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No plot twists, please

Talks between the Directors Guild and the studios could set the stage for a deal with the writers.

January 15, 2008

One hallmark of a really good Hollywood mystery is the adept use of red herrings, or plot twists that appear to reveal something important but turn out to be false leads. That storytelling device came to mind over the weekend as the studios began formal contract talks with the Directors Guild of America. The two sides may reach a deal in short order, including compensation for works used on the Internet -- the hotly disputed issue that's at the core of the Writers Guild of America's strike against the studios. But it's by no means clear whether the directors are leading Hollywood back to work or if the talks are just a misdirection play.

The studios and the various entertainment unions have traditionally engaged in what's known as pattern bargaining: The deal struck with one union sets a pattern for how the other unions will be compensated. This is particularly true when it comes to residuals, or the payments the studios make when a work is syndicated or repurposed (for example, when a TV show appears online long after it was broadcast). The total residuals paid to the writers on a movie or TV show have been the same as those paid to the director, while the actors involved have split a larger pot. So if this were the typical negotiation, the residual formulas accepted by the Directors Guild would be endorsed by the writers and actors unions as well.

Of course, if the writers and actors don't like the terms in the directors' contract, they're not bound to accept them. As writers are quick to note, most members of the Directors Guild don't collect residuals directly (the money goes to the union's pension plan), so they're not as motivated on the issue. The writers can continue to strike, and the actors can follow suit when their contract expires this summer. With the studios running out of finished scripts, Hollywood soon will be dishing out little besides reality TV and reruns. And the walkout's cost, which the studios estimate is already well over half a billion dollars, will only grow faster.

That's why the studios and the Directors Guild should craft a deal with an eye to what the writers will accept. This doesn't mean capitulating to all of the writers' demands; rather, it's finding an acceptable middle ground between the writers and the studios on one key issue: Internet compensation. The studios' negotiators have focused their rhetorical fire on the writers' demands for jurisdiction over reality TV shows and other noneconomic issues, but Internet compensation is the heart and soul of this dispute. Leaders of the directors union have said they think their talks with the studios can help end the strike that has put so many people out of work, including their own members. They and the studios now control the plot of this movie. Here's hoping the talks aren't a red herring.

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