The Writers Guild of America (WGA) renegotiates its Minimum Basic Agreement (MBA) with the AMPTP every three years. In late 2007, negotiations over the MBA reached an impasse, as a result the WGA membership voted to give its board the authorization to call a strike, which it did on Friday, November 2, 2007; the strike began the following Monday, November 5, 2007.

After weeks of back room negations, WGA negotiators reached a tentative agreement with the AMPTP on February 8, 2008. On February 10, 2008, the boards of both guilds unanimously approved this tentative agreement. Striking writers were then given the opportunity to vote on the agreement February 12, 2008. During that vote 92.5% voted in favour of lifting the restraining order. Finally, on February 26, the WGA announced that the contract had been ratified with a resounding 93.6% of members supporting the new MBA.

Key Issues in the Strike

The key issues in the dispute were focused on DVD residuals, union jurisdiction over animation and reality program writers, and compensation for “new media”.

DVD Residuals

The WGA felt that the current residual formula, which entitled a member to 0.3% per DVD sold,
was far too low and did not accurately compensate its members for the high profitability of DVD sales. In fact, they claimed that the 0.3% of DVD sales should be increased because the figure was arrived at and carried over from VHS sales projections and production costs from the 1980Â’s. In support of their assertion, the WGA relied on a New York Times report that stated that in April 2004, companies made $4.8 billion in home video sales versus $1.78 billion at the box office between January and March of that year. WGA members argued that a writer’s residuals, or profits made from subsequent airings or purchases of a program, were a necessary part of a writerÂ’s income that is typically relied upon during periods of unemployment common in the writing industry. The WGA position was that the residual should be doubling from 0.3% to
0.6% per DVD sold.

Conversely, the AMPTP argued that DVD revenue streams were unproved and that the profit figures did not accurately reflect the market realities. Moreover, the AMPTP claimed that they could not increase the residual rate because of their need to recoup rising production and marketing cost. They went further to insist that the current DVD formula rate of 0.3% be applied to residuals in other digital media as well.

New Media

According to some industry experts, it is widely expected that new media, in its various forms will eventually overtake both DVD in the home market and television in the broadcasting market as the primary means for distribution. As a result, many WGA members believed that this round of MBA negotiations should include significant emphasis on carving out a share of this lucrative market for their members. The sense of urgency around new media was heightened by a general feeling among the WGA membership that they had given way too much to the AMPTP and underestimated the significance of VHS sales in the 1980Â’s. It is for this reason that new media was widely seen as the central issue in the strike.

The importance of new media rights was underscored in a speech given by writer Howard Gould, at a meeting of the full WGA membership the night before the strike date was announced. He said, to a standing ovation:

Soon, when computers and your TV are connected, thatÂ’s how weÂ’re all going to watch. Okay? Those residuals are going to go from what they are towards zero if we donÂ’t make a stand now… This is such a big issue that if they see us roll over on this without making a stand – three years from now, theyÂ’re gonna be back for something elseÂ… And in three years, itÂ’ll be “we want to revamp the whole residual system,”… this is one where we just gotta stand our ground.

Costs of the Strike

According to a National Public Radio report filed February 12, 2008, the WGA strike cost the economy of Los Angeles an estimated $1.5 billion. Conversely, a report from the UCLA Anderson School of Management put the loss at $380 million, and economist Jack Kyser put the loss at $2.1 billion. While the raw numbers vary widely, there is no disagreement that the strike took an enormous toll on an already weakened American economy.

The Agreement

The terms reached in the new MBA will be in effect from February 13, 2008 until May 1, 2011. The new MBA provides annual hikes in basic pay terms from 3%-3.5%, depending on the writing category. “This contract is a new beginning for writers in the digital age.” WGAW president Patric Verrone said, “it ensures that guild members will be fairly compensated for the content they create for the internet, and it also covers the reuse on new-media platforms of the work they have done in film since 1971 and in TV since 1977. ThatÂ’s a huge body of work that will continue to generate revenue for our members for many years to come as it is distributed electronically.”

Further the WGA singled out five key gains in the contract:

• Establishing WGA jurisdiction over writing for new media
• Giving writers “separated rights” in new-media content (separated rights are the contractual rights traditionally enjoyed by writers of original television and motion
  picture scripts)
• Establishing residual payments for new-media reuse of covered material, including
  Internet downloads and ad-supported streaming of feature films and TV programs.
• Establishing “distributor’s gross” as the basis for calculating new-media residual
  payments.
• Creating meaningful access to information and auditing tools that will allow the WGA to
• monitor the development of new-media markets.

As the dust settles on the longest labour dispute in 20 years in Hollywood, both sides appear to be taking a measured reaction to the final settlement. However, like with any major labour disruption, the real hard work begins now, with both sides having to rebuild the bonds of co-operation after such prolonged conflict.

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