The Strike Is a Lawyer's Game Part 2: It's Not Over... Yet

This is the second piece (and sequel to the first) by WGA strike captain Alfredo Barrios, a former corporate attorney turned writer.

I was asked to comment on the DGA deal. I decided to wait a few days. Like most of you, I was waiting for more information about the deal than a broad sketch in a press release.

In the meantime, it's my understanding that a small group of self-described “moderates” who advocated “patience” have ignored their own admonition and embarked on a mission to get as many names on a petition that essentially advocates that we should take the DGA deal, no matter its shortcomings – and as we all know, there are substantial shortcomings.

I’ve been heartened to hear that most people have resisted the urge to sign this so-called petition – regardless of whether they think the deal is generally favorable or bad. They know that the Negotiation Committee is about to go into meetings with studio CEOs in order to address problem areas in the agreement. And the CEOs seem willing to listen, given the leverage that we have at the moment. So why would you sign the petition, which only serves to undercut the Negotiation Committee’s power? You wouldn’t.

I won’t go into great detail about the DGA deal’s shortcomings. Most people know that the Electronic Sell-Through Rate is still abysmally low. As lawyer Jonathan Handel points out, the studios didn’t even meet us half way, and their rate only kicks in after certain sales volumes are met.

Most people also know that while the studios agreed to DGA jurisdiction over new works created for the Internet, it only applies to shows that have production budgets in excess of certain threshold numbers. Basically, if it’s a low budget Internet show, the guild doesn’t have jurisdiction over it. The problem of course is that most successful webisodes are low budget, and if you plan to create one, chances are you’d fall outside guild jurisdiction. So those threshold numbers need to move down in order for the jurisdiction provision to mean anything.

And then there is Ad-Supported Streaming… At the moment, the network rate for a rerun of a one-hour dramatic episode is roughly $21,000. The studios are now offering $1200 for a year’s worth of streaming of that same episode on the Internet, and this only kicks in after an initial two to three week period in which they would be able to run it for free. So as TV reruns become Internet reruns – and as anyone who owns a computer can attest, it’s happening now – our residual payments are obliterated. That’s why this proposal is characterized by many as a massive rollback. Remember, this is what we were fighting to avoid.

So what’s the answer? A flat rate closer to the existing network residual number? We can ask for it, but I think the studios will resist it. They argue that they’re still working out the business model for Internet streaming. They don’t want to be locked into a high flat rate number…

Which is why a graduated scale of residual payments makes so much sense. In other words, if a show streams on the Internet, and it’s successful (i.e., gets a certain number of hits), the writer of that show would get higher residual payments than the writer of a less successful show. It protects us and the studios. We both share in the upside. And if a show doesn’t do as well, the studios are only on the hook for a relatively low, initial flat rate payment.

I haven’t heard any reason why this wouldn’t work. I’d be interested in hearing what the CEOs have to say about it.

Some are asking: but would prolonging the strike be worth it? Would we want to strike for one or two or maybe several more months for a graduated scale and improved terms in various other areas? Fair enough. It is a cost-benefit analysis. And it depends – and this is critical – on what you think our leverage is.

The real question from my point of view would be: is it worth it to the studios to have us striking over a graduated scale that would protect them and us? I don’t think so. I think they want to do a deal now.

Before the DGA deal was announced, I thought the most interesting part of the deal wouldn’t necessarily be its substance – although important, we all anticipated it would have problems – but rather the timing of its announcement. That would tell you something about the studios’ timeline for getting this strike resolved. They back-channeled through the holidays and really pushed the DGA for a quick resolution. Remember, these were the same studios that wanted to make us feel the pain of the holidays to improve their bargaining position. So if they had more time, the smarter play from their own playbook would’ve been to sweat us out a little while longer. They didn’t.

They’ve taken a lot of financial hits over the last few months – much bigger than they probably anticipated – and have many more looming on the horizon (with the Oscars and the commencement of pilot season weeks away, and a potential SAG strike just months away). They realize it’s time to end this, and they have the power to do so…

… if they deal with us reasonably and fairly.