Residual Anger

Residual Anger

Hollywood unions on the brink.


When top entertainment moguls chose Warner Brothers as the site to announce the breakdown of negotiations with unions representing TV and movie writers on March 1, the use of the Burbank studio was rife with historic symbolism. Right outside the doors from where Disney president Robert Iger and Dreamworks’ Jeff Katzenberg were speaking, Hollywood had staged a violent clash in its last industrywide labor war. On the morning of October 8, 1945, thousands of picketing film workers, some wearing white-painted civil defense helmets, were confronted by truckloads of scabs who attacked with lead pipes, monkey wrenches and nightsticks, as studio security lobbed tear-gas canisters into their ranks and rifle-bearing LA County deputy sheriffs rounded up the strikers.

No one is expecting a recurrence of such cinematic events anytime soon. But the labor atmosphere in Hollywood in this spring of 2001 hasn’t been so tense and volatile since the great strike-lockout of 1945-46–a series of cataclysmic events that led to the defeat of the Hollywood labor left.

The breakoff of talks announced at Warner Brothers by Iger and Katzenberg came after six weeks of preliminary closed-door negotiations between industry employers and leaders of the 11,000-member Writers Guild of America. The WGA film and TV contract expires May 1. Two months later, the contract with the 120,000 members of the Screen Actors Guild (SAG) and the American Federation of Television and Radio Artists (AFTRA) also expires.

If no early agreement is reached and the unions go out on strike, virtually all major film and TV production could be shut down, hammering a half-billion-dollar-a-week dent in the Southern California economy. That’s not even counting the additional AFTRA TV contracts that expire in the fall.

While WGA vice president Dan Petrie Jr. (Beverly Hills Cop and The Big Easy are among his credits) says that a new strike “is in no way inevitable,” he warns that “pent-up demand has reached a boiling point, the sort of pressure that produces earthquakes.”

One attention-focusing foreshock of such an upheaval was last year’s six-month strike in the commercials industry carried out by SAG-AFTRA, the longest actors’ walkout in the history of Hollywood. As this year’s labor talks loomed, stretched on and collapsed, a feverish production speedup moved through the industry. The studios are flushing every bit of “product” out of their pipelines as quickly as possible. Some studios are retouching old classics for potential re-release. And TV executives are frenetically developing new “reality-based” shows that employ no unionized performers or scribes. The guild actors and writers, meanwhile, are cramming in as much last-minute work as they can, bracing for possible paycheck famine.

Or better said, certain paycheck famine. For even if a strike is averted, “the producers are about to impose a virtual lockout,” says a Hollywood union official. No new projects are being undertaken, for fear they might be interrupted by a strike. So under any conditions, a very dry summer is anticipated by all.

In short, an epidemic of nail-biting has swept through the lunch tables at the Ivy and Morton’s, as Hollywood steels itself for the showdown.

Global Boondoggle With No ‘Back End’

At issue, really, is whether the unions will be able to catch up with an industry that has, in the past two decades, “radically restructured itself, vertically, horizontally and globally,” as Paul Worthman of AFTRA puts it. What the writers and actors want is better compensation for their work when it appears–or reappears–in the booming cable, Internet, video, DVD and foreign markets. Too often, the artists are paid little or nothing in residuals for such reuse and resale of their work.

When a consumer plops down $25 for a new DVD, for example, the credited screenwriter receives only 4 cents. Much of the current residual formulas date back to the 1980s, when cable and video were infants, when DVDs and the Internet had not yet been born, and when foreign sales represented 30 percent of TV and movie revenues, instead of today’s 65 percent. “Over the past decades, the companies asked artists to accept significantly reduced or bargain-basement residuals to help them build new foreign markets, in home video, DVD, off-network reruns on basic cable, reruns on foreign TV, made-for-basic-cable, made-for-pay-TV and the Fox Network,” says WGA president John Wells. “Writers did so with the understanding that talent would eventually receive a fair share as those markets matured.”

