Michael Eisner to see if they want to help negotiate a settlement? I hope it’s being considered.

I see this strike – which most experts said would “never” happen – as changing the entertainment industry. I don’t know what all the changes will be, but I don’t think there will be too many beneficiaries. The story won’t be the lead on the evening news and the front pages of the trades and business and entertainment sections of newspapers every day for much longer. While they are, the messages are very confusing and do not paint pictures of unity or understanding:

“If the two sides can’t agree on who walked away, how will they settle on sticking points,” DAILY VARIETY put in red on the front page.

“A fateful e-mail from the union’s East Coast branch abruptly halts a final attempt to broker a deal,” the LOS ANGELES TIMES added a subhead to a story.

Is this about who walked away or emailed? Are the writers and the AMPTP concerned about who said what or getting this settled?

The TIMES also had pie charts and graphs, including one, for some reason, that compared median salaries of male vs. female Hollywood writers in 2005.

Others proclaim, “It’s Going to be a Bumpy Ride,” “Book To Movie Deals in Jeopardy,” and one of the most-telling, “Studios to Stop Production Deals,” an aim of many that goes back well before the 1988 strike. Major layoffs at networks and studios, withheld paychecks at a big talent agency, talk of cutting back the numbers of pilots are all either being threatened or are in the works.

I’ve watched sufficient CNBC and read enough WALL STREET JOURNAL stories to know that this is a convenient excuse to cut overhead and employment rolls that may never offer the same opportunities again. This is not unique to the entertainment industry. I’m not going to be cynical to believe that’s why the situation went far enough to cause a strike. But, I do believe that executives are telling shareholders that they are being responsible and using the situation to the companies’ benefit.

The whispers about how our business is the only one that pays residuals are increasing. The auto workers who put together our cars do not get bonuses when we hit 100,000 miles. The doctor who performed successful heart surgery doesn’t get a percentage of our salaries when we return to work. I don’t like the logic or the implications, but I’m hearing it more and more and feel the strike may be an excuse to provide less, not more.

The biggest problem, though, is that, no matter how many pie charts, no one knows the size of the pie, how many flavors will be offered, if it’s good or bad for us in the long run and how many will be manufactured.

How can the writers negotiate for percentages when they don’t have an idea about the grosses, revenues, sales, overhead deductions or anything that makes this is a valid math problem?

And, how can the studios claim there isn’t that much revenue to be generated, when we all know there is?

Come on, guys. This strike isn’t good for anyone. Will consumers stop watching TV when the re-runs start early?  Will the laptop replace the television? Will my grandson know what a remote control or a 30-second spot is?  Is the industry debating terms that won’t even be relevant or remembered 19 years from now when there’s more strike talk?

The number of people involved in this strike itself is relatively small, but its impact is gigantic. No matter how much “content,” how many “platforms” or which system is used to calculate residuals, we need to protect our industry. It’s our country’s biggest export, one of the drivers of the American economy, provides some of proudest accomplishments and provides diversions and entertainment so badly needed today.

What would Lew Wasserman do to end this? It’s worth trying to figure out.

-- By Candy Spelling     

Comments

[Holy shit... who saw that coming.]

Wow. Candy Spelling rocks. Someone give her a gun and a padlock. She can finish this negotiation up in a few hours.

[Allen]

Is she serious? Michael Eisner? He almost single handedly drove Disney into the ground and was fired. He's still angry about it too: "They made deals with Steve Jobs, who takes them to the cleaners. Who's making money? Apple." Get over yourself, Eisner. Suggesting Eisner is the worst opinion I've ever heard. He sure would be a great mediator since he stated "I've seen stupid strikes, I've seen less stupid strikes ... This is a stupid strike," and ""It's a waste of their time, [The studios] have nothing to give. They don't know what to give."

Hmm, yeah. Great suggestion. I agree that something has to be done, but some of her comments and suggestions were way too "stupid" a la Eisner.

[Studio exec]

she's right. No one wins. Maybe she and gov could team.

[EJ]

The whole residuals thing is a mess. Pay the writers more up front for their work, a fair amount for the important work they do. The studios own the content and then are free to try to pursue new ways of distributing it wihtout trying to figure out when a profit is being made and how much to pay all the players. The Internet may not pay off for a while, but it is in everyone's best interests to make it work. The current demands for percentages of an unknown quantity muddy the waters and tie the studios hands in trying new things in a changing world.

[sasha]

Hey - I'm a teacher - I want residuals on all my students future paychecks!

[devon]

There's a reason why Candy's husband had current shows on the air for three decades+6 years. Spelling gave many producers/writers/actors their start and practically handed some their entire 'brilliant' careers, he knew that the show must go on, yet more importantly that'the show business must go on'.

