Writers’ strike shakes Hollywood

It started last year with failed talks over royalties. Now it threatens to bring down the Oscars and is costing Hollywood millions. Tim Bennett reports on the US writers’ strike.

It started last year with failed talks over royalties. Now it threatens to bring down the Oscars and is costing Hollywood millions. Tim Bennett reports on the US writers' strike

What happened to the Golden Globes?

This year's Golden Globe awards took place "not only without stars, but without drunk stars", as LA Times columnist Tom O'Neil put it. The ceremony, seen as a vital indicator of which films might win next month's Oscars, was reduced to "three hours of vapid patter" in a press conference, said David Zurawik in the Baltimore Sun, because most nominees, including George Clooney and Johnny Depp, refused to turn up, in support of a two-month strike by Hollywood writers.

Why are the writers on strike?

The usual reason: money. Writers earn royalties or residuals' from US studios and production firms every time something they have written is repeated. The trigger for industrial action was the failure of talks last year to agree extra new-media' residuals for shows viewed online via computers and iPods, for example.

The studios, owned by megaliths such as CBS and Fox, have offered writers $139 a year per half hour of TV content, regardless of advertising revenue generated, claiming the writers have no other mass outlet for their work. The LA Times describes the offer as "peanuts"; writers want "eight to ten times as much".

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But can a bunch of striking writers cause much trouble?

Oh yes. The Writers Guild of America (WGA) has around 12,000 members working across the film, TV and new media industries. Without writers, late-night talk shows, which rely heavily on topical jokes, ground to an immediate halt in November, followed by production of shows from Ugly Betty to Desperate Housewives. Now sympathetic actors are refusing to show up at awards ceremonies; even the Oscars is under threat, with no one sure whether even nominated actors will turn up.

Meanwhile, says Dan Glaister in The Guardian, some high-profile writers are threatening to exploit the internet to break the dominance of big Hollywood studios by creating what screenwriter Aaron Mendelsohn calls "a whole new model to bring content directly to the masses".

How much is this costing?

$500m was the estimated cost of the last 22-week WGA strike back in 1988. But the Alliance of Motion Picture and Television Producers (AMPTP the bargaining arm of the US studios) believes the losses suffered so far already run to more than $550m for writers and studios combined.

On the production side, NBC seems to have been hit hardest, having lost between $10m and $15m of advertising revenue from this year's (less than) Golden Globes alone, says the Press Association. "It feels like the nerdiest, ugliest, meanest kids in the high school are trying to cancel the prom," griped Ben Silverman, NBC's entertainment chief.

Meanwhile, writers are being hammered as firms from Warner Bros to 20th Century Fox tear up existing contracts (invoking "force majeure" clauses) and lay off staff perhaps as many as 1,000 in the case of Warner Bros. And the pain isn't confined to writers and producers Los Angeles itself has already lost more than $1.4bn, says David Smith in The Observer, if you consider all the party planners, caterers, stylists and make-up artists who make a big chunk of their income from awards ceremonies and now face "financial ruin".

So has everything stopped?

Not quite. The WGA has reached a deal with David Letterman's production company Worldwide Pants, and the show is back on air. "We pay the writers the residuals they are entitled to because we think they deserve it," CEO Rob Burnett told The New York Times. A deal has also been struck with Tom Cruise's film firm United Artists. Other TV networks are trying, with mixed success, to bypass writers by filling schedules with more news, reality TV and imported programmes.

How long could it go on?

The worst-case scenario is "all-out civil war", says Jonathan Handel in the LA Times, with the WGA and Screen Actors Guild on one side and studios, networks, directors and crew on the other. A failure to make a breakthrough soon could see the dispute drag on "for months".

There is hope of a deal between the Directors Guild and the AMPTP after talks last weekend aimed at resolving the new media residuals issue, but many doubt the WGA will automatically follow suit with a similar deal largely because, while directors care about residuals, they may not strike a hard bargain with the AMPTP provided their new contracts with the studios are sufficiently generous on what they see as a more pressing issue: up-front fees.

Could British writers go on strike too?

No. There is seemingly little prospect of a similar strike here as the BBC reports, the Writers Guild of Great Britain (WGGB) is happy to show solidarity with the WGA, alongside other global guilds, by staging a London rally. But there is no talk of strike action here, mainly because they have already negotiated what The Guardian calls "satisfactory agreements" with UK broadcasters on new media residuals.

In fact, the strike could be good news for Britain's film industry. The WGGB has been careful to underline its support for the forthcoming BAFTA awards, on 10 February. Given that the Golden Globe Awards was a shambles and there is still a question mark over the Oscars, the UK's premier award ceremony is suddenly very high profile. None of the glamorous BAFTA nominees have yet threatened to stay away and many now believe the awards could permanently wrest the global number-two spot away from the tarnished Globes.

Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.