They have more than matured. The vertiginous concentration of ownership throughout the entertainment industry, the rivers of revenue produced by “synergistic” marketing, the profligacy inherent in plowing, say, $140 million into the new film Pearl Harbor, convince the creative unions that the time has come to present an overdue bill. “You get the feeling, this is our last chance before we completely miss the boat,” says actor Matt Kimbrough, an activist member of SAG and AFTRA.

With a single conglomerate now able to produce a film in its studio, rerun it on its own TV network, exhibit it abroad through a subsidiary and then remarket it on video and DVD, for example, unionists speak of “transfer pricing” abuses. Companies within the same corporate family can move product back and forth at below fair-market value, thereby chipping away at residual earnings for actors and writers.

The economic stakes are enormous for both sides. And depending on whether you talk to the unions or the employers, over the next three years it will take somewhere between $750 million and $2.7 billion to satisfy the labor demands. “We are so far apart on the economics that there was no way to bridge the gap,” said the industry’s lead negotiator, Nick Counter, as the first round of talks collapsed. So far apart, in fact, that even after the WGA scaled back its demand to increase DVD residuals from 100 percent to 25 percent–or an extra penny per sale–the producers rebutted with an offer of a zero percent increase.

Belaboring the Hollywood Myth

Sitting across the table from labor is Counter, head of the Alliance of Motion Picture and Television Producers (AMPTP), consulting with a council of about twenty studio labor relations managers as well as a three-man team of economic advisers: Viacom boss Jonathan Dolgen, Disney president Robert Iger and Warner Brothers chief Barry Meyer.

Insiders say that Disney’s Iger and Fox mogul Rupert Murdoch are taking the toughest line. And some think the studios are itching for a strike–an opportunity not only to roll back the unions but also to burn up deadwood deals with unproductive producers.

In turn, the unions face some steep challenges in the coming negotiations. To make their case for a fairer performers’ share of revenues, they must marshal to their advantage the mountains of data provided by what is called “The Residuals Study.” This report, an unprecedented opening of the employers’ books, was won by SAG in the 1998 contract. The union considered it so crucial to identifying new sources of income for employers, and therefore potentially for its members, that it gave up higher wage demands in return. The employers dragged their feet for two years before turning over the data earlier this year.

“We also learned a lot from our six-month negotiation and strike in the commercials industry last year,” says actor John Connolly. Connolly is a SAG member and first national vice president of AFTRA, as well as co-chair of the actors’ negotiating committee in the upcoming talks. “Even though we won substantial gains, neither the mobilizations during negotiations nor the strike itself were well enough prepared, in tactics, infrastructure or leadership development.”

This time around, he says, more attention needs to be paid to member training, strategic planning and the building of alliances. “This year SAG and AFTRA are attempting to take a much more pro-active and conscious approach to building leverage and power,” says Connolly.

With an inverse pyramid of so much lucrative international product now balanced on the relatively small fulcrum of professional writers and actors,”the unions are potentially more powerful than ever before,” says a WGA staffer. “But only if we seize the massive opportunity now before us. And, frankly, that’s pretty iffy.”

Among the myriad Hollywood myths is the notion that the creative guilds are powerful organizations with a long and storied history of striking and bringing the industry to heel.

Reality is considerably less dramatic. The negotiating cycles of the past fifteen years have been essentially concessionary, and the guilds have fallen into the habit of closed-door, “fast track” contract approvals with virtually no member mobilization. “What came of the last WGA strike in 1988 was twelve years of labor peace with early deals,” says WGA vice president Dan Petrie Jr. “All that has come at a certain price to our membership.”

In the meantime, what we know as “Hollywood” has transformed itself from being something like Lew Wasserman’s LA-centric private fiefdom, which he ruled paternally for decades as chairman of MCA, into a global behemoth whose economic survival is considerably less tied to movie production. The challenge for the entertainment unions, say its most strategic visionaries, is catching up with their employers–that is, making the transition from being rather parochial company town guilds to becoming more global, strategic-thinking labor unions. That transition, say veteran unionists, would require the guilds to rely much more on hard economic research into the restructuring carried out by their employers and, more important, to forge ever closer relationships with organized labor at home and abroad. “The performers’ unions have to take off their Hollywood-obsessive, rose-colored glasses,” says Connolly. “We have to move away from the narrow narcissism that has prevented us from taking our rightful place in organized labor, which has allowed the rest of the movement to dismiss us as pampered poodles.”

