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Cue the writers

The Directors Guild agreement may point the way for a deal between studios and writers.

January 18, 2008

The second act in Hollywood's labor drama came to a surprisingly swift conclusion Thursday when the studios reached a three-year deal with the Directors Guild of America. The contract -- signed after only six days of formal negotiations -- may not satisfy striking writers, whose 11-week-old walkout has cost the entertainment industry hundreds of millions of dollars. But the pact at least points the way to a compromise that could put this company town back to work.

The best news came in the statement released by eight chief executives of film and TV studios, who invited the Writers Guild of America to informal but high-level discussions. The studios' negotiators had broken off formal talks with the writers Dec. 7, saying they wouldn't go back to the table until the guild dropped demands tied to studio accounting methods and the unionization of reality TV and animation writers. On Thursday, the studios' invitation came without preconditions. That's an important and welcome step forward.

Whether the resumption of negotiations can quickly end the writers strike depends in part on the details of the directors' deal. Nevertheless, judging by the outline released by the Directors Guild, the studios appear to have moved closer to the writers' position on several contentious issues. In particular, they gave the directors three things related to the Internet that the writers union also covets: a requirement that projects made for the Internet be done with union directors, unless their budgets are small; the ability to collect some of the advertising and sales revenue the studios hope to garner online; and a payment formula that's less subject to Hollywood accounting gimmicks.

It's up to the writers to decide whether the Internet-related provisions share enough of the potential wealth to be acceptable. But it's worth bearing in mind that online video businesses are still searching for a successful formula. The point now isn't to lock in compensation formulas that can endure for decades. It's to settle on principles that can guide the studios and unions to new compensation formulas after the online video business matures. The directors appear to have achieved that, raising hopes that the deal will show the writers and studios how to bring their protracted, costly dispute to an overdue end.

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