[kasey]

She's right. Does anyone even know what's at stake? My sympathies are with the writers, especially since they're at such a disadvantage.

[dp2]

I think Candy has presented some interesting ideas, and I agree with several of her observations.

However, I do take issue with one of her points (which I know she was simply restating a point that's been circulating about town and in the press) about residuals.

First, this statement is dubious. Ever heard of network-marketing businesses (like Amway, Avon, Mary Key, Primerica, Tupperware,etc) or franchise business (like McDonald's, Subway, Pizza Hut, etc)? Some--not necessarily all--people involved in those lines of business earn residuals--so do musicians. Many bankers, insurance agents, real-estate agents, stock brokers, and most--if not all--executives receive some form of performance-based income (like bonuses and stock options) as part of their compensation package. Although one might argue bonuses technically aren't the same as residuals, they're certainly similar enough in spirit. Besides, there's no argument about stock options--those ARE a form of residuals. I could provide a lot more examples; nevertheless, one needn't take my word on this: check out monster.com. Furthermore, WGA writers aren't the only writers who earn a portion of their income via residuals--many other writers do too. Again, don't take my word on this; check out Writer's Market for yourself.

Second, the AMPTP's claims about residuals are a red herring meant to divert the public's attention from the bigger issues at stake. Mr Counter blasted writers in his rant on their residuals, but he never mentioned anything about his own (or the other producers') residuals. As a Hollywood outsider, I--and I imagine many others--would empathize more with his position on the issue of residuals if he (and the other producers') were to offer to rescind their own residuals as well. Of course, everyone KNOWS that's not going to happen! Yet, the WGA leadership, in my humble opinion, hasn't done much better on the PR front. Although I don't think the WGA leadership has to respond publicly to every one of the AMPTP's claims, but they do have to respond to some of them publicly if they want the rest of us (Hollywood outsiders) to empathize with and support their cause. Garnering our support is important, because we can help to change the dynamics of the market via protests, boycotts, lobbying, and other actions--the AMPTP leadership seems to get this. On the other hand, if the WGA leadership continues to shut us out of the process, then we also have the power to change the dynamics of the market against them--the AMPTP leadership seems to get this too.

Third, the AMPTP's claims that the residuals are cutting too deeply into their bottom-line, and their claims that the studios aren't making any money are full of ____ (stuff). These kinds of claims insult my intelligence. I have family members in Northeast Ohio and Southwest Michigan who are struggling to make ends meet (due mostly to offshoring). People, who really aren't making money, are losing their homes--all over the country. Nevertheless, I'm also annoyed by Verrone constantly whining that the producers won't open their books. There are other ways to get the information. If the producers won't give it to him, then he could form a team to reverse-engineer and extract the information from all of the data that's publicly available. Since several producers have sought VC financing from Wall Street recently, they have to provide detailed numbers (assets, liabilities, profits, taxes, etc) on each of their projects. This information gets filed with the SEC, it's published periodically throughout the year, and sent to shareholders in the prospectus. Armed with all of that information, any of the numbers you don't have, could be extrapolated. After doing that, then Verrone could go back to the producers and show them in black-and-white how much they made, and it would be up to the producers to open their books if they'd like to make any adjustments (which shouldn't be necessary, because P/L statements don't lie--unless there's fraud involved) to the figures.

[dp2]

One more thing . . . as if I haven't already written enough stuff. :)

I hope that the AMPTP and WGA resolve their differences soon. However, if they don't, then it's not going to matter much, because they both will lose their audience. The show must--and will--go on, and the public will obtain its content from elsewhere. Remember, we (the public) have other outlets for obtaining content: independent films, viral video (aka Youtube), and various foreign sources.

Besides, armed with a mini-DV and a PC or Mac, I and many others will produce and share our own content on Youtube, and Google will gladly help show us how to monetize the effort. Amanda Congdon (and several others) has already shown us that this is possible and profitable.

[EJ]

OK. I keep hearing this stock options equals residuals notion. It is not the same. Stock options offer you ownership in a company. Typically they are used in startups because those young companies don't have the cash to pay market salaries. So they offer the incentive to help grow the company. There is no cash flow on products sold. Your only hope is that the company is successful and the stock goes up. However, statistically most startups fail and you end up with nothing. (I should know, I've been there.) Stock options make little sense with the dinosaur companies like the studios. Their stock barely moves typically so those companies usually compensate through competitive salaries and bonuses. Under a normal scenario, i.e. the non-Hollywood world, companies produce a product and if it does well there are bonuses passed out. The studios should dump the residuals that are causing so many problems and focus on fair compensation for all contributors.