‘Mickey and Judy’ Unionism

Unfortunately, both sets of guilds–the writers and actors–enter into this decisive phase of their history quite distant from that paradigm. WGA president John Wells is that exotic Hollywood species known as a “hyphenate”–a writer-producer. One of the town’s top “show-runners,” Wells is therefore a major employer, presiding over and owning a big piece of the hit series The West Wing and ER‚ as well as Third Rock From the Sun. This puts him in the odd, conflictive position of negotiating down his sizable profits as producer as he tries to raise the rates of writers.

WGA executive director John McLean, likewise, has spent most of his career on the other side of the table, serving for twenty years as a labor relations manager for the networks. And top WGA consultant Robert Hadl also comes from management, having served as general counsel to the entertainment giant MCA. To its credit, the current WGA leadership came to office pledging less obeisance to the producers. But its entire top tier comes from the most elite positions, distant from the rank and file–a fact not lost on a significant portion of the WGA membership. When WGA leaders call themselves mere “employees” of the studios, this ignores the fact that the top cut of the guild “are often their own corporate ‘bosses’ as well, earning gargantuan sums,” as WGA member William Richert put it in a Variety guest column titled “Just Who Are the WGA Firebrands Fighting For?” In the last writers’ strike, in 1988, he argued, “Almost 30 independent producing companies got shuttered…while the ’employers’ of the WGA salaried writers stayed in business, being producers as well as writers.”

The main actors’ union, SAG, comes into this fight even less prepared. At a moment when unity and clarity of purpose are paramount, SAG is bloodied by a factional guerrilla war that is being fought out daily on the front pages of the trade papers. Things have gotten so bad that in early February SAG president William Daniels (Dr. Mark Craig on St. Elsewhere) had to make an embarrassing–and unsuccessful–public appeal for peace. And while SAG has historically been prone to such turmoil–remember the great Ed Asner/Charlton Heston duels of the early 1980s?–the Daniels regime has mostly itself to blame for its predicament.

About five years ago, a new layer of mostly commercial actors started to gain a louder voice within SAG. Dissatisfied with what they saw as inadequate contracts and a sluggish leadership, they came together in a broad coalition eventually known as the Performers Alliance. But by 1998 their ranks had split and they opposed ratification of that year’s contract. “Then the whole group took a sharp turn to the right,” says a leftist founder and now ex-member of the alliance. “They mobilized and espoused a narrow, craft-based and elitist program, and they turned out enough votes to defeat the merger with AFTRA.”

This was quite a dramatic victory, as the marriage of the two actors’ unions had, for years, been almost a foregone conclusion. But because AFTRA, unlike SAG, includes in its ranks broadcasters’ and TV and radio news employees, the alliance used an appeal to the “purity” of SAG to defeat the merger. Cashing in on that momentum, the Performers Alliance’s slate won victory in Hollywood-based board elections, and Daniels, a union tyro, was chosen as president.

The new leadership was seated, sounding strident and even ultramilitant. But its erratic posturing and its open hostility to the allies of unseated president Richard Masur (a political progressive but a cautious unionist) stirred a boiling pot of factionalism. Soon, Daniels and his fervent allies were being derided by their critics as the “Branch Davidians.”

The near entirety of the New York-based portion of the 105-member national SAG board and one of the union’s executive directors, John McGuire, became sworn enemies of the Daniels-dominated Hollywood leadership. And when the SAG Hollywood leadership endorsed the idea of shutting down many out-of-town branches of the union, the internal war only intensified. The result is a gridlocked, deeply divided union with a severely demoralized professional staff.

President Daniels, in an interview, concedes that things inside SAG might be “chaotic” but he defends his tenure, saying, “We have brought back our high-profile performers into the union, and we have gotten a lot of working actors on the board.”

