Studios, directors in accord

The Directors Guild of America, after swift negotiations, reached a new contract with the major Hollywood studios Thursday, a move that ups the ante for striking writers to craft their own accord.

The three-year agreement advances how much directors earn when their work is distributed over the Internet, a keystone in the 11-week-old writers strike that has virtually shut down prime-time TV production and upended Hollywood’s most sacred institution: the awards season.

Whether the terms won by directors will be acceptable to writers is not immediately clear.

However, if the Writers Guild of America spurns the DGA deal, tensions that have been brewing could divide and weaken the union.

“If the WGA rejects the basic concepts of a DGA deal, there’s going to be a great deal of dissatisfaction among the membership,” said Dick Wolf, creator and executive producer of the “Law & Order” TV shows. “The bottom line here is: This town should be back to work in three weeks.”

Though writers and directors want the same thing -- compensation for the digital distribution of their work online, on cellphones and on other new-media devices -- they took different approaches. Unlike the writers, directors were less confrontational in their dealings with studios.

The negotiations between the directors and the Alliance of Motion Picture and Television Producers, which represents the major studios, were preceded by weeks of informal talks between the parties. DGA studies also buttressed the studios’ position that the future of the entertainment business on the Internet is less certain and developing more slowly than writers contend.

As a result, the directors were able to forge a compact with the big Hollywood studios in relatively short and peaceful order. Among the provisions secured by directors is a doubling of the current residual rate paid for downloads of TV shows and movies and the setting of a residual rate for advertising-supported streaming.

Gil Cates, who chaired the DGA’s negotiating committee, said the contract achieved two key goals for the union: jurisdiction over new digital production and fair pay for work shown on the Internet.

“This is a very strong contract which has obvious value in it,” Cates said. “I hope it helps the writers.”

Signaling that the directors agree with the studios that digital distribution of entertainment is still in an early stage, the contract includes a sunset provision that allows them to revisit new-media residual formulas when the three-year deal expires in 2011. By then, both sides believe, they will have a clearer picture on the economics of delivering movies and TV shows over the Internet.

Concurrent with Thursday’s announcement, the major studios, which broke off negotiations with writers in early December, invited the WGA to resume talks.

“We hope this agreement with the DGA will signal the beginning of the end of this extremely difficult period for our industry,” eight chief executives said in a statement.

Gov. Arnold Schwarzenegger, visiting The Times on Thursday, said the agreement between the directors and studios could “very well be a motivational vehicle for people to come together.”

Some in Hollywood have questioned why Schwarzenegger, who for years was one of the movie industry’s biggest action stars, has not done more to help mediate a settlement between the writers and studios.

“They know I am very interested and available all the time,” the governor said. “But people have to be ready to make an agreement.”

It’s unknown, however, whether writers will find the DGA terms sufficiently palatable to frame their own agreement. What’s more, leaders of the WGA and the Screen Actors Guild, whose contract expires June 30, have stressed that they won’t be tied to terms set by directors.

Distrust between writers and directors goes back a long way. Many writers blame directors for negotiating a much-maligned formula for home video residuals more than two decades ago that became the standard for all talent unions.

However, WGA leaders could face a backlash if they summarily reject the directors deal. In recent meetings with members of the guild’s board and negotiation committee, some TV and screenwriters have been urging leaders to seriously consider the DGA deal as a framework to revive their own contract talks.

Anxieties have been running high among television writers, who are rapidly finding themselves out of work because of the strike. ABC Studios, 20th Century Fox Television, CBS Paramount Network Television, NBC Universal and Warner Bros. Television have terminated development and production agreements with writers in the last week.

Jerry Bruckheimer, one of Hollywood’s biggest movie and TV producers, said, “There is enormous pressure on everybody to settle this and move on.” His TV shows -- including the “CSI” franchise, “Without a Trace” and “Cold Case” -- halted production because of the strike.

Writers, who have been highly vocal during the strike, were guarded in their comments Thursday.

Matt Weiner, creator of AMC’s “Mad Men,” said he was “optimistic” that the WGA and the producers could now sit down and talk and that the strike could end soon.

“Hopefully, our issues will be dealt with as sensitively and generously,” Weiner said. “Our demands don’t seem to be any more unreasonable than those of the DGA.”

The guild, for its part, isn’t tipping its hand.

Patric M. Verrone, president of the Writers Guild of America, West, said that he would meet shortly with the guild’s negotiating committee to study the directors contract.

“I don’t want to prejudge it,” Verrone said. “I do hope it’s a sign that they want to bargain seriously, which we’re anxious to do.”

The directors agreement guarantees a one-time payment of about $1,200 for one-hour TV dramas streamed over the Internet in the first year. The studios also would be allowed to promote a show free for a 17-day period.

The agreement more than doubles the current residual rate for movies and TV shows sold online. In addition, directors received jurisdiction over Web episodes based on existing scripted TV shows and original Web shows above certain budget thresholds. For example, Web series costing more than $500,000 would be covered. That could be a sore point with writers and actors because a large number of Web shows would not be covered because they so cheap to produce.

The proposed contract must still be ratified by the DGA’s board of directors, who meet Jan. 26, and the union’s members. It would go into effect July 1, the day after the current contract expires.

One reason for the fast pace was the direct involvement of News Corp. President Peter Chernin and Walt Disney Co. CEO Bob Iger. The executives had been designated by their counterparts at the other media companies to hammer out a blueprint for a deal.

Chernin and Iger also are expected to be similarly involved in any resumed writers talks.

Beyond the writers, the studios also face what could be equally contentious negotiations with actors, whose contract is up June 30. Actors have many of the same concerns as writers and have strongly supported them on the picket lines.

Studios have begun preparing for the possibility of an actors strike by pushing up shooting schedules of various movies.

The Screen Actors Guild said in a statement that it planned to analyze the DGA deal carefully.

“Now is the time for the [studios] to return to the bargaining table they left and negotiate a new deal with the WGA that provides for fair compensation for writers,” the statement said.

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Times staff writers Lynn Smith and Evan Halper contributed to this report.

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(BEGIN TEXT OF INFOBOX)

Internet pay

The proposed three-year contract between the Directors Guild of America and major Hollywood studios includes pay for work distributed over the Internet under these terms:

* Expands the union’s contract to Web shows that are derived from existing scripted TV programs. Also covered are original programs created for the Internet that cost more than $15,000 a minute, $300,000 a program or $500,000 a series to produce.

* More than doubles the rate currently paid by employers for paid downloads of television shows and films from the Internet.

* Pays a fixed sum for streaming that is equivalent to about $1,200 for a prime-time one-hour drama within the first year after the initial broadcast. The rate in subsequent years is based on a percentage of revenue.

Source: Directors Guild of America