One of his chief lieutenants, actor and board member David Jolliffe, is unmoved by internal critics. “We’re painted as an aggressive leadership,” he says. “But I wear that title proudly. When you get to my position you always have detractors. But I’m proud of what we have done, and for that Bill Daniels has to stand and have petty people with petty agendas sling mud at him.”

Those “petty” critics include the long-term, often most active, guts-and-glue militants of SAG. Board member and former first VP Amy Aquino argues that the leadership is bereft of any strategic vision. “I call it the Mickey and Judy school of unionism,” she says alluding to the early Rooney-Garland musicals. “It’s like, ‘Hey gang! Let’s put on a union!'”

One recurring internal criticism of the SAG leaders is that they might go off half-cocked into the current negotiations without first taking the membership’s temperature regarding a new strike. After last year’s costly six-month SAG-AFTRA walkout in the commercials sector, during which thousands of actors went without paychecks, there’s little rank-and-file enthusiasm for another season without work. And there’s a growing feeling that the hard-line posturing of SAG unnecessarily prolonged the strike. “Claiming the contract won in that strike as a victory is proper if we’re talking about drawing the members into activism,” says former SAG president Masur. “But otherwise, claiming such a long strike as a victory is obscene. People lost homes and careers, and we lost work that will never come back because we gave the producers enough time to learn how to shoot outside the country.”

Below-the-Line Resentment

Solidarity with other industry union members might also be shaky in the event of a writers and actors strike. About 100,000 “below the line” workers–photographers, makeup artists, painters, carpenters, sound and light technicians, gaffers and grips–are represented in the International Alliance of Theatrical Stage Employees. And IATSE president Tommy Short rocked Hollywood in late January when he told Variety that the issues of the WGA and SAG were “unclear” to him. “If anybody thinks I’m going to support an institution that is trying to obtain unobtainable proposals in a collective bargaining process…” Short said. “I don’t mind getting on a bus, but not on a bus without a driver that’s going over a cliff.”

While it must be said that Short comes from the most conservative wing of organized labor and that his own sharply undemocratic union hasn’t struck since the 1930s, when Al Capone took it over, it’s also true that he gave voice to a rather common sentiment within his ranks. “What Short said probably represents the feeling of about 80 percent of our membership,” says one leftist IATSE official, the leader of a Hollywood local. “We’ve got no confidence in the guild leadership, especially SAG. These guys just don’t know what they’re doing. You don’t go on strike for six months to get what you could have gotten in the first week.”

Some guild strategists know very well that more work has to be put into building real alliances with below-the-line workers. “We have to jettison the mentality that makes us think we are so different from any other working people,” says AFTRA VP Connolly. “We have to realize that we now work for corporations that produce sewage and produce movies. We have to reach out to the rest of labor and stress how alike we are instead of how unique we are.”

Pressure in that direction was applied by the national AFL-CIO in mid-February when federation leaders John Sweeney and Richard Trumka hosted a two-hour Hollywood union summit at the Biltmore Hotel. Participants in that meeting say that, behind closed doors, the national labor officials let it be known that they expected to have a strong role in supporting and advising on the upcoming negotiations and in any strike movement that might come out of it. “The AFL felt there was just too much at stake to leave it in the hands of inexperienced leadership,” says a Hollywood union official who attended the meeting. “The federation was brought in late during the commercial strike, yet their expertise was crucial in winning it. This time they want in early.”

It’s unlikely that the writers will return to the table before April. There’s some speculation they may wait longer and even work for two months without a contract beyond the May 1 deadline in order to gain leverage as the actors’ contract comes due on July 1. SAG and AFTRA have yet to begin formal talks.

The next few months, then, could be crucial to defining labor’s position and power in Hollywood for decades to come. To the most conscious among Hollywood’s unionists this is the moment to maximize member training and preparation, to stitch together interunion alliances, to deploy an effective strategic contract campaign and, most of all, to hone the guilds into a powerful, modern arm of the labor movement able to confront some of the mightiest corporations now operating in the global market. “There’s way too much talk right now about a strike,” says a thirty-year veteran guild organizer. “And not nearly enough, if any, talk about a real fight. And that’s the fight we now have to wage